House Price Crash Discussion Thread

Generali

Gorgeous_George wrote: »

I think even the most optimistic amongst will not expect prices to do anything but fall, in real terms but , as you say, they could remain over-valued for many years.

I'm sure that 20 years ago prices would have been undervalued thanks to the Tories see-sawing of high interest rates.

Just as many people would prefer to own their own homes I'm sure that there are many who buy because of the lack of suitable rental properties. There will always be a mix of attitudes to home ownership. There will be diehard owners and diehard tenants whilst in the middle will be those who can be influenced either way. Some of these people will buy when they should be renting and some will rent when they should be buying. It can be so much cheaper to rent when one considers Stamp Duty, EA fees, solicitior fees, new carpets and decor etc. Of course, most of these costs can be negotiated or avoided altogether. If only our Government would do something about Stamp Duty.

Now, where's that turkey?



GG

Unless we get a recession or stagflation then the current thing where sellers and buyers have different ideas about what a house is worth could persist for quite some time. Having said that, I think the most likely denoument of the asset prices bubble is an almighty recession or prolonged period of stagflation.

Which we get is largely dependant on the speed at which the BoE cut rates and also the extent to which the banks go 'on strike' when it comes to lending money to customers. We've seen the end of easy credit for a very long time IMO - credit may remain cheap in the short term but there'll be a lot less of it available. Then supply and demand will run it's course and prices will increase, especially for unsecured credit. If you're living on a credit card now might be a good time to stop.

free4440273

Equities have not priced in a risk of recession as yet; just take a look at the Dow, Dax and FTSE - not far off their 52 week all-time highs :eek: Sterling does seem to have priced in a real possibility of a nationwide house price decrease: which is another way of saying that equities are pricing in rapid reductions in official BofE base rates. (I still think equities are massively over-priced; not that fundamentals actually matter any more :rolleyes:

ManAtHome

Think equities could hold up - depends whether the peeps with money (Middle East and China mainly) decide to buy in rather than continue taking the drop on bonds. Recent evidence suggests they're quite keen on taking a slice of western companies...

dolce_vita

Up until 2 minutes ago I would gladly have given my house away for a bit of peace and quiet.

Everyone's gone out visiting now and I'm finally left alone.

Thank f**k that's over with for another year.

All I hope for now is mrs vita comes back a bit frisky and I get my leg over.

Happy christmas.

mr.broderick

dolce_vita wrote: »

Up until 2 minutes ago I would gladly have given my house away for a bit of peace and quiet.

Everyone's gone out visiting now and I'm finally left alone.

Thank f**k that's over with for another year.

All I hope for now is mrs vita comes back a bit frisky and I get my leg over.

Happy christmas.

Quality post..

nightwatchman

Many people just wouldn't consider living in a property they didn't own if there's a choice. It is perfectly possible for someone to buy a place in the belief that the value of it will fall yet still be acting rationally.

Bahhh!!! I don’t know what you people earn however with my modest earnings I can not afford a garden shed.
My household earns approximately £30.000 per annum.
When eventually we manage to have a kid our earnings will go south significantly.
Asking prises on my area (Birmingham Edgbaston) are minimum £140,000.
With my modest £18.000 per annum I can afford only £63.000 mortgage (£18,000x3.5). Please do not tell me that I can afford higher mortgage, you may as well suggest to sell my self for slave.
I have to take my wife out of our financial calculations as her earnings will diminish when we start a family. To hold off starting a family is not an option as our biological clock is running out of time (she is 29 this year).
I know that there are somewhat cheaper properties out there however do I really want my kids to grow up there?
In Winston Green Birmingham you can get a three bedroom house next to HM Prison for £110.0000. NO THANKS!!!!!
In our case if we are going to get a house a mere 20% or 30% reduction in house prises is mean nothing to us. OK I have some savings for a deposit but frankly why should I bother? We were not working like dogs all our life’s so as to augment the banks earnings.
At the moment we rent a shared three bedroom house for £400 per month. In the worst scenario when ever the landlord kicks us out we will apply for a council accommodation.
For the lower working class, like us there is no choice, we will be on the rent FOR EVER. (Unless I suppose I eBay a kidney or any other parts of my body)
Some times I question my self why I bother working at all. If we was on income support most likely we would have manage to start a family by now and we would be living in a nice house paid by your taxes (I only cursing my pride).
Just make yourselves rich with your property portfolio, it will come the day that you will pay for my house.

