property values in the 80s crash?

peach101

Hi all,

I'm curious. I wasn't living in the country during the last property crash, and was wondering if there were any areas of the UK that did not suffer a drop in property value, or was it pandemic? Were there any areas of the country or property types that actually continued to appreciate, despite astronomical interest rates? This may be a naive question, but I'm only aware of the horror stories (and understandably so).

Alion

I was just a wee thing during the last crash and didn't even know about it, but I'm told that property prices in our area did not drop, continuing to grow very very slowly and then picked up quickly again.

News stories will always cite the worst cases...

Hermione54

I bought a house for £43000 in 1987. By 1990 its value had climbed to over £60000; but I had to sell it in 1994 and only just cleared what I paid for it - made no profit at all. How sad is that?

sortofok

It's "different this time" though Herms.

phlash

My Father bought a flat for £40,000 in 1990, sold in 1995 for £18,000.

He knows what its like to buy at the peak!

kingkano

and what if he'd kept it till 2000 or 2005 eh?

meanmachine_2

Surely these posts are completely pointless if you don't state WHERE you're living.

d'oh!

To the OP - yes, a few areas escaped the worst of it. Most of Scotland was OK because their prices hadn't got to silly levels - - unlike today

Also, exclusive parts of London were fine.

But today all areas have "boomed" at much the same rate, so it's difficult to draw comparisons.

Also, buy to let is a whole new factor and who knows what impact that'll have on areas where it's been most popular (mainly London and South East).

phlash

kingkano wrote: »

and what if he'd kept it till 2000 or 2005 eh?

I told him he should have. I was a property bull at that time, I'm very much a bear now though!

Its not always possible to hold onto an asset, theres all sorts of reasons why someone may need to sell.

In our current climate, if prices drop it may not be so easy for homeowners to hold onto their property and "ride out the lull". Because they would have bought at such high prices at such low interest rates. A property lull will probably coincide with a interest rate high, making it very difficult to service such huge debts.

Generali

Overall, property prices were pretty much flat in nominal terms over the period 1989 - 1994. However, in real terms they dropped about 31%.

This masked things though. By and large, genuine prime property rose a little in nominal terms, although still fell in real terms.

The real losers were people that had bought small 1 bed flats and studios in less desirable areas. Every week there seemed to be a couple trying to bring up a child or 2 in a tiny flat in a horrible bit of Streatham or the Isle of Dogs in one of those 'human interest' stories on the news.

My guess is that the unsaleable flats if prices fall again (because the owner can't afford to realise the loss) will be the 1 or 2 'executive' bed flats in Nottingham, Slough, Bromley and so on.

I've noticed that terraced houses seem to be the sector that has been flying up in price in the past few months so maybe they'll be unsaleable in if a crash happens too. However, I suspect that these are being bought by what the Americans call 'flippers': buy it, stick in a new bathroom and splash some paint around and flog it onwards.

Dennis99

I think this inflation adjusted graph is interesting, if you bought in 1989 your house didn't regain its value until 2002 on average.
The website it comes from is full of interesting stuff. :cool:



http://www.in2perspective.com/nr/stats/-real-inflation-adjusted-house-prices.jsp;jsessionid=94BF0FAE4731F357B18D0013099356EF

sortofok

Nice find Mr.D