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

buglawton

Factors:

- UK housing stock virtually static for the next ?? years
- Govt. encouraging highly skilled workers from abroad to settle in the UK
- Most people aspiring to having room for hobbies and children in their house
- By having some of the lowest labour costs in this corner of the EU, our employment levels will remain high,

So, any UK housing market crash will be 100% psychologically driven (herd mentality). And will recover correspondingly.

Take Germany: Every time rents have risen sharply due to market forces, the coalition-type govt. they have there has initiated truly massive building programs to get supply & demand even again.
Most of these projects a low-rise flats, usually in a carefully landscaped environment with good public transport and preplanned local amenities. Building quality is extremely solid to keep neighbour noise down. Room sizes are huge comapared the UK's mass produced housing standards. A balcony the size of a typical kitchen substitutes for a garden.

There hasn't been a national 'property boom' in the last 50 years in Germany.

Two examples I personally know about in the last 2 years (where interest rates are 3.5%):
1. Berlin, 'Zone 2' spacious 2 bedroom 'Victorian' flat near a major park and 2 tube stations: £45,000.
2. Berlin 'Zone 3' New 3 bedroom detached house built off-plan, slightly customized: £170,000.

So, whatever price gyrations we have in the UK in the future, with Govt. policy on housing quantiy (and quality) being as insipid as now, the British population will always be making sacrifices to live anywhere half-decent. It will also be interesting to see if anyone whose house recently crossed the 1% to 3% Stamp Duty barrier will be able to bring themselves to vote Labour next time.

(We are encouraging our son to consider moving abroad after he graduates, as we can't imagine how he will manage in the UK with housing costs draining the lifeblood out of him!)

loopyloo_4

Some people got a payrise, but nothing is secure these days... bang goes your job  :-X

I can always get a lower paid job and still be able to afford to rent somewhere. My mortgage was my only debt. I will always earn more than my rent costs. Thanks for your optimism! :-/

kinster_2

lol, what I'm trying to say here is that a lot of people just think that the only way of getting money is having a job... you have some money put away... why don't you do something with it ...

loopyloo_4

Oh sorry :-[

I like looking at it at the moment. checking my balance and seeing it there.... Havent really thought about doing anything else with it as I wouldn't like to risk losing it all.

GDB2222

FWIW, I am convinced that house prices are going to go through the floor over the next 3 years. I lived through the property crash in the early 90's and did very well out of it, as it happens. Although the conditions are not the same, there are similarities, and the consequences are likely to be tyhe same.

The key point about the market at the moment is that high prices reflect a willingness of people to borrow as much as possible to buy property. People are willing to commit themselves at this level because they think that property prices are going to continue to rise.

That perception is now changing, and when it does so, the supply of buyers will dry up because nobody will take on a huge mortgage now if they reckon they can buy the same house in a couple of years' time for 10% less. There have been people posting here, saying that they think the market will correct by 10%.

The next stage is that there are always forced sellers. People die, divorce, become redundant, and they need to sell. What happens when a forced seller meets a market with no buyers? Obviously, they have to reduce the price drastically. This, of course, has an effect on market sentiment, so prices fall further, and so on.

The last time this happened there were two layers in the market. First, there were owners, sitting pretty, waiting for their price. Some of them sold at good prices. The other layer was the forced sales, which went through much cheaper. The house price statistics show an average of these two layers, and they do not reflect the truly drastic losses suffered by people forced to sell. The market in London fell as a whole by about 30%, but some of the properties being forcibly sold suffered far bigger drops.

The worst drops were in property which, deep down, nobody really wanted. These were properties bought at the height of the boom as a first step on the property ladder. When prices crashed, nobody wanted to buy studio flats. They could afford to jump that first step on the ladder and go for a 'proper' one or two bedroom flat. The same thing happened to ex-local authority property. I know personally of ex-council flats bought in the boom years for 60 to 70k which were knocked out as forced sales for 20k.

If you owned a desirable 3 bed house, you would not have seen the same sort of drop, and that is why the *average* price dropped by 'only' 30%.

Interest rates are far more benign than in the early 90's. Even so, when the perception changes, buyers will dry up, and the market will go into free fall. Fingers crossed, that's happening as we speak.

I hope I have not upset too many people.

aidsy

2222 i do belive u have got it wrong , but you are intilted to your views. Maybe you are talking about a single area u know of. but i can see a steady rise in property and by no means expect any crash/drop.

i do think there is too much to loose if there was a crash/drop ie jobs and homes

paul2468

I think that prices are on the way down, I have a property up with the Halifax here on merseyside and the market is just not moving in fact it is as dead as a dodo, i have reduced twice with no luck.

bridiej

People have been saying house prices are going to fall for the last 5 years! ::)

Reestit_Mutton

People have been saying house prices are going to fall for the last 5 years! ::)

I'll say something different then...prices have already fallen in Edinburgh.

Evidence: A property on my street similar to my own (ex) property has just had to drop its price twice and is now advertising at approx. 15-20% below what I got for my flat in July and it still hasn't sold.

Reestit Mutton

reubenpeckham

I really think that the main cause of the 'dip' in house prices is the doomsters writing in the media and in on bulletin boards such as this- which only serves to undermine public confidence.

There are no economic factors to justify- employment is high and interest rates are still low.