House Price Crash Discussion Thread

peterc123456789

Ive have recently had an offer accepted on a house.

The mortgage is in place with nationwide and Im going to put a 25% deposit down.

Iam due to exchange conracts on 14 th April 2008

However the talk of the housing crash has got me running scared.

Should I talk the loss of the solicitors fees and mortgage arragment fees (over 1 grand) and wait to see what happens in the housing market.

If prices fall then I would recoup that loss with a reduced price in the sale of another house.

Or should I keep on going as I plan to live in this area for at least 5years

neverdespairgirl

pickledpink wrote: »

HA HA HA to you too!!:rotfl:

Check out these figures from the Land Registry and tell me property doesn't double,triple or quadraple!!!!!!

I couldn't really understand that post - a huge mess of figures all jammed together. But I'll reply to what I think you were getting at, apologies if I misnderstood you.

Looking at the Halifax graph of house prices in historic terms, it shows
drops of a lot more than 10% lasting a lot longer than a short time.
It's all house prices, not just Docklands flats.

For example, taking average house prices across the UK, where the last
figure is the average price:

Q1 1988 U.K. 51,584

Q1 1989 U.K. 68,189

Q1 1990 U.K. 69,103

Q1 1991 U.K. 68,932

Q1 1992 U.K. 65,882

Q1 1993 U.K. 61,662

Q1 1994 U.K. 63,232

Q1 1995 U.K. 62,340

Q1 1996 U.K. 62,453

Q1 1997 U.K. 66,956

Q1 1998 U.K. 70,560

Q1 1999 U.K. 73,735

Q1 2000 U.K. 84,385

Q1 2001 U.K. 87,045

Q1 2002 U.K. 101,133

Q1 2003 U.K. 124,753

Q1 2004 U.K. 148,399



Looking at those figures, in just pound terms, if you had bought the
average house in January 1990 for £69,103, it would have lost over 10%
of its value by 1993, and would not have hit the same price again until
1998, which is 8 years. That's not a case of recovering the value quickly.

And, of course, those figures aren't adjusted for inflation.

The website measuringworth.com gives the following figures:

In 1998, £69,103.00 from 1990 was worth:

£89,269.46 using the retail price index
£89,708.79 using the GDP deflator
£98,734.02 using average earnings
£104,400.02 using per capita GDP
£106,658.13 using the GDP

In 1999, £69,103.00 from 1990 was worth:

£90,639.46 using the retail price index
£91,710.00 using the GDP deflator
£103,492.29 using average earnings
£109,584.05 using per capita GDP
£112,354.42 using the GDP

In 2000, £69,103.00 from 1990 was worth:

£93,324.67 using the retail price index
£92,903.09 using the GDP deflator
£108,142.41 using average earnings
£114,834.85 using per capita GDP
£118,143.24 using the GDP

In 2001, £69,103.00 from 1990 was worth:

£94,968.67 using the retail price index
£94,949.58 using the GDP deflator
£113,008.82 using average earnings
£119,686.43 using per capita GDP
£123,609.27 using the GDP

In 2002, £69,103.00 from 1990 was worth:

£96,557.88 using the retail price index
£97,907.49 using the GDP deflator
£117,010.09 using average earnings
£125,505.10 using per capita GDP
£130,076.94 using the GDP

In 2003, £69,103.00 from 1990 was worth:

£99,352.61 using the retail price index
£100,904.18 using the GDP deflator
£121,011.36 using average earnings
£132,411.11 using per capita GDP
£137,771.22 using the GDP



So by that measure, and depending what inflation calculator you choose,
it would have been well over a decade before your average house had
regained its 1990 value. According to average wages, the house wouldn't
have gained its previous value until 2003!

WTF?_2

mr.broderick wrote: »

Yeah they were good times !!!!!! bought 7 years ago for £65k sold it last year for £210k nice holidays cheap money borrowed for cars on house etc..pity you missed it all heh?

Back to being antagonistic and trying personal jibes in an effort to get attention I see. Nothing much changes, eh Mr. B?

Yep, another intelligent contribution from you

:rotfl:

nelly_2

We will hopefully be exchanging on our house tommorow

I will be on tommorow night and still be campaigning for houses to drop in price cos I aint a selfish shight

Deadman_2

mr.broderick wrote: »

Yeah they were good times !!!!!! bought 7 years ago for £65k sold it last year for £210k nice holidays cheap money borrowed for cars on house etc..pity you missed it all heh?

What did you move into after you sold it?

WTF?_2

neverdespairgirl wrote: »

So by that measure, and depending what inflation calculator you choose,
it would have been well over a decade before your average house had
regained its 1990 value. According to average wages, the house wouldn't
have gained its previous value until 2003!

Yep - it's all about timing, something that the 'buying a house is always a great idea' crowd seem to miss.

Right now, IMO houses are just about the most ridiculously overpriced that they have ever been. I would not be at all surprised if it takes at least a decade to just get your money back when you take into account inflation. However, high inflation may well enable nominal prices to recover to current levels within 6-7 years.

WTF?_2

Deadman wrote: »

What did you move into after you sold it?

He moved back under the bridge

Generali

neverdespairgirl wrote: »

I couldn't really understand that post - a huge mess of figures all jammed together. But I'll reply to what I think you were getting at, apologies if I misnderstood you.

Looking at the Halifax graph of house prices in historic terms, it shows
drops of a lot more than 10% lasting a lot longer than a short time.
It's all house prices, not just Docklands flats.