jane606

Nightwatchman I hear you. Your story is all too common. The biggest tragedy is that people don't consider the root cause of the issue. Simple question of demand and supply. Yes, Britain had the time of its life under Thatcher, enjoying relatively low taxes, but she did have sufficient houses built and sold off the council houses. And the British population votes for her not once or twice, but thrice. There were warnings about the long term folly of her policies, but people didn't give a hoot: they just thought "yippee we have to pay less taxes". What you sow, you shall reap.

And New Labour add fuel to the fire by opening up the borders to every Tom, !!!!!! and Harry. Just heard on the news today that there are close to 1,000,000 Eastern Europeans now in the UK. They are nice people, but this uncontrolled mass immigration from the East of Europe keeps property prices stratospheric. The rich - those with properties - get richer and the poor - those without - get relatively poorer. And, of course, it's the rich who determine the laws.

nightwatchman

Thanks Jane

I have to admit that I am an angry man with the way the things are at the moment.
This Forum is not making me feel any better. There are all this people explaining why their equity is safe and all the others explaining that it may go down by 30% by the next five years. None of these scenarios are satisfactory for my family.
Hardly ever I and my wife have been unemployed.
Our wages are not bad compared to many others.
We have never overspend (my bank balance is relatively doing OK)
Our only fault was that we were financially broke between 98-02 as I was just finished my HND and she was struggling to get on her feet after getting out of an abusive family.
None of us had a wealthy parent to support us financially, however we always worked hard for our crust and given our circumstances I honestly believe that we did OK.
And yet it looks like in the future we will have to plead state help so as to have a roof over our heads.
I know that there are many others like me out there. Sooner or later many will have to beg from the state like me.
Frankly I feel that I have been condemned to serfdom.
If nothing changes I will not be surprised at all if the communist party re-emerge in ten years from now.

pickledpink

If you look over the last century there has always been property slumps about every 10 years or so - but it always picks up again. You can prove that by just looking at how much properties cost 5/10/20/30/40.......years' ago. In 10 years from now we will be looking back at the current prices and reminiscing how cheap they seem!

Providing you buy for the long-term (say, 5/10 years minimum) you are bound to make a healthy profit. And even if as a FTB you hit negative equity for a year or so, that shouldn't matter if you don't intend selling in the very near future. You'll also still be paying the same mortgage repayments whatever the value of your property - and as property always rises in the long term you're bound to make a profit.

I do understand how frustrating it must be for those who do find it difficult to get on the mortgage ladder, but unfortunately, that's just a part of life. We'd all like to own our own properties, or upgrade to something bigger/nicer but unless we can afford it we have to make the best of what we've got until we're in a position to climb the ladder. After all, a home is what you make it.

Turnbull2000

pickledpink wrote: »

If you look over the last century there has always been property slumps about every 10 years or so - but it always picks up again. You can prove that by just looking at how much properties cost 5/10/20/30/40.......years' ago. In 10 years from now we will be looking back at the current prices and reminiscing how cheap they seem!

Providing you buy for the long-term (say, 5/10 years minimum) you are bound to make a healthy profit. And even if as a FTB you hit negative equity for a year or so, that shouldn't matter if you don't intend selling in the very near future. You'll also still be paying the same mortgage repayments whatever the value of your property - and as property always rises in the long term you're bound to make a profit.

I do understand how frustrating it must be for those who do find it difficult to get on the mortgage ladder, but unfortunately, that's just a part of life. We'd all like to own our own properties, or upgrade to something bigger/nicer but unless we can afford it we have to make the best of what we've got until we're in a position to climb the ladder. After all, a home is what you make it.

You've oversimplified the whole issue on a massive scale. And why the emphasis on profit? Are you expecting FTBs to trade up to a cheaper property in Vietnam upon selling?