House Price Crash Discussion Thread

dfarry

whathavewedone wrote: »

Sorry for rambling post, just wondered if anyone had some advice on how we can minimise our exposure to risk, given that we are where we are.

Thanks

Hi, not sure what you are concerned about really - unless of course you are struggling to afford what must be a very costly mortgage....

But to be honest if your OH is in work and you are thinking about going back - and of course you can pay the bills then the only other worry might be if you wanted to sell (and make a loss).... but you've said that this is "THE" house so the best bet is to keep paying the bills and enjoy your home.

whathavewedone

Thanks Dan. No we are not struggling. We have enough left over each month to save a bit even though I'm not working at the moment.

I'm just thinking about worst case scenarios a few years down the line and how best to insure ourselves against them.

As you say I should probably just carry on as I am and enjoy our house.

dfarry

whathavewedone wrote: »

Thanks Dan. No we are not struggling. We have enough left over each month to save a bit even though I'm not working at the moment.

I'm just thinking about worst case scenarios a few years down the line and how best to insure ourselves against them.

As you say I should probably just carry on as I am and enjoy our house.

A few years ago we nearly brought a new place and would have trebled our mortgage... the moving process was a nightmare and we eventually pulled out.

This even has had some quite significant knock on effects (generally for the better I'd say) but the fact of the matter is that my family are still living in a house that is really too small for us and no longer meets our needs, plus the area whilst OK is not really where we'd like to buy... sometime in the next few years the house buying spectre will I'm sure be upon us again....

At least for you that is all out of the way, you have a house that suits your needs and this will be your home for many years. Of course it is good to be prepared for the worse case scenario but don't let that stifle your enjoyment of the home by your family - afterall life's too short.

whathavewedone

Thanks again Dan.

We were so happy when we moved in. We were outbid on so many other properties in the area at the time and I am now really glad we weren't tempted to really overstretch ourselves for houses that were no better than the one we live in. Looking back on summer 07 it was a mad time. People were prepared to pay way over the asking prices just to get a decent family home near good schools.

I'm sure you will get your dream home soon at a fraction of the price that you would have paid a few years ago.

Merry Christmas :beer:

crazygaijin

chucky wrote: »

I live in Zone 1 and rents are less than thay were last year. Any landlord with any sense will reduce his asking price. For every week that the property is empty that is 2% of his annual rent that he loses out on - so a 10% drop in asking price is quite reasonable.

You are right 10% down is very reasonable, I think tenants can even negotiate up to 25% discount off the rent and in 6 months it will be down a lot lot more.

Rents are falling faster than HP drops at the moment, but HP drops will catch up with the falling rents and next year eventually they will overtake.

At the moment rents haven't fallen enough to make enough of the amateur BTLers not be able to afford their repayments. But soon we are going to see the market flooded with repossessions especially in London. Most of the buyers going to these auctions will be the buyers with enough cash to actually buy out right. Because getting a mortgage will be nigh on impossible, even more so the lower the Gov drops the base rate.

In Japan the base rate is 0.1% but that doesn't mean you can get a mortgage for that. They advertise mortgages for 2% in the bank of Japan but that's only for 2 yrs then it goes up to 7%.

It will be similar offers for those lucky few that can get a mortgage approved. The banks are in such a situation right now that to be able to stay afloat is going to be very difficult. They are going to get even more Ruthless on people who already borrowed and new mortgage applicants.

So if you have enough cash next year (like 100K) to buy out right, you are going to be in a lovely position. My wife and I are going to take out time looking at really nice places and putting in very low offers or going to auctions and not bidding too high until we get something that we can call a home for the first time.

codger

IveSeenTheLight wrote: »

What is the point of this thread now that we have a whole forum.

This should be de-stickyfied and allows to move with the rest of the discussions

'Twould be nothing short of tragic were this thread to vanish: it's a little piece of social history.

I can't be the only one who looks back with fond memories on its genesis and early progress, and the especially insightful posts by MSE member abidan who took time off from running her own property advisory website to provide high-calibre advice to so many of us here . . .

IveSeenTheLight

codger wrote: »

'Twould be nothing short of tragic were this thread to vanish: it's a little piece of social history.

I can't be the only one who looks back with fond memories on its genesis and early progress, and the especially insightful posts by MSE member abidan who took time off from running her own property advisory website to provide high-calibre advice to so many of us here . . .

It would not vanish though, it would still be in the forum, somewhere.
I don't see the need for a historice thread when there is now a dedicated whole forum for discussions.

Lets face it, in the 137 pages of posts, the discussion varies widely and at times way off topic.
Has anybody read all 137 pages. I have not.
Would any newcomer read all 137 pages, I very much doubt so.

This thread was developed as the place to go to discuss a house price crash, seems a bit pointless now with a whole forum to discus house prices, the economy and the recession.

Tillydot

What did you mean crazjgaijn when you said
They are going to get even more Ruthless on people who already borrowed

CraftyFox_2

For a definitive guide to understanding the cyclic nature of the property market (or, more specifically, the land price cycle) one would be very wise to study the works of one author and former economic adviser, Fred Harrison (you can find details of him on the internet easily enough).

Put very simply, his main assertion is that the property value cycle lasts 18 years from peak to peak (or trough to trough). Compare the dates: 1972,1990,2008. One may go back previously for several hundred years and observe the same cycle of repetition. It's worth exploring and not dismissing out of hand. Although I would sympathise with those who claim it's too simplistic, one cannot refute the dates in question. Furthermore, he asserts that each downturn lasts (at least) two years or thereabouts (e.g. 1990-1992) with losses ranging from 20% to 40%.

On this basis we can expect this downturn to last until at least 2010, with much more of a retraction in land price (i.e. property prices) until then.

dfarry

It is simplistic but is supported by history.... my gut feeling is that 2010 will be the low point in the property market. I hope so anyway as I'll be aiming to upsize then but although I'll be selling for less I'll be buying for less and will not be hit by so much stamp duty/fee's.