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

PoorDave

RHemmings wrote:

It wouldn't work that way. If we know exactly what fair value is, the prices should go straight there and stay there.

But we're talking about everybody trying to buy at the "bottom" and sell at the "top".

Although if everyone is buying, and nobody's selling when we're at the bottom of the cycle, who is left to buy the houses?

Odd.

The "fair value" of an object in a perceived rising market is always going to be slightly above its value 5 mins ago. You're buying the right to get the gains when it rises over the next 5 mins.

For instance, a house listed at 150k will be worth more than that in somebody's head, as they think "prices are rising by 5% per annum (just an example number), so this will be worth 7.5k more in a year if i buy it now"

I think...

I suppose it then works the opposite way if the "perception" is that prices are falling.

So how would we know what "fair value" is?

desperadoV2

F_T_Buyer wrote:

Firstly I think you should pay off your debt. Then save for a 5% deposit at least. By the rate your going, this should be within a year.

You can always ask the same question again in the future. I'm sure in a few days someone will ask the same question, and we'll all give the same answers...

I have started to pay off my debt. I already have 5% deposit saved but still thinking

should I pay off debt in full using the 5% deposit? (or)
move the debt to 0% for 6 months
put the money on saving account (5.15%) for 6 months (stoozing)
and buy property after 6 months.

My mind constantly keeps changing. I'm 70% towards closing all my debt. Still deeply thinking though.

richgirl

The housing slump is well underway across the atlantic, why do people think the UK will be immune to the housing slump, when our house prices are far more over priced then over there ?

Whats the average house price ? £167k

Whats the average salary ? £27k

Thats more than X6 average salaries.

And on top of this we have rising inflation but CPI and non recorded inflation i.e. fuel ! council tax ! etc.

House prices will move towards a state of under valuation which usually is around X3 average salaries, which implies a halving of house prices in REAL terms. And in sentiment terms more so ! These few months are likely your last chance to sell before we enter a house price decline spiral, where sellers chase prices lower by cutting 5%, 10% every few months, which by then is too little too late and demanding even more price cutting which IS what happens during a bear market, instead of buyers chasing prices higher, sellers chase prices ever lower...

Dan29

desperadoV2 wrote:

Maybe I should ask the question, Other than property ladder, what does offer good, safe & secure investment and the profit as good as properties.

If you're right with your prediction of house prices dropping 25%, then you'd be better off putting it under the mattress.

F_T_Buyer

desperadoV2 wrote:

I have started to pay off my debt. I already have 5% deposit saved but still thinking

should I pay off debt in full using the 5% deposit? (or)
move the debt to 0% for 6 months
put the money on saving account (5.15%) for 6 months (stoozing)
and buy property after 6 months.

My mind constantly keeps changing. I'm 70% towards closing all my debt. Still deeply thinking though.

Currently you'll be paying more interest on your debt than your receiving (assuming you're not on a 0% deal). You could stooze, but the costs for six months don't make it worthwhile (BT fees). I would pay off your debt first (most expensive first obviously).

If you were to get a mortgage today, the lender will probably take into account the debt you have anyway (well they should), so it doesn't matter either way.

I know a lot of people here play the "if you don't buy now, you never will" card. But that already applies as property has never been this unaffordable - FTBs at around 10%, rather than the normal 40-50% (apart from the very short period in the 90s - black wednesday).

What would youngsters do in the future if they couldn't afford to buy?

wibble68_2

Viz wrote:

I was in a similar situation to the OP last October. However, I decided to go ahead and purchase a new home for £185k. My mortagage started at £167k.
Across the street someone is selling an identical house for £215k. Obviously their home is only worth that much if someone is willing to pay.

This post suggests to me that housing market sentiment is still good.

As people like Viz believe they're making money on their home.

Viz, how do you plan to convert your gain in to cash and is your house the only property in the country that's going up?

The turning point will be when/if interest rates get to a certain level thus reducing affordability and eroding sentiment.

To the OP,

The question you need to ask is can you service your debt.
Will you be on the bread line if interest rates went up 2 or 3%?

As for a crash?

How long is a piece of string?

I can't believe people are still coming out with the old 'Across the street someone is selling an identical house' boll****

mystic_trev

Bearing in mind many Houseprices have trebled in the last ten years (one of mine has) a 30% correction wouldn't really be that great? It would only affect those who've entered the market post 2004.I offloaded my home at the end of last year, and am now in the process of selling my 2 BTL's. I've noticed that many of the bulls from HPC, GHPC and even some on Singing Pig are downsizing their investment in Property.

The bubbles about to pop!

RHemmings

wibble68 wrote:

This post suggests to me that housing market sentiment is still good.

As people like Viz believe they're making money on their home.

Viz, how do you plan to convert your gain in to cash and is your house the only property in the country that's going up?

It is possible to extract the money from your home by selling it and then renting.

desperadoV2

I know what I'm going to do. I'm going to wait for 7th Sep, the day BOE is going to announce whether interest rates are going up or staying unchanged.

The inflation is currently 2.4% and to bring the inflation down to the target of 2%, they have to raise the interest rate by another 0.25% and make it 5%

I will see what I can do after 7th september.

My instinct says, its going to go up by 0.25% making it 5%

What say you?

desperadoV2

wibble68 wrote:

The question you need to ask is can you service your debt.
Will you be on the bread line if interest rates went up 2 or 3%?

If someone goes for Fixed rate mortgage for 5 years, do they have to worry about interest rates going up or down? House price crash wouldn't affect them if they are going to stay put, right?

My understanding is, if I do decide to go for mortgage, then I will go for 3 or 5 years fixed term mortgage. So if there is a house price crash, I will be safe paying the same fixed amount towards my mortgage.

Will my fixed term mortgage gets affected if I'm on a negative equity? It shouldn't, right?

Is my understanding correct?