House Price Crash Discussion Thread

SingleSue

Thanks everyone for their welcome.

There was one of two other things that I forgot to put on my post that I had picked up on in my trawl through this thread.

At one point one poster was saying it is only new build flats in city centres suffering from great losses or not selling, this is not my experience.

Last summer we had 3 3bedroom town houses completed in our village - these are still for sale (think the price is way over what it should be).
Around the same time, there was also a bungalow built, which is also still for sale (this is at a fairly decent price too, most surprising).

The area I live is semi rural and the location of these properties is in a usually sought after, well to do one.

We do have the usual new build flats still sitting on the market, some a year after they were built and the next big town approx 10 miles up the road have had serious drops in their new build apartment values. At the peak of when they were being built, they were going on the market for 250k, now people who are being hit by the fixed rate mortgages ending and being forced to sell (or being repo'd) are now having their flats valued at no more than £130k - a shocking fall! Not that I am sure lessons are being learnt as they are still building and building and building apartments at similar prices to the ones right next door where the apartments are struggling to sell, some at half the price they were purchased for 2 years ago.


First time buyers (the normal ones) have not been able to get on the ladder here for some time, average salary is around the 16k - 20k level (ok a few may get hyper salaries but not many) yet a 2 bedroom house is circa 150K, so a fall will be good for them but not for the many many people who will find themselves in the same position (or possibly worse as the potential for drops are higher than what we experienced) we were in in 93/94.

Onto the mortgage protection scheme - this only protects the building society/bank in the event of a repo. We were advised (wrongly) when we purchased ours that it protected us in the event of any problems so imagine our shock when we received a telephone call from the financial arm of the insurance company demanding nearly 30k! I wish that the internet was widely available then, this site would have been a godsend to us at the time with all the advice of how to deal with these people!

WTF?_2

fc123 wrote: »

We were extremely fortunate that we didn't have any illness or tragedies because we lived hand to mouth continually.

I am absolutely praying that a similar recession and all the pain that goes with it won't happen again.
But I have a bad feeling...just anecdotal from businesses around me, we are all down at least 25%...which is our drawings.

We had friends with the 6 months salaries saved and redundancy monies too, but couldn't find work to keep their home...in the end the cash ran out.
Thanks for the post singlesue...welcome

This time around I doubt that very many will have any savings with which to weather unfortunate financial circumstances. In fact, I doubt that they will have any idea whatseover how to cope when they have absolutely no cash and their lines of credit get withdrawn. 'Just put it on the credit card' seems to be the solution to all financial problems these days.

fc123

!!!!!!? wrote: »

This time around I doubt that very many will have any savings with which to weather unfortunate financial circumstances. In fact, I doubt that they will have any idea whatseover how to cope when they have absolutely no cash and their lines of credit get withdrawn. 'Just put it on the credit card' seems to be the solution to all financial problems these days.

Back to the days when the banks etc. only offer help if you don't need it......need a loan? Oh, you are to much of a risk because you NEED to borrow (??).
My sis is well off and has no debt....but has cards that she doesn't use often ( and then clears balance).Totted up to around £70k available last year.

Those that don't need credit could probably still get it.
But if you don't need it, you're not going to take it.............the banks need the nation to be indebted to them and shell out large ammounts of their income on interest charges....it's how they make their money.

They will have get to used to less T/O too.

milknbeans

Evening,
Quick question: I'm thinking of selling my house (1st house, bought 3 years ago), its 70% shared ownership. If I sell now, I get 25k equity. Ive got the option of either going back home to the parents (cheap rent, compromised privacy!) or going the next step on the ladder, and getting soemthing a little bigger. But don't know which one is a better financial choice, how long do you reckon I would have to live back at home for the house price drop to be significant enough?? And yes, I know you don't have crystal balls!!

mr.broderick

milknbeans wrote: »

Evening,
Quick question: I'm thinking of selling my house (1st house, bought 3 years ago), its 70% shared ownership. If I sell now, I get 25k equity. Ive got the option of either going back home to the parents (cheap rent, compromised privacy!) or going the next step on the ladder, and getting soemthing a little bigger. But don't know which one is a better financial choice, how long do you reckon I would have to live back at home for the house price drop to be significant enough?? And yes, I know you don't have crystal balls!!

I ACTUALLY DO HAVE CRYSTAL BALLS

Terrysdelight

dreado wrote: »

Ok, I’ll get this (re)started. I’ve been thinking about buying my council flat for a while and am wondering how this predicted ‘price crash’ could effect a council flat: Should I wait? How long for?

I bought a property under right to buy years ago - just before a crash. My purchase price was right at the peak and then the crash hit me by about 40% so wiped out the discount.

If it were me, I would personally hold on a bit and take the discount from the lower price. I work in Investment Banking and I strongly believe house prices will take a big hit soon. The hit could wipe out all your discount.

neverdespairgirl

dweeby wrote: »

Back-calculating, that would mean you have ~£210k in savings.

Accounting for your rent and inflation eating at your stash, even with ~6.7% (pre-tax) interest you need to be saving £600/m to stand still. Under this scenario, you're gaining by any decrease in property prices. Different figures, but this is sort of where we're at.

dweeby wrote: »

We aren't actually spending any of the interest on our savings, it just adds on to the capital. And we are saving extra over that, so inflation isn't a problem for our capital.

dweeby wrote: »

1.Living in rented accomodation, which I don't like.
- There is no chance to increase the value over time by little improvements.
- There's little point spending money to re-decorate, so the place isn't as nice as your own place.
- You're at the mercy of the landlord to increase rent.
- The rented place probably wasn't chosen with the same criteria of buying a house, hence it probably doesn't match your needs as well.
- You pay rent forever.

For us, our rented flat is absolutely ideal in terms of location - my workplace is 2 mins' walk, my OH's is 5 mins away. We love the street, and the area. Our landlord has not only redecorated in the last 10 years while we've been here, but asked us what colour we wanted and did it while we were on holiday, to minimise hassle for us. And the kitchen's being replaced in the summer, and again, our opinion has been sought.

dweeby wrote: »

2. If (if) house prices were to increase by even 1%/year, you're loosing out (or have to save more to stand still).

No, not if house prices are increasing below inflation.

dweeby wrote: »

The renting vs buying argument (as a home not an investment) doesn't have a simple answer, even in the current climate.

It depends also on the difference between rent and interest-only mortgage payments, which in our case is significantly in our favour.

neverdespairgirl

pickledpink wrote: »

The problem with investing equity from a house sale into a savings account is that the interest doesn't always cover the monthly cost of a rental. On top of that, you are not adding to your capital by compounding the interest and could find that with inflation your savings eventually become less and less in terms of value.

If you were paying interest on a mortgage payment, and sell and bank the equity, you still (should!) have the money available that you were paying on the mortgage, so your savings shouldn't go down.

I have little sympathy for someone blows £100k on holidays and cars, to be honest.

neverdespairgirl

Generali wrote: »

Generally speaking, you had to have a good deposit, save the equivalent of a months mortgage payment each month for a year with the BS and be a long-standing customer to get a mortgage.

I don't know for sure, but I think my parents had a mortgage with Barclays when they bought their first place, in 1974. It was a 3 bedroom maisonette with a small garden, in Blackheath, and they paid £13k for it.

neverdespairgirl

carolt wrote: »

As Churchill put it: "When I was 16, I thought my parents knew nothing. When I was 21, I was amazed how much they had learnt in 5 years."

I thought that was Mark Twain, and 14 and 21?