I'm getting out now......

owner

No, because in a falling market many FTB's will hold off in the expectation of even lower prices

Can't believe this, you only need to read all the posts on here from FTB's desperate to get on the ladder asking about 6x multiples etc. if prices fall by as little as 10% they will all be steaming in.

sciencegeek

i would disagree with owner's post above.
I am a potential first time buyer and have watched the price of houses rocket over the past few years with dismay.
If prices can go up 1000 a month then i dont see why they cant go down 1000 a month. At the moment I am totally priced out of the areas I want to live in but if prices start tumbling I will be waiting till prices bottom out till I buy.
(If, for example I can rent for 500 a month but prices are dropping by 1000 a month i would be plain stupid to buy in).
I will get my own home eventually but in the meantime I will continue saving hard.

Romani_Ite_Domum

owner wrote: »

Can't believe this, you only need to read all the posts on here from FTB's desperate to get on the ladder asking about 6x multiples etc. if prices fall by as little as 10% they will all be steaming in.

Many FTBs only get on the ladder out of fear that prices will continue to rise. Once the pressure is off the fear factor will go. Sentiment of prices can only go up will change.

owner

I will be waiting till prices bottom out till I buy

But how will you know they have bottomed out ?

LiveOnLess

owner wrote: »

Can't believe this, you only need to read all the posts on here from FTB's desperate to get on the ladder asking about 6x multiples etc. if prices fall by as little as 10% they will all be steaming in.

Yes I take you point, but as I said in a falling market many FTB's will hold off. After all, who want's instant negative equity. This is what happened last time, and it'll happen again once people realise that house prices don't always go up, and that it may be 12-15 years before that gat back to a "high". Let's here from some FTB's.... what do you think?

PS. The government are desperate to keep this "boom" rolling, but they are running out of options. You can't buck the market for ever, remerber the ERM shambles?

sciencegeek

well that would be tricky but my point was I would be waiting till I thought the price represented value for money for my circumstances and that means prices dropping considerably more than 10% in most cases.

If prices drop (for arguments sake) 30% then rebound 5% before I buy in I wont be crying about not catching the precise bottom of the market.
If however prices drop 5-10%, i hastily buy in (this would still above what I can realistically afford) and then they drop a further 10-20% I will be a bit annoyed at myself.

ramellous1

owner wrote: »

Can't believe this, you only need to read all the posts on here from FTB's desperate to get on the ladder asking about 6x multiples etc. if prices fall by as little as 10% they will all be steaming in.

If prices fell 10% would'nt it be sensible to wait to see if they fell further before steaming in rashly.
There seems to be a lot of peeps desperate to talk the market up on these threads but for the normal (with low debt) homeowner a fall will be good news as there will be more liquidity in the market so it will be easier to trade up or down.

I also note a lot of housing bears get flamed for supposedly wanting the country to fall into recessionary hell. If this is what they are concerned about and are positioning themselves for protection then good luck. When a tide turns it doesnt matter what you want to happen you just have to flow with it.

fatpigeon_2

owner wrote: »

Can't believe this, you only need to read all the posts on here from FTB's desperate to get on the ladder asking about 6x multiples etc. if prices fall by as little as 10% they will all be steaming in.

If the housing market drops in value then banks lending criteria will tighten. People desperate to get a 6x mortgage now may well be desperate to get a 3.5x mortgage in the future. Lax lending and money supply growth created this boom, tighter lending will result from it.

kingkano

Exactly right fatpigeon. Although the same truth means that sciencegeek certainly wont be affording their home after just a 30% drop. The market drops 30% lenders HALF their lending offers. They are still 20% short of that house yes???

RHemmings

owner wrote: »

Can't believe this, you only need to read all the posts on here from FTB's desperate to get on the ladder asking about 6x multiples etc. if prices fall by as little as 10% they will all be steaming in.

Those FTBs desperate to get on the so-called ladder most likely believe that if they don't buy today at any price, that prices will only go up. Prices going down 10% will cause a sea-change in sentiment, as if prices have gone down this far, they'll go down further.

It's IMHO useful to look at similarities with other bull markets, such as the pre-crash dotcom share boom. People were pretty desperate to get on board while prices were booming, but stayed well away once they were crashing.

Edit: Apologies to Romani Ite Domum who wrote something very similar to what I wrote before I did.