50% house price falls

golddustmedia

dolce_vita wrote: »

then you are obviously a fvcking idiot and not worth getting into a debate with.

Then I suspect I'll be the one smiling in 7 years time when I'm right and you'll possibly be renting or "waiting for house prices to become affordable in the big crash that's about to happen" and been "about to happen" for 5 years now.

By the way, no need for insults. Just makes you look narrowminded. The figures I'm pointing out are based on what HAS happened over the last 40 years. That's factual evidence rather than hearsay.

golddustmedia

JohnInDebt wrote: »

Either that or he/she is under 30 and was too young to remember the last crash.

Actually I remember the last crash well, what's more in the middle of the crash, my parents sold their house. And guess what, it sold for double what they paid for it 9 years earlier. Still proving property growth is stable over a long term, even during a crash.

Romani_Ite_Domum

golddustmedia wrote: »

How much do you think a 3 bed house cost a century ago?

I've done a quick check and a GOOD 3 bed house in 1907 was about £500.
If you now assume the same place to be worth about £200k to £250k. Lets average it at £225k, which is 450 time more than it was worth a century ago.

So, fastforward a century and assume the same growth, the value of a house in 100 years may be 450 times it's current price, which is a bit over £100M.

So yes, I do believe that in a century houses will cost that much, but remember everything else will go up too, including salaries.

The biggest flaw in your argument in that you are basing your figures at today's prices ( the top of the biggest HPI boom in history ) and just continuing a graph upwards.

The housing market is at least 20% overvalued. You need to look at the trend. A market crash will probably undershoot the trend and take 8-10 years to rise back to todays levels.

Phirefly

How anyone can believe ANYthing they read in any media anywhere is a joke. We DO NOT KNOW. Staunch believers of the argument either way are naive. Regardless of the validity of your source, any information/research/stats on this issue all have to be taken with a pinch of salt.

Its like climate change, we just DO NOT KNOW. The only think you can do is keep aware and have a blanced view and not react in a knee jerk fashion, as its THAT which causes crisis (NR anyone?)

harryhound

Please, please, please - if you are thinking of buying a home for the first time or borrowing another 50K to "trade-up". Go the the Nationwide index and do the sums for your property type in your area.
Then you will have some facts.
You will also need a good big deposit because 125 LTV (loan to value) is now history.

My thoughts are here:

http://forums.moneysavingexpert.com/showthread.html?p=6313370#post6313370

HugoSP

It seems everytime there is the slightest bit of data suggesting that house prices will not rise for once in a while, or asking prices have fallen by 2.6%, a huge debate is sparked and the same people come here and tell us all that the UK will become the wasteland of property values. No doubt famine and pestilance will follow shortly.

During the last crash, there was one example of serious negative equity, where the value of one home had fallen by 75% since it was purchased with a 95% mortgage. I think this was the largest % drop in the country. There were a handful of examples of 50% price drops up and down the country. To my mind these were largely caused by those individuals paying far too much for their houses. Had they and the valuers been sensible they would have bought a house for the right price at the time and probably suffered a 10% drop in prices.

A family member who lived in a mining town lost around 10% of the value of their home when they sold it, due to the local economy suffering as a result of the mines being closed. There were no national influences at the time, and property in other areas was rising steadily, but not making huge gains.

The actual market around the midlands where I was living probably fell back by 5 to 10% during the early 90s. There were people with negative equity but these were those who had just bought with 95% mortgages. Mortgage companies came to the rescue with schemes that could allow homeowners to take their negative equity with them to their new home, which was a godsend as people were having to move to find work.

Down in the South West I understand that prices fell by some 25%, which meant that we could afford a decent house when we moved here. This was a market correction, unlike the 50% 'drops' I refer to above. Based purely on the valuations we had on our house, the market recovered those losses after some 4 years or so.

Now we have a record number of families splitting up (divorces/separations etc) and hence the number of households is multiplying almost overnight. All these new households need houses to live in. Although divorces and separations were prevelent at the time of the last crash they weren't at the levels they are now.

The current issues with the banking system will be managed. The major banks are being coy with the mortgage deals they're offering at the moment to protect their margines. This will put the breaks on the market in the short term, plus you've got the move up to the end of the year when people aren't looking so much.

It seems that the BoE are intervening early to manage the NR issue. Years ago it would have stood back and let the fallout come down around our ears, then deal with the mess. The American Central Reserve are doing the same.

Currently there is talk over fixed rate mortgages coming to an end, and the effects this will have on mortgages and affordability. Typically new products will be some .5% above what homeowners have been paying. That is probably around £40 extra a month on average.

Rents will have increased by similar amounts or more over the same period, and peoples' earnings will have increased.

In addition there are cutbacks that most (but not all) familes can make, plus there are genuine opportunities for earning extra money around. Whilst not all families can take advantage of earning extra income etc, enough people should be able to do a few extra hours for the economy to stay out of trouble.

In addition, the structure of mortgages is changing. I have noticed with BTL mortgages (and homeowner mortgages must be reflecting this initiative) that some banks are able to keep the interest rates low whilst charging higher arrangement fees. The arrangement fee can be added to the mortgage to make the payments more affordable in the short term. So the answer is for homeowners would be to find a good fixed or tracker mortgage that they can afford over the benefit period, add the arrangement fee to the debt, and enjoy some certainty over a rough period.

dannyboycey

HugoSP wrote: »

the answer is for homeowners would be to find a good fixed or tracker mortgage that they can afford over the benefit period, add the arrangement fee to the debt, and enjoy some certainty over a rough period.

Many of the figures you've spouted are observations on your part and have no basis in fact. I wouldn't mind had it not been for your ridiculous nuggets of advice to 'homeowners'.

dannyboycey

Phirefly wrote: »

How anyone can believe ANYthing they read in any media anywhere is a joke. We DO NOT KNOW. Staunch believers of the argument either way are naive. Regardless of the validity of your source, any information/research/stats on this issue all have to be taken with a pinch of salt.

Its like climate change, we just DO NOT KNOW. The only think you can do is keep aware and have a blanced view and not react in a knee jerk fashion, as its THAT which causes crisis (NR anyone?)

What do you suggest? Rolling a dice? Tossing a coin?

codger

Papers like The Daily Mail and The Daily Express are no different from any other nationals: they're not published to tell the truth but to reinforce the existing prejudices of their readers.

The Mail's rabid anti-Labour stance will lead it to forecast The End of The World if there's a prospect of Labour winning the next election (or "House Prices Set to Rocket!" if the Tories win), whilst the Express will print any headline it feels like to impress a readership whose collective intelligence still doesn't equal that of a gnat.

Doom-and-gloom headlines make more for sensational reading than informed comment -- especially when the headlines (and the reports) are penned by sub editors and reporters who were still in primary school during the crash of 1991-1994.

There wasn't a 50% fall in house prices then, and there won't be so catastrophic a fall now.

Anyone who thinks for a moment that such a drop is on the cards should be buying up emergency food supplies, candles and generators now, because a halving of the national value of the UK's property portfolio would do damage on an unimaginably vast scale to every aspect not only of the economy, but to Society itself.

adr0ck

why does everyone go on about wages not keeping up with house prices?

havn't wages grown faster than house prices?

go back 30 - 40 years and you had one breadwinner in each family

now you have two

therefore surely wages have gone up more than house prices

or do the two added together still less than the one wage 40 years ago?

its all womens fault :eek:(runs away)