anyone else want a CRASH...?

james3333

iam wanting to upsize at the moment, but i recon a CRASH is likley.
i WANT a crash, because it would mean that i could get the bigger property cheaper
i.e my house is worth 130k and i want one for 180k
so, if there is a crash, of say 20% my house would be would only drop to 105k and the bigger a drop to 144k!!!
now, due to wages not being affected by a crash this would make the bigger property much more affordadble,
my house would drop by 24k but the bigger house would drop 36k!!!!!!!

so is this how the market 're-builds' itself after a crash, by people upsizing for cheaper and hence freeing up smaller, more affordable housing for FTB's?

or am i being dumb?

lynzpower

if theres a crash- the person selling might end up in negative equity and might not be able to sell

if theres a crash, people may well lose thier jobs- meaning less buyers

If theres a crash, interest rates likely to rise more, so dont bet on affordability

Lots of good reasons why a crash isnt a brilliant thing for britain at large, but market in some areas looks somewhat stagnant.

loads of crash threads around at the mo- look about

ollyshaw

Makes sense to me.

My opinion is the larger the bubble the bigger the pop. We should all be hoping for a cool down.


Olly

james3333

even if there was a massive crash, i could maybe keep my smaller property and buy the big one so i'll have 2 propeerties
seems like a win win situ for me?

Alan_M_2

One thing often overlooked is that after a retuction in calues the lenders tighten up their criteria proportionately.

They'll be getting thier fingers burnt and will ony want to be taking on AAA rated new business.

So the current wave of BTL mortgages may be requiring 30% + deposits as opposed to the tiny deposits people are getting away with now (which actually makes financial sense if you think about it).

Interest rates may be on the up.

When a crash happens it doesn't occur overnight, in a week or a month , historically it's taken about two years for the entire market to level out from the day the drops start (countrywide). So don't be in any hurry to start jumping in as soon as properties start driopping in value, the likelyhood is it will have further to go still.

Hypothetically lets say a crash occured in 2007, then I'd be gearing up to buy in 2009/10 once the dust has settled, this will then be followed by a stable period of around 10 years where houses will increase at approximately a stable rate of inflation until the next generation of property speculators grows up, memories fade and the whole cycle starts again.

james3333

sounds good to me...
***** trotts off to top up hi ISA ready for 2009*******

Hereward

You are assuming that a price crash is uniform across the market: this is unlikely to happen. You may find that the larger property only drops by 10%, whilst yours drops by 30%, this would mean that the price differential would increase. Conversely, the larger house could drop by 30%, whilst your drops by 10%, which means that the price differential would decrease further.

The second scenario is more likely to happen, but it is not guaranteed, also the caveats highlighted by lynzpower would still apply.

ravenfield

The crash will happen when everyone thinks it will not. and when it does, nobody will buy a property even if they can pay by cash. Judging from the mindset that everyone now no longer believe it will happens, the bubble will become so huge that when it does burst, a lot of people will suffer and much more damaging than 10 years ago. would have been better if the housing price it just slow to a standstill rather than keep growing as reported in the news.

I don't own a house and couldn't afford one. Thinking if i should migrate to elsewhere once I become chartered and with my GF.

Rick62

Current prices don't seem to make any sense, in which case one of two things could happen, we could have a stagnent market for 10 years, no major movements while affordability caught up or we could have a more sudden crash over a couple of years.

I think the latter is more likely - as the boom has been driven by sentiment so will the correction and probably better, as it will shake out the market.

The crash won't be uniform, obviously it will vary by region or property type, but the biggest difference will be quality. Poor quality can perform well in a boom, in a crash it gets hit hardest and takes longest to recover.

So if you have, say, a nice victorian house in a nice town it may drop 10% and subsequently recover quickly, if you have a new build BTL type flat 5 miles outside leeds/manchester/addtownofyourchoice it may drop 30 or 40% and not recover for 10 years.

So I think most people who bought a place they can afford and to live in should be OK, those at risk are the people who are piling in to BTL at 85% plus LTV in all the new developments.

james3333

ravenfield wrote:

and when it does, nobody will buy a property even if they can pay by cash.

what a idiotic statement... why would NOBODY buy a property in a crash?
FTB's will be on thier hands and knees wanting a crash!!!!!! this would be thier chance to get on't ladder!
and therefore, this would make sense to me that my house would be more desirable to more people than a bigger 2nd rung house, hence i would like to think i would benefit from a crash...

Dead_Eye_Jones

very much agree with the point on a uniformed crash, I certainly agree that new build flats will see a loss, these are going up all over the place and where I live cost more than a house!! Thing is though, they are sold at a premium through clever marketing and that they are "new". And very persuaive these factors are too.

However after a year or 2 all these people in swish flats are going to start wanting to upsize to a more family orientated house. So we'll have a load of these luxury pads flooding the market, they wont come with attractive 'deals' this time round and will nolonger be new - infact they will be competing with newer new builds being agressively marketed! All the owners will be pairing up and looking for family houses in family areas.

I really dont see the demand for large family houses dropping away, people who own these houses proably have low mortgages having bought before any boom and have lived there for years, so will be under no pressure to sell. Population is increasing as immigrants bring over their families, and some of us Brits are still breeding too! I get the impression that house building is now focused on 'affordable' tiny houses/flats so the demand for traditional family housing is just only gonna get higher. Remember, people live in a family home for 20-30 years, assuming no forced relocation, these people really are just gonna sit happy in their homes - people (women) love to nest.

However people who have mortaged their souls to buy 1 bed flats in trendy xyz during the recent boom could be in trouble. These are the people who will be plunged into negative equity. Everyone else will just stay where they are - so i think the most likely scenario is a big slow down.

I too would like the market to cool, or drop a little, to help me move on up, but im not banking on that happening, like the above poster Im saving hard. My mortage is falling by about 10% a year so assuming my agressive overpaying continues Ill be in a great position - but this has nothing to do with gambling on markets going up or down, its to do with working hard and good MSE practise, personally I like to be in control of my own destiny and not under the control of markets that could go either way - lets face it, no one knows for sure. (Unless you are a regular at the housepricecrash forum in which case you will have believed that prices are on the brink of a crash for the last 5 years - lol - how wrong they were!)

Personally I didnt want to hang around, buying a home is not just about money, it is an investment, but its also a home, as long as I have a stable roof over my (future) kids heads Im not too bothered. I saved a huuuge deposit so I could buy straight into a family house, aslong as I keep my job (which lets face it is always critical even if you rent!) I get to keep my house, It has a room each for the kids (unless we get triplets eek!) and a nice garden. Sorted! Of course I aspire to that dream house, but the pressure is off ! And all it took was hard work and career progression!

In the longterm I will pay off my mortgage and live off my pension, Im relying on hardwork and good MSE skillz to ensure that leaves me in a good position, trying to second guess the markets isnt for me, but good luck to those that do - some of you will win, some will lose.... this site isnt really about gambling though !