Will House Prices Crash in 10-20 Years?

Jack_Johnson_the_acorn

Crashy_Time wrote: »

Well I was right about landlords becoming a tax target, right about the Brexit vote, right that the property bubble sentiment would turn.......Hmmmm.....right that Aberdeen was going round the U-Bend.....:rotfl: All I`m saying is that it is a global Ponzi scheme, if you are too thick/overleveraged to admit that then there isn`t much point is us communicating over the wonderweb now is there?

Let's (for the sake of furthering the discussion) agree that housing is a big ponzi scheme. Would you agree that you can :
1, save money by ending housing costs once mortgage is paid.
2, Security of tenure.
3, not have to live in a shared house / 1 bed flat to save on massively expensive rent.
4, hpi hpi hpi.
5, not have to deal with EA's.

cells

Crashy_Time wrote: »

Well I was right about landlords becoming a tax target, right about the Brexit vote, right that the property bubble sentiment would turn.......Hmmmm.....right that Aberdeen was going round the U-Bend.....:rotfl: All I`m saying is that it is a global Ponzi scheme, if you are too thick/overleveraged to admit that then there isn`t much point is us communicating over the wonderweb now is there?

Managers can never be subservient to their workers no matter how much the workers want it.

cells

Crashy_Time wrote: »

Well I was right about landlords becoming a tax target, right about the Brexit vote, right that the property bubble sentiment would turn.......Hmmmm.....right that Aberdeen was going round the U-Bend.....:rotfl: All I`m saying is that it is a global Ponzi scheme, if you are too thick/overleveraged to admit that then there isn`t much point is us communicating over the wonderweb now is there?

There are only really two options. Prices go up or they go down. In the extreme prices could double or crash in half

If you are scard the smart move is to buy with a low deposit. A person can go out an buy a £200k house with £10k down.

If prices boom fantastic. If prices crash 50% then also fantastic as you only lost £10k. The other £90k hit is on the bank and you can re-enter the market at the lower price not long after bankruptcy. If your a couple you could potentially reenter the market as soon as you exit the market.

Now I don't expect a crash but the above mitigates all the risk you and your group fear so much


You know how with gambling in casinos there is the saying 'the house always wins'. Well with buying your own home with a mortgage the homeowner always wins.

wotsthat

Crashy_Time wrote: »

Well I was right about landlords becoming a tax target, right about the Brexit vote, right that the property bubble sentiment would turn.......Hmmmm.....right that Aberdeen was going round the U-Bend.....:rotfl: All I`m saying is that it is a global Ponzi scheme, if you are too thick/overleveraged to admit that then there isn`t much point is us communicating over the wonderweb now is there?

It's a pity your predictions are crap when there's money on the line and they're about something which affect your life rather than the minutiae of Hamish & Aberdeen.

Your housing prediction has cost you £450/ month for how many years?

You'd look somewhat smarter if you were outside of the ponzi by virtue of living in a paid for house rather than getting a landlord to play on your behalf.

mwpt

cells wrote: »

There are only really two options. Prices go up or they go down. In the extreme prices could double or crash in half

If you are scard the smart move is to buy with a low deposit. A person can go out an buy a £200k house with £10k down.

If prices boom fantastic. If prices crash 50% then also fantastic as you only lost £10k. The other £90k hit is on the bank and you can re-enter the market at the lower price not long after bankruptcy. If your a couple you could potentially reenter the market as soon as you exit the market.

Didn't we go through this before? This option isn't open to many people because we have more equity than just that sitting in the house deposit, so we'd still be liable for the remainder of the mortgage. Also, I'm not convinced that bankruptcy is this easy path you indicate it is, which mortgage lender is going to lend to someone who recently declared bankruptcy?

