House Price Crash within 2 years???????

anggriff1

My boyfriend believes that house prices are going to crash dramatically in the next two years, so much so that the flat I purchased two years ago for £116,000 will only be worth half that in a few years' time. He says he wants to wait for two years before he buys somewhere because prices will be cheaper then.
Please can you tell me that this is just total rubbish and the logic is bizarre???????? Surely even if the value of my flat did go down that much I could just hold fire before selling it for the value to go up again ?????? Please help. Thanks x

lypsey

He is probably right about a crash , however if you don't intend to move then negative equity is not a problem
Good luck

Debt_Free_Chick

anggriff1 wrote:

Please can you tell me that this is just total rubbish and the logic is bizarre????????

Who knows Some people agree with him, others don't. The one thing we can't do is to predict what might happen. House prices usually fall when there are far more sellers than there are buyers and/or very many properties are placed on the market at the same time. Coupled with concerns over interest rates, which make mortgages more expensive.

Surely even if the value of my flat did go down that much I could just hold fire before selling it for the value to go up again ?????? Please help. Thanks x

You could do. Does it really matter what a property is worth if it's your home and you don't need to sell?

Even if you were selling to move, the price of the next property on the ladder would almost certainly have fallen too.

lewt

i hope they do! fall that is so i can buy one

lisyloo

however if you don't intend to move then negative equity is not a problem

Not true.
It doesn't matter about your intentions.
It's whether you NEED to move that's the problem.

You may be forced to move due to divorce, sickness, death of immediate family member, debt, forced job relocation etc.

Does it really matter what a property is worth if it's your home and you don't need to sell?

If you are contemplating buying then yes.
You could save more than £50K in 2 years if he is right (big IF of course).
If you already own it then there isn't a lot you can do (except sell).
Some people have STRed (Sold to rent) and so far they have got it horribly wrong.

Even if you were selling to move, the price of the next property on the ladder would almost certainly have fallen too.

If you property is below the mortgage then you CANNOT move (unless you have a big wad of cash to put in).
If you owe the bank £100K and your property is only worth £80K then you can't sell it unless you find the other £20K.
Negative equity is a problem because it stops people from moving which is a big problem if you really NEED to.

In answer to the original question I suspect he'e wrong simply because there is strong demand and it's all about supply and demand.
However that's only my opinion.

Surely even if the value of my flat did go down that much I could just hold fire before selling it for the value to go up again ??????

You could yes, but having been through the last crash you could be waiting the best part on a decade, which might be a problem if you want to move area or start a family etc.

But to be honest unless you are prepared to sell your house to go into rented accomodation on the abck of your boyfriends opinions then you are better off just staying put and trying to manage your finances well e.g. saving for a rainy day.

adr0ck

your boyfriend is probably right for the following reasons:

population of UK is falling dramatically year on year

number of new homes completed is rising sharpley year on year

house sizes (number of people in each home) is increasing dramatically year on year

more and more homes are coming onto the market year on year

no one has a second home now so there all coming onto the market

hope this helps

mobile-advice

adr0ck wrote:

your boyfriend is probably right for the following reasons:

population of UK is falling dramatically year on year

number of new homes completed is rising sharpley year on year

house sizes (number of people in each home) is increasing dramatically year on year

more and more homes are coming onto the market year on year

no one has a second home now so there all coming onto the market

hope this helps

Can you substantiate any of that?

I very much doubt the population of the UK is falling, when so many people are complaining about mass immigration.

talksalot81

I believe we will see a crash. However I would not believe that prices will find themselves at 50% of the 2004 level.

lypsey wrote:

if you don't intend to move then negative equity is not a problem
Good luck

Dont forget your mortgage. Many people are on low rate fixed term deals. At the end of this, the rate will revert to svr (probably a rise of several percent). If you are in negative equity, you will basically be unable to renegotiate a mortgage deal.

So if you have a need to renegotiate your mortgage (even if you dont intent to sell), then negative equity is indeed bad for you.

MickKnipfler

Maybe though, we will get inflation too and interest rates will rise. Therefore, the monthly payment on a FTB motgage won't be any cheaper. However, you may only owe £75k instrad of £150k!

lisyloo

Can you substantiate any of that?

I very much doubt the population of the UK is falling, when so many people are complaining about mass immigration.

I could be wrong but I would guess that was all tongue in cheek.

sarkin

Here is a graph for property prices since 1974. AS you can see that we are at almost breaking point. http://www.housepricecrash.co.uk/graphs-average-house-price.php