Another anxious post-Brexit first time buyer

TrickyTree83

kilby_007 wrote: »

You understand that it is possible for house prices to fall, right? If you buy a house during a crash, of course other comparable houses will sell for less after you've bought yours, it's a given! I don't see your point?

You talk like a typical boomer. "It's in the interest of buyers". You do realise that house prices have been rising at several times that of inflation don't you? If house prices are outstripping wages year on year, it might be beneficial if you're on the housing ladder already, but what about the next generation(s)? There's three ways a housing market can operate:-

1) House prices rise at the same rate as inflation. Housing is affordable to the same group of people/salaries year on year.
2) House prices rise at several times the rate of inflation and then there is a "crash" cycle which corrects the market every x amount of years.
3) The rich buy all of the houses and everyone else rents, lining the rich's pockets further.

The property market has actually been through 1 (pre-70's) and is now deep into phase 2. Osborne et al have been propping up the market with cheap credit. The political & financial decisions over the coming months will dictate how quickly the next crash happens, but sure as the sun rises and sets, there WILL be a crash, and then the rich will buy more houses.... (3)

I'm not a boomer. I do realise that the rate of price increases cannot and in my opinion should not continue, but reductions are a bad way of redressing the balance, a slower rate of increase of even stagnation would be preferable. Prices may fall due to external factors (availability of credit), but if buyers are inflicting this, they are in essence also going to eventually inflict it on themselves.

Your 3rd point is exactly the situation I'm advocating avoiding.

Personally I bought at the height of the previous crash in 2008. I rode it out and sold recently to move up the ladder. The possible problems in 2008 didn't stop me buying a home and they shouldn't stop others now.

Anyone pulling out or dropping prices by 20% at the moment will be contributing to a slowdown and reduction in market values.

Crashy_Time

TrickyTree83 wrote: »

WOW.

Mortgages have nothing to do with liquidity or the availability of credit?

"Accounting liquidity measures the ease with which an individual or company can meet their financial obligations with the liquid assets available to them. There are several ratios that express accounting liquidity.

Read more: Liquidity Definition | Investopedia http://www.investopedia.com/terms/l/liquidity.asp#ixzz4CuhTJVdA
Follow us: Investopedia on Facebook"

And hate to break this to you, but climbing the housing ladder rarely means a step up is less than where you're coming from, even with a 20%, 30% drop.

Plus, again, that is not how mortgages work.

If you buy your first place for £100,000, 10% deposit, £90,000 mortgage (easy numbers), then 20% gets wiped off your value, you still owe the bank £90,000. So when you buy your next place, even if you were downsizing as you seem to suggest - where has your deposit gone? You'll not be able to buy. And if you want to step up, well that's even more of an unlikely situation.

With that in mind, keeping the housing market moving at reasonable (by recent standards) prices will be of benefit to everyone apart from first time buyers who apart from the already wealthy will be the only people who will gain from such a drop in the market. Most others will lose.

Most people either rent, have paid off their mortgage, or have quite low mortgage outstanding, the majority don`t care about the minority who will be in NE after a correction, but prices are made at the margins, one reduction in a street lowers the value of everything similar in the street, so any forced sales or sentiment change affects the whole market.

Crashy_Time

TrickyTree83 wrote: »

I'm not a boomer. I do realise that the rate of price increases cannot and in my opinion should not continue, but reductions are a bad way of redressing the balance, a slower rate of increase of even stagnation would be preferable. Prices may fall due to external factors (availability of credit), but if buyers are inflicting this, they are in essence also going to eventually inflict it on themselves.

Your 3rd point is exactly the situation I'm advocating avoiding.

Personally I bought at the height of the previous crash in 2008. I rode it out and sold recently to move up the ladder. The possible problems in 2008 didn't stop me buying a home and they shouldn't stop others now.

Anyone pulling out or dropping prices by 20% at the moment will be contributing to a slowdown and reduction in market values.

No, you buy freedom by having little or no debt. The cheaper you can buy/borrow a house to live in the better. The only losers are those with too much debt, but fortunately for them the PTB were forced into a position where they had to back debt holders or go bust themselves. The problem now is if we get contagion in the EZ the PTB are going to lose control of interest rates, currency, and political direction. Debt default/credit crunch is bound to happen, forcing down house prices.

economic

Crashy_Time wrote: »

No, you buy freedom by having little or no debt. The cheaper you can buy/borrow a house to live in the better. The only losers are those with too much debt, but fortunately for them the PTB were forced into a position where they had to back debt holders or go bust themselves. The problem now is if we get contagion in the EZ the PTB are going to lose control of interest rates, currency, and political direction. Debt default/credit crunch is bound to happen, forcing down house prices.

ill still be very happy that i bought. its in an area of very little supply in a prime area. i didnt pay too much for it too so made an instant £30k profit. my aim is to save my earnings (my post tax savings rate is 85% - and i earn £100k) and invest in other things as well as pay down my mortgage so eventully i can retire within a couple of years. if i ever wanted to move i would just let out my existing place and release equity to make it tax efficient and rent in a place i wan tto move to. doesnt make sense to sell and buy or buy another.

Crashy_Time

economic wrote: »

ill still be very happy that i bought. its in an area of very little supply in a prime area. i didnt pay too much for it too so made an instant £30k profit. my aim is to save my earnings (my post tax savings rate is 85% - and i earn £100k) and invest in other things as well as pay down my mortgage so eventully i can retire within a couple of years. if i ever wanted to move i would just let out my existing place and release equity to make it tax efficient and rent in a place i wan tto move to. doesnt make sense to sell and buy or buy another.

You are in an unusual position, people who stretched to borrow for property recently (especially in London) will not feel so relaxed.