House prices to fall 5% in 2013

Graham_Devon

Here we are, have a capital economics prediction.

Capital Economics has reiterated its forecast of a 5 per cent drop in house prices this year, followed by a further 3 per cent drop in 2014.

While lenders are expecting to increase the availability of secured loans, including higher LTV mortgages, any positive effect will be challenged by a tightening of credit scoring criteria, according to the think tank’s UK Housing Market Analysis for the first quarter of 2013.

What's unique about this prediction is it includes a real life scenario. FTB's will need to save £450 every single month for 5 years in order to gain a 20% deposit.

I don't care what anyone says, that's a lot of money to be saving while living.

System

Graham_Devon wrote: »

I don't care what anyone says, that's a lot of money to be saving while living.

The point people make is that even if house prices fell an unrealistic 20% NOMINAL they'd still be saving £450 for 4 years.

MacMickster

Graham_Devon wrote: »

What's unique about this prediction is it includes a real life scenario. FTB's will need to save £450 every single month for 5 years in order to gain a 20% deposit.

I don't care what anyone says, that's a lot of money to be saving while living.

I disagree.

A £108K mortgage over 25 years with 5% interest rates would costaround £630 per month. On top of this, you would be responsible for maintenance costs and buildings insurance which don't apply while you are renting. You also need some leeway in your budget in case interest rates should rise higher (I would always budget for at least 7%.

If you can't afford around £900 per month in total on housing costs then you can't afford that £108K mortgage at all.

Renting (not necessarily the nicest flat or area) for £450 per month whilst saving is certainly possible in most areas of the country outside of London, so if you can't then save £450 per month then you shouldn't be applying for the mortgage in any case.

If only they would go back to giving out those 100% mortgages then people could buy that £135K flat without a deposit (but pay £790 per month at 5% interest rates plus maintenance, insurance etc to do so).

Graham_Devon

MacMickster wrote: »

I disagree.

A £108K mortgage over 25 years with 5% interest rates would costaround £630 per month. On top of this, you would be responsible for maintenance costs and buildings insurance which don't apply while you are renting. You also need some leeway in your budget in case interest rates should rise higher (I would always budget for at least 7%.

If you can't afford around £900 per month in total on housing costs then you can't afford that £108K mortgage at all.

Renting (not necessarily the nicest flat or area) for £450 per month whilst saving is certainly possible in most areas of the country outside of London, so if you can't then save £450 per month then you shouldn't be applying for the mortgage in any case.

If only they would go back to giving out those 100% mortgages then people could buy that £135K flat without a deposit (but pay £790 per month at 5% interest rates plus maintenance, insurance etc to do so).

Well, you wouldn't even get a flat here for £450 a month.

Cheapest available on rightmove for a 2 bed flat is currently £585 per month. Cheapest 3 bed £645 per month.

IveSeenTheLight

Graham_Devon wrote: »

Well, you wouldn't even get a flat here for £450 a month.

Cheapest available on rightmove for a 2 bed flat is currently £585 per month. Cheapest 3 bed £645 per month.

Other than considering moving to a cheaper area, how would you suggest that the rents should be reduced in your area?

somethingcorporate

Graham_Devon wrote: »

Well, you wouldn't even get a flat here for £450 a month.

Cheapest available on rightmove for a 2 bed flat is currently £585 per month. Cheapest 3 bed £645 per month.

Saving for a house takes commitment.

House share/rent a room loads of ways to bring down costs if you are desperate to buy a house. Plus, why do they need 20% deposit? 10% is fine if your credit rating is ok which brings it down to 2.5 years - seems very reasonable if you ask me or 5 years at <£250 per month.

MacMickster

Graham_Devon wrote: »

Well, you wouldn't even get a flat here for £450 a month.

Cheapest available on rightmove for a 2 bed flat is currently £585 per month. Cheapest 3 bed £645 per month.

Why 2 bed and not 1?

Generali

MacMickster wrote: »

Why 2 bed and not 1?

You can't fit all the consumer electronics and beer in a 1 bedder.

Generali

Graham_Devon wrote: »

Here we are, have a capital economics prediction.



What's unique about this prediction is it includes a real life scenario. FTB's will need to save £450 every single month for 5 years in order to gain a 20% deposit.

I don't care what anyone says, that's a lot of money to be saving while living.

It's a really good point but the thing I missed at the start of all of this which I think you continue to miss is that without mass repossessions or other forced sales, prices don't need to come down.

All that has happened is sellers have decided they're not going to 'give away' their house and are holding out for a price they're not going to get. It takes a willing buyer and seller to make a deal. Neither is in a position to dictate.

shortchanged_2

Well I know the new year hasn't been very positive where I am. There have been quite a few price reductions on several houses that have been on the market for some time. Reality at last?

Generali

shortchanged wrote: »

Well I know the new year hasn't been very positive where I am. There have been quite a few price reductions on several houses that have been on the market for some time. Reality at last?

Maybe, we'll see when the Rightmove data come out. Jan - June are generally positive months and July - Dec negative (the spring bounce runs Jan - Jun).