House Price Crash 3

Alan_M_2

westernpromise wrote:

At the same time I am surprised at people in this thread who think there should be a limit on how much banks should be allowed to advance. That seems to me to be nannying of the very worst kind. We are all responsible adults and we should all be able to take a view on whether a place is worth it or not. A situation where nobody can afford to buy anywhere is obviously

Heavily snipped as I really only want to comment on this part.

This is cause and effect, mechanisms are in place to stop people overstretching themselves, because, if we're honest, a large majority of people don't have enough common sense or grasp of economics to understand whats affordable and what isn't. Or at least they choose to ignore it so they can get the house they want.

If the mechanisms aren't in place to be able to pay the inflated prices, then this will keep the prices at sustainable level. This isn't nannying in the slightest.

Each new product that comes onto the market from self certification to the proliferation of BTL schemes actually causes the inflation of prices, it isn't the result of the price increases.

So you as a responsible adult, I'm sure, wouldn't consider borrowing 6 multiples of your income to get into a bigger property. So who would? Well the very same people that really don't comprehend it's a bad idea to be borrowing that much money, the people the income multiple is designed to protect.

Guy_Montag

The more you nanny, the more you need to nanny.

Piowse

I have a property in the SE and the question at present is when to sell. Considering all the indicators, I am becoming (somewhat) convinced that some sort of correction in prices is likely starting in 2007. Only somewhat, as economic predictions are so uncertain. Despite that, if the past is any key to the future, cycles will continue....we're now at about the same price/earnings ratio that was reached immediately before the last significant correction of the 1990's. We read that demand is still going up (so do all those Polish immigrants we keep hearing about have enough for down payments and income to support £150,000 mortgages??). But pretty soon, in the SE anyway, all will become unaffordable and so prices must then stabilise/fall. Some sort of unpredictable local/global nasty event could also happen any time to dent optimism and start a crash. So all in all, I reckon in early 2007 I will be selling. I just hope that is not too late.

A useful web site - and pertinent to this thread - is:

http://www.housepricecrash.co.uk/index.php

Contrary to the title, it's not all doom and gloom, there is a lot of balanced info available. However, reading some of that information also shows you that no-one can predict this trend properly. Even the Economist experts got it wrong last year!

mpsavuk

Alan_M wrote:

1986 is the year I left school, it would have raised a few eyebrows had I manage to buy that year:)

Being old enough to have experienced a previous property crash is useful. It really focuses the mind. Makes you very wary.

Young & inexperienced people don't realise just how rapidly a market can turn.

History really does repeat itself!

lynzpower

i know the regulars among us have been here before :rolleyes: but am I still right in thinking HIPs are still coming in in JUne 07?

I cant be bothered to look for myself right now, but has it been confirrmed up what costs the seller would be needing to bear in June 07?

Is there anyone here who is considering trying to sell before this to avoid these costs? ( I have incidentally, jsut cos Im well skint!)

And has there been any change in what potential impact this might have in terms of supply/ demand? As I guess it might restrict demand ( esp for those selling who are selling as they are broken & beating the reposession) and increase demand in that FTBs wont have to save up as much to purchase IYSWIM
Or what???

mystic_trev

Lynz - HIP's are still coming in in June next year, albeit minus the HCR.It looks like most EA's will include them in their fees, although if you don't sell you'll have to pay for them. Goodness knows what effect this will have on the market! It could be that if IR rises have subdued the market, this could be the trigger? Who knows!

lynzpower

Ah, so the EAs will include in fees. That makes sense.

What will be interesting, is that if you are selling to avoid the repo, you have to find EAs & HIps costs. Now I know another user on this site was really broke, and that she was considering selling up. Now the thing was that what she would get for the house was barely worth more than what she paid for it. Additionally, there was a secured loan on the place to IIRC. She didnt sell in the end AFAIK but managed to find a job just in the nick of time :T

However, what will happen if people like her,and in worse situations than her need to find the money for hips/ higher ea costs but thier properties are not worth much more, and the EA costs have to come out of the "profit" when there is no " profit"

roswell

Just a thaught but has anyone got a graph showing month by month the average house price over the last 18 months or so because I have a sneeky feeling the "average" has been falling for quite some time.

Alan_M_2

It depends what average you want, the problem with graphs and statistics is they are only as good as the information from which they are compiled, so and average UK house price really doesn't tell you much as the whole of scotland could drop in price, yet Kensington and Chelsea increases by 300% and negates Scotlands entire statistics, (exaggerated but you get the idea), a breakdown into geographical areas is more informative, but even then, some towns go up some go down.

roswell

Thanks, Alan,

Thats true but im pretty sure we hit a headline stage of just short of £200,000 and now its more in the region of £170 000 which to me in my undertanding shows a decrease, i know its not "best practice" to average averages but i think in thsi case it could well be a early warning.