Is a 20% fall in house prices a crash?

Marine_life

......if you compare peak to trough on the GBP: EUR exchange rate over 12 months they have actually fallen 22%.

In November 2015 the EUR to Sterling rate was 1:43, last Friday is was 1:11 which is around a 22% fall. I am transferring my hard earned EURO as fast as I can!

bigfreddiel

Euro to sterling

House prices

What's the connection

Basically if house prices drop 20% and you have a house it doesn't really matter.

If you're a first time buyer then I guess a 20% reduction is quite handy.

Cheers fj

Pincher

I assume the whole world is converging on the UK,
to pick up a bargain at 20% discount.
No hurry, as the expectation seems to be GBP1:USD1.1 by end of 2017.

Malthusian

Marine_life wrote: »

......if you compare peak to trough on the GBP: EUR exchange rate over 12 months they have actually fallen 22%.

Only if you're carrying a load of Euros around to buy a UK house with. Or if you want to sell your UK house in order to buy some stuff priced in Euros.

As I have no intention of selling my house and if I did it would be to buy another house priced in Sterling, the fall in Sterling makes no difference to me.

HouseBuyer77

Basically if house prices drop 20% and you have a house it doesn't really matter.

It does if pushes you into negative equity and your current mortgage deal reverts to a standard variable rate after a certain time. You'll be stuck on the SVR unable to remortgage. Most deals on the market revert to SVR after a time, your mortgage could go from around 2% to 4% or 5% overnight.

Malthusian

HouseBuyer77 wrote: »

It does if pushes you into negative equity and your current mortgage deal reverts to a standard variable rate after a certain time. You'll be stuck on the SVR unable to remortgage.

The OP is talking about a 20% drop in the value of UK house prices in Euros, so this only applies if your mortgage is in Euros and you're trying to obtain another mortgage priced in Euros. Which is pretty unlikely.

HouseBuyer77

Malthusian wrote: »

The OP is talking about a 20% drop in the value of UK house prices in Euros, so this only applies if your mortgage is in Euros and you're trying to obtain another mortgage priced in Euros. Which is pretty unlikely.

Indeed, it's not really relevant to the OP's question.

I was replying to bigfreddiel who was saying a 20% house price drop isn't of immediate consequence to home owners, which is not the case.

Third_Age

It is if you are from overseas looking to buy here but if you already have your money in sterling there has not been a price crash at all.

steampowered

Marine_life wrote: »

In November 2015 the EUR to Sterling rate was 1:43, last Friday is was 1:11 which is around a 22% fall. I am transferring my hard earned EURO as fast as I can!

You are doing it the wrong way round!

With investments you make money by buying when they are low (i.e. they have fallen) and sell them when they are high (i.e. they have risen).

If you panic sell when your assets decrease in value, that is a sure way to lose money!

Ray_Singh-Blue

Marine Life is doing it the right way round. But he has written "Sterling to Euro conversion rate" the wrong way round to throw us off the scent