But in terms of strategy for hedging, my own was to buy a property about 25% below what I could afford in a simple mortgage. I kept a chunk of equity outside of the house, and do not overpay my mortgage because I make more on dividends with this cash than I pay on interest to borrow it. I also chose an area where yields seemed reasonable because my monthly mortgage is 30% lower than I'd pay in rent for the same place. This allows me not only to build equity in the house as I pay it off but save money vs renting. I also took lodgers for a period to earn tax free income.

The scenarios are as follows:

• Very high HPI in London
  In this scenario, I'd give up on my future in London and start planning to retire elsewhere using the equity from the London house.
• Moderate HPI in London
  I weigh up the balance of trading up in London at some point in the future vs moving elsewhere.
• Prices static
  Probably look to trade up in London at some point in the future.
• Moderate crash
  Almost certainly look to trade up, still in London.
• Huge crash
  Would require a 60% crash to wipe out most of my free equity and leave me in a bad situation.

Of those, all of them present somewhat positive choices to me except for the last one and that I view as extremely unlikely in London based on evidence of what happened in the worst global recession in 80 years.

I do have sympathy for people wanting lower house prices who get angry with the factors that have caused them but I don't have much time for people who are wilfully ignorant and choose not to try make the best of a bad scenario and wish harm on others.

cells

mwpt wrote: »

Didn't we go through this before? This option isn't open to many people because we have more equity than just that sitting in the house deposit, so we'd still be liable for the remainder of the mortgage. Also, I'm not convinced that bankruptcy is this easy path you indicate it is, which mortgage lender is going to lend to someone who recently declared bankrupt

It won't come to that. The fact that the bank takes 9/10ths of the loss means the banking systems would have no choice but NOT to make these people bankrupt.

They would very likely cut interest rates to the bone and offer loan forbearance. Also a lot of customers in negative equity will just keep paying their mortgage as they are no worse off paying the same monthly mortgage as before. Not to mention a repayment mortgage adds more and more equity each month

This is pretty much what I said to the hpc crash wishers almost a decade ago. Those who took the risk did fantastically well in London. Those who took the risk of not buying are crying.

So I will say once again. If I truely feared a house price crash I would buy with a 5-10% down mortgage. The bank takes most the risk you only take the 5-10%. With buying a lot cheaper than renting (about 5-6% vs 2%) its mad not to. Of course as you say it doesn't apply to people with other capital the banks will go after but I doubt there are too many crash wishers with significant suns of money who just refuse to buy until society reprices 'ponzi' price homes

System

House prices will not double for a long time. It's down to real wage growth and affordability

lisyloo

Crashy_Time wrote: »

Do you have figures for how many did? I am going to bet it is quite a lot, the UK is not a nation of canny savers/investors, much as many on here seem to think so, IMO it is a nation of quietly desperate class conscious serfs who thought the property bubble was Manna from heaven, until it wasn`t.

No I don't although I suspect there are figures available on MEW/HEW somewhere.
I agree that most people are not "good with money" but I disagree that HPI hasn't "saved" most people from themselves.

FWIW - the people I know who MEWed are having to work til late 60's to pay back their mortgages, but they are still being able to pay it back and own a house at the end of it.
So not particularly savvy, but not disaster either as they'll still own a home in retirement and have no rent to pay.

MobileSaver

Carl31 wrote: »

They will if there is a significant global event to trigger it, say like the collapse of the EU due to members defaulting on their debts,

I agree however the price of housing will be the least of everyone's worries if that were to happen...

westernpromise

lisyloo wrote: »

No I don't although I suspect there are figures available on MEW/HEW somewhere.
I agree that most people are not "good with money" but I disagree that HPI hasn't "saved" most people from themselves.

FWIW - the people I know who MEWed are having to work til late 60's to pay back their mortgages, but they are still being able to pay it back and own a house at the end of it.
So not particularly savvy, but not disaster either as they'll still own a home in retirement and have no rent to pay.

The BoE publishes the stats. Crashy could look them rather than "betting" if he chose, but we don't expect rigorous thinking from crash trolls, do we?