House Crash

sarkin1

can I ask where you live as 1 bed flats down here are around 150,000 or are you earning above the national average. Just to go back to the original questions of what it was like last time. Loads of money was on TV, the Yuppie was alive and kicking and all the city boys were driving around in Porches. These days its all BTL and people driving 4x4's and Sarah Beeney is the queen of TV. The years after the crash, debt was bad and everybody lived with in there means. As the years went buy people forget how bad it was and now we have a generation of people who dont even know there was a crash or it was so long a they cant relate. Hence first time buyers piling into new build flats maxed out on 100% interest only deals thinking property can only go up. My girlfriend at the time worked in an estate agent and she use to tell me of people comming in handing the keys to the house over with all their posessions and kids in the car with nowhere to go. It was really sad I hope it will not be as bad as last time but so many people use their house as a cash machine it's not just FTB's whole will loose it will also the one that remortgage another 10,000 out of the house as the take another 2 year fix rate. Back to last time after the crash we had resecsion loads of people out of work, I remember walking down to the job centre to sign on and the queue was out the door, they were hiring more people to cop with the demand.

temba

sarkin1 wrote: »

all the city boys were driving around in Porches.

:rotfl: :rotfl: :rotfl: where did they keep their umbrellas and shoes?

A_Fool_&_His_Borrowed_Mon

Amitoocautious wrote: »

Well we are buying as FTB on less than 2.5 times joint income which has been standard for years. In fact we have worked out that we could still afford it one one salary so there are some of us still out there

Exception rather than the rule, your case though.

Average wage 25k, Average Price, around 180k.

That's just over 7x salary.

In the Mid-Late 90's, the average wage was around 18k, the average price around 80k.

That's some difference today compared to then (which wasnt long ago)....

sarkin1

I think it was up north in some crappy inner city whole. But you would know more than me about that. :beer:

jo1967

Just thought I would let you know my situation from the 90's.

We bought a 2 bed flat in March 1990, the day we signed the interest rates went up again & I remember paying 15%. It seemed our mortgage (and yes it was a 100% mortgage) changed every month. We struggled to find a property in the first place coz stamp duty was payable at £30k & over so competition was tough!

The property prices plummeted & we were stuck. We payed £29,950 in March 1990 and moved in August 1999 having sold for £21,500. We had our son by then & decided to bite the bullet & move while we still had plenty mortgage paying years in us. To do this we had to go back to a 25 year mortgage (no other way to afford) & we bought a 2 bed house for £34,500 (plus the flats shortfall added to the mortgage). One good note we sold a very good Prudential endowment which helped us move & changed to a repayment.

On the brightside we then benefited from another boom & 3 1/2 years later sold our house for £78K. We got a 3 bed semi with garage & finally have equity of £35k plus.

It wasnt easy & i feel very bitter that we lost 9 years of paying the mortgage, but thats life & at least I have a nice house & a bit of equity!! :rolleyes:

Darknesslass

Generali wrote: »

I think you're mixing up your crashes. In 1992, the pound fell out of the ERM as the British Government was no longer prepared to pay the price of defending the exchange rate against the market clearing rate.

The housing bubble popped in 1989 and prices fell until 1992. This was on the back of high interest rates, rising unemployment, a credit crunch and changing sentiment.

Yes remember it well, brought first house in 1990. Eight months later worth £8000, less than we paid for it. Took 8 years to pull out of neg equity. Urm not risking that again.

The housing market was pretty much like it is now first time buyers unable to afford property so starter home sellers wanting to move on found it hard to find buyers. Mind banks are coming up with various mortagage deals now which back then they would'nt do.

MiserlyMartin

Thats because they are desperate for the market not to crash, it would ruin the whole industry for them. Eg: Halifax and a lot of other lenders are tied to property through their estate agent businesses. So they are dreaming up new headline grabbing mortgages which they hope will get positive PR on HPI.
Countywide are surveyors and estate agents, its vested interests everywhere.

More pressure for CPI on the upward trend today. Oil prices up and a weak US dollar. (Expensive exports from us)

Generali

MiserlyMartin wrote: »

Oil prices up and a weak US dollar. (Expensive exports from us)

Oil prices are down in sterling terms and about the same as a year ago in dollar terms (CPI is measured in terms of changes in price since this time last year).

A strong pound does mean that our exports are more expensive (and that our imports are cheaper) but that tends to put downward not upward pressure on inflation.

However, that we have inflation caused by money supply increases is, IMO, true by definition. It is being expressed through asset prices (houses, art, fine wine etc.).

Sisyphus

ruggerboy wrote: »

Hi Sisyphus

Thanks for this. Just to respond to a some of your points:

Oil has risen a lot higher than it was when the BoE made those falling inflation predictions.

It's certainly true that oil prices have perked up in the last few months and since the BoE made their falling inflation predictions. But, crucially, oil has not perked up sufficiently to impact CPI on an annualised basis. ...

do you want to reconsider that comment in the light of this morning's inflation number?

I expect the next CPI number to be higher as oil prices have been higher since March.

Generali

CPI is up to 3.1%.