50% house price falls

andysstuff_2

I live in a rented property worth abt £150K and pay £575 per month. Mortgage on same is gonna cost me upwards of £1000 per month. If property prices are now stagnant or falling, then there's no incentive for me to buy, I'm better saving the £425 a month towards a deposit at some future date, when prices will be lower as well.

If I, and people in the same situation don't but , this then adds to the problem, further lowering house prices as people who need to sell for whatever reason accept lower and lower prices.

Becones a bit of a vicious circle, just like the crash at the end of the 80's when prices, particularly at the botton end of the market did fall by 50%.

pinkshoes

Doozergirl wrote: »

We've had this conversation before, have we not? It doesn't work like that!

nobody knows how it'll work or what's going to happen! For all we know, if house prices crash by 50%, then we could be in the middle of an economic crisis, 1000s of workers being layed off, even food prices rocketing. Buying/owning a house could be the least of your worries!

nickswift

here is that leaked document

http://www.!!!!!!/file/328d4b/

nelly_2

nickswift wrote: »

here is that leaked document

http://www.!!!!!!/file/328d4b/

Every region has dropped in price! even the mighty London

baby_boomer

Generali wrote: »

If prices can treble in 10 years why can't they halve in another 10?

Well if wages grow at 4% pa (not guaranteed I know) then if house prices halved over 10 years they would be nearly 3X more affordable compared to average salaries than they are now.

That's a revolution which doesn't fit our rising population / more single person dwellings profile IMHO.

I suppose it could be achieved by a government which was prepared to announce at an election an end to planning restrictions at the same time as property prices were plumeting :rotfl:

PasturesNew

boyse7en wrote: »

Rent is due to go up to £580 in November, which will take return up to nearer 7% gross

... unless the tenant leaves because he finds a cheaper one and it's empty 1-2 months

macaque_2

pinkshoes wrote: »

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

The recent credit crunch might stimulate a spike in rents (as buyers stay out of the market) however one has to wonder how long any such rises might stick. The BTL market risks becoming heavily saturated as landlords try to grow their portfolios beyond the reasonable needs of rental demand.

obsessed_saver

As I see, Rightmove is blaming the price fall on the HPI... which could be plausible.

Alan_M_2

I'm interested to know why so many people think rents have anything to do with the value of property, they are directly related to income and affordability and to a much lesser extent, availability.

If there was a price correction of any amount how on earth would you expect rents to increase?

Rent is connected to the value of a property in one respect only, as the property as an asset class than the potential investor will consider their current return on that investment (rental income) verses it's capital value.

So in the same way rent doesn't drop when house prices do, then rent doesn't increase when house prices increase, (well no more than inflation or market forces will allow).

Rent unlike a mortgage can't be stretched over 40 years or paid Interest only (or any other fashionable scheme that makes things "seem" affordable).

Rent by it's very nature is actually a reasonably good indication of the current state of house pricing (whether it be reasonable or overvalued) at least to a very simple extent.

MonkeySaving?

andysstuff wrote: »

I live in a rented property worth abt £150K and pay £575 per month. Mortgage on same is gonna cost me upwards of £1000 per month. If property prices are now stagnant or falling, then there's no incentive for me to buy, I'm better saving the £425 a month towards a deposit at some future date, when prices will be lower as well.

If I, and people in the same situation don't but , this then adds to the problem, further lowering house prices as people who need to sell for whatever reason accept lower and lower prices.

Becones a bit of a vicious circle, just like the crash at the end of the 80's when prices, particularly at the botton end of the market did fall by 50%.

Likewise mate, we pay £595 a month rent on a property worth £280k.... that would normally be a 2k+ mortgage a month.