'Will house prices crash in 2008?' Poll Results & Discussion

kittykitten

I predicted 5-10% drop. I really do believe it's coming sooner or later, probably due to a combination of the fact that lenders are being a lot more strict about mortgage applications so some people can't get the finance they need to buy for the first time or to re-mortgage to move, and the bottom has dropped out of a lot of the buy-to-let market because rents no longer cover mortgage rates in a lot of places.

Call me selfish, but personally I don't think a fall in house prices is a bad thing. From the point of view of people like myself (I'm 24, back at home with parents since finishing uni cos I can't afford to buy on my own as I'm newly qualified so not earning a whole lot) a slump, however slight, will generally be a good thing as it will hopefully be the boost we need to get onto the ladder. I know a lot of people are worried about negative equity but this happened in the 90s and it wasn't as big a disaster as the media make out - most people simply will have to ride out the storm by staying where they are rather than moving house every 2 years, which for some strange reason seems to be the trend at the moment. I've never quite understood this need to move constantly - can anyone explain the point to me? Surely you're better off finding somewhere that's comfortable and you're happy with and staying there? Moving house is one of the most stressful things you'll ever do, why do it?

Obviously if there is a slump it'll cause a problem for those who need to sell despite negative equity, but unless you are required to move because of work or are a buy-to-let person, I don't see why you can't just ride it out - as was pointed out above generally property prices have gone consistently up (probably since records began) any slump is only really going to be short term. Property should be about a home, not an investment, unless you can afford to risk your money.

rsooty

kittykitten wrote: »

Call me selfish, but personally I don't think a fall in house prices is a bad thing. From the point of view of people like myself (I'm 24, back at home with parents since finishing uni cos I can't afford to buy on my own as I'm newly qualified so not earning a whole lot) a slump, however slight, will generally be a good thing as it will hopefully be the boost we need to get onto the ladder.

Although this would be beneficial for first time buyers there are too many factors preventing a good fall in property prices. To start with, there