House Price Crash Discussion Thread

dweeby

December prices were down by 0.8% according to rightmove's report.

read it here.

MissMoneypenny

That's just the asking price too.

Nenen

deanlr55 wrote: »

Fairly new to all of this but very intrested. I am looking for some good advice and a bit of knowledge to help me out please.

I am living at home and will be moving out around June 2008 time. Do I look to rent or buy? How would the market impact my decision? Would I be better off waiting to buy for another year or so?
Great to hear any help, maybe look at worse and best case scenario's?
Many thanks to anyone who helps

I'm no expert but, from my own reading of these boards while selling our last house (March 2007) and currently renting while we look for somewhere to buy, these are my opinions:

The biggest problem you face is that no one has a definitive crystal ball that tells them what is going to happen to house prices over the next year or two! The most you can do is make an educated guess.

At the moment IMHO it looks likely that house prices will fall in the next year or more (some areas are already dropping) however the only certainty in all this is that the housing market is uncertain and things could suddenly turn again! If you read these threads for a while you will see a wide range of opinions predicting the future from 'definite crash' to 'probable stagnation' right through to 'small price increase'. The only opinion I haven't seen bandied about recently is that house prices will increase significantly in the next couple of years. That last point means that at least you don't need to rush into anything!

I guess that most posters on here would tell you to hold off buying for a while yet to see how the market is doing in your area. While doing this, save as much as you can to get a large enough deposit so that, if/when you buy, you are protected to some degree from negative equity. The downside of that option is the insecurity of renting, i.e. you usually sign a contract for 6 months and (even if they tell you at the beginning you can stay as long as you want) at the end of the 6 months you can be asked to move out (e.g. if the LL is selling due to HPC). You are also restricted to what you can do to the house, eg can't hang pictures/put up shelves where you want and you are beholden to LL for repairs. You live in the knowledge that any accidental damage will be deducted from your deposit too. Some LLs are excellent but it is difficult to tell in advance unless you have inside knowledge. You will also incur two (or more) lots of moving costs plus letting agency fees. The advantage of renting for a while is that you can see what happens to the housing market and might get a much better deal in 6 - 24 months time. You can often rent a house more cheaply than you would pay on a mortgage for it too.

The downside of buying now is that in 6-12 months time your house might be worth less than you paid for it which (depending on the size of deposit) could put you into negative equity and prevent you from moving should the need arise. Personally, I'd find it very galling to see something I've stretched myself to buy come down in price by tens of thousands and realise if I'd just been a little more patient and prepared to put up with the downside of renting for a little while longer I could have comfortably bought the house of my dreams!

Your circumstances, your age, financial status, size of deposit, whether you have a partner, children (or likely to have them in the next five years), job prospects etc all have to be factored into your decision. If you are likely to want/need to move in the next five years then I think most experts (of which I'm not!) advise waiting.

Personally I think that waiting is the sensible option but, at the moment I've got a serious case of nest-building-instinct and am longing to buy (against all my better judgements)!
Hope this helps and good luck.

chappers

wolvoman wrote: »

You talk about the media and story-making analysts creating a self-prophesising downturn, but then your last paragraph suggests you might be part of the self-fulfilling prophecy. The 'storm' you wish to ride out by tightening your belt is more likely to happen if you (and millions of others) actually do tighten your belt.

Absolutely I have no problem riding the storm out and maybe losing some short term value from my property, it would be foolish to overstretch ourselves and not be able to pay our way however, and become homeless. We currently have a £104K mortgage with an LTV of about 40%. We also have spare money which we are overpaying our mortgage with, but with an uncertain future, whether helped on by myself or not , extra credit at this point no thanks.

Capricorn_One

dweeby wrote: »

December prices were down by 0.8% according to rightmove's report.

read it here.

I really like using Rightmove's website but they are just another bunch of people that did all they could to bump up the market and scare people (particularly FTBers) into thinking "it's now or never".

So when they say the market dropped 0.8%, I'm more likely to think it's rather more. Better still I'll not trust anything they say, or any other bank, building society or estate agency. Their greed will ultimately cause a lot of misery in 2008.

Ed.

deanlr55

ok many thanks for your help................i think that i will rent for approx 12 months and see how market is summer 2009????

ATN

Capricorn - I'm interested to know why you won't trust any official house price data published, especially from any bank or building society? I'm assuming you know what the banks and building society's base their reports on?

ATN

Deanlr55 - FYI - Predicitions are that the market in 2009 is likely to drop by 8%, this is on top of the predicted 5% drop this year too. Still who really knows......

Nenen

ATN wrote: »

Deanlr55 - FYI - Predicitions are that the market in 2009 is likely to drop by 8%, this is on top of the predicted 5% drop this year too. Still who really knows......

Out of interest (vested of course) please could you provide a source for that prediction ATN?

nelly_2

Generali wrote: »

Personally, yes. If demand for houses stays at a depressed level due to an inablility of would-be borrowers to get mortgages then that should push down prices. That may in turn cause a recession due to what is known as the wealth effect.



I prefer the Italian stuff. Wagner is a wee bit heavy (not to mention long!) for me. I like to be out of the opera in time for a bit of grub.

I saw the sound of music at the paladium the other day does that count?

Actually I loved it so I'm counting it