House price crash?

tomstickland

Whilst it is possible for a crash to happen, I don't believe the BofE or the government for that matter would allow it to happen.

How would they prevent it from happening?

Until people get off their backsides and stop reading the ever-repeated threads on Housepricecrash and start shouting and loudly there won’t be any changes.

What changes do you want?

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nonsensefactory wrote: »

The idea of having preset lending multiples is that is acts as a rationing device i.e. to stop you over-extending yourself - 10 years ago you couldn't go the bank to get a 5 or 6 times mortgage just because you want a 4 bed detached in a leafy suburb and not the 2 up 2 down your salary dictates, the bank would've laughed you out of court. Now people are going to the bank asking for a 5 or 6 times mortgage to buy and the banks are lending it to them - these people are screwed and it's why I'm staying out of the market, at least for now.

How about lending multiples of no more than 3.5 times based on a previous years Inland Revenue record. No overtime or bonuses or other things taken into account. Basic salary only. Second home owners pay at least the full rate of council tax. I mean if they can afford a second home why do they not pay the full rate of council tax. Its just an absolute joke. I know why because the people who implement these rules all have second homes. This country is an utter joke form start to finish.

Melissa177

Ad wrote: »

How about lending multiples of no more than 3.5 times based on a previous years Inland Revenue record. No overtime or bonuses or other things taken into account. Basic salary only. Second home owners pay at least the full rate of council tax. I mean if they can afford a second home why do they not pay the full rate of council tax. Its just an absolute joke. I know why because the people who implement these rules all have second homes. This country is an utter joke form start to finish.

But people with second homes do pay 90% council tax? (And they invariably don't use the services).



It sounds to me like you have a chip on your shoulder about what other people have! If people couldn't afford a 5x mortgage, the banks wouldn't be lending the money to them.

Melissa177

Ad wrote: »

Unfortunately this corrupt lying government and ineffectual bank of nothing will do all they can to prevent a crash. How many ‘Buy to let’ properties and second and third homes does your councillor, MP have? The Bank of England is a spineless joke... Independent my a***.

What do you want them to do - raise interest rates massively to quell house prices? Whoop-de-doo! :cool:

cepheus

For most people acquiring wealth through property price rises is an illusion since they will probably continue to own a property solely for living in. In fact as they age they will probably try to move into a larger property which will cost even more. The only way to utilise that wealth is to sell and become a tenant or move into a cheaper property.

The irony is that lower house prices make moving into a larger property easier, and it is what you have in material terms which determines wealth not some illusionary price. Look at it this way if the average house were £200 rather than £200 000 and an average detached house were £400 rather than £400 000 anyone would be able to afford a detached house and would be all the richer.

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Melissa177 wrote: »

But people with second homes do pay 90% council tax? (And they invariably don't use the services).



It sounds to me like you have a chip on your shoulder about what other people have! If people couldn't afford a 5x mortgage, the banks wouldn't be lending the money to them.

Edit Not worth a response.

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Melissa177 wrote: »

What do you want them to do - raise interest rates massively to quell house prices? ! :cool:

Whoop-de-doo too...

Melissa177

I'm trying to understand why you think people who have second homes should be penalised (I don't have a second home, I struggled enough to get the first one!), and also why banks should be restricted to how much they lend potential homeowners.

I don't see why banks should be controlled (by the government, or anyone else for that matter), how much they can lend to people.

Happy to debate the points, "Ad"!

Woby_Tide

One of the points against a crash currently is that at the first sign of prices falling(which I'm sure will happen), and actually coming down, people will start buying those places again and restabilise the market, then it will happen again and again. A bg crash now loooks unlikely, the stagnation looks more likely with markets going through minor pits and troughs purely based on demand currently, until demand subsides it's unlikely to allow a crash.

HugoSP

The reason banks are lending 5x income for mortgages are because people have been finding the money out of their incomes to service these.

• Interest rates are much lower than when banks were lending 3 x income
• Other living expenses have fallen, eg insurance, shopping etc
• The tax system has changed and has improved for many families on low incomes
• Deregulation of utilities have reduced energy costs (over the last numer of years - not months)

I could go on, but my point is that the structure of living costs have changed. We spend far less on some things than we did 50 years ago or even 15 years ago. Other things cost us more.

I don't doubt that the market may cool down or even devalue by 10% in less volatile areas, just like it did in the 90s. I hope it does as my sister is looking to get back onto the market. I very much suspect that a one step .5% rise in interest rates could have this effect as large numbers of sales at point of exchange will fall though.

Personally, I believe the above would be good for the housing market in the long term. I speak as a LL and a property investor.

But, things have changed. We now know a lifestyle that our parents could only have dreamt of in some cases. The market isn't going to crash because we've all become spoilt children and want everything now, but those who behave as such willget caught out, along with some who simply make the mistake of being over exposed.