House Price Crash Discussion Thread

m00m00

rightmove for things currently listed
nethouseprices for historic sales data

keep an eye on both of those regularly, just remember nethouseprices (and other sites of the same type) are generally several months lagged

ebonylight

i dont really understand negetive equity??

m00m00

negative equity in short is basically where the amount of mortgage you owe, is greater than the value of the property.


for example, you buy a 100k property with a 90k mortgage, this gives you 10k of 'equity'

a year later, you've paid off 5k on the mortgage, but the house value has dropped to 80k

this means you now have a house worth 80k with a mortgage of 85k and thus 5k of 'negative equity'

merlinthehappypig

ebonylight wrote: »

i dont really understand negetive equity??

Nothing personal intended at all, but it just shows how short people's memories are when someone who works in property doesn't understand negative equity. Houses - those are the things that always increase in value, aren't they?

IveSeenTheLight

ebonylight wrote: »

Oh thank god there is a thread about this.
My partner and i bought a very nice but rather small three bed house last july

You just bought in July and you are thinking about moving already

Your house price may go down, but if it does, then any property you are looking to move to would also likely to have dropped in price so it would not affect a move. You should check how portable your existing mortgage is.

It very likely that house prices will drop and then rise again (although I cannot predict timescales of when this will happen)

I don't know where you live, but 148,000 for a three bedroomed house seems quite reasonable compared to other areas.

Your house price may not be affected as much as others if a crash happens

mrs_deadline

Yes you can get trapped in a house if you have negative equity, this happened to us for most of the 1990s. Bought as the market peaked in 1989, interest-only mortgage backed by an endowment so we weren't even chipping away at the mortgage to begin with. Pretty soon our house value plummeted from 50k to about 35k and interest rates went up to ridiculous heights. There wasn't a lot we could do except sit tight and save hard, it took a while for prices to finally pick up so we had plenty of time to save up our moving costs, 9 years to be precise.

obsessed_saver

haha. This is funny. (The HPC thread crashing).

Nenen

obsessed_saver wrote: »

haha. This is funny. (The HPC thread crashing).

That thought crossed my mind too! Mind you I'm feeling really sad that all the threads that were 'clogging up the board' have been merged... bar one or two 'rebels' who continue to start new threads where they shouldn't! I miss the banter and discussion!...note to self... must get out more!

benood

obsessed_saver wrote: »

haha. This is funny. (The HPC thread crashing).

Not just funny, it's an OMEN!

WTF?_2

mrs_deadline wrote: »

Yes you can get trapped in a house if you have negative equity, this happened to us for most of the 1990s. Bought as the market peaked in 1989, interest-only mortgage backed by an endowment so we weren't even chipping away at the mortgage to begin with. Pretty soon our house value plummeted from 50k to about 35k and interest rates went up to ridiculous heights. There wasn't a lot we could do except sit tight and save hard, it took a while for prices to finally pick up so we had plenty of time to save up our moving costs, 9 years to be precise.

Many who are hyping the market are claiming that there's no need to fear negative equity if you don't plan on selling your house anytime soon - not necessarily true.

Many people are buying with a 2-year low-interest fixed mortgage repayment. At the end of this time they will revert to the Standard Variable Rate of the mortgage provider. This is typically base rates plus a certain percentage, anything from 1-2.5% generally.

This would mean substantial increases in their monthly repayments (maybe up to twice as much in some cases),so they remortgage. Avoiding the fact that this is a bit of a swizz financially (it's really just extending the term of the mortgage rather than saving money) they have to be below a certain Loan To Value ratio on the house. Typically 90%.

Many will have bought the property on 100% mortgages and rely on the booming house market to mean that when they come to remortgage, the loan now less than 90% of the value of the house.

Without booming prices, the LTV stays high and doesn't beat the target threshold.

If the LTV isn't low enough they can't remortgage the house and will be stuck paying a lot more every month for their mortgage.

This is one of the reasons why negative equity is going to become a very big deal indeed during the coming house price slump.