House market crash!

mi-key

Doesnt need a 'crash' as such.

There was an interesting piece in the The Telegraph the other day about BTL's - they worked out on most 85% mortgaged places ( the typical amateur BTL property over the past couple years ), a drop in the value of the property of just 20% would mean the investor lost all their investment.

Get a drop of this much - which is quite possible - a lot of areas that saw the price rises first have already dropped 10% over the past year - and you'll see all the amateur BTL'ers bailing out.

Add to that a couple more interest rate rises, and a lot of these BTL landlords investments will start costing them money each month - so where do they draw the line £100 a month, £200 a month ? - remember most of these arent people with millions to spare, they are people with limited incomes who may not be able to afford to stump up another couple of hundred a month.

PoorDave

cuffie wrote:

Where did I read somewhere that someone has "predicted (?!)" that house prices will double by 2011??!! xx

Anyone can predict anything!

PoorDave

Xbigman wrote:

I predicted a house price crash two years and the question for me is, why hasn't it crashed yet?
Banks willing to lend more and more money (have you seen the new deathbed mortgages), more people than houses, low interest rates (even a full 1% rise will only get back to average rates) and market stoking by EA's.
I think the market will still crash but I can see it going 25% higher over the next two years first.

This is all just my personal opinion.

Its also wishfull thinking. A price crash would allow me to buy a better property or get into BTL's at the bottom of the market. Hurry the day.
Regards

X

My feeling is still that in the "information age" which we (allegedly) live in, as soon as price falls start, the people who can suddenly afford to buy will. My feeling is that there is more data about the market generally widely available to people sitting at their computers.

My question to FTB's is still...There's a 200k house (i have chosen a random price that's easy to make my point with - was going for 100k, but what can you get for that these days?!) which after a fall in price is 180k. You can afford up to 190k (for example). What are you going to do? Buy it now and own a house, or wait more years? (keep in mind you may have been waiting for this crash for 5+ years already). It might be worth 120k at the bottom of the market, but a correction may occur as loads of other FTBs wade into the market buying 180k houses, so months later it's worth 191k. Now you can't afford it again!

The problem with FTB's is not all of them are as "money savvy" as th eones found on MSE, so they will not all have the superb decision making skills/years of market analysis you guys will have.

Flame away!

PoorDave

mi-key wrote:

Doesnt need a 'crash' as such.

There was an interesting piece in the The Telegraph the other day about BTL's - they worked out on most 85% mortgaged places ( the typical amateur BTL property over the past couple years ), a drop in the value of the property of just 20% would mean the investor lost all their investment.

hundred a month.

Hmm. Surely if i take out a BTL mortgage at 85% of value, i pay 15% deposit, so a 15% drop would lose me all my money, not 20%. Unless you're making a subtle point that i've missed.

The people to worry are those who (allegedly) took on BTL because "everyone was doing it" and have been wondering why theirs only brings in a fiver a month profit, and they're not millionaires yet!

The people with an eye on the investment figures vs having their deposit cash elsewhere are (again allegedly) coming out of the market

LittleJo

Hi,
Maybe I am getting it wrong but prises are immaterial unless you are buying or selling. After the last price crash values soon came back.
I agree it is best to buy at the bottom and sell at the top, but hey, what would we all give for hindsight!!
Jo

ollyshaw

I know what you mean, you havent made any money on a house unless you have sold for more then you bought. As for the last crash, it took 10 yrs to recover!

Olly

mi-key

#55 - not sure exactly how they worked out the figures to come up with the 20% loss - but thats what they said, maybe it takes into account a 5% increase in house prices since the place was bought ? ( so a 20% drop from the current price would wipe out the investment ).

madfrenchgirl

yay

another home of those threads... will the discussion ever end? i know some people are newcomers, but can we put a sticky regarding house price crash discussions: "it has already been done trillion amounts of times, please look up previous posts before posting a new one"

(i am kidding btw, everyone can post whatever they want, but it seems the debate goes round and round and uses a lot of website resources)

sm9ai

PoorDave wrote:

My feeling is still that in the "information age" which we (allegedly) live in, as soon as price falls start, the people who can suddenly afford to buy will. My feeling is that there is more data about the market generally widely available to people sitting at their computers.

My question to FTB's is still...There's a 200k house (i have chosen a random price that's easy to make my point with - was going for 100k, but what can you get for that these days?!) which after a fall in price is 180k. You can afford up to 190k (for example). What are you going to do? Buy it now and own a house, or wait more years? (keep in mind you may have been waiting for this crash for 5+ years already). It might be worth 120k at the bottom of the market, but a correction may occur as loads of other FTBs wade into the market buying 180k houses, so months later it's worth 191k. Now you can't afford it again!

The problem with FTB's is not all of them are as "money savvy" as th eones found on MSE, so they will not all have the superb decision making skills/years of market analysis you guys will have.

Flame away!

Well were would they get their money from. If prices start to fall the bank would lend less. 5 times mortgage would probably dissapear overnight.

Why would a bank lend a stupid amount of money when they know that if you go bankrupt then they wouldn't get it back.

But I see what your saying, although a crash would probably happen with mass redundancies so less people would be able to buy anyway.

Gorgeous_George

BBC reports that the UK population broke the 60 million barrier and that's those we know about.

More people = more houses needed.

The crash may be further away than some would like.

If you are on the ladder, you have set the point where you will pay for the rest of your time in home ownership. A crash will make your next move cheaper. A rise and your 'paper profit' increases but next move is more expensive. Delaying buying means you have not set the point where you will pay for the rest of your time in home ownership. If the crash happens, quids in. If not, quids lost to rental and quality of life should count for something.

I don't want to rent.



GG