House Price Crash

BT_man

CB1979 wrote:

bring on the revolution!

What a great quote, I think it may just be starting :):)

aderbyshirelad

lisyloo wrote:

This is purely anecdotal and not scientific but from my memory (I was born in 1968) back in those times expectations, things people did and the possessions people had were different.

We used to go on holiday once a year in a caravan within the UK.
Now I go abroad 3 or 4 times a year.
We NEVER eat out or had takeaways when I was young.
Now it's a fairly regular occurence for many people with disposable income (weekly).
We just had one car per family and one TV per family.
I don't particularly remember feeling poor simply because we didn't have loads of electronics and takeaways.
If we wanted something we saved up for it, we didn't have credit cards.

Personally I don't think things were easier.
It has ALWAYS been hard for people starting out.

The problem is now that many people have an expectation of getting their own home straight away.
Years ago people had to share with family (sometimes after they were married).

Undoubtedly land prices and house prices are relatively high right now, but I think people's expectations are also very high these days.
No-one likes saving for anything anymore, they want it NOW.

I'm off to move into my first home now - god willing - so won't be able to keep track of this discussion until Tuesday. However, I have to say I agree pretty much with all that you said, lisyloo.

I can't see much difference in my life style to that of my parents - relatively speaking. They both worked hard, they saved and they found the first few years of owning a home challenging (but it made a nice change for my dad not to have to tiptoe around his m-i-law all the time!), just as I am sure my wife and I will. But, like them (I hope) we have managed to buy well and have not overstretched ourseleves. We have spent a lot of time and effort researching this homebuying lark and thanks to sites like this have learnt a lot and have already avoided a lot of costly mistakes.

Anecdotal it may all be, but the "I want it now-storecard-creditcard-mewing" brigade just seem to think they can plunge into huge decisions as there'll always be someone to bail them out.

Gorgeous_George

There were many more council houses in the 50's, 60's and 70's. People in council houses lived next door to other council houses. With everybody living and working together there was little 'keeping up wit hte Jones's' syndrome.

People were happy with their lot.

As a kid I could name nearly everybody on the estate (about 100 homes). They stayed there for a long time. Divorce was rare.

The Tories screwed us all - many times over.



GG

A_Fool_&_His_Borrowed_Mon

MORPH3US wrote:

To me (and i'm sure i'll get shot down for this) it seems that the only people moaning about high house prices and hoping for a crash are the people who can't afford to buy a house or could but want a six bed detatched for £10,000 rather than a realisitic price. Then they have the cheek to moan on about people being greedy and wanting a free ride.

*retreats to the deepest darkest bunker with periscope up for a view of the fall-out*

*Incoming Artillary Barrage*

I Think Current homeowners demanding 1/4 million for a starter terrace they bought for 50k four years ago have the true cheek about being greedy & wanting a free ride.

Although homeowners are only a part of it. It's more a case of it filtering through the system, the Estate agents & lending institutions have the true cheek, being the root cause, as higher prices mean higher profits to them, that's why they're the kind of people who keep on saying things each month like :.

Harvey Williams of RICS said "there will be no crash"

&

UK house prices gather pace despite Aug rate hike - RICS

RICS & their ilk have a financial interest in prices remaining high & no crash happening. :money:

Addiscomber

One thing that was certainly different in the 1970s is that it was difficult to get a mortgage, even if you had a regular savings account with a building society. There was a queue, and it was about 3 months before you could apply. I don't know how people managed, because I don't think there was any approval in principle system, and you needed to know the property that you wanted the mortgage for, yet you would surely stand to lose it if you had to wait to even be able to apply? The estate agent managed to arrange one for me so I told the building society that I considered had mislead me into saving with them what they could do with their queue and withdrew all my savings!

I cannot recall the cost of a loaf or milk, but white goods are certainly cheaper now in relation to incomes than they were back then. I have to agree that folk's attitudes and expectations have changed immensely, and it isn't for the better. Chickens are coming home to roost.

