House Price Crash Discussion Thread

Generali

I thought you guys could do with a bit of light relief here in the ghetto:

http://www.youtube.com/watch?v=10WoQZKZkNs&feature=related

I bet this sort of thing could put a real downer on a community. The buyers at the original price being bitter towards the later purchasers that have 'destroyed the value of their homes'.

ivegotabig1

House prices Tumble !!!!

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/13/bcnrics113.xml

The Illusion is slowly but surely being shatered... & what the BOE or FED does will make little differance, the economy has been living a lie for several years !! & Now its finally been found out !! Things will take there course which is a delflating of the economy to more sustainable levels.....period !!

logit_2

Hi everyone, i'm a FTB and i've been looking for a 2 bed flat in London for about 3 months now. The areas i'm looking in are Putney, Wimbledon and Clapham South. I think i've found a really nice flat in Clapham South that is up for £470k (built 5 yrs ago). I was prepared to buy, but now i'm getting very nervous about all this talk of a fall in prices. From what i've seen over the last three months in these areas, there is still a healthy demand (judging by the number that go under offer) and supply of decent flats is limited, hence shouldn't that mean prices should remain stable in these areas?

WTF?_2

logit wrote: »

Hi everyone, i'm a FTB and i've been looking for a 2 bed flat in London for about 3 months now. The areas i'm looking in are Putney, Wimbledon and Clapham South. I think i've found a really nice flat in Clapham South that is up for £470k (built 5 yrs ago). I was prepared to buy, but now i'm getting very nervous about all this talk of a fall in prices. From what i've seen over the last three months in these areas, there is still a healthy demand (judging by the number that go under offer) and supply of decent flats is limited, hence shouldn't that mean prices should remain stable in these areas?

Are you looking to 'invest'? Then my advice is don't do it.


If you are looking just to 'get on the ladder' then now isn't a good time. Prices look set to fall over the next couple of years and you could have little or even negative equity in your property when it comes time to move on up.


If you're looking for somewhere to actually make a home and stay in long-term then it boils down to do you feel comfortable about taking on the amount of debt you will need to take, in order to buy the property?

codger

logit wrote: »

Hi everyone, i'm a FTB and i've been looking for a 2 bed flat in London for about 3 months now. The areas i'm looking in are Putney, Wimbledon and Clapham South. I think i've found a really nice flat in Clapham South that is up for £470k (built 5 yrs ago). I was prepared to buy, but now i'm getting very nervous about all this talk of a fall in prices. From what i've seen over the last three months in these areas, there is still a healthy demand (judging by the number that go under offer) and supply of decent flats is limited, hence shouldn't that mean prices should remain stable in these areas?

Unless you're currently (a) homeless or (b) living in intolerable conditions, the options are pretty straightforward:

a) Gain nothing at all by buying now, at risk of losing a lot in the not-so-distant future;

b) Lose nothing at all by not buying now, at risk of losing a lot less in the not-so-distant future.

The third option -- "Gain everything by buying now, on the assumption that even more will be gained in the not-so-distant future" -- no longer exists.

As to areas where there is, allegedly, "healthy demand":

Buyers dictate market value. Not estate agents, suveyors, valuers, builders or even sellers.

Unless every prospective buyer of every home in an "area of healthy demand" is a cash-rich FTB -- statistically unlikely -- or has a property in an identical "area of healthy demand" (even more unlikely) then they're now unlikely to be able to sell at the price they may once have hoped, and so won't be able to buy at the price the vendors in the other "healthy" area may once have hoped.

The "healthiness" of any area is relative. Not absolute.

codger

hgllgh wrote: »

Another sub prime hit. UBS for £5billion
http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=427394&in_page_id=3&ct=5

It's noticeable that every bank is taking a sub prime hit with many around the same level as UBS. Merryl Lynch is next in the media hotlist with a £3 billion loss. Just goes to show they all had their fingers in that rather dirty piece of American Pie!

Once these losses are "written down" does that mean they will not lose any more from the sub prime meltdown? Do they not have additional loans that could be defaulted on if there is a recession in the US which would surely signal further losses next year as people lose jobs and therefore are even more likely to lose their homes?

Your phrase "they all had their fingers in that rather dirty piece of American Pie" is accurate but might be better rendered as "they all have their fingers" in that pie.

Because they do.

Bankers, politicians, and certain economists appear to wish that any and all discussion of sub-prime be in the past tense -- as if it's all over, as if all the bad news that could emerge has already emerged.

Well, surprise, surprise, folks. . .

:eek:

logit_2

Not really looking for an 'investment' per se, but obviously some capital appreciation would be nice. Whatever I buy now, I cant say for sure whether I will live there for 5+ years - I suppose I just feel at 28 it's time to get a foot on the ladder, and any rental payments I make can go to paying off the mortgage.

I suppose in my mind I always envisage there being a healthy demand from wealthy individuals in these areas, hence there's no reason for prices to fall.

Maybe it'd be best to rent for 6 more months and see what happens then - but then what if prices increase by 5%+ in these areas!? Arghhhhhhh :mad:

boinging_2

logit wrote: »

Not really looking for an 'investment' per se, but obviously some capital appreciation would be nice. Whatever I buy now, I cant say for sure whether I will live there for 5+ years - I suppose I just feel at 28 it's time to get a foot on the ladder, and any rental payments I make can go to paying off the mortgage.

I suppose in my mind I always envisage there being a healthy demand from wealthy individuals in these areas, hence there's no reason for prices to fall.

Maybe it'd be best to rent for 6 more months and see what happens then - but then what if prices increase by 5%+ in these areas!? Arghhhhhhh :mad:

Please, please don't think I'm being nasty when I say this, but you posted on this site looking for advice, Codger has given you the best advice you could hope for.

Biggie

logit wrote: »

but then what if prices increase by 5%+ in these areas!? Arghhhhhhh :mad:

You will be persecuted for this. anyone who mentions a risk\stabilisation is targeted on this forum. A few brave had tried going against the grain but I've observed that people get too upset. Hence the post above.
In all seriousness though I don't think prices will increase though don't expect any kind of crash either especially in desirable London areas. If I was a FTB and I was renting I would hold out for a year and see what happens to the market. However if falls didn't effect me that much because I want a home and security and the house was affordable then I would buy especially with the baggage of a family.
But remember nothings guaranteed things and sentiment can change very quickly weather that's a rise\fall.

WTF?_2

logit wrote: »

Not really looking for an 'investment' per se, but obviously some capital appreciation would be nice. Whatever I buy now, I cant say for sure whether I will live there for 5+ years - I suppose I just feel at 28 it's time to get a foot on the ladder, and any rental payments I make can go to paying off the mortgage.

I suppose in my mind I always envisage there being a healthy demand from wealthy individuals in these areas, hence there's no reason for prices to fall.

Maybe it'd be best to rent for 6 more months and see what happens then - but then what if prices increase by 5%+ in these areas!? Arghhhhhhh :mad:

There is always the risk that you will lose out if prices go up in the meantime and you buy in later rather than now....

I'd have to say right now though that prices are trending downwards rather than up. Lower prices in the foreseeable future are the 'clever' bet.

So my advice would be that waiting is now the right thing to do. You won't actually lose any cash, just end up borrowing more for the mortgage if it's the wrong decision. Against that the prospect of getting a better place than you could have afforded before, or saving money on the mortgage is a risk worth taking IMO.