I can't see a house price crash comming

Dirk_Rambo

iinvestor wrote: »

I can't see a house price crash comming.

you should have gone to specssavers then. good on you all the same

Pete111

Cleaver wrote: »

If they earn between £60k and £70k between them then they both earn over the average wage, so I would say that they were in some form of high income bracket.

A bank should be lending to a couple who both earn about 25% over the national average wage.

Not in the south east/London - it's actually a very average dual income (London average is reckoned to be 35k)

I posted a while back on this - many, many full time working couples in London (white collar, approx 30yo) can bring in the best part of 70-80k without having particularly snazzy jobs.

However the OP may not be in London or the SE - which I agree would make their household income above average.

doire_2

iinvestor wrote: »

My reasons are :

1) Low interest rates has meant borrowers can easily service their debt, pay more of the capital and are under no pressure to sell. Buy-to-lets look attractive to cash rich investors, who are fed up by the measly 0.5% of by banks.

2) High immigration,

3) Lax lending by the banks. A lot of banks have been bankrupt but no major house price crash materialised. And banks have shown no major change to their generous lending criteria.

4)High inflation (most important). Government statistics show inflation around 3% over the last 3 years. But we all know inflation in the real world has been at least 6%. With food and fuel prices soaring, and the government quantitative easing program has meant the purchasing power of cash has greatly been reduced.

Now imagine house prices were overvalued by 25% in summer 2007.

In last last three years the value of cash has been reduced by at least 14% (2008;3%, 2009;5%, 2010;6%) in the real world,

Interest rate cut has meant borrowers receiving massive discounts, hence effectively paying less for the house then originally budgeted, by paying less interest and more of the capital.

if they only save 2.5% per year in interest on their mortgage, and interest rates stay low till 2012 they will have saved 10% ( a 10% discount on the borowing)

So 14% lost by savers and 10% gained by borrowers, has led me to conclude house prices won't fall,


Public sector job loses are unlikely to effect house prices, because interest rates are still low making house prices still affordable, and inflation is predicted to rise to 8% and when the value of money is falling people would rather keep their saving in a house then in the banks.

Yes house prices were overvalued in 2007 but government policy has meant their is unlikely to be a major crash.


*BTW i am not a home-owner, but someone with a deposit waiting for the house price crash to materialise.

Hmmm only 45 posts in nearly 2 years.

I wonder whose multi moniker this is?

Bullfighter

princess*daisy wrote: »

Not entirely sure what you mean by this - £60-70k is a very good household income.

I was accepted for my mortgage in June. I bought the house for £88k on my own with a 10% deposit and I only earn £28k a year. Got a rather good deal as well.

Congrats, this is more like it.

80/28 = 2.85 x your salary.

Since I believe that the average national salary is £25k, that means that the average house price should be c.£80,000. (pretty much what it was in 1999/2000 before the post .com credit bubble). In 1999/2000 the UK average salary was 21k.

Obviously it will be higher in areas where the average income is more, so in my area of leafy Surrey I would expect that the average house price to reflect an average salary of £50k-60k ie around £170k.

davilown

Just to post a quick reply - I have no problem saving for the 20% deposit. The income is very good for us, we just don't spend it all, we save it (and should have that deposit in 20 months). In fact I think its the best way to go. House Prices are not going anyway fast over the next few years are they?

Secondly, I wish there was such a thing as a 3/4 bed house in a reasonable area in the South East (Chichester area) at £90k. Average that I have looked at are around £230k (reduced from £250k so far).

Have spread the search area after doing test runs to work/schools etc and going as far as the Hamble.

Yes I know the price is higher than some others in the area but we know the areas extremely well and would not want to buy in those locations. Snobby? perhaps, but this is a house for the kids to grow up in and crash at in between uni course (albeit I have another 6 years to wait until my son starts uni should he wish).

Yes I am a FTB, but after seeing this site for the last however many years, there is no way I'm putting my family in the same financial constraints (always paid my debt/never missed payments) as the previous decade. I hope to spend around £215k including deposit.

On top of that, its all very well people pointing to certain websites for 10% mortgage offers ( I am guilty of the exactly thing), but its another thing actually getting the mortgage at a reasonable rate near the advertised one.

Strings

princess*daisy wrote: »

Not entirely sure what you mean by this - £60-70k is a very good household income.

I was accepted for my mortgage in June. I bought the house for £88k on my own with a 10% deposit and I only earn £28k a year. Got a rather good deal as well.

Its an ok-ish income, depending on where you live.

You were very lucky to get a good deal given you only had a small deposit

IveSeenTheLight

Graham_Devon wrote: »

Not comparing like with like here ISTL.

You have only mentioned the interest rates. The HSBC 3.95% is a "special" released not long ago, and it has a 60% LTV.

The 4.99% was a 75% LTV product.

You've shown interest rates dropping, but then so has the max LTV.

Edit: infact, the 75% product is still available:

https://mortgages.hsbc.co.uk/product/145-5-year-fixed-advance-standard?source=results

Wrong again Graham.
I am comparing like for like.
I've also always said from X.XX%.
Naturally the best rates are for those with the best LTV.