One thing that bothers me greatly about what is happening now is that anybody doing further education to help them get on, emerges already deeply in debt. That is something new.

lightspeed

Another house price crash thread full of the same posters. lol. Its amazing how many people latch onto these types of threads like flys around ****, when will people learn that no matter how many times you make your point, its not going to make it happen!

"Next year Rodney, we'll be millionaires"

I would class myself as on the fence with this topic and as a recent FTB i must admit that a crash would p**s me off having just made the biggest purchase of my life only to find that if i had of waited X number of months/years i could have bought it cheaper.

I would like to think that myself and my partner have made a sensible purchase, i know that the house that we have bought was probably worth 70k in 2000 whereas we have paid 150k. Does this bother me? The simple answer is yes, but in the short we have not overstretched to the extent that others appear to have done, nor have we had 100% LTV. We are certainly not well off, but instead we are comfortable and do have a decent scope financially for any IR's hikes.

The fact is that something is only worth what someone else is willing to pay and for as many people as there are who are adament about waiting for a crash, i bet there are equally (if not more people) who are prepared to pay the current inflated prices (you only have to look at posts on this board).

I wonder at what point will current house prices become the "norm", etched into peoples minds and perceptions as being the going rate?

IMHO, its by no means impossible but i think it will take a catostrophic event/factor to make house prices fall by 50% or even 40%. IR hikes will eat away at those on the edge of affordability but will they increase enough to make a whole scale difference to house prices?

I also agree that sentiment is a key factor in house prices but one thing that has been overlooked is the stubborness of the human race. If i saw the value of my property fall by 50% i certainly wouldnt be selling unless it was completely nesscesary. I realise that there are many people who simply couldnt afford to wait out a crash but i do believe that not everyone is as close to the edge like people describe and that there are alot who could bide their time.

I have gone through all of the factors that support a crash occuring and do think that their are some worrying signs, however, there are still people (like myself) who are confident in their financial ability to cope and manage if such a scenario happened. Those that wont cope are probably those who would fold anyway in time, those that have made silly decisions and buy everyhting on credit.

When prices crash i wonder if anyone will then start a thread about high house price inflation??? I can see it now - "we waited for the crash and now all signs are pointed to a 3 fold increase in property within 2 years, hust wiat and see, let the money come rolling in" lol

I very much doubt it, just doesnt have the same ring about it, does it?.

As far as i am concerned, if you cant afford to buy in todays market, then dont, wait and see what happens but remember that a 25% fall now would probably take the price of that house you've been eyeing up down to those unaffordable levels you were moaning about 2 - 3 years ago.

I am not saying that a crash wont happen, i am just saying that the impact may not be as great as everyone is expecting when or if it does occur.

mystic_trev

A_Fool_&_His_Borrowed_Mon wrote:

I Think Current homeowners demanding 1/4 million for a starter terrace they bought for 50k four years ago have the true cheek about being greedy & wanting a free ride.

How true!

I still have fair amount of Property in my Investment porfolio, but stopped buying once prices exceeded the "long term trend" I think that anyone buying post 2004 will be in for a very big shock.

IMVHO

Mrs_pbradley936

Someone asked for data on wages/earnings and this might be useful - only goes back to 90s but you could search the site for historical data.

http://www.statistics.gov.uk/downloads/theme_labour/ashe/ASHE_2004web.pdf

lisyloo

One thing that was certainly different in the 1970s is that it was difficult to get a mortgage

I definitely agree with that.
The easy availability of credit has made a massive difference to the supply side of the supply & demand equation.

If you can't afford a mortgage then you can lie fairly easily on a self-cert mortgage (not that I'm recommending it - just saying it's easy).

It's far too easy these days to get credit cards, secured debt (larger than the value of your house) etc. these days.

RHemmings

pbradley936 wrote:

Someone asked for data on wages/earnings and this might be useful - only goes back to 90s but you could search the site for historical data.

http://www.statistics.gov.uk/downloads/theme_labour/ashe/ASHE_2004web.pdf

The best data would be to compare median house prices to median income. Here is "house prices" since 1952 until this year. Probably an average, rather than a median.

http://www.nationwide.co.uk/hpi/historical.htm

Now we need to find figures on average income. Your link is OK for a few years, but we need data back further.