50% house price falls

lypsey

Several things have come to light over the last few days that appears to show sentiment changing
http://www.thisismoney.co.uk/news/columnists/article.html?in_article_id=424293&in_page_id=19&in_author_id=2046
It says "One senior director at a FTSE bank actually wagered that, at some point over the next three years, UK house prices will have fallen by 50% from the level they are at now. "
I have for a while been saying houses will fall by 50% and finally someone from a major banks says the same

http://www.thisismoney.co.uk/mortgages/house-prices/article.html?in_article_id=424291&in_page_id=57&ct=5
Just possibly it has begun

More bad news on ASKING prices
http://www.home.co.uk/asking_price_index/

http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=7455&cat=44-0-0
Prediction of huge withdrawl from dodgy mortgages (the same ones everyone said were non existant in the UK)


I also noticed on the front of The Mail and several other papers very gloomy house market reports

Lastly oil at 80$ and the prediction of BTL collapse in a few papers this week will see total devistation to the housing market

I know a lot of you will slate me but I still believe house will fall 50% .... watch this space

pinkshoes

so if house prices drop by 50%, then there will be very few houses on the market to buy, and most rents will be hiked up to cover the negative equity.

I also noticed on the front of The Mail and several other papers very gloomy house market reports

You're admitting to reading The Mail?!?! oh deary deary me!

lypsey

Pinkshoes , are you on a different planet , do you really think in the last crash (I had 40% negative equity and didn't get out of it for best part of 8 years). What do you think some houses got knocked down , beamed to mars etc. As for rent it is exactly the same as houses , it is nothing to do with supply and demand , it is AFFORDABILITY.

PS I read the Telegraph if it really matter

RabbitMad

If house prices loose 50% of their current value then I for one will be jumping back on the BTL bandwagon.

I've just sold my rental place for £174,000 while getting £625 pcm rent. If that was available for £87,000 then that's a great return on your investment (alternatively the rent would cover a repayment mortgage - subject to being able to get one of course)

It ain't going to happen without a major recession and near total economic melt down.

lypsey

Rabbitmad
Consider this..... house prices fall by 1% (only) a month . The average house is over 200k but I want you to think about the FTB'er or BTL'er. Say for example they are buying houses worth 130k , this is then a reduction of 1300 quid a month . Can you put you hand on your heart and say (if you were them) I am buying today but if you waited 1 year you may save your self 13k - 14k. Don't forget that sort of money over 25 years costs best part of 30k once you have repaid it

I await your answer with baited breath??

boyse7en

I'll join you on BTL. My current BTL is worth approx £180k and I get £550pcm for it. We wanted to buy another when we remortgaged back in Jan, but the figures (rent vs mortgage interest) didn't stack up. At £90k and £550pcm it makes better reading on the spreadsheet!

The fact that a Senoir Bank official has placed a bet that house prices will drop 50% is hardly a good indicator of its likelihood. It depends on how much he's bet and the odds. If he's got odds of 50000-1, I'd put a tenner on it!

Wig

boyse7en wrote: »

I'll join you on BTL. My current BTL is worth approx £180k and I get £550pcm for it.

So assuming you let 100% of the time with no downtime, you have no maintenance costs, you are getting a 3.6% return on your money with the risk of capital loss.

That doesn't sound like a sensible place for your money to be.

In a bank you could get +/- 5% and no risk to capital losses.

vikingaero

I don't care!

The price of my house is a paper figure as I have no intent to sell because I want to live in it for the long term future. I bought it for £100k donkeys ago and it's worth £350k. So if prices fall then it's worth £175k. I don't have a mortgage either so rates don't affect me.

ftbworried

boyse7en wrote: »

The fact that a Senoir Bank official has placed a bet that house prices will drop 50% is hardly a good indicator of its likelihood. It depends on how much he's bet and the odds. If he's got odds of 50000-1, I'd put a tenner on it!

This just says to me that he's protecting HIS negative equity incase it does happen!!! He's only essentially buying an insurance policy for IF it does happen. It doesn't indicate that it will (or even that he thinks it might).... plenty of people insure their houses for if they burn down- the chances of it happening are quite slim but you want it covered for just incase...

RabbitMad

lypsey - If I was to choose to invest then hand on heart it would be because I felt that we were near enough the bottom of the market. I would not want to miss the boat by trying to hit the exact bottom (even if that meant by waiting I'd have saved £10K)

(While selling my LTB others came on the market with asking prices that were 10-15K greater. I don't begrudge selling short as I wanted out there and then, even though I could have had a further 10K by waiting a month or 2)

WIG- I assume boyse7en bought it for a lot less than 180 and therefore the total return if he was to sell now is very good. he conceeds these figures at the moment don't add up

Generali

Personally, I would quite happily buy an asset that is falling in value if it was returning a very healthy income if I was confident that the income wouldn't fall and that I wouldn't need to sell.

I don't know how many others would do that when faced with the reality just as I have my doubts how many 'in it for the long term' BTL LLs really are if prices start to fall.