House prices rises over time

brit1234

I got the feeling House prices won't reach 2007 levels for about a decade. Be a bit like Japan did with its housing bubble previously. They too wee meant to be small islands over crowded with rapidly risssing prices till that crashed and never really recovered.

des_cartes

brit1234 wrote: »

I got the feeling House prices won't reach 2007 levels for about a decade. Be a bit like Japan did with its housing bubble previously. They too wee meant to be small islands over crowded with rapidly risssing prices till that crashed and never really recovered.

Yes I read about Japan too. They had a similar house price bubble to the one the UK has just had back in the 1980's. Like Britain, they cut their interest rates after the crash to almost zero but even so, house prices are still lower now than they were then. It couldn't happen here could it?

des_cartes

mudshark wrote: »

So you knowingly ripped them off? Lovely...!

As for your idea that lenders only lend 80%, or whatever, of a property's value due to anticipated price falls I'd like to see a link on that - I believe it's to provide a cushion for when some people can't make repayments.

Anyway, are you waiting until prices fall to a level that seems right before buying again? It's a risky game if you miss the bottom and whilst it's maybe OK when investing in the stock market I think for most of us taking that sort of risk with property is too big a risk. You sold in 2006 but prices peaked a year or 2 later, fell then recovered to 2007 levels at the moment. If they fall a lot more then you do well but if not and then when the Tories have sorted us all out (;)) they recover nicely you might not be feeling so comfortable. Not saying you will lose but you're playing a risky game.

As for your idea that lenders only lend 80%, or whatever, of a property's value due to anticipated price falls I'd like to see a link on that - I believe it's to provide a cushion for when some people can't make repayments.

Are you really that naive? Banks don't give a damn about people who can't make repayments, they are only interested in getting their money back.

Actually I did give them a good deal as I wanted rid of the house knowing that the high prices of the time couldn't continue. As you can imagine, with several hundred thousand pounds invested, I do keep a close eye on the property market and I can assure you that house prices are around 10% below 2007 values and falling every month. If I thought different I would be buying now. I am not (unless I can get somewhere 30% below 2007 prices) and I would urge anybody else not to either as you stand to lose a lot if you do. Playing the property game is all about timing, get out at the right time but hold your nerve whilst others lose theirs when buying.

The_Negotiator

And completely ignore all social change and the numerous other factors?

des_cartes wrote: »

If you know what the house was worth in year x, find out what people earned in year x and compare the two. Then apply the same ratio to the house now. For example if the house cost 10k in 1980 and average wages were 3k then if average wages today are 30k then the house is worth 100k. Beware though, some people will try to convince you the house is worth 200k purely because before 2007 you coulkd borrow 6 times your income to buy a house. Those days have now gone so you now have to base the value of the house on what people can now borrow which is around 3 times your income.

HAMISH_MCTAVISH

We've all seen this graph of "real" house prices on hpc and elsewhere.



But there seems to be ongoing confusion from some people who expect actual house prices to behave in the same way.

The fact is that historically in previous cycles, nominal prices (ie, what you actually pay for a house, not an imaginary figure adjusted against RPI) have never fallen anything like real prices have.




The falls achieved in this crash were far larger (and faster) than the falls achieved in the previous crash. And you can clearly see that nominal falls prior to that were almost non-existant compared to the 'real' price falls.

But of course, 'real' price falls do nothing to help potential buyers unless wages also increase.

Otherwise, all that happens is houses get more expensive AND so does everything else relative to wages.

So with regards to the OP, take a look at the nominal house prices graph above, and calculate the percentage difference between the average house price then and today, then apply it to the property you're looking at. It won't be precise, but it will be a good starting point.

And for des_cartes and the other scaremongerers, take a look at the same graph and realise that any significant further falls in nominal terms would be completely without precedent in UK housing. You've had your crash. Any further correction is likely to be mostly in real terms, which neither particularly hurts existing homeowners or particularly helps potential FTB's, until wages start to rise as well.

mudshark

Des_cartes - sorry, I overestimated you. You see if I fail to make repayments then my debt increases and the longer this goes on for the less comfortable this gets for the lender but as long as there is a cushion then at least the property can be sold to pay off the debt. My point is that the idea that lenders only lend up to 80% of the property value due to expected property price falls is just wrong.

property.advert

The formula is [original price]x(1+x)^n where x equals the annual price increase in % terms (so 5% is 0.05) and n is the number of years.

Thus, a 7% annual price rise over 15 years would be (1+0.07)^15= 2.76 making a house worth £100,000 today worth £276,000 in 15 years time.

IveSeenTheLight

davholla wrote: »

If you know how much a house cost in year x, is there anyway you can tell how much it should be now assuming that it's value rose/fell at the same rate as average prices. I.e. a website that will calculate this?

Go to Land Registry, put in a search then do the following calculation

Current Month Price / Historic Month Price
e.g. £156,789 / £123,456 = House prices have risen on average by 1.269 x the amount (or a 26.9% increase) over that period.

Take your known bought price e.g. £96,543 and then multiply with the increase rate i.e £96,543 * 1.269 = £122,513

Remember that this is a rough average and may not reflect the actual property and type you are interested in.

IveSeenTheLight

bullau wrote: »

why dont you post the chart that shows average houseprices in ounces of gold? No arguing with that chart, unless you dont understand anything about currency or what has happened to sterling that is. We have had a major crash in terms of other currencies.

what happened to you being 100% sure that gold was a bubble and due an imminent crash?

How many gold bullion bars do you have in your wallet / bank account?

IveSeenTheLight

brit1234 wrote: »

I got the feeling House prices won't reach 2007 levels for about a decade.

Some local areas are already above the 2007 levels.

brit1234 wrote: »

Be a bit like Japan

Japan again :rolleyes:
Why not do a search in the MSE forums for previous discussions and explanations how the Japanese market is different to the UK Market for many reasons? Doesn't fit with your requiremnts though does it?