For example, taking average house prices across the UK, where the last
figure is the average price:

Q1 1988 U.K. 51,584

Q1 1989 U.K. 68,189

Q1 1990 U.K. 69,103

Q1 1991 U.K. 68,932

Q1 1992 U.K. 65,882

Q1 1993 U.K. 61,662

Q1 1994 U.K. 63,232

Q1 1995 U.K. 62,340

Q1 1996 U.K. 62,453

Q1 1997 U.K. 66,956

Q1 1998 U.K. 70,560

Q1 1999 U.K. 73,735

Q1 2000 U.K. 84,385

Q1 2001 U.K. 87,045

Q1 2002 U.K. 101,133

Q1 2003 U.K. 124,753

Q1 2004 U.K. 148,399



Looking at those figures, in just pound terms, if you had bought the
average house in January 1990 for £69,103, it would have lost over 10%
of its value by 1993, and would not have hit the same price again until
1998, which is 8 years. That's not a case of recovering the value quickly.

And, of course, those figures aren't adjusted for inflation.

The website measuringworth.com gives the following figures:

In 1998, £69,103.00 from 1990 was worth:

£89,269.46 using the retail price index
£89,708.79 using the GDP deflator
£98,734.02 using average earnings
£104,400.02 using per capita GDP
£106,658.13 using the GDP

In 1999, £69,103.00 from 1990 was worth:

£90,639.46 using the retail price index
£91,710.00 using the GDP deflator
£103,492.29 using average earnings
£109,584.05 using per capita GDP
£112,354.42 using the GDP

In 2000, £69,103.00 from 1990 was worth:

£93,324.67 using the retail price index
£92,903.09 using the GDP deflator
£108,142.41 using average earnings
£114,834.85 using per capita GDP
£118,143.24 using the GDP

In 2001, £69,103.00 from 1990 was worth:

£94,968.67 using the retail price index
£94,949.58 using the GDP deflator
£113,008.82 using average earnings
£119,686.43 using per capita GDP
£123,609.27 using the GDP

In 2002, £69,103.00 from 1990 was worth:

£96,557.88 using the retail price index
£97,907.49 using the GDP deflator
£117,010.09 using average earnings
£125,505.10 using per capita GDP
£130,076.94 using the GDP

In 2003, £69,103.00 from 1990 was worth:

£99,352.61 using the retail price index
£100,904.18 using the GDP deflator
£121,011.36 using average earnings
£132,411.11 using per capita GDP
£137,771.22 using the GDP



So by that measure, and depending what inflation calculator you choose,
it would have been well over a decade before your average house had
regained its 1990 value. According to average wages, the house wouldn't
have gained its previous value until 2003!

Great analysis.

Personally, I'd use the GDP deflator in this case. Increased wages should reflect increasing productivity in part.

HammersFan

Generali wrote: »

Great analysis.

Personally, I'd use the GDP deflator in this case. Increased wages should reflect increasing productivity in part.

That analysis is very careful and its good to see figures quoted to back up arguments.

Thing is though, in all those years of flat or slightly declining prices if you had bought you would have done pretty well when things eventually took off (I am talking about a person who invested in property, not one buying a house to live in). The other thing the analysis does not account for is that the actual money spent to obtain a property would usually only be a fraction of its value - gearing would mean that ROI would be much higher than these raw figures indicate.

Timing is totally cricial when taking the short-term view - but medium to long-term its less so. The average wage in 10-20 years time will be so much higher than it is now that (IMO) even todays prices will then look ridiculously cheap.

Looking at the Halifax figures over the last 3 years, if you exclude London, Scotland and NI (very unusual markets) growth has been around 5-7% PA (which doesn't seem that extrodinary) - might things have settled down already in terms of price trends?

merlinthehappypig

merlinthehappypig wrote: »

Back on topic - I had to laugh earlier this evening.

We made an offer on a house a few months back. It was on at 'offers over £450000'. We offered £440000 and the vendor told us to get stuffed (in so many words - she was very rude according to the agent).

A couple of weeks after that she rang the agent and demanded to know why we hadn't come back with a higher offer. The agent told her and took great pleasure in doing so...........

The price changed to 'offers around £450000' about 6 weeks ago and I looked tonight and noticed that it was now 'offers around £430000'.

She will be lucky to get £400000 now. Talk about cutting off your nose to spite your face.

Something that is going to repeated more and more as people face up to reality, I think. First genuine reduction we have seen from someone who isn't a forced seller (as far as we can tell)

As a follow up to this.

We went ahead and offered her £400000, two months or so after we had our offer of £440000 rejected. You could hear the gnashing of teeth from miles away........

Her initial reaction was to say that she would now be prepared to accept the £440000 we offered in January. We told the agents that that offer was no longer available, obviously, as she had turned it down. We said that the way the housing market was heading, we felt that £440000 was too much. Whilst we would have paid that in January, things had changed.

To cut a long story short we have agreed a price of £420000. Whilst we are only talking a drop of 5% or so, I believe that this is significant.

This isn't a 10%-15% drop on an unrealistic asking price, that we have been seeing over the last few months. Make no mistake, we would have paid £440000 in January, had she accepted the offer, but now we only have to pay £420000. It's a genuine reduction caused entirely by the seller's perception of where the market is heading, aided by the estate agent warning her that if she hangs on, she might not even get that.

Add the stamp duty saving and that is now £20450 we don't have to borrow.

Knowing our luck we won't be able to get the mortgage now, though the LTV is now only 15% so fingers crossed.