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

meanmachine_2

jamminjamaica wrote:

after all isnt this why most of us buy houses.

So then why do you know EXACTLY how much "profit" (haha) you've made on your place and why are you now here to crow about it?

Honestly...


By the way, the N Ireland market is in no way comparable to any other part of the UK, or indeed the world. House prices there have been suppressed for about 20 years. And you know why? SENTIMENT.

The negative sentiment caused by "the troubles".


And on that subject, I wonder if all of the genius homeowners with all their wise advice would care to explain why the London market was practically dead from 2002-2004. Again the answer is: sentiment.

Simple as that.

Viz_2

RHemmings wrote:

But did you buy the house hoping that it would make you poor? In my case, I'm part of a farmily in the parent role. If I throw away tens or hundreds of thousands of pounds by purchasing a house at the wrong time, or be forced to buy in a "not so good" area, then this may severely affect the quality of life I can provide my family. Remember that the amount you pay for a house is not only the original purchase price, but the purchase price plus the amount you pay in interest and other charges. It adds up to a lot of money, that could be used for other things.

I agree as I too am a parent. I have a four year old daughter.

desperadoV2

I can see this topic going on forever without an end. I think we need to write all the pros and cons for first-time buyers (ie. current interest rates, what affects the interest rate etc) and they all decide based on their own circumstances.

nelly_2

I so cant be arsed with this topic anymore!

RHemmings

nelly wrote:

I so cant be arsed with this topic anymore!

Yeah, it's not like when and how to buy a house is a major life decision or anything like that.

seven-day-weekend

I've mentioned this on other occasions, just so people know it really happened . but in the early 80s (I think) the interest rate on mortgages was 15%.

Could you still afford your repayments if this happenend?

(luckily we could, and never brought them down as the IR dropped, thus paying for our house quicker),

richgirl

mystic_trev wrote:

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!

A slight error in perception

if house prices have trebled - Say from £50k to £150k, therefore a 30% reduces your GAIN FROM 150% to 81% !!! i.e. a 69% drop ! The actual HIT will be greater than people currently percieve due to mis-interpreting that a 30% drop is off the high and not off the amount gained

Similarly people who have had a 100% gain, means that a 30% drop would mean an effective loss of 60% of the GAIN !!! i.e. £50k to £100 less 30% = £70k, Thus £50k gain reduced by 60% to £20k !

Imagine all those who have released 10 or 20% of their house prices based on the 100% property gains... where a 30% drop would mean ALL the GAINS have been wiped out !!! And when THAT hits home THEN the panic will set in !

mi-key

I think the main point of all this is that the people who stand to lose out, are the ones who cant really afford to be buying anyway.

In our situation, we are buying now - the mortgage on the house is around 2.2x our joint salary - if either of us had to stop work, and we only had one income coming in, we could still afford the mortgage, bills, food etc...

We are taking out a 5 year fixed rate - OK, if interest rates drop we may have paid more than we would on a discount or tracker - BUT - we can comfortably afford the payments, and dont have to worry about any rise in the interest rates.

We are also planning to make 10% overpayments each year, which means after the 5 year fixed rate has run out, even if interest rates have risen by a lot, when we come to remortgage, the amount we will be remortgaging for is a lot less than what we are borrowing now, plus, being a remortgage you can get a much better deal as all the lenders are so desperate to steal business from each other.

I am sure there is a possibility that in 1 or 2 years time our house will be worth less than we paid for it, but as we arent planning on selling it anyway, and touch wood will be able to afford the mortgage payments, what difference does it make ?

The only people who are going to suffer from a drop in value or rise in rates are those that have bought in the last couple of years and over borrowed - when their initial 2 or 3 year cheap rate runs out, and they suddenly find they need an extra few hundred a month to pay the mortgage, then they will be in trouble.

So, for the original poster, I'd say buy if you are sure you can afford it if the worst happens - if you are having to borrow more than 3 or 3.5x your salary, then think very seriously about what could happen in the future.

RajaStyle

Do you think people in the US were having this conversation over the last 2 years ? Well now they have their answer .... The US property bubble has popped .... question is ... will it have a knock on effect onto the UK market as analysts predict

http://www.dailynews.com/search/ci_4253105

http://www.moneyweek.com/file/17452/the-us-housing-bubble-has-popped---what-now.html

manhattan

RajaStyle wrote:

Do you think people in the US were having this conversation over the last 2 years ? Well now they have their answer .... The US property bubble has popped .... question is ... will it have a knock on effect onto the UK market as analysts predict

http://www.dailynews.com/search/ci_4253105

http://www.moneyweek.com/file/17452/the-us-housing-bubble-has-popped---what-now.html

looks quite nasty over there,i wonder if it will have an effect on us here?