House Price Crash Discussion Thread

jamescredmond

Melgard wrote: »

Hi, I'm new to this forum and I've been trying to read all the posts but there are so many on this topic so sorry if I'm repeating previous questions. Myself and my partner are first time buyers and we've seen a house we both love and is ideal for us to live in for a long time. It's on for £275,000 but we've been told he will take an offer. Do you think it would be sensible in today's financial climate to make a very low offer (say £220,000 then possibly go up to £240,000 if he doesn't accept)? Do you think the first offer is too low? Or is it a totally wrong time to buy? We live in the South East if that makes any difference.
Thanks for any advice.

yes, welcome to the board.

prepare for a blizzard of advice.

codger's analysis is similar to my own. I can well understand your desire to get out of rented and into your own pad - I did just that 20 yrs ago.

BUT:

many forecasts point to a 25-30% fall over the next 3 yrs. it could even be more. or less. there is no magic formula, only guesswork based on nothing more than analyses of previous HP falls and observation of the consumer confidence barometer/present economic conditions.

should the property you're looking at fall in value to below £200k 3yrs after you bought it, would this bother you?

if not - and this is your dream house and you are confident of servicing the mortgage - then get haggling.

but if you're not 100% certain, stay out of the market for at least 18 months.

your rental outgoings may well be less than the falls in equity, I suspect.

but then, what do I know? (or anyone else, for that matter).

codger

Melgard: I suspect one of the reasons james is being so upfront in saying that no-one really knows / no-one can really predict is because he's well aware of how this market can be affected by sentiment (though not, sentimentality!)

My own political opinions are irrelevant here, but could I just add in to the mix of factors for your consideration that there's a General Election on the not-too distant horizon and it's surprising, the bounce effect that occurs when the Westminster scenery gets a substantial revamp.

It last happened in 1997 and, going by the way this current administration is by turns failing the electorate and insulting its collective intelligence, the same may be set to happen again.

It isn't, per se, anything as simple as a change of government equating to a change in the fortunes of this particular market. Rather, it's the working through of a kind of collective psychology as people persuade themselves that though they've heard it all before, this time things can only get better (no plagiarism intended) and thus that strange quality called 'confidence' begins to reassert itself.

For that reason, plus a number of others, I don't think the horizon-forecasting re market stabilisation and upswing need be focused too many years ahead.

(But then again, and to quote james, what do I know?)

harryhound

Statistically there is an increase in the national deficit (ie a tax reduction/increase in benefits) during the 18 months running up to an election. This of course can cause an instant increase in inflation in the 18 months after the election.
So watch out for "money supply" figures, from here on in. "World economy" may not be enough to prevent the Government trying to inflate away the debt burden.

shelovestobuystuff

I was on here a while ago discussing whether high end properties such as big country houses and estates would see the same price falls as middle and lower price bracket properties.I had a property in mind which I was interested in but it was out of my reach financially.I have just had a letter from the agents today and was very surprised to see the new asking price,a whopping £200k below the previous asking price of £695.I very much doubt though that the bank would be as keen to lend us that much money this month as they obviously were a few months ago.
Is this happening all over the country now with the high end properties being reduced in price too or haver I just been offered a bargain?

m00m00

happening everywhere

van_persie

shelovestobuystuff wrote: »

I was on here a while ago discussing whether high end properties such as big country houses and estates would see the same price falls as middle and lower price bracket properties.I had a property in mind which I was interested in but it was out of my reach financially.I have just had a letter from the agents today and was very surprised to see the new asking price,a whopping £200k below the previous asking price of £695.I very much doubt though that the bank would be as keen to lend us that much money this month as they obviously were a few months ago.
Is this happening all over the country now with the high end properties being reduced in price too or haver I just been offered a bargain?

Today's bargain is tomorrow's market price.
With prices having fallen in the region of 10-15% already, what do you think will happen over the next year or so?

Here are a few clues:
- no more lax lending due to credit crunch
- unemployment to rise
- recession
- upward pressure on interest rates due to inflation
- rates on mortgages to be upwards of 7%
- people coming out of fixed deals having to switch to much higher rate deals
- repossessions, BTLs dumping stock, forced sales...

I predicted the top of this housing boom but I am shocked at the rate of its bust.
I now think we'll hit the bottom a lot harder & faster than many expect.
It's looking like at least 20% off peak by Xmas (by which time more mortgage resets will have kicked in) and a further 20% off by the following Xmas.

So, in short - wait!

LisbonLaura

Find the 1998 value because soon that will be the mark. It's called sanity...However it only applies providing the recession doesn't become a depression.
If it does, go lower still.
Will the vendor accept either? - of course not.
Do you want to pay far more than it will be worth in a few years? - I doubt it.

i082327

LisbonLaura wrote: »

Find the 1998 value because soon that will be the mark. It's called sanity...

Are you kidding me, you can't make sweeping statements like that, if i apply that to my current £110000 property that would make it about £25000 and I could get a mortgage to buy about 6 of them?

Madness

m00m00

i082327 wrote: »

LisbonLaura wrote: »

Find the 1998 value because soon that will be the mark. It's called sanity...

Are you kidding me, you can't make sweeping statements like that, if i apply that to my current £110000 property that would make it about £25000 and I could get a mortgage to buy about 6 of them?

Madness

well not true, if houses dropped by this much the chances are mortgage rationing would be so strict it would be a struggle to get a mortgage on one 25k house, no matter what the salary is.

purely theoretical though, as prices on such properties will not drop by that much.

a 2 year old shoddy new build .... quite possible though

harryhound

How about the 200 year old stone cottage up a valley in Wales some where?
2000 a year for the oil heating (more if using LPG).
Local diesel at 140 a litre = couple of quid to get the Sunday paper and 150 just to visit it in the 4x4 (one of the few places where a 4x4 might be useful, especially in the winter).
I think I can hear a reduction coming up the valley to such retirement/weekend properties.