utterly disillusioned

movieman

Basically we're in a situation where one generation has priced the next out of the housing market, thanks to lots of cheap credit and restrictive planning laws. There's no reason whatsoever for a young person with skills to stay here when they're just treated like a cash cow by the generation above them, trying to sell them some crappy flat for 150,000 pounds that they paid 50,000 for less than ten years ago, and when we've all moved to countries that offer a far better standard of living, you're going to have fun trying to sustain an economy by selling ever more overpriced houses to each other.

This is one of the main reasons why pretty much everyone I know who isn't settled here with kids and a big house they paid <100k for in the crash has either moved abroad or is looking to emigrate now. Personally I'm just waiting for my visa, then I'm out of here.

thelawnet

al_yrpal wrote:

Its a fact that property sales fall because of unemployment, sorry you don't like it, but nothing else will make it happen. I repeat, it has only happened once in the last 60 years, so don't hold your breath for a big price drop. There may be a slow down, or a pause, but whilst employment stays steady and incomes are rising prices will increase. If unemployment increases substantially and prices drop you will have an opportunity to buy, but don't hold your breath because the whole world is still going great guns.

You can repeat all you like, but it's total rubbish.

Firstly, clearly prices have gone down more than once in 30 years, never mind 60:



Secondly, the world is not going great guns, the US is already crashing

http://www.scrippsnews.com/node/12405

Australia has already been crashing for a while

http://www.smh.com.au/news/national/boom-and-bust-on-the-home-front/2006/08/25/1156012745891.html

And thirdly, unemployment is not the only thing that makes house prices fall. If interest rates go up, many people will get repossessed. If interest rates go up, the cost of money increases, and people simply cannot afford to pay more money for the same thing.

Interest rates *wiill* go up, and house prices will fall accordingly. Don't forget that despite valuations etc., house prices only reflect people's willingness to pay. If a person is willing to pay £400k for aproperty, that's what it's worth. If they are not, then it is not worth £400K any more is it?

Apart from that, you're right, house prices will go up for ever, and soon enough it will cost 1 BILLION pounds for a flat in Brixton over a crack den, so BUY BUY BUY

movieman

Firstly, clearly prices have gone down more than once in 30 years, never mind 60:

Well, that's misleading. Real house prices crash all the time, but nominal prices have often avoided crashing because of massive wage inflation (e.g. in the 70s when inflation peaked around 25% in one year). The difference today is that there's practically no wage inflation when most jobs can be outsourced to China or replaced with cheap Eastern European immigrants.

If a person is willing to pay £400k for aproperty, that's what it's worth. If they are not, then it is not worth £400K any more is it?

And don't forget: that person offering to pay 400k is probably only doing so because they just sold their house for 300k. If the perceived value of their house drops to 200k, suddenly yours is probably only worth 250k.

Housing in the UK is a huge ponzi scam transferring money from buyers to sellers, until they run out of gullible people to keep propping up the bottom... then it will crash hard. The best thing is, so many young people have completely given up on housing because it's utterly unaffordable, and instead of saving for a deposit they've been spending every penny on having fun. So when prices do crash, there'll be no huge wave of FTBs looking to buy property cheap... it could well go Japanese, with prices dropping for decades. Why blow most of your lifetime income on a house when you could spend it having a life instead?

al_yrpal

thelawnet

I am not urging anyone to buy and I am just saying that house prices rise with incomes and over the long term it hardly matters when you buy. It will take a big recession and mass unemployment to bring prices down substantially and then one will not have confidence to become a FTB. Where does that leave you? Like many of the 'Sell to Rent' doomsters who are sitting there with red faces paying useless rent.

As for those little short term dips in prices, they are hardly worth mentioning they were so short. They were just reactions to mini price escalations, the overall trend was still for prices to rise with incomes AND this last time they rose more because of low interest rates.

If you read all the doom like housepricecrash, but none of the more balanced appraisals, and believe just the doom as you so obviously do, you'll just end up miserable and disillusioned like the OP who isn't earning enough to get started as he is. What you need to do is take some actions.

There are a number of things that one can do in that situation. The only way to tackle problems is to make changes in your life, not sit around moaning and playing "aint it awful". Move on, get a better job, get some training to get a better job. Consider buying with a friend if you haven't got a partner, rent a room its tax free, have a word with Dad, get a second job etc etc Make some effort in life to get what you want.

meanmachine_2

al_yrpal wrote:

.

As for those little short term dips in prices, they are hardly worth mentioning they were so short. They were just reactions to mini price escalations, the overall trend was still for prices to rise with incomes AND this last time they rose more because of low interest rates.

There are a number of things that one can do in that situation. The only way to tackle problems is to make changes in your life, not sit around moaning and playing "aint it awful".

What planet are you living on?


I dare you right now, RIGHT NOW to go onto the debt free site and post this same drivel. Go on - explain to the all the people on there that it's all their own fault they're in debt because THEY DON'T EARN ENOUGH.

Also, a crash from 1989 to 1996 is seven years. That's not a minor blip. And any correction this time around is liable to last longer, because the boom has been longer.

