House Price Crash Discussion Thread

neverdespairgirl

limotek wrote: »

There is definately a Credit Crunch, however I do believe that the Media exagurates the point and scares the public and as always the media are good at making something worse than it is!!

I don't mean to be rude, but I think you might have been a tiny bit wrong

DirectDebacle

Average Price Adjusted for RPI

1975 Q1 £10,388 £73,034
1975 Q2 £10,728 £68,957
1975 Q3 £10,978 £67,562
1975 Q4 £11,288 £67,187
1985 Q1 £33,200 £78,399
1985 Q2 £34,174 £78,067
1985 Q3 £34,700 £79,021
1985 Q4 £35,436 £80,360 `

1995 Q1 £51,084 £75,599
1995 Q2 £51,633 £75,031
1995 Q3 £51,334 £74,398
1995 Q4 £50,930 £73,714
2005 Q1 £152,790 £174,978
2005 Q2 £157,494 £178,297
2005 Q3 £157,627 £177,799
2005 Q4 £157,387 £176,521
2006 Q1 £160,319 £179,346
2006 Q2 £165,035 £181,445
2006 Q3 £168,460 £183,630
2006 Q4 £172,065 £185,604
2007 Q1 £175,554 £187,876
2007 Q2 £181,810 £191,459
2007 Q3 £184,131 £193,153
2007 Q4 £183,959 £190,489
2008 Q1 £179,363 £184,587
2008 Q2 £174,514 £176,093
2008 Q3 £165,188 £165,188

http://www.nationwide.co.uk/hpi/historical

The real house price story. Buy a house as a home and a base to make short term investements from. Not as the base of your short term investments.

chucky

neverdespairgirl wrote: »

I don't mean to be rude, but I think you might have been a tiny bit wrong

media coverage has been a bit silly recently - Panorama programme that put the final nail in the coffin with B&B... there's probavbly a few more out there too.

yes there is a problem a big problem but the main stream media are broadcasting and reporting what the people in the street want to hear.
as you know they're all in the business of selling bad news.

DirectDebacle

chucky wrote: »

media coverage has been a bit silly recently - Panorama programme that put the final nail in the coffin with B&B... there's probavbly a few more out there too.

yes there is a problem a big problem but the main stream media are broadcasting and reporting what the people in the street want to hear.
as you know they're all in the business of selling bad news.

I can imagine the dispossessed and the re-possessed, will be nodding their heads in agreement. Reading the articles as they stand in the dole queue thinking,"Whats all the fuss about, could be worse" as they listen to 'Things Can only Get Better' playing over the tinny speakers.

codger

Yoshua wrote: »

The demand for houses isn't about what we want. It isn't about wishful thinking. It's about the availability of credit – the actual ability of people who want houses to buy houses. And the current lack of availability of credit – there are many fewer mortgage products out there than before, and the remaining ones are pretty pricey - means there is very little demand for houses.
That's why mortgage approvals are at record lows. And that's why house prices have fallen 20% in the last year. It is also why they are going to keep falling, fast. Not long now and that lack of demand is going to be met by a huge flood of supply on to the market. And this will be no ordinary supply. It will be desperate supply. The unemployment numbers are beginning to tick up and as we move into recession, they are going to soar. And as the newly unemployed move into default on their mortgages, so their houses will move on to the market.

I agree about affordability and the role of credit in that.

House prices fell because they were daft. They were daft because they were unaffordable by a significant number of potential buyers.

But the housing crash had little to do with the "credit crunch" other than that venal outfits like B& B with its self-certs and 110% mortgages had to awaken to the otherwise obvious reality that it was to financial acumen what an elephant is to ballet dancing.

In the not-too distant past, responsible financial institutions -- stress: responsible -- offered mortgages on the basis of 2.5 to 3 times annual income.

