Credit crunch forecaster now suggests 50% falls in house prices

MrRee_2

So, if property prices remain static - but inflation is 5% - in 10 years one could argue that a 50% fall has occurred?

But, at the end of that 10 years a buyer would have to pay the same as they would have to today ..... the person who rented for those years waiting for the drop would have paid around £120,000 in rent - the person who bought would be 10 years into clearing the debt ... maybe even debt free.

I have looked at it from all sides now, renting is an absolute waste of good money - buying is, by far, the best option.

Jimmy_31

MrRee wrote: »

So, if property prices remain static - but inflation is 5% - in 10 years one could argue that a 50% fall has occurred?

But, at the end of that 10 years a buyer would have to pay the same as they would have to today ..... the person who rented for those years waiting for the drop would have paid around £120,000 in rent - the person who bought would be 10 years into clearing the debt ... maybe even debt free.

I have looked at it from all sides now, renting is an absolute waste of good money - buying is, by far, the best option.

Thanks for the tip.

Cleaver

MrRee wrote: »

So, if property prices remain static - but inflation is 5% - in 10 years one could argue that a 50% fall has occurred?

Most people who just own a house to live in don't care about the price of their house compared to inflation, they just care compared to what they bought it for.

As an example, a house down a street is £100,000 to buy which costs £600 a month on a repayment mortgage. The same house is also £600 to rent. After ten years the person sells the house for £100,000, which is a loss if inflation has been running at 5%. But that person won't care as at the end of ten years they'll have spent £44k on mortgage interest (instead of £72k in rent) and they'll only have £74k left on their mortgage, so will walk away with £26,000.

So although the house has 'lost' 50% in value, it's only cost them around £150 a month to live in over the ten years. Simplistic figures, but just to demonstrate why people don't care about the price of their house compared to inflation.

John_Pierpoint

That is a bit of a strange mortgage is it not?
The average mortgage only lasts 7 years before the house owner needs to move, (let alone "re-mortgage")
On most "repayment" mortgages, in the first years nearly all the payment goes on interest not capital repayment.

Thermidor

Cleaver wrote: »

I don't think house prices will fall 50%. However, I might be saying something like that if I had a book like his to flog.

:rotfl: Hilarious!


House prices in England have actually RISEN in the last 6 months. Fact.

People like him have been coming out with this wishful thinking !!!! for over 4 years now! By rights all houses should now be worth about £100 if their very accurate - NOT - forecasts were right!:rotfl:

Thermidor

MrRee wrote: »

So, if property prices remain static - but inflation is 5% - in 10 years one could argue that a 50% fall has occurred?

But, at the end of that 10 years a buyer would have to pay the same as they would have to today ..... the person who rented for those years waiting for the drop would have paid around £120,000 in rent - the person who bought would be 10 years into clearing the debt ... maybe even debt free.

I have looked at it from all sides now, renting is an absolute waste of good money - buying is, by far, the best option.

Buying property in the UK is always the best option. In 10 years from now, if you decide to sell, you'll have gained a profit. Look back 10 years and compare house prices to now:)

Jegersmart

Thermidor wrote: »

Buying property in the UK is always the best option. In 10 years from now, if you decide to sell, you'll have gained a profit. Look back 10 years and compare house prices to now:)

haha - yes, very good.

Conrad

No one I know in the real world has inflation as a house price eroder on thier radar. They just don't. They simply want to put down roots, decorate and pay down the debt under historically low interest rates.

I can't think of anyone who would complain after 10 years if thier place valued at the same sum they paid for it. Would just be the norm as it were.

There uber bears are so money centric.

IveSeenTheLight

Thermidor wrote: »

Buying property in the UK is always the best option. In 10 years from now, if you decide to sell, you'll have gained a profit. Look back 10 years and compare house prices to now:)

You don;t need to wait 10 years.
I have a property I bought almost 5 years ago (Jan 2007) and it is showing an increased valuation.

Mallotum_X

IveSeenTheLight wrote: »

You don;t need to wait 10 years.
I have a property I bought almost 5 years ago (Jan 2007) and it is showing an increased valuation.

Lets end all the discussion now, prices have gone up over the last 5 years, end of.