Your comments are despicable.

Made yourself welcome on the debt free site yet? Come on - what are you waiting for?

Basically what you're saying is "please change your job and earn more money so you can pay stupid amounts for a house and protect my unearned equity". YOU'RE the one who's moaning. Moaning about the younger generation not taking out massive amounts of debt just so you can crow to your smug friends about how much "profit" you've made from your property.

Unbelievable attitude.

thelawnet

al_yrpal wrote:

thelawnet

I am not urging anyone to buy and I am just saying that house prices rise with incomes and over the long term it hardly matters when you buy. It will take a big recession and mass unemployment to bring prices down substantially and then one will not have confidence to become a FTB. Where does that leave you? Like many of the 'Sell to Rent' doomsters who are sitting there with red faces paying useless rent.

As for those little short term dips in prices, they are hardly worth mentioning they were so short. They were just reactions to mini price escalations, the overall trend was still for prices to rise with incomes AND this last time they rose more because of low interest rates.

If you read all the doom like housepricecrash, but none of the more balanced appraisals, and believe just the doom as you so obviously do, you'll just end up miserable and disillusioned like the OP who isn't earning enough to get started as he is. What you need to do is take some actions.

There are a number of things that one can do in that situation. The only way to tackle problems is to make changes in your life, not sit around moaning and playing "aint it awful". Move on, get a better job, get some training to get a better job. Consider buying with a friend if you haven't got a partner, rent a room its tax free, have a word with Dad, get a second job etc etc Make some effort in life to get what you want.

Thanks for your extremely patronising and unasked for tips, but I already have a very good job, and can afford a 5-bed detached in Surrey, no problems. I'm just not convinced it's a good idea to spend £600k now for something that could be worth £400k in a few years. We're renting a 4-bed detached by a river, next to a park, for £1100/month at the moment, I can tell you that even a 10% fall in property prices on the kind of property I want (going for £500k and up in today's market) would pay for a good few years rent. I think it's fair to say that you'd feel like an idiot if you bought a house now and could have got it £100k cheaper in a year's time.

I was talking to my friend who bought in London in 1989 and sold at a 25% loss in 1992. Some of his neighbours just walked out and handed the keys back to the bank. It certainly did matter when you bought.

And with house prices crashing in Australia and the US without any recession, why do you think we need an unemployment epidemic to have a crash here?

Fact is, nobody can predict the future, but it's fair to say that asset prices for any asset in the past have gone to fair value in the long run, so if you are going against that you are taking a pretty big risk, if you consider that by every measure house prices are at their highest level ever. Wouldn't you worry before buying shares that they were at a very high price/earning ratio? Similarly, I'm concerned that by percentage of household income, by multiple of average salary, by any other metric you want to look at, house prices are at their highest ever level. Doesn't this scream 'Danger !!!!'.

At the moment interest rates have gone up 0.25%, will go up 0.25% again soon, and this will affect the market in the next six-twelve months. Even the most optimisitc predictions don't predict an increase of over 5% against the worst downside predictions of 50%. In these circumstances, I am not going to take the huge gamble, when the risk is so high. On half a million pounds, I could be looking at a loss of up to £250,000. That's a pretty scary prospect, and I don't work hard to risk all my money on such losses.

Sure, if you want to tell me there's never a wrong time to buy, that's great, but it's absolutely 100% clear that there is a potential for prices to fall, just as there was a potential for .com shares to drop. I'm paying £13k a year in rent, so if there's even a 10% chance of prices dropping 20%, it becomes good value. And if you believe there is a zero chance of prices dropping, then it's clear that you must be grinding the world's largest axe, as nothing is risk-free.

PS. I accidentally clicked 'thanks' instead of 'quote' on your post....

PropertyGuru

thelawnet wrote:

You can repeat all you like, but it's total rubbish.

Firstly, clearly prices have gone down more than once in 30 years, never mind 60:

that graph is from http://www.housepricecrash.co.uk and shows nicely how prices in real adjusted levels have collapsed after every boom.

Bust follows boom, if you prefer. The current analysis suggests prices will slide till about 2016, where they will bottom out at about £80,000 in today's money.

That's about £120,000 allowing for 4% inflation during the period.

About 30% off in fact.

mystic_trev

Yep with had the boom...now wait for the bust! It's going to be the mother of all busts. Wait until you hear all those recent BTL's going bunkrupt, complaining that nobody ever told them House prices could go down, then running to their Lawyers to sue the Banks for lending them the money!

Doomed I tell you - we're all doomed!

libitina_2

Aren't repossession rates already up this year? I'm sure I read it somewhere....

mishkanorman

I purchased a house when they were still "affordable" I consider myself lucky BUT at the time we took what we could afford, where it was possible to travel to work and still be near family. we had a choice of two houses to pick from and it certainly wasnt easy.

Some first time buyers do have the 'its not fair, houses cost too much' and still have all of lifes luxuries. Perhaps better financial education in schools is required ??

I think previous comments about tightening belts and job promotion are incredibly helpful, positive things to say. Its a shame they were shot down

To the OP, have you considered buying elsewhere in the country ??


mishka