**Don't Buy A House** House Prices Set To Crash!!!

dougk_2

In my opinion house prices will continue to rise - Maybe only 1 or 2% over then next couple of years but they will rise. Hence why with low interest rates (you can get 15 year fixed for under 6% if you are concerned about the future) in my view it is wise to buy now, and there currently is plenty of choice for buyers as there are plenty of properties on the market. The small drops before xmas seemed to have recovered and the amounts they fell by was fairly insignificant.

Low intrest rates means you can pay less rather than borrow more.

My property was a 2 bed semi on a 1960's estate - and yes I chose an area where I could afford not where I particularly wanted. 2 bed properties are still available there for £100k or less. Yes I was a FTB and I had lived at home and saved for 5 years to buy the property (not bad considering at the time I started I was earning only £5,500k and had to travel 50 miles a day). I do accept in some areas (big towns) that larger houses are now unaffordable by FTB's...but then it appears many FTB's want smaller modern houses with no gardens.

In 10 years time I expect my salary to be 50 to 100% higher (as should everybody who is hoping for a career) so the mortgage payments at the same rate will be much more insignificant.

I therefore WOULD advise an FTB to buy now if they are renting as they are simply paying for somebody else to have a mortgage, and as property prices climb or even stay static they are the ones losing out. Rental prices are unlikely to drop significantly even if house prices did drop so how many landlords would sell up? But as has been the case for many years if you want a house you have to cut out other things - holidays, cars, drinking, clubbing etc as I did and as F_D did (I would assume by his comments earlier).

There is a difference between mortgage debt and credit card / loan debts.

Houses are one of the few things which are nearly guarnteed to go up over time (yes there are drops and dips but they recover).

Unsecured loans are the problem or borrowing against your home for non-tangible items.

vishpatel

guess it depends on whether you think there will be house prices falls or not.

I've yet to find evidence of this 'recovery' that DougK speaks of... would be interested if you could back this up with statistics.

The Land Registry is where you get the real story. Those figures are always out of date by 3-6 months though....

dougk_2

I have noticed these increases in the area around me and the prices at which houses in the area are selling for. I'm not saying it is happening everywhere and I suspect London will take the longest time to recover. Personally I wouldn't want to live in London anyway (far to busy and hectic!)

In addition to this here are some stats saying the same thing:

http://www.rightmove.co.uk/pdf/p/hpi/HousePriceIndex21February2005.pdf

and

http://news.bbc.co.uk/1/hi/business/4306975.stm



Time we tell... but a crash (20% + ) is very unlikely in my view. A dip 5-10% a very small chance and that would only make prices the same as a year ago , so no need to panic!

vishpatel

I couldn't disagree more DougK. Well, I must remember to come and re-visit this with you every 3-6 months to see who gets it right....

Rightmove has indeed posted a slight rise, as did Nationwide. But Halifax, Hometrack posted falls. So it's a bit soon to call it a recovery!! And a recovery from what?? We haven't even seen any decent falls yet!!

Can I ask what do you make of the 6 year low in mortgage approvals? Do you not agree that they are widely regarded as a pre-cursor to falls? Do you expect those numbers to 'recover' too ?

Why don't you have a read of this
http://business.timesonline.co.uk/newspaper/0,,2770-1522171,00.html

nelly_2

Doug Im not certain but, I'll put a quid on it that you are the only person n Britain that thinks house prices are reasonable, and if you think thay havent inflated past wages look at this;
http://www.landreg.gov.uk/propertyprice/interactive/ppr_ualbs.asp

Ive done my area looking at detached in M25 1 Jan to March 1999, then rechecked for same period 2004.
In 1999 a detached was £99 646

in 2004 it is £207 987

thats more than doubled and I suspect peoples wages didnt more than double in that time.

Well I have found something we can agree on though all the rules and regs in the building industry, although gas installation and electrics i can see the safty aspect but the FENSA thing for windows is utter pants. They crowbared it in under the heading of "safety" ( who ever died of a draughty window???)

The real reason is,, the double glazing industry is worth in excess of 1.6 billion a year, and a lot of work was being done for a discount for cash,

(£5000 of windows at 10% discount for cash= £500 quid back in the punters pocket for the same standard of work)

so it didnt go through the books and the government was losing out on millions.

Like they dont get enough already.

I dont know what they have in mind for plasterers but they will get me somehow

vishpatel

here's another interesting story..

Panic selling as house prices slide
http://www.citywire.co.uk/News/NewsArticle.aspx?VersionID=72797

dougk_2

Wow... its highest level since May 2003....big deal! (a whole two years) - Hardly a "crash" situation.... and Interest rates are the highest they have been since sept 2001!

dippy

That article is interesting:

"The ratio of completed sales to the numbers of property on estate agents books fell to 27%, its lowest level since 1996, before the current boom got under way. The long-term average is 37%. In other words, buyers are holding back expecting prices to go lower, and properties are sticking."

dougk_2

It is this sort of headline that causes the panic....."Panic selling as house prices slide".

A slide is an over enthesis of what has happened 2 or 3% over a few months is hardly a slide.

It rather like saying and 2% increase is a massive leap!

In reality the headline should say "House prices have fallen by a small amount over past through months in some areas but risen in others"

Also more property on the market could be viewed as a positive sign as people look to trade up or move to new properties if they feel the time is right - Only raw stats properly analysed can tell you what is happening and even then they can be read in different ways (ask any accountant!).

Its all political and subjective.... For example the tories winning the next election would be good fro some people yet disastrous for others and its also a case of fear of the unknown.

dippy

Sellers are holding out and still believe they are in a booming market, hence only the few percentage drops. The key indicator to watch out for is volume of transactions and that one speaks volumes, no pun intended. If you've just gone past the peak in asking prices after 4-5 boom years and the number of sales is flooring, you know that what goes up must eventually come down. Once sellers start to accept reality then it's a long way down.