That ratio was determined in the long-term interests of lender safety and buyer prudence (and also took into account the not inconsequential side issues of disposable income availability, to spend on the house, on the family, on the car, on holidays, on commuting season tickets etc et al.)

With peak UK house prices averaging out at 8 times the average annual UK salary, the crash of the housing boom was inevitable. It didn't take a financial genius to foresee it: MSE was full of posts about the bursting of the bubble long before that burst occurred.

"Pent-up demand" can certainly kick-start the supply of any product but as long as that demand comes from those who can't afford it, then there's actually no demand at all. It's desire. Not demand.

I've no idea what forced-sale prices will achieve in coming months but the housing market is no different to any other market: auction floor figures will impact on non-auction prices.

So if financial institutions are now looking back (as they indeed are) with fondness on a time when they weren't nationalised, when the bank or BS manager was a respected individual in the community, and when safe-bet lending was the order of the day, none of 'em are going to go back to high multiple earnings ratios.

In which case, UK house prices aren't ultimately going to drop 20% on average. More like 40% -- whether there's pent-up demand or not.

newbuyer_3

I have just bought a house (signed yesterday), and paid £25,000 more than the sellers paid 2 years ago. (The house cost me £150,000) Although they have done some work, it is essentially the same house (not extended etc).

My point is that people will ALWAYS need somewhere to live, and there will always be people like myself (first time buyer) who view buying as a better option than renting, which in my eyes is wasted money.

It may end up putting me in a negative equity situation, but I chose a house I would be happy to live in for the long haul, and I firmly believe that prices will always follow the trend of rising, even if there is a fall in the short term. I also made sure that I could afford all monthly bills, even if they double, and that I am fully insured incase of redundancy. Prices falling is the last of my concerns at the moment, as they will rise again in time.

Also the cheaper houses will always be in demand. Not only wanted by other first time buyers, but also unfortunately wanted bypeople who can't afford to live in their expensive houses with expensive mortgages. People who were given mortgages for more than 4 times their income will struggle to pay if job losses continue and mortgage rates increase, and they will look to downsize to more affordable properties.

I agree with some of the other posts and blame the media for making the situation worse.

While I wait for house prices to fall, rise, then probably fall again, I will enjoy living in a home I love, happy in the knowledge that it is mine.

Ivana_B_Rich

codger wrote: »

it was to financial acumen what an elephant is to ballet dancing.

:rotfl: :rotfl: :rotfl:

John_Pierpoint

Welcome to MSE.
You don't say what your loan to value is?
Hopefully you have a big deposit so you will not be trapped geographically by negative equity or bankrupted by loss of income.
What is the difference between renting the money and renting the bricks?

newbuyer_3

Hi John, thanks for the friendly welcome.

I have lived with parents for the past 5 years (as has my partner) and we have managed to save a large deposit.

Although the house cost £150,000, the survey revealed some problems so the sellers gave us a cash allowance on completion of £10,000.

This meant the house cost £140,000, and I paid a £35,000 deposit. The mortgage is therefore £105,000.

My job is in a secure sector, and I am confident I will not lose any income.

When you 'rent the money' as you put it, following the first 7 or so years at least you begin to pay off more than the interest, and eventually own your property (which as I said will inevitably increase in value again at some point).
You could rent for 25 years, have paid £150,000 and not own anything at the end.
Also, mortage rates may be high at the moment, but again this may change in the future. I personally felt I would rather be in my own home, paying towards owning it than renting.
I do see the value of renting if you are doing it for the shot-term purely to make a financial gain from the current housing market, but I would prefer to be settled than have to consider moving again. I want to make my house my home, not look to make a profit.

I also had no problems getting a mortgage.

I just wanted to let people who are worried about selling know that there are still people like me who want to buy, and don't expect ridiculous discounts.

John_Pierpoint

Let's compare notes this time next year.
I'm a mortgage free pensioner, but I do have a son & daughter in law, who are choosing to rent at the moment, even though they do have enough to put down a very reasonable deposit.