Debate House Prices


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House Price Crash Discussion Thread

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Comments

  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    I agree and the same thing happened in the last crash, so no reason why not this time around. BTL's will be getting better yields but (say) a 30% loss on their capital ! :eek:

    Not true. In your example the BTLer doesn't lose 30% of their investment at all.

    The average BTL is bought with a 40% deposit which means that a 30% fall in prices would leave our mythical average LL to suffer a 75% fall in the value of their investment. Plus the costs of buying of course. Of course the joy of leverage (which is the real power behind the BTL investment) means that anyone with a 15% deposit has an unrealised loss of 200%. Unless they are reposessed in which case they have a realised loss of 200%.

    On the bright side, it removes the CGT liability.
  • mystic_trev
    mystic_trev Posts: 5,434 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Point taken G - Sorry, brain not in gear - it's been a long day!
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    Point taken G - Sorry, brain not in gear - it's been a long day!

    Tell me about it. I started at 6.30 this morning and I'm still going!

    I just re-read the post and it might come across as harsh. It was meant to be funny - seeming like I was disagreeing but then reinforcing your point. It's hard to get tone across with the written word.
  • brit1234
    brit1234 Posts: 5,385 Forumite
    I hope you all saw Panorama tonight. It showed how Land registry figure have been fraudulently increased over years by dodgy companies, builders and solicitors. Many now being investigated by the serious fraud squad.
    :exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
  • adr0ck wrote: »
    what happens to first time buyers in a recession?

    cheaper house prices... but no jobs = no home

    Thats correct. Thats why cash is king during this recession.
  • The more intense the property crash the higher rents will rise.

    Basic economics of supply & demand......with nobody buying, more will want to rent but there are only so many properties and there is already a shortage so rents will rise BIG time.

    The more people lose their jobs and houses, the more they will be relying on state help. The state won't pay high rents as they can't afford it. There is only so much in the pot and more people will need to be taking out of it.

    Did rents go up during the last crash? I don't remember that. Are you sure? However this time, there are far more BTLers, so more rental properties available.
    RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
    Read the sticky on the House Buying, Renting & Selling board.


  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    Rents did rise during the last crash. No link I'm afraid. It makes sense though. Fewer people buying and more people renting. Supply and demand innit!

    As you say, the chances are that rents will be pushed down by people on housing benefit. One difference between now and the last crash is that welfare won't pay your mortgage interest any more so the imprudent and unlucky will be reposessed faster.
  • brit1234
    brit1234 Posts: 5,385 Forumite
    The more intense the property crash the higher rents will rise.

    Basic economics of supply & demand......with nobody buying, more will want to rent but there are only so many properties and there is already a shortage so rents will rise BIG time.

    I think you mean simple economics rather than basic economics of supply and demand. You should know that rent has always been linked to earnings and at the moment is at a historic low. If you raise rent too high you will simply push people into multi occupancy properties or they will choose to stay at home. Rates will plateau at a certain level and not continuously go up.
    :exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
  • The dynamics of society has changed significantly since the last crash. We have open borders and influx of migrants who are migrating to the Capital and hence risse in right to buy mortgages. If rents rise during a crash and people are made umemployed the revers could happen, rents come down. Migrants who are not entitled to state support will not be able to afford and may return back to their country of origin until that time it si affordable again. Natural economic cycly. Right to buy properties may become vacant and land lords may be forced to lower rents.
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