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

jaime_3

Hi. We are trying to buy and sell at the moment (in Reading, Berks) so this all makes interesting reading. The market here has already come down (with average house price dropping up to £20k) since the spring so we doubt very much that there is going to be any kind of crash - and our mortgage adviser agrees. Crashes happen when the market spirals out of control - but the multiple rises in interest rates have already slowed things down considerably and therefore prevented this kind of crash. Prices have now come down in almost all areas of the city, as much as they can. The problem is that all the unecessary scaremongering about house price crashes, negative equity and rising interest rates has frightened off most of the FTBs completely = so the smaller homes at the bottom of the chain are not shifting = and this is affecting the rest of the market. I don't know what will happen to change this but I can't see a crash coming. People will just be forced to sit tight until the interest rates come down a little and people at the bottom start buying again I guess.

vansboy

We're trying to sell our place - on for £329k - lady who wants it, was offered £20k less for hers - so expected us to drop a similar amount!!

Yes prices are decreasing - but from an over-priced level, anyway.

& no, we didn't take the offer!

VB

roadrash

I agree with aidsy.
Why is the UK so hooked on 25yr standard mortgages?

I have jsut brought a house mind you! I am not a first time buyer as I owned a house in 2000 that I brought for £63k and sold back in March for £102k, which was nice ;D

As I say, I have just brought a house for £114,000 and the asking price was £115,995.

I think the whole hype of a 'house price crash' is VERY over rated, and certainly egged on my the media!!

House prices where I live now (Peterborough) dont seem to be going down at all!! Infact they are rebuilding the town centre from scratch costing £200m, which is only a good think, plus they are building another 8000 homes in and around the area.

So my advice, if you are thinking of joining the property ladder is to do what you insticts tell you, do some research on the area and house prices etc, and if you can afford it..go for it!!

manhattan

we live in peterborough too,and as a first time buyer i refuse to buy at these prices,even though we have saved a large % towards a deposit.at the minute we only pay £260 a month rent for a modern 2 bed in a nice area,if we brought a house in the same street it would cost us about £600 a month mortgage ,so we have just put our savings into a high interest account while we wait and see what happens in the near future.i think they will come down a bit.(please!) ;D

aidsy

manhattan you say u r paying £260pcm rent and the same house would cost u £600 on a mortgage... i can onlt have a guess that the house is approx£80k

well you seem to be getting away with a very small rent , in my area on N.Ireland North Down £260pcm is not heard of,, a prop of 80k would be reciving a rent of 400 - 450 pcm

manhattan

Posted by: aidsy Posted on: Sep 9th, 2004, 11:42pm
manhattan   you say u r paying  £260pcm rent and the same house would cost u £600 on a mortgage...   i can onlt  have a guess that the house is approx£80k
 
well  you seem to be getting away with a very small rent ,  in my area on N.Ireland  North Down   £260pcm   is not heard of,,    a prop of 80k  would be reciving a rent of 400 - 450 pcm

the house is worth about 120k and we rent it off a private housing association i dont know why its that cheap to be honest we have been paying that for about 5 years? ???

loopyloo_4

I have only just found this thread.

I too am waiting for the prices to fall. I bought a flat in 2000 and have just sold at a profit of approx £65k. I am now renting a house at an astronomical price of £650 per month, but do not want to get a £160k mortgage on my own which is what i would need to buy a house in my area.

The interest i make on the profit does cover some of the rent i am paying but how long should I wait before buying again? I was hoping they would fall in the next 1-2 years but people keep telling me its not gonna happen.

Any advice?

lisyloo

If you are looking for significant price falls then I would have thought you'd need to wait longer than that.
The last time it was about 4 years at least (1989-1993).

I would say sit down and go through some scenarios in a spreadsheet.

Bear in mind that you are not paying maintenance or building insurance whilst in rented accomodation.

I don't know your area but your rent seems to be quite high compared with the type of house you are looking to buy.

loopyloo_4

£650 is quite reasonable for the area, just by Lakeside in Essex. I am renting a small 2 bed house.

I keep shuffling ideas about in my head but just dont want to be stuck with a HUGE mortgage.

lisyloo

Huge is of course a relative term because it depends on your income, but yes, it's a big figure on your own.

I really honestly don't know what's going to happen.

There are two schools of thought.

Some people are convinced there is going to be a crash because prices are now so overvalued and way off their long term average.
Also market sentiment will keep people away as no-one wants to buy a falling asset.

However there are also those who believe that prices will not fall substantially because we are supported by low interest rates and high employment.

I have been studying this closely for nearly 2 years and I don't have a clue which one is right (and I believe it's impossible to know anyway).

To a certain extent you should do what makes you happy and what you are comfortable with because no-one knows what's going to happen and there are risks with either buying a house or selling to rent (as you have done).
It just depends on which set of risks are more appealing or less disastrous for you.

Personally I do feel there is going to be some sort of correction.
I find it hard to believe it's going to be like 1989 though because of the fairly stable economic situation so I guess I side with the "gentle slow down" theory which is bad for people who sell to rent.

I can guarantee that however much you study this subject you will not find answers (I haven't in 2 years).
You can only understand the risks and make a decision that you are most comfortable with.