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

Crashy_Time

wotsthat wrote: »

I'd wager that never has anyone got to the end of a 25 year mortgage term and found their house is worth less than they paid for it.

Up until the advent of this bubble, and the MEW lifestyle that may have been true.

lisyloo

I'd wager that never has anyone got to the end of a 25 year mortgage term and found their house is worth less than they paid for it.

I wouldn't be so bold as to say never.
I'm sure there are a few that found they were built over mineshafts or coastal erosion has been worse than expected and they fell off a cliff.
To say there are no risks and it never happens simply isn't right.
However it's a pretty safe bet.

What most of us can't predict is whether life has any surprises for us in terms of health, longevity or business.

Mostly it works out and mostly I think you have to take that risk, but to say always and never is simply overlooking the risk.

Crashy_Time

wotsthat wrote: »

I suppose for balance we should also remember that neighbours can be terrible if you buy and Edinburgh flats have a propensity to lose the roof every winter.

Never had really annoying neighbours then?

observingthedebate

Crashy_Time wrote: »

Behaviour in the market suggests than many people have made assumptions and commitments based on how much they hoped their house would be worth in the future though?

I agree with you that is a very dangerous behaviour to adopt. Extremely so. I just I am not sure how many people have actually done so.

The way I see it. There is a lot or property ramping about, but equally there is a lot of the opposite, doom mongering about people having borrowed over and above their means.

I live in London, I own a property but would never ever get into MEW'ing. Of all the people I know, acquaintances and friends, all financially literate, I cannot think of one who would.

I simply don't think, based on my experience, that people are so disastrouusly in debt.

Said all that, my opinion on the thread is that we past tipping point about Jan/Feb time.

Crashy_Time

observingthedebate wrote: »

I agree with you that is a very dangerous behaviour to adopt. Extremely so. I just I am not sure how many people have actually done so.

The way I see it. There is a lot or property ramping about, but equally there is a lot of the opposite, doom mongering about people having borrowed over and above their means.

I live in London, I own a property but would never ever get into MEW'ing. Of all the people I know, acquaintances and friends, all financially literate, I cannot think of one who would.

I simply don't think, based on my experience, that people are so disastrouusly in debt.

Said all that, my opinion on the thread is that we past tipping point about Jan/Feb time.

I thought most mortgages (is it only recent mortgages?) in London were I.O?

observingthedebate

Crashy_Time wrote: »

I thought most mortgages (is it only recent mortgages?) in London were I.O?

Nobody I know has a I.O. mortgage or would contemplate it. Makes no sense financially, and people know it. We mustn't forget that people in London have very large wages, relatively speaking, and substantial deposit (sometimes incredibly large ones I admit!).

One phenomenon that has happened for certain is that joint mortgages are now the norm. This I admit is risky. Personally, we were lucky we never needed to go down that route.

Again, this is based on my experience of people I know and talk to (and yes, before anyone asks, I do go out more than once a week )

wotsthat

Crashy_Time wrote: »

Up until the advent of this bubble, and the MEW lifestyle that may have been true.

It's true to date (apart from when houses fall down mineshafts or off cliffs - thanks lisyloo).

I don't know why you're so obsessed with the MEW lifestyle - it's not compulsory to MEW and, anyway, hasn't MEW been negative for years?

Same with worrying obsessively about the neighbours. I've had annoying neighbours but I'd never come across any I'd consider selling up to avoid. How many time have you moved to get away from the neighbours?

Despite 'having no skin in the game' you could have been mortgage free today, for less money than you've paid in rent, and looking forward to a mortgage and rent free future. I'm sure you'd declare victory if there was a crash but you've got to need something of the order of 50% to even breakeven.

Crashy_Time

IveSeenTheLight wrote: »

You may find this interesting
http://www.ros.gov.uk/pdfs/ros_statistical_report_apr-jun2014.pdf

Table 11 in particular for your flat reference.

You've cited a 16 year period (not a normal mortgage period).
You may dfind this interesting which showed the period between 2004 and 2014 Edinburgh had a 28.8% HPI.

http://www.ros.gov.uk/press_release/RoS10yearreport.pdf

I'm sure with a bit more digging we could find the HPI between 1998 and 2004.

Remember also how mortgage holders have benefitted from low interest rates.

http://www.rightmove.co.uk/property-for-sale/property-44904080.html


This is what a basic Edinburgh tenement looks like and costs like. My earlier 40 - 50k examples were from actually going out and viewing the three or four properties that were still at that price. They were not a match for even this basic flat. They were very small, and not liveable for more than six months, let alone 17 years! That is where renting pays divdends, you are not tied to a property. The averages for Edinburgh are pulled up by people paying a premium to live in Morningside or wherever, because they can stand in a coffee shop and maybe see JK Rowling or something.


Dig around in your stats, but this example probably would have cost similar around the 98 -99 period? Certainly around the early 2000`s in would have been 70 - 90k.

Crashy_Time

observingthedebate wrote: »

Nobody I know has a I.O. mortgage or would contemplate it. Makes no sense financially, and people know it. We mustn't forget that people in London have very large wages, relatively speaking, and substantial deposit (sometimes incredibly large ones I admit!).

One phenomenon that has happened for certain is that joint mortgages are now the norm. This I admit is risky. Personally, we were lucky we never needed to go down that route.

Again, this is based on my experience of people I know and talk to (and yes, before anyone asks, I do go out more than once a week )

If people in London are on such large wages, then why so many I.O mortgages? The way the London market plays out is unlikely to be decided by the people you know, the market behaviour of a large number of participants will be the deciding factor?

IveSeenTheLight

Crashy_Time wrote: »

They were very small, and not liveable for more than six months, let alone 17 years! That is where renting pays divdends, you are not tied to a property.

I know Edinburgh reasonably well as my wife went to University there, so I've seen student flats, know friends who went on to buy and live there throughout the last 20 years.

I'm interesting to know how much your rents increased to find larger, better apartments over those 17 years.

Crashy_Time wrote: »

Dig around in your stats, but this example probably would have cost similar around the 98 -99 period? Certainly around the early 2000`s in would have been 70 - 90k.

I believe Wotsthat has already dissected your figures and showed them to be false