House prices need to drop 40% to be affordable discussion

RenovationMan

Pimperne1 wrote: »

Yes but if it hadn't been for the 0.25% interest cut in 2005 and the lowest interest rates on record since March 09 then the bears would have been right (and much earlier).

Did anyone really expect the government to do nothing while most of the population went under? Like it or not, a large amount of the UK's wealth is tied up in housing and so it was clear that the government would put procedures in place to soften the blow.

I had felt this for a long time and so not only did I buy at crash prices I am now benefitting from low interest rates. It's all very well for certain people to travel the internet extolling how they and their respective guru's all 'saw it coming', but from what I have seen they have made precious little, if any, gain from it.

I have friends who had little interest in the value of their house but who I discussed the overheating housing market with and we all prepared ourselves the best we could. We all, to a greater and lesser extent, increased our emergency savings funds and paid down our mortgages. All of us gained from this preparedness because we were in a great position to ride out the storm. Once things settled down I decided to take advantage of low rates and buy a larger house. A couple of my friends followed suit and several more are continuing to pay down their current mortgages, all of us aided by the current record low interest rates. We have all gained from seeing the crash coming and being prepared for what we saw as the inevitable.

DervProf

RenovationMan wrote: »

It's all very well for certain people to travel the internet extolling how they and their respective guru's all 'saw it coming', but from what I have seen they have made precious little, if any, gain from it.

Perhaps they didn't want or intend to gain from it. I certainly saw trouble ahead, and tried to prepare myself as best as i could. I never wanted to gain anything from a property boom/bust. Like a lot of everyday folk, I just wanted a roof over my head with a few quid left over to spend on other things. You, as we know, have tried to take advantage of low interest rates and have "played" the property market somewhat for future financial gain. It seems to be currently working out OK for you. Well done on that. I suggest that a majority of people don't take the same approach when it comes to running their finances. From what I`ve seen of friends and family, they just get on, pay their mortgage and pay their bills. Most of the people I know only have a passing interest in the value of their house and the equity in it. Not that there's anything wrong with trying to climb the property ladder, or trying to pay off a mortgage early. I'm just pointing out that although some people predicted economic trouble, they didn't try to take advantage of it. Does that make their predictions or viewpoint any less valid ?

Pimperne1

Pimperne1 wrote: »

Yes but if it hadn't been for the 0.25% interest cut in 2005 and the lowest interest rates on record since March 09 then the bears would have been right (and much earlier).

How can I change what I said here to prevent rewired from thanking me?:mad:

Jimmy_31

DervProf wrote: »

Perhaps they didn't want or intend to gain from it. I certainly saw trouble ahead, and tried to prepare myself as best as i could. I never wanted to gain anything from a property boom/bust. Like a lot of everyday folk, I just wanted a roof over my head with a few quid left over to spend on other things. You, as we know, have tried to take advantage of low interest rates and have "played" the property market somewhat for future financial gain. It seems to be currently working out OK for you. Well done on that. I suggest that a majority of people don't take the same approach when it comes to running their finances. From what I`ve seen of friends and family, they just get on, pay their mortgage and pay their bills. Most of the people I know only have a passing interest in the value of their house and the equity in it. Not that there's anything wrong with trying to climb the property ladder, or trying to pay off a mortgage early. I'm just pointing out that although some people predicted economic trouble, they didn't try to take advantage of it. Does that make their predictions or viewpoint any less valid ?

Im one of those everyday folk, once im in my first house and i dont owe a penny on it i will be very happy to have a few quid in the bank and a roof over my head with zero debt hanging over me.

I predicted economic trouble and stayed away from buying an overpriced house. i could have quite easily jumped into BTL or flipping houses but i would much rather just have saved up to end up with my own house to look after so i can carry on living a simple happy life.

I also have a cunning plan in place that if i should ever want to move to a bigger house i will use the money i save from my earnings to pay for it. This is a very very complicated way of trading up so is not for everybody:)

geneer

julieq wrote: »

OK, let's define 20% nominal falls over a 3 year period as a "crash". That'll simplify things. It isnt quite what the bears told us what a crash was (70% nominal by Christmas I think was the generally accepted definition, and it was due to start from 2004 prices)

Some times its just not mocking someones derisible arguments.
Julieq is doing a bang up job of stitching herself up.

DervProf

Jimmy_31 wrote: »

Im one of those everyday folk, once im in my first house and i dont owe a penny on it i will be very happy to have a few quid in the bank and a roof over my head with zero debt hanging over me.

Good luck with you very reasonable plan, I hope it works out for you. Having no debt is a good aim to have in life in my opinion. It's all very well spending most of your working life paying back debt, but you could get to retirement age, having just paid back the last penny you owe, only to pop your clogs. If you can manage to pay off your debts well before retirement age, you can spend more of your life enjoying your earnings, and not worrying about how much you owe. Sadly, with higher property prices, the opportunity to have a working life without a fairly large debt burden is less likely.

Graham_Devon

julieq wrote: »

OK, let's define 20% nominal falls over a 3 year period as a "crash". That'll simplify things. It isnt quite what the bears told us what a crash was (70% nominal by Christmas I think was the generally accepted definition, and it was due to start from 2004 prices), but if what I'd have called a "correction" followed by "stagnation" is actually a "crash" then we're all agreed that we've had one. All friends now, eh? Isn't it easy when you use clear definitions?

What by a whole one person?

Pimperne1

Graham_Devon wrote: »

What by a whole one person?

Wasn't there a 70% club? That sounds like more than one person (unless its the "there's a party at Michael Barrymore's club").

Graham_Devon

Pimperne1 wrote: »

Wasn't there a 70% club? That sounds like more than one person (unless its the "there's a party at Michael Barrymore's club").

Indeed there was.

With club cakes each Sunday, a club sweatshirt, post it notes and a paperwight.

How many were in this so called club? Does humour pass you by?

julieq

Well we're clear now aren't we? 20% falls over 3 years is a "crash", let's agree on using that word. However it's not the consensus definition of a crash from the bears in 2004. It's a post "crash" redefinition to skirt around the inconvenient fact that they got it massively wrong.

Anyway where are the 40% falls coming from, and what's the trend in Manchester Met?