You are all scaring me!

OLS

Now listen here you pesky kids, , stop scaring me about all this crash business......i'm now officially worried (not yet petrafied) about our new house we are due to exchange and complete on in Jan!

We have sold our Flat (well, in a sense, mort offer recieved, searches completed etc, just waiting for the management comp to pull their finger out and issue the over priced report and will be exchanging and completing on this the first week in Jan). We bought it 2.5 yrs ago as FTB, with it being the only decent place in our price range (we wanted to be sensible and not get a mortgage up to our means, but still wanted something with barley any work needed as only enough spare cash for furnishing it etc, and in a nice ish area) and at the time there were not many flats and we were hoping to stay in it a year and move on to bigger and better things, 1.5 years later we were still there and thought we better get our fingers out and get it on the market, 6 months later (so 2 years in total) we finally put it on the market as it turned out I was expecting, in the previous year to this, in our area they were putting up flats in every parking space they could find! It was valued at 20k above what we paid, we thought this was an average valuation (not being in the market long, believing all the 4 EA's and seeing what the new ones were aking - 10-20k more than our val) so we put it up, we dropped it a few times and changed EA's but we had no luck (a fair few offers about 20k under the purchase price but we could not be in Neg Eq, it was better for us to pay the morgage and live in a 1 bed flat than, owe the bank 20k and live back with one of our parents!), then finally in Nov, we had an offer of 5k under the purchase price, we decided to neg, and got him up to our purchase price, so we were happy with this.

The property we were meant to be getting (old family friend passed on) fell through as they decided to auction it as it was taking to long to sell our, plus they had upped the price of wanting 85k to 100k and with the amount of work that needed (bout 40k to get it to a good standard) we didnt think it was worth it (some fool ended up paying £130k for it at auction, which is a bit silly!). So the great house hunt begun, right at the time the prices were startign to level out but not drop. We didnt want to go over £130k as again we didnt want to live up to our maximun, incase unexpected things happened (mort increase, car break down etc), we still wanted to live in the same area, and wanted a 3 bed home but would settle for 2, we didnt want ex council and would settle for something that needed mainly cosmetic work, but no major works......we could not find anything anywhere, in our price range they were either, ex council, needed far to much work doing or were 2 beds but newish builds so very small. I spotted some properties on a street we liked up for sale, all 4 up for between £130k and £135K. We went to viw one and really liked it, we rang up to view the other and they were all under offer and not accepting viewings. I put some notes through saying if there offers fell through give me a ring, one of them did, we went to view and while it didnt have CGH it was something we could see ourselves livivng in. Terraced property, 2 basement rooms, one decked out one not, kitchen& living room, 2 beds and batroom on 1sr floor then attic room on 3rd floor, we came to an agreement of an offer for £122k, and we have been feeling pretty smug, to have a 3 bed property, with room for making more space (dividing attic in to 2 rooms if the family extendsor 2 cella rooms put to better use as livable rooms) in a nice area.

But now you guys are scaring the s**t out of me and Im thinking were going to offer on this house and then there is going to be a crash and it wont be worth the £122k we getting it for......then again, its a family home, not a move in move out thing, and I would be happy staying there (and planning on it) for the forseeable future, so if worse came to worse we could make it to 4 beds so it would be family liveable for a long time to come, well for time for the prices to level back up again....................HOPE SO ANYWAY!

Oh and :xmassign: and a Happy New Year Everyone x

gingin_2

Hi OLS

I think if your mortgage is no more than 3.5x your joint income and you are in professions that can weather a potential economic storm, you can afford a potential rise in interest rates, you are in love with the house and can live in it for the next 8-10 years happily you should go for it... If you are in doubt of any of the above I wouldn't personally.

We are waiting it out for a few years after being certain we would buy this spring. Husband has strong economics background and is working in the Finance industry and believes 2008 will be a bad year to say the least and 2009 even worse, beyond that who knows. He is saying house price falls despite interst rate cuts, but none of us have a crystal ball....

Good luck

busydaffodil1

if its a house you love, your not intending to move for a few years and you can afford it, go for it.
How would you feel in 6 months time if you didnt go ahead?
Theres always risks in life.........and if there was a price crash, does it make any difference if your in your flat or new house? Maybe a couple of grand difference. Hardly worth worrying yourself to death over.
Enjoy your Christmas & have a Happy New Year in your new home!

Generali

The value of the house matters twice - the day you buy and the day you sell.

That prices fall 50% or rise 100% matters not a jot unless you're buying or selling as long as you can keep paying the mortgage.

HugoSP

It all depends why you are buying IMO.

People still need houses and not everyone is in the best position to speculate on the housing market.

My personal opinion is that those areas that have seen the biggest recent rises in prices could see the biggest falls soon. In the last slide our house in Leicester probably fell in value by around 5 to 10% but as we weren't in NE or looking to sell we weren't bothered. However price falls in the areas that had benefitted from the biggest rises, were realistically around 30% plus. There were reports of people with properties being worth some 50% of what they paid, as there are now with newbuild apartments but IMO these were people who paid far too much for their property in the first place.

A number of people on this forum have actually sold up to rent (STR) speculating that their equity will earn decent interest and they will then be able to buy the same sort of property cheaper in the future. I say good luck to them, they may be right but they do risk being priced out of the market if we don't get the price reduction that everyone is predicting.

This is rather like taking a risk on a base rate tracker mortgage, as opposed to going with a safe 5 year fixed rate product.

To my mind, it's all about how the lenders behave or can behave towards the borrowing public. Once the dust settles I suspect that lenders will start being competitive once again. When this starts to happen and prices are still stagnated then for a short while buyers will be in a strong position. Then the housing market will begin to catch up - perhaps slowly at first.

