House Price Crash Discussion Thread

neverdespairgirl

neas wrote: »

I just wanted to put things in perspective... people sometimes put too much value on money... money is there so you enjoy your life. We only live short lives really so as humans its best to make sure you enjoy it.

And just so you know im intending to start a family before I get my First home.

Couldn't agree more. OH and I live in a rented flat, and have a gorgeous 2 year old (see my picture!) and are enjoying our lives immensely.

neverdespairgirl

pickledpink wrote: »

It's a lovely warm feeling knowing your childrens future is secure and you will one day leave them a wonderful legacy to help them improve their lifestyles.

My parents are in their late 50s, and have given me a wonderful legacy. They gave me love, a happy home, a good education, wonderful siblings, encouragement, support, and fun. I couldn't care less if I never inherit a penny from them. I hope they live long and healthy lives and enjoy the fruits of their labour themselves.

Generali

neverdespairgirl wrote: »

No, not if house prices are increasing below inflation.

That's not necessarily the case as people tend to use a mortgage to buy a house.

If you have a house worth £150k and a mortgage of £120k, you have equity of £30k in the house. If prices rise by 1%, you have a house worth £151,500 and £31,500 of equity in the house. Your equity has risen by 5%, slightly more than the RPI at present.

Of course this works both ways and so if nominal prices are falling, the entire fall comes out of the equity and so is similarly magnified.

neverdespairgirl

Of course, the leveraging effect - you are absolutely right.

carolt

neverdespairgirl wrote: »

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

Thanks for the correction. Unless Churchill said it too, and nicked it off Twain.

WTF?_2

neverdespairgirl wrote: »

Of course, the leveraging effect - you are absolutely right.

In view of the unprecedented boom in house prices over the last five or six years I think people find it easy to forget that leverage goes both ways.

Not to worry though - they're about to get a harsh lesson in economics.

This of course is why it's so important to get the message across. Buying now is likely to severely damage your financial health. It's too late to help anyone who jumped into the market in the last couple of years but maybe someone just about to buy or 'invest' can save themselves a world of pain.

Mr._H_2

Another significant month-on-month fall in house prices according to Halifax:

http://news.bbc.co.uk/1/hi/business/7336010.stm

However, "Despite the drop in prices, Housing Minister Caroline Flint denied that the market was heading for a crash."

What exactly is the definition of "crash"? Do we have to wait for significant (>10% ?) year-on-year declines to be able to say that? Is anything less just a "correction"?

Mr._H_2

chucky wrote: »

it's quite amusing watching the doom mongers on here...

it's not a perfect market but it's not a bad one or even one that is crashing - get a grip please... :-)

I think you need to brush-up on your reading comprehension skills. I was not doom-mongering in any way. Nor have I in any of my previous posts. My post did not offer an opinion one way or the other; it provided a factual statement, a link, and then asked a few questions.

My personal opinion is still that we are not going to see a "crash", if you define crash as >10% year-over-year falls. But, I'm significantly less sure of this opinion now than I was just a couple of months ago.

chucky wrote: »

also the better properties will always maintain their price.

Interesting theory. Did that happen in any of the previous crashes/corrections?

m00m00

the volume of property selling dropping, is due almost entirely to banks withdrawing mortgage offers on a massive scale, not wishful thinking on the part of kite flying sellers.

WTF?_2

chucky wrote: »

it's not a perfect market but it's not a bad one or even one that is crashing - get a grip please... :-)

Warning: Listening to chucky's posts can be harmful to your financial health. :rotfl:


http://news.bbc.co.uk/1/hi/business/7336010.stm
House prices fell by 2.5% in March, the biggest monthly decline since September 1992, much more than many analysts had forecast, the Halifax has said.
House prices are now 1.1% higher than they were a year ago, the slowest annual growth rate for 12 years.

http://news.bbc.co.uk/1/hi/business/7336066.stm

The number of mortgages being lent for house purchase has slumped to its lowest level for 16 years, according to the Council of Mortgage Lenders (CML).
There were just 49,000 loans made to home buyers in February, 3.5% lower than in January and 33% down on February last year.
Loans for house purchase made up only 30% of all mortgage lending, the lowest proportion on record.


http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2008/04/08/ncredit208.xml

More than 75,000 households could be plunged into negative equity this year with Labour heartlands expected to bear the brunt of the credit crunch, data from the biggest banks and building societies have shown.
..
The new analysis, from Experian, one of the country's largest credit reference agencies, is based on information from more than 80 per cent of Britain's lenders.
It is understood that the information is being looked at by banks and building societies, which may refuse to lend money to people living or moving to the negative equity hot spots.

..

Vince Cable, the Liberal Democrat Treasury spokesman, said: "As house prices continue to fall and mortgage costs rise, we are in real danger of returning to the woes of the Tory recession.
"The Government must act now to prevent mass repossessions, which will only worsen this housing crash."

http://business.timesonline.co.uk/tol/business/economics/article3704088.ece

House prices in Britain plunged last month by the worst figure since the financial crisis in the early 1990s.
Halifax, the country’s largest mortgage lender, revealed today that March prices dropped by 2.5 per cent, the biggest monthly fall for 15 years, beaten only by a 3 per cent fall in September 1992 when on "Black Wednesday" John Major's Government took sterling out of Exhange Rate Mechanism. The fall last month took the annual three-month rate of house price inflation down to 1.1 per cent and the average house price to £191,556.
Analysts had forecast a monthly fall of 0.4 per cent and an annual three-month gain of 2.3 per cent.

..

Howard Archer of Global Insight said: "The increasing danger of a sharp housing market correction heightens pressure on the Bank of England to cut interest rates by a further 25 basis points from 5.25 per cent to 5 per cent on Thursday, even though this may only have a limited impact in bringing down mortgage rates overall given the lack of liquidity and elevated market interest rates. We expect the Bank of England to act, despite still serious inflation risks."