50% house price falls

dolce_vita

golddustmedia wrote: »

You have to look past the media hype and short term fluctuations.

Take the housing market over the last 40 years, INCLUDING the crash around the early 90's, prices have on average doubled every 9 years.

Property is a safe LONG TERM investment if you're able to wait out any fluctuations that may last a year or so.

And if you can keep up with the repayments

Yeah you can speculate about "making £50k in 1 year" on a £200k house, but I say better to look at making £200k over 10 years on it, which is a more realistic AND PROVEN figure.

If in 5 years the price has dropped to 150k wouldn't it then be a better time to buy it?

Also, when saying "prices will drop by 50%" look at the other factors;
- The population is continually expanding from immigration, births, marriage separation, single person living until older etc etc.

So why aren't house prices continually going up now then?

The demand for housing continually outstrips supply, even if buyers get cold feet they still need to live somewhere and this feeds the rental market, thus demand remains.

The supply and demand argument has been shown to be too simplistic and is not the main reason for HPI

profit from property, even if the road might be a little bumpy along the way.

The market conditions and sentiment are changing before our eyes.

The days of easy money and therefore rampant HPI are over.

There is only one way things are heading.

Hold on tight folks.

keeperbear

dolce_vita wrote: »

The market conditions and sentiment are changing before our eyes.

The days of easy money and therefore rampant HPI are over.

There is only one way things are heading.

Hold on tight folks.

Do you write headlines for the Daily Mail? Prices are still heading upwards in many part of London.

Talk of a 50% crash in property prices is total garbage. Hasn't happened in the USA, despite subprime problems.

keeperbear

lypsey wrote: »

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

Ok, your Daily Mail type argument has really scared me. I think I will sell my house, rent and invest my money in a safe major high street bank like Northern Rock. Maybe not.

If the housing market falls by 50% the stock market will also drop like a stone. No type of investment apart from cash will be safe if the economy tanks.

tr3mor

Generali wrote: »

If you save £100 pw at 7% for 40 years, you end up with £1,000,000. A diversified portfolio of investments (including property) should acheive 7% for you.

Given an average inflation rate of 3% your £1,000,000 is only £300,000 in today's money.

Guy_Montag

keeperbear wrote: »

Do you write headlines for the Daily Mail? Prices are still heading upwards in many part of London.

Talk of a 50% crash in property prices is total garbage. Hasn't happened in the USA, despite subprime problems.

Hasn't happened yet - but one house builder is offering 20% off their properties. That's an overnight drop of 20% in the "value" of every house in the neighbourhood. Pretty good start.

Personally I think 50% is a bit unlikely, but as Generali points out it's happened in Japan.

dolce_vita

keeperbear wrote: »

Do you write headlines for the Daily Mail?

If I did, it would be more like this.........

"BLACK ASYLUM-SEEKING PAEDOPHILE GYPSIES WITH AIDS ARE CLAIMING BENEFITS AND PREVENTING OUR KIDS FROM OWNING THEIR HOMES"

Special report inside

dannyboycey

keeperbear wrote: »

Do you write headlines for the Daily Mail? Prices are still heading upwards in many part of London.

Talk of a 50% crash in property prices is total garbage. Hasn't happened in the USA, despite subprime problems.

Asking prices down 2.6% nationwide in one month - At that rate, it would take just about a year and a half to see 50% falls.

You say it hasn't happened in the USA - some areas have seen sharp falls already, but downward trends can take a number of years to reach the bottom of the market - it's worth noting that during this time there will be rises some months here and there too.

A housing crash is just part of the natural economic cycle, and the UK is well overdue one. IMO it has already started, although it wont be widely accepted until year-on-year falls appear in Land Registry figures.

50% is a strong possibility.

dannyboycey

dolce_vita wrote: »

If I did, it would be more like this.........

"BLACK ASYLUM-SEEKING PAEDOPHILE GYPSIES WITH AIDS ARE CLAIMING BENEFITS AND PREVENTING OUR KIDS FROM OWNING THEIR HOMES"

Special report inside

That's why you wouldn't get a job for the Daily Mail.... I think they've already done that story. You'd be accused of being unoriginal!

golddustmedia

Generali wrote: »

If you save £100 pw at 7% for 40 years, you end up with £1,000,000. A diversified portfolio of investments (including property) should acheive 7% for you.

Using my example in property above:
£100 pw is approx the interest payment on a £90k property.
After 9 years is worth £180k
After 18 years is worth £360k
After 27 years is worth £720k
After 36 years is worth £1.4M

So after 40 years would be heading around £2M, DOUBLE what the bank would give you!


So in property in less than 40 years you'd have a better investment AND you wouldn't have to mess around with a portfolio of investments etc. Also history has shown us the financial markets are far more unstable than the property market.

If it all went wrong, you can't live IN your share portfolio!

golddustmedia

dolce_vita wrote: »

So why aren't house prices continually going up now then?

They are.

You just have to look at the figures over a useful time span like 1 year. Property is a slow moving entity, it takes months to complete a sale. Like looking closely at a snail, if you looked for a second you might say it's not moving, look for an hour and it's a different picture altogether.

The area I live in I bought 2 years ago for £168k, current price is around £200k and I'm trying to find a place for my inlaws at the moment and month by month the prices in the area are higher.

There will be some locations where prices are up, some where they are down, but nationally I see the market is still rising and, over the long term, will continue to do so.

Everything reaches a point of maximum value, I would agree that a 2 bed flat in London that is perhaps valued at £350k might not achieve £400k this year, or even next year, because people look at the market and realise they could have a house outside of London for the same value. However as time passes, the market adapts and the flat in London goes up because its value is no longer comparable to the house outside London as that has gone up now.

Like I said, you have to take the long term view. Someone mentioned having negative equity in their home during the 90's crash. However I'll bet that even at it's worst that house was worth more than it was 18 years before. So as I said before, look at the long term view. Property, ON AVERAGE, doubles every 9 years.

I said I paid £168k for my home 2 years ago, I have every faith that in another 7 years it will be worth £336k, I've even more faith that in 16 years it will be worth £672k.

If nothing else, the UK is an island, land (property) is one commodity that's guaranteed in limited supply!