The big problem that needs to be tackled now IMO is the banks' reluctance to pass on the latest rate cut to those borrowers who they are not obliged to. Most of the big lenders have passed on nothing, whilst there are a few who have passed on .15%, as opposed to the .25% that the BoE has passed on. Whilst they act with this greed the market will never recover and their own customer base will simply not grow.

This stagnation is quite different from the 80s crash as I seem to recall that prices were rising quite quickly (certainly in the area we were living in) almost up to Black Wednesday then the crash was quite sudden. What we have seen this time is a slowing down in many areas whilst certain properties have come down in some areas. Others will disagree with me on this I am sure, and there are those here who will try and draw every simularity they can without even looking for inconsistancies.

Also, what the OP must remember is that it is usually the same usernames who bang on about an impending house price crash, and some have been caught serial mudslinging at those who have the cheek to disagree with them. They are in a minority, and it is the majority who, whilst recognise that there are problems out there, don't forsee more than a stagnation or a less spectacular price adjustment in there areas.

The stories of massive falls in property prices almost always relate to newbuilds that are often sold at a premium. Even in the 1990s when property was supposed to be recovering my inlaws lost some 10% on the value of their new home when they sold.

cafenervosa_2

I hope there is a crash because where I live terraced houses were 25 - 35k from 1999 - 2003. Until recently it was hard to find a terraced house for under 90k, now I have noticed a good few in the 80k bracket and even some in the 70k! I thought a 20k mortgage was a lot of money back in 2001, for anyone who has tried to save up 20k cash will understand how much money it really is! So I am hoping for a crash because all this cheap credit has fueled the house price boom, remember this is not real money, its credit! Now the credit crunch has begun I hope it brings us all back to reality!

chriz1000

I’m currently buying a house too OLS, I want it for a family home and as others have said, as long as you don’t get forced to sell during a crash you have nothing to worry about. If you can happily see yourself living there until things pick up, and can easily afford the mortgage repayments you should be fine.

£20k for a house is ridiculously cheap money though. Using the 3.5 times joint mortgage rule you’re looking at the targeted residents earning around £3k per annum each! I would be very surprised to see any 2 bedroom house which is in a decent state selling for under £60k even at the peak of a crash. Inflation has happened, and there is a cap on the minimum wage that never used to exist.

OLS

gingin wrote: »

Hi OLS

I think if your mortgage is no more than 3.5x your joint income

No its not

gingin wrote: »

You are in professions that can weather a potential economic storm,

Yes we both are

gingin wrote: »

you can afford a potential rise in interest rates,

Well we have enough to cover us if the interest rate goes up to about 11/12%

gingin wrote: »

you are in love with the house and can live in it for the next 8-10 years happily you should go for it.

Were inlove with the house, as in where it is, the price, the room sizes, just not the decor, but we will be doing that ourselves, I dont think you can every find a house completley to your taste decor wise!

gingin wrote: »

Good luck

Thanks

busydaffodil1 wrote: »

if its a house you love, your not intending to move for a few years and you can afford it, go for it.
How would you feel in 6 months time if you didnt go ahead?
Theres always risks in life.........and if there was a price crash, does it make any difference if your in your flat or new house? Maybe a couple of grand difference. Hardly worth worrying yourself to death over.
Enjoy your Christmas & have a Happy New Year in your new home!

We would feel crap in 6 months time if we didnt go ahead, if the prices stayed abuot the same and we couldnt find anything else, however if the dropped massivly We would feel relieved, if we were in prison for murdering the inlaws that is!

I think I will enjoy our 1st christmas and new year with the little one, thank you, well wishes back to you and eveyone else who replied xx

dolce_vita

HugoSP wrote: »

This stagnation is quite different from the 80s crash ......


..........Also, what the OP must remember is that it is usually the same usernames who bang on about an impending house price crash......

..... They are in a minority, and it is the majority who, whilst recognise that there are problems out there, don't forsee more than a stagnation or a less spectacular price adjustment in there areas.

.

This "stagnation" will eventually lead to a crash.

It is quite funny how the people who talk about "stagnation" now couldn't even contemplate anything other than rampant HPI a few months ago.

In a few months time I'm expecting them to be talking about the crash being "not that bad"

And then we'll get to "this will only last a year, prices will be going up soon"

Then "it normally takes two years for these things to settle down"

And all the time without ever thinking about why massively rising house prices are a good thing.
When in reality it does no-one any favours except the banks.

But that is the way the boom and bust system is designed.

Sometimes you win and sometimes you lose. It's really about luck and timing.

And the time has come for all the froth to be blown out of the system and those left standing to participate in the next cycle. Some people will lose out and some people will gain.

As Warren Buffet said :

"it's only when the tide goes out that you see who has been swimming naked"




OP- I didn't mean to scare you any more. Good luck in whatever you decide and have a nice christmas.

nicola1982_2

I think if it's a long term living arrangement and you aren't FTBs then it's more about the interest rate hike (is it manageable) rather than the price. You already have a flat so would be affected by a nose dive in prices either way if you were buying as investment. You sound keen and you are borrowing well within your income so just make sure it's definitely what you want and get checks done etc.

Uncle_Rico

cafenervosa wrote: »

I hope there is a crash because where I live terraced houses were 25 - 35k from 1999 - 2003. Until recently it was hard to find a terraced house for under 90k, now I have noticed a good few in the 80k bracket and even some in the 70k! I thought a 20k mortgage was a lot of money back in 2001, for anyone who has tried to save up 20k cash will understand how much money it really is! So I am hoping for a crash because all this cheap credit has fueled the house price boom, remember this is not real money, its credit! Now the credit crunch has begun I hope it brings us all back to reality!

4-5 years savings on below average salary. Where are you from, Redcar?