House Price Crash 4

sheraz2

I believe there will be a slow down but no crash or big drop. This country is just far to obessesed with getting as many properties under their belt as possible.

Let's face it, you guys who are FTB, if you could, you wouldn't hesitate buying a two or three properties beucase of all this that you have been through now

jyonda

I'd like to add to some of the points Alan M made.

1) A crash won't just happen and will most likely be an effect of raised IR's meaning it will really be a case of how well the LL bought initially and just how high those payments get. If the mortgage payments top the rental income or the LL has voids it won't matter when they bought or how much for.

2) Sure, IF you can ride out the crash then the worst hasn't happened but if you buy something you are then stuck in for x years knowing you could have bought for significantly less a year later, that's hardly an irrelevance or nuisance.

5) The 'problem' is that the swings in value have really been life changing for a whole swathe of the population meaning they can live the dream as seen on tv and buy abroad. A place in the sun, so to speak. Lots of people have sold up and started new lives or now enjoy a 2nd or even 3rd home which is a bit sh*t when lots of other hardworking people can't afford just the one. So again not really an irrelevance.

I agree with a lot of what you are saying and I value your contributions on this site very much but I think you have glossed over a few areas here!

Alan_M_2

Sure, a lot of my original comments and yours are perspective, in so much as it matters from what perspective your looking at it from. Which was kind of what I was trying to get across in my original post.

How much something is a problem, relevant or infact irrelevant is often more to do with how a person actually feels about the situation they are in rather than hard financial facts.

Your point 2 for instance, could be quite depressing for one person, but the next person could be quite happy knowning that in 20 years or so it'll be probably be worth twice what He paid for it and there's a roof over his head.

It's a glass half empty or half full situation. Although all your points are absolutely valid.

jyonda

Well in hard fact terms, if I paid 300,000 in cash for a house today that next year is worth 200,000 not only would I have lost 100,000 but all future earnings on that 100,000 which could have been invested elsewhere.

If I borrowed that 300,000 then not only will my debt be 100,000 more but also my interest payments will be far higher meaning the house costs me much much more than just that 100,000.

Any gains in value would also be realised much sooner and ultimately be far greater and it would in essence be nothing short of a financial disaster even though i got to hang on to a property which no longer suited my housing needs during the crash. Plus all the stress of worrying if I could afford to make next months payment, will IR's go even higher, will i lose my job? Etc.

Guy_Montag

sheraz2 wrote:

I believe there will be a slow down but no crash or big drop. This country is just far to obessesed with getting as many properties under their belt as possible.

Let's face it, you guys who are FTB, if you could, you wouldn't hesitate buying a two or three properties beucase of all this that you have been through now

Personally I only need one house, so I only intend to buy one house. If I want to invest in something, I would rather spread my risks across a range of companies (/commodities/currencies). & I hope I will always have the sense not borrow to invest.

RHemmings

sheraz2 wrote:

I believe there will be a slow down but no crash or big drop. This country is just far to obessesed with getting as many properties under their belt as possible.

Let's face it, you guys who are FTB, if you could, you wouldn't hesitate buying a two or three properties beucase of all this that you have been through now

That obsession might just because people see property as an easy, risk-free, source of money. It wouldn't take much for that sentiment to change.

I could easily buy a house or two. But don't.

SmartGirl_2

Even my 9 year old son seems to know that property prices always go up. It would be foolish to think otherwise, wouldn't it???

mr.broderick

Just about to put in an offer on a house i really like in a cracking area. Checked on up my street how much they paid for it in 2000. Im going to offer the asking price as they've rejected previous offers from me a couple of grand lower than asking. If accepted they stand to make over £100k. It doesnt worry me if the market does crash, Im in it for the long term and there aint anything i can do about it anyway.

Alan_M_2

Here's another thing that's often taken out of context.

Your vendor won't have made £100K if they're buying a new house, which in turn has increased by £100K, or maybe even more, who knows.

They make a £100K if they move to a cheaper area or downsize, but that's not really the same is it.

mr.broderick

Wasnt the point i was making, point was they've rose sharply over recent years and may be at a pinnacle and maybe i am buying at the current ceiling. Just so you know the vendors are getting divorced and going their seperate ways, her to her parents, him into rented..