Wow 50% here we come

jonewer

MikeLondon wrote: »

Surely 1000's of people are going to be in your position, and they will all be waiting for a drop. But if there are loads of people waiting in the wings, won't they themselves force the price up.

Why would people rush into buying a house when the prices are dropping? Surely you can wait a couple more months till it becomes even more affordable or until the buyer is prepared to accpet your offer..... or you could go buy somebody else's cheaper, nicer house.... it becomes a buyers market whereas at the moment we have a sellers market where buyers scramble over each other to press more money into the sweaty paws of the seller in the hopes of securing their [STRIKE]tiny rabbit cage in an urban war zone [/STRIKE]dream home.

Also, higher interest rates tend to have a lesser effect on those with a deposit - the larger the better. So if for example I have a 10% deposit on a £250k place but prices fall by a half, then in effect I have a 20% deposit and am now paying higher interest on only £100k instead of lower interest on £225k. The interest rate therefore has to be very significantly higher to make the house less affordable.

izzybusy23

MikeLondon wrote: »

Ok, i'll try another way.

You have a £10,000 deposit, and the property costs £100,000.

A bank are prepared to lend you the £90,000 you need.


In the future, once the 'crash' has happened.

That same property may only be worth £80,000.

You still have £10,000 deposit but the banks are now only prepared to lend you £60,000 due to the credit crunch etc etc.

So you could have bought a house at £100,000, but now you cannot get the mortgage.

So, less expensive BUT ALSO less affordable.

But surely if you are staying within your multiples of 3 x joint salary, house prices will be affordable either way?? Its only the overstretched or wanting to get a higher mulitple is the scenario you are talking about?

Bank's are tightening their criteria but only back to the good ole days of 3 x joint income, so those who are staying within that will be able to afford either way??

smugbear2007

Guy_Montag wrote: »

Ah, I see where you're coming from. However, since there will be fewer people able to make an offer that will drive down the price further (though that may what brings it to £80k in the first place).

the upshot is cash will be king once more, as those with good savings will be in a good position

pickles110564

jonewer wrote: »

.... it becomes a buyers market whereas at the moment we have a sellers market where buyers scramble over each other to press more money into the sweaty paws of the seller .

Only if you are really stupid and sell up, you might get some people who have to sell but there aint gonna be loads of houses on sale to make your cloud in the cuckoo land dream come true.

Get real you just keep dreaming because you are bitter because you put your hand down your trousers but could find nothing there so you missed the boat and have been paying for it ever since, causing you to try and scare others to make you feel better

WTF?_2

MikeLondon wrote: »

But if someone's prepared to lend you £10.00 now, and the item you want costs £10.00, you're laughing.

Next week, it may only be worth £6.00, (yay!!!!), but you may only be able to borrow £5.00, thus making it less affordable, despite being less expensive?

That make any sense at all?

Sadly, it's only reckless lending (by the likes of sub-prime specialists like Northern cRock) that have made houses 'affordable' at their current grossly inflated levels.

In fact, lenders like NR have been partly responsible for pushing the market up by actually making stupidly large loans to people who are going to have great trouble repaying them.

The other side of the 'house price inflation' coin is media hype and good old greed from the general public.


Anyway, you're quite correct that cheaper houses doesn't necessarily entail more affordable houses. That's something that the 'house prices can only ever go up' brigade always fail to appreciate.

Once sentiment and economic conditions change, even people who would formerly have been chomping at the bit to buy if prices were a little lower will hesitate to jump into a sinking market.

As always, timing is the trick. Buy into the market when it makes sense - ie when prices are low but going up and not when prices are still high but coming down!

Generali

pickles110564 wrote: »

Only if you are really stupid and sell up, you might get some people who have to sell but there aint gonna be loads of houses on sale to make your cloud in the cuckoo land dream come true.

If prices start to fall, my reckoning is there'll be a lot of highly motivated sellers.

Those BTL people for whom the rent doesn't cover the mortgage for a start. It's not a great business to have a depreciating, cashflow negative asset!

Presumably, there are going to be quite a few people in trouble once they come off their 2 year fix that was taken out in 2005. The ones that can't meet the mortgage payments and haven't managed to sell by winter 2008 should be getting reposessed about then. Banks are usually pretty motivated sellers as they don't get their money back until the property sells so until then have to carry the whole mortgage on their balance sheet as a bad debt.

Interesting times Pickles, old fruit!

cafster

Only if you are really stupid and sell up, you might get some people who have to sell but there aint gonna be loads of houses on sale to make your cloud in the cuckoo land dream come true.

Reposessions, divorce, deaths, moving jobs, moving abroad - clearly nobody moving house then :rotfl:

Leighthal

Guy_Montag wrote: »

So who's going to buy an 80k property if they can only borrow £60k? Surely that means it'll end up going for £70k?

STR'ers probably.

wibble68_2

Generali wrote: »

If prices start to fall, my reckoning is there'll be a lot of highly motivated sellers.

I agree.

A lot of posters on here seem to be very sure that BTLers will hang on to their investment in a downturn.

You only have to look at the massive queues outside Northern Rock branches this morning to understand the British herd mentality.

nelly_2

wibble68 wrote: »

I agree.

A lot of posters on here seem to be very sure that BTLers will hang on to their investment in a downturn.

You only have to look at the massive queues outside Northern Rock branches this morning to understand the British herd mentality.

No their init for the long run mate