'We've reached a tipping point' Signs of house price weakness

Rota

Crashy_Time wrote: »

I would have to see a reversal in the way credit is given to the masses. That happened already because the system had a meltdown and the banks couldn`t lend, but it is happening again now as the banks choose not to repeat the mistakes of the past (See the latest RBS advert about NOT doing 0% transfers. They are telling people that excessive borrowing is no good anymore, that is a big shift)

Why does that concern you? As long as you know your strategy why would anyone else's borrowing habits be an issue?

So say you were happy with how banks were lending, what % drop would be an entry point for you?

Ohh, and Crashy, I wouldn't be advertising that a "debate is kicking off" elsewhere when you get your rrrr's handed to you everyday.

Rota

Crashy_Time wrote: »

http://www.dailymail.co.uk/news/article-2720949/Property-price-crash-happen-months-sellers-finally-outstrip-buyers-theyll-continue-rise-year.html#ixzz39yD1pEdb When the Sheeple`s Wail is hedging it`s bets, you know that the jig is nearly up.

First time buyers piling in - doesn't sound like the start of your crash to me.

http://www.telegraph.co.uk/journalists/anna-white/11025679/Why-first-time-buyers-are-still-piling-into-a-hot-housing-market.html

Crashy_Time

Rota wrote: »

Why does that concern you? As long as you know your strategy why would anyone else's borrowing habits be an issue?

So say you were happy with how banks were lending, what % drop would be an entry point for you?

Ohh, and Crashy, I wouldn't be advertising that a "debate is kicking off" elsewhere when you get your rrrr's handed to you everyday.

Let`s face it, with statements as idiotic as that you are not really involved in any "debate", whether here or elsewhere. What % price correction would it take to make you too sick to post?

Rota

Crashy_Time wrote: »

Let`s face it, with statements as idiotic as that you are not really involved in any "debate", whether here or elsewhere. What % price correction would it take to make you too sick to post?

See, point made. Lets face it, you have little or no understanding of how finance or mortgages work so you will never ever buy. Which fascinates me as to why you feel the need to come and educate us on how to win in life.

In 2004 I know people were getting self cert mortgages. I didn't care less. How does that effect me?

Back on topic.......

If you do intend to buy you must know a level (% drop) you would find fair value. What is it?

Jason74

Crashy_Time wrote: »

If it was a plan that suited you, well done, glad you achieved your goal. I just think that there will be a correction and that property prices will drift down for years. If you want to believe that a flat bought for 92k in 2002 is going to continue to be worth 250k+ going forward, well good luck with that as well.


I have calculated my rental costs over the 17 year period again, and done it more accurately, as there were periods of paying room rates at 200 - 300 p.m in shared houses/flats, it comes out at around 71k. So about 4k a year, 350 p.m on average? I am happy with that batting average for housing costs, and am happy to have been able to live in 8 decent properties over the years.


I wouldn`t want to be highly leveraged in this market, and you have taken yourself out of that position, others won`t be so lucky. Worst case for you is that you paid a chunk of money into a property and you will lose a chunk of that money going forward, but you will still have a place to live.


You save some rent every month, but you will lose money that you have already paid into the property as prices correct. Others saving for a house are gaining every month that your house decreases in value. In a crashing market many average properties are going to lose a lot more in a year than my historical rental costs?

Thanks for the reply. I actually agree with you on the leverage point as it goes, certainly in my part of the world. I'm not sure I'd want to be heavily mortgaged (either related to income or a properties value) in the current market. But if I was stuck with the choice of a huge Mortgage or private renting, I'd probably still buy, albeit reluctantly. Although that's more a comment on how horrible it is in private renting in London than anything else. I'm lucky, in that I don't have to make that choice.

In terms of the other comments, such as "good luck" with thinking the flat will hold it's value at £250k (which I never said I did btw), I think you miss the main point of my post. I thought I was pretty expicit when I said "that gain (in value) means nothing to me, as the primary value of my (mortgage free) little pad is that it provides me with a comfortable place to live in an area I really like". The asset value is almost irrelevant in the calculation for me. The main benefit of owning is that I have security of tenure, and over my lifetime will pay over £300k less for housing than if I'd tried to rent the same home.

I will lose nothing if the property value falls, and gain nothing if it rises. It will be the same property, providing me with the same benefit, and my expenditure on it remains the same. The value is only relevant if I choose to move in the future, and given that the value of my property is directly linked to the value of anything I might choose to buy in the future, price movements don't make that much difference to me even then. So talking about money I'll "lose" if it's value drops misses the point.

Ironically it's the same argument I have with some of the uber bulls who make out I'm much better off because the paper value of my property has rocketed. It's paper value is largely irrelevent, it's the value in tems of security of tenure and lack of future costs that made owning such a good plan for me, and makes it the best long term plan for most people, in most circumstamces if they can afford it. I actually see HPI as a bad thing, precisely because it reduces the number of people who can afford to access this best option in an important life area.

wotsthat

Crashy_Time wrote: »

Doesn`t help Robmatic though does it? People buying in the "special" postcodes of Edinburgh in 2010 probably thought their flat would be worth 50k more by now, not 5, that hardly covers solicitors costs?

All of the calculations you've been presented with show, on a cash flow basis, that it's cheaper to buy with a mortgage than renting and hoping. You are a case in point - you can never breakeven whatever the size of any crash is.

It might be different in the future for today's new starters. I'm not as confident in my predictive skills as you are with yours - that's why I bought - it came with a virtual guarantee of home ownership. You ought to be questioning your own ability to predict the future.

Your strategy doesn't even have an end game. You're so wrapped up in other people's actions you haven't considered what price you would be willing to pay.

Crashy_Time

Rota wrote: »

See, point made. Lets face it, you have little or no understanding of how finance or mortgages work so you will never ever buy. Which fascinates me as to why you feel the need to come and educate us on how to win in life.

In 2004 I know people were getting self cert mortgages. I didn't care less. How does that effect me?

Back on topic.......

If you do intend to buy you must know a level (% drop) you would find fair value. What is it?

Cheap and plentiful credit for the masses, banks desire to get people borrowing, property !!!!!! on TV, all contributed to the overheated property prices we see today. If you don`t get that basic problem, you don`t get to guide the debate. Okay?


On the way up, if people over borrow to stay in a certain street, then the prices for the whole street rise, of course it works the other way round as prices start to correct, those who can drop their price to sell leaving those who borrowed too much snookered.

ukcarper

Jason74 wrote: »

Thanks for the reply. I actually agree with you on the leverage point as it goes, certainly in my part of the world. I'm not sure I'd want to be heavily mortgaged (either related to income or a properties value) in the current market. But if I was stuck with the choice of a huge Mortgage or private renting, I'd probably still buy, albeit reluctantly. Although that's more a comment on how horrible it is in private renting in London than anything else. I'm lucky, in that I don't have to make that choice.

In terms of the other comments, such as "good luck" with thinking the flat will hold it's value at £250k (which I never said I did btw), I think you miss the main point of my post. I thought I was pretty expicit when I said "that gain (in value) means nothing to me, as the primary value of my (mortgage free) little pad is that it provides me with a comfortable place to live in an area I really like". The asset value is almost irrelevant in the calculation for me. The main benefit of owning is that I have security of tenure, and over my lifetime will pay over £300k less for housing than if I'd tried to rent the same home.

I will lose nothing if the property value falls, and gain nothing if it rises. It will be the same property, providing me with the same benefit, and my expenditure on it remains the same. The value is only relevant if I choose to move in the future, and given that the value of my property is directly linked to the value of anything I might choose to buy in the future, price movements don't make that much difference to me even then. So talking about money I'll "lose" if it's value drops misses the point.

Ironically it's the same argument I have with some of the uber bulls who make out I'm much better off because the paper value of my property has rocketed. It's paper value is largely irrelevent, it's the value in tems of security of tenure and lack of future costs that made owning such a good plan for me, and makes it the best long term plan for most people, in most circumstamces if they can afford it. I actually see HPI as a bad thing, precisely because it reduces the number of people who can afford to access this best option in an important life area.

It seems that people like crashy think homeowners are obsessed about the value of their properties, where in reality it's the money we save over rent that is the main financial benefit.

Rota

Crashy_Time wrote: »

Cheap and plentiful credit for the masses, banks desire to get people borrowing, property !!!!!! on TV, all contributed to the overheated property prices we see today. If you don`t get that basic problem, you don`t get to guide the debate. Okay?


On the way up, if people over borrow to stay in a certain street, then the prices for the whole street rise, of course it works the other way round as prices start to correct, those who can drop their price to sell leaving those who borrowed too much snookered.

At what % drop do you find your local market fair value and purchase a property?

Crashy_Time

Jason74 wrote: »

Thanks for the reply. I actually agree with you on the leverage point as it goes, certainly in my part of the world. I'm not sure I'd want to be heavily mortgaged (either related to income or a properties value) in the current market. But if I was stuck with the choice of a huge Mortgage or private renting, I'd probably still buy, albeit reluctantly. Although that's more a comment on how horrible it is in private renting in London than anything else. I'm lucky, in that I don't have to make that choice.

In terms of the other comments, such as "good luck" with thinking the flat will hold it's value at £250k (which I never said I did btw), I think you miss the main point of my post. I thought I was pretty expicit when I said "that gain (in value) means nothing to me, as the primary value of my (mortgage free) little pad is that it provides me with a comfortable place to live in an area I really like". The asset value is almost irrelevant in the calculation for me. The main benefit of owning is that I have security of tenure, and over my lifetime will pay over £300k less for housing than if I'd tried to rent the same home.

I will lose nothing if the property value falls, and gain nothing if it rises. It will be the same property, providing me with the same benefit, and my expenditure on it remains the same. The value is only relevant if I choose to move in the future, and given that the value of my property is directly linked to the value of anything I might choose to buy in the future, price movements don't make that much difference to me even then. So talking about money I'll "lose" if it's value drops misses the point.

Ironically it's the same argument I have with some of the uber bulls who make out I'm much better off because the paper value of my property has rocketed. It's paper value is largely irrelevent, it's the value in tems of security of tenure and lack of future costs that made owning such a good plan for me, and makes it the best long term plan for most people, in most circumstamces if they can afford it. I actually see HPI as a bad thing, precisely because it reduces the number of people who can afford to access this best option in an important life area.

All fair points, except you may be being over generous with projected rent payments? If I had wanted to own and stay in long term the 40k flats I viewed in Edinburgh in the late 90`s, it would have made sense to grab one and pay down the mortgage as quickly as possible. I didn`t want to own and live in them then, and I don`t now, and they are heading back to 40k anyway IMO. I didn`t see the massive housing bubble coming in the late 90`s, and anyway I prefer to save and invest money rather than taking punts on illiquid assets like property . Best case one of those flats peaked at being "worth" 140k in 2007, who cares, with mortgage interest and costs it is hardly worth the years of living in it to make a small windfall (and also have to buy/rent somewhere else) And of course people trying to sell them now are struggling to do so.