House Price Crash

realwildone

The most amazing point is that Martin thinks house prices are overvalued and may come down. All the noggins on here, the very site he set up to advise people about finance, are still recommending that people jump in and buy not one but two houses and rent one out at less money to someone they don't know.

Oh you lot really crease me up.

RHemmings

hechizero wrote:

The base priciple of economy is supply and demand. Speaking specifically about London, demand outstrips supply. This state is certainly not a precursor for a house price crash. Unless there is a stock market crash or a similar economic tragedy, the property market will remain strong in the capital.

Didn't demand outstrip supply in both Hong Kong and Japan? Both had massive house price crashes did they not?

Guy_Montag

AndrewSmith wrote:

In today's claim culture it will be easy for the borrower to calim mis-sale unless the broker or lender concerned can prove affordability currently, and at the end of any incentive period of the mortgage.

For god's sake people, get real and be realistic when you are asking for advice on what you can borrow. Don't be tempted to go with the lender/broker who dangles the carrot of the most mortgage in front of you.

Andy

Actually I considered trawlling round the lenders & major brokers looking for the worst advice possible some sort of "borrow 8 times your income" (like one of my colleagues did), "house prices can only go up, we're in a new paradigm of low inflation, low interest rates" type thing. Hiding all my savings & waiting for it to blow up, then claim for mis-selling. Try to get myself a lovely house.

I get fed up of always doing the sensible thing & losing out to idiots who can't be bothered finding out what their signing up for, but just as they're about to lose their shirts, the legal eagles swoop in & rescue them.

dunstonh

All the noggins on here, the very site he set up to advise people about finance, are still recommending that people jump in and buy not one but two houses and rent one out at less money to someone they don't know.

I dont think you will find that the case. The professional advisers on this site have been giving out risk warnings and urging caution for some time now. The experienced landlords have been doing the same.

It is only the inexperienced individuals who are going into it blind or those that havent see crashes before that are urging people to do it.

mookybargirl

It's easy enough for people who bought a house before prices went up to talk about FTB and how we're (yes, I'm one) taking out 3/4x our salary or more, but do we have any choice.

Me and OH have waited more than 2 years to be able to afford a house. In that time, houses here have gone up 20k and are still rising. Should we have got into debt 2 years ago to get in before more rising? Maybe.

What do we if it crashes? Well, we deal with it when it happens. There's been talk about crashes in the last 2 years while we've been saving, but do we wait forever for a crash that might not come. Life has to go on and to do that, we need somewhere to live. We've bought a house knowing we want to live there for the forseeable future. We are NOT relying on making money or it increasing in value. We've bought a home, not an investment and yes if the house prices crash, we'll be in difficulty with lots of other people but we can't put our lives on hold.......

PoorDave

mystic_trev wrote:

It'll happen sooner of later (the crash that is) and probably sooner. Let's face facts, If as yesterdays Mail tells us, houseprices have doubled in the last four years, a 40% correction isn't really very much?

A 50% fall would therefore be back to where they were 4 years ago.

E.g. 50k house 4yrs ago is now 100k. So a 50% fall on today's price is back to 4 years ago prices

RHemmings

mookybargirl wrote:

It's easy enough for people who bought a house before prices went up to talk about FTB and how we're (yes, I'm one) taking out 3/4x our salary or more, but do we have any choice.

Me and OH have waited more than 2 years to be able to afford a house. In that time, houses here have gone up 20k and are still rising. Should we have got into debt 2 years ago to get in before more rising? Maybe.

What do we if it crashes? Well, we deal with it when it happens. There's been talk about crashes in the last 2 years while we've been saving, but do we wait forever for a crash that might not come. Life has to go on and to do that, we need somewhere to live. We've bought a house knowing we want to live there for the forseeable future. We are NOT relying on making money or it increasing in value. We've bought a home, not an investment and yes if the house prices crash, we'll be in difficulty with lots of other people but we can't put our lives on hold.......

Presumably you made your decision after weighing up evidence both pro and con, after seeing a number of views on the future direction of the housing market. The people I really feel sorry are those who haven't found the resources and information sources that give a more balanced view, and are influenced by property !!!!!! and ramping articles in the press.

PoorDave

Does anyone else wonder if mortgage lending multiples will reduce once the "crash" takes hold? So that the people who are waiting for a crash before they buy will actually find they still can't buy what they want, as their purchasing power has also reduced, despite price reductions.

If it's irresponsible to lend 5x now, won't it be equally, if not more irresponsible to do so when interest rates are higher (since we're saying this will be part of the economic climate surrounding the crash)? Does that mean such lending won't happen? Or are we sure that prices will fall so far 3x single income will buy a place a FTB will happily purchase?

Your thoughts.

RHemmings

PoorDave wrote:

Does anyone else wonder if mortgage lending multiples will reduce once the "crash" takes hold? So that the people who are waiting for a crash before they buy will actually find they still can't buy what they want, as their purchasing power has also reduced, despite price reductions.

If it's irresponsible to lend 5x now, won't it be equally, if not more irresponsible to do so when interest rates are higher (since we're saying this will be part of the economic climate surrounding the crash)? Does that mean such lending won't happen? Or are we sure that prices will fall so far 3x single income will buy a place a FTB will happily purchase?

Your thoughts.

Look to the past. Properties became much more affordable after the last crash, and remained that way for years until bubble thinking took off again.

F_T_Buyer

PoorDave wrote:

A 50% fall would therefore be back to where they were 4 years ago.

E.g. 50k house 4yrs ago is now 100k. So a 50% fall on today's price is back to 4 years ago prices

Link to the data please?

House prices have not doubled in the LAST four years.