how many REALLY think there'll be a crash rather than a stabilisation ?

Orion_3

I don't know why it should be THAT depressing - if you've GOT a house, then unless you're planning to sell it then it doesn't really matter how much it's worth. If you're selling it in order to buy another house, then as long as other houses have dropped in value too, again it shouldn't matter.

If you've got more than one house and are therefore selling for reasons other than wanting to buy another house, then you're probably rich enough not to worry anyway.

Anyway, it's average HOUSEHOLD wage, not individual. So it's 8 times the average wage, as most households consist of two wage earners. So £150,400, not £75,200.

franklee

Melissa177 wrote: »

I think house price will continue to rise because of particular trends (esp in London):

- immigration
- a lenient tax regime for foreigners
- people wanting to live on their own more and more
- increase in population

- If there is a shortage of actual housing (rather than it's price being the problem) then why have rents remained so low? (Yields are 4-4.5% round here but to make a decent profit they would need to be double that).

- Although immigrants take up housing they often share and so you get more than one wage earning adult per property (sometimes many more). This will supply more workers keeping wage increases down.

- People may want to live on their own but if they can't afford to do so they will rent and house share. So who will be buying and how will they afford to pay after another 40% rise in prices (or any more rises).

- Even if wages do go up to make housing "affordable" then inflation and interest rates will too making housing less "affordable" again.

- After all that if house prices do go up anything like 40% then we will get a brain drain as more and more young people move abroad.

CVID

http://uk.news.yahoo.com/rtrs/20070806/tuk-uk-britain-housing-fa6b408_2.html

Orion_3

CVID, there's another thread on this already.
1) How are they arriving at these figures?
2) Where prices will be in five years is not relevant to where they'll be in 9 months. I don't want to buy just before prices plummet, regardless if they'll eventually recover within 5 years.

CVID

Orion wrote: »

CVID, there's another thread on this already.
1) How are they arriving at these figures?
2) Where prices will be in five years is not relevant to where they'll be in 9 months. I don't want to buy just before prices plummet, regardless if they'll eventually recover within 5 years.

Ah, clearly a get rich quick merchant, then!!

They're not talking about 'recovery' within 5 years.They're talking about something considerably bigger, such that any 'plummeting' would be over before you could draw breath, presumably.

Orion_3

Get rich quick merchant? How will buying a house get me 'rich quick' then? I can only get on the property ladder by giving up a £45K deposit and spending an addition £350 a month going from renting to mortgaging. This makes buying right now on the say-so of one group's dubious calculations somewhat of a risk for me. All I want is a home and be able to afford to live. 'Getting rich' either quickly or slowly is pie in the sky for me.

kingkano

Orion wrote: »

I don't know why it should be THAT depressing - if you've GOT a house, then unless you're planning to sell it then it doesn't really matter how much it's worth. If you're selling it in order to buy another house, then as long as other houses have dropped in value too, again it shouldn't matter.

If you've got more than one house and are therefore selling for reasons other than wanting to buy another house, then you're probably rich enough not to worry anyway.

Anyway, it's average HOUSEHOLD wage, not individual. So it's 8 times the average wage, as most households consist of two wage earners. So £150,400, not £75,200.

Clearly the poster said AVERAGE WAGE not average household income. I also use this argument myself numerous times that it should be a couples income (ie 2x) but its always thrown out with the 'what if they have kids' comment. So that clearly makes it 75,200 and I still pose the original question to dolce vita.



Coming back to your first paragraph. Firstly, if you don't need to sell then correct the actual house value doesnt matter unless you want to change lender perhaps. If you need to downsize though, with drops as massive as these, your pretty much scr3wed. You buy at current avg £210k. Say 15% deposit (lets be generous).that leaves a mortgage roughly 180k. If this house drops to 150k your already -30k in negative equity. No deposit to change property, you in fact have to find a lender willing to give you a 125% or some such mortgage to be able to move on.... how is this good???

As to you not knowing why it should be so depressive.... I meant depression in the economy. For such huge drops in HP (remember I was quoting 65% drop from current levels as the poster quoted 4x avg salary) - the whole economy would be suffering BIG BIG STYLE.

Although to be honest, look at how 'high' people are on HPI - now imagine how depressed they'd be if their house was losing 5% a month? :eek:

Orion_3

Well it goes to show even more what a dangerous situation we are now in. The higher prices now get the more dangerous the situation gets.