First-time Buyer fear - Will house prices crash??

F_T_Buyer

RHemmings wrote:

But how does a "large deposit" protect you? Protect you from what? I have a "large deposit", and I don't want it to just vanish in a puff of market correction. I can use that money to do things for my family and myself. Could you be more specific about what you mean by "protect yourself"? There do seem to be some people who seem to assume that the only thing that can go wrong when you buy a house is negative equity. But timing a purchase wrong and wasting tens if not hundreds of thousands of pounds is something that I would want to do my best to avoid.

What he/she means is the more money you have in your pocket, the longer you can stay in the casino!

dougk_2

If there is a house price crash it will be tied to sevral other things such as high unemployment, high interest rates, high fuel prices etc etc.

So when the prices of the houses are lower the chances are the same people not able to buty now will not be able to buy then either when the amount they need to borrow maybe less but the interest rate higher meaning similar monthly repayments. There is also a strong possibiity these people would be unemployed themselves. On top of this due to uncertaintity banks will ne less willing to lend so much money anyhow.

In large areas of the country the cost of renting is as much as the cost of an IO mortgage (which is a like for like comparision).

When I was younger I took the view that as i had no assets (other than enough for a deposit on a house saved from working) that I may as well buy as rent. The reason being was the worst that could happen was I would lose the house and be back to square one (less a deposit) and have to rent. Life is full of risks and gambles

RHemmings

dougk wrote:

If there is a house price crash it will be tied to sevral other things such as high unemployment, high interest rates, high fuel prices etc etc.

So when the prices of the houses are lower the chances are the same people not able to buty now will not be able to buy then either when the amount they need to borrow maybe less but the interest rate higher meaning similar monthly repayments. There is also a strong possibiity these people would be unemployed themselves. On top of this due to uncertaintity banks will ne less willing to lend so much money anyhow.

In large areas of the country the cost of renting is as much as the cost of an IO mortgage (which is a like for like comparision).

When I was younger I took the view that as i had no assets (other than enough for a deposit on a house saved from working) that I may as well buy as rent. The reason being was the worst that could happen was I would lose the house and be back to square one (less a deposit) and have to rent. Life is full of risks and gambles

Look to the 1990s crash. For the majority of people buying a house very rapidly became easier than it had been before. Unemployment increases during a recession, but it's not like everyone, or even anything like the majority are out of work. Were you out of work during the mid 90s when property was very cheap?

If you go back to square one after buying, then as you mention, you've lost your deposit. If your deposit is sizeable then that's a very different situation from if you just rented all the time. And if you lose the house, then prices crash, you may well have lost the chance to buy a house at a more reasonable cost. Imagine someone ruined during the 1990 crash ruefully looking at the houses they could have bought in the mid 1990s if they hadn't bought before.

Life is full of risks and gambles. But there are risks which are a reasonable punt, and there are risks that you'd be downright stupid to take.

meanmachine_2

The fact is, all the homeowners on this thread desperately need flesh blood, otherwise the shark stops swimming, sinks and dies.

Homeowners, desperate to protect their unearned equity, aren't going to say anything to discourage people from buying are they?

And dougk, the risk you took was when house prices were probably 3-3.5 times earnings.

Like you, I think I'll wait till prices have returned to normality.

deefadog

Well i have just taken the plunge, moving-in in 2 weeks, we are now the proud owners of a Quater of a million pound house!! - How ridiculous does that sound but we have a mortgage of around 90k on that.

In fact from the time we secured the property around 5 months ago to now the same house has gone up 30k! (it's a new build by the way).

I do feel for FTB's, i was lucky when i bought my first house for 50k - sold for 150k in 6 years! (why did i not buy 6:))

But if you can do it then do it, life's too short imo

desperadoV2

What am I going to do? Should I or Should I Not?

Rather then asking whether the house prices going to crash. Let me ask this question:

How is the economy doing now?
Is interest rates going to go up?
How is unemployment doing now?
Do we have more properties for sale or more buyers?

What's the forecast for all of these questions?

Where can I find all statistics for these kind of information?

Please let me know.

F_T_Buyer

desperadoV2 wrote:

What am I going to do? Should I or Should I Not?

Rather then asking whether the house prices going to crash. Let me ask this question:

How is the economy doing now?
Is interest rates going to go up?
How is unemployment doing now?
Do we have more properties for sale or more buyers?

What's the forecast for all of these questions?

Where can I find all statistics for these kind of information?

Please let me know.

Economy:

Surprisingly well. But you have to consider the debt people are taking on, which they are then spending: http://www.creditaction.org.uk/debtstats.htm. You also have to look at which parts of the economy are growing (US has technology, Germany has Car manufacturing, Japan has consumer electronics, UK has BTL investment)

Interest Rates:

Yield curve: http://members.cox.net/dmrc/InterestRates/UK_Rates.htm
(note the date this data was updated)

Employment:

http://www.statistics.gov.uk/CCI/nugget.asp?ID=12
But you have to consider where this employment is. Is it manufacturing? Nope. Public sector (hence paid by the tax payer)? Yep.

Properties:

Info: http://www.policyexchange.org.uk/images/libimages/143.pdf
Info: http://www.policyexchange.org.uk/images/libimages/137.pdf

You need to look at who and why people are buying properties. Is it FTBs (i.e. new money going into the market)? Movers (I.e. roughly equal out as they buy and sell)? Second property owners? BTLers (i.e. buying to rent out, if so does the rent cover the mortgage).

http://www.cml.org.uk/cml/statistics

richgirl

desperadoV2 wrote:

What am I going to do? Should I or Should I Not?

Rather then asking whether the house prices going to crash. Let me ask this question:

How is the economy doing now?
Is interest rates going to go up?
How is unemployment doing now?
Do we have more properties for sale or more buyers?

What's the forecast for all of these questions?

Where can I find all statistics for these kind of information?

Please let me know.

At X6 salaries house prices are way over priced, X3 is where they are headed


What does the above chart look like its going to do next ?

F_T_Buyer

Here's the figures for FTBs:
http://www.naea.co.uk/uploaded_photos/news/junehousingmarketsurveyfinal.doc

12.5% currently. Note, the CML consider anyone who has not owned a house within 6months as an FTB. But the whole point of measuring FTBs is measuring new money entering the housing market.

I could go on for ages quoting stats, and we could spend ages arguing their importance and flaws. As this subject seems to be annoying members, why don't you check out https://www.pricedout.org.uk and https://www.housepricecrash.co.uk.

I'm sure you can start threads there, although on any forum you will get bias views. Always ask for supporting evidence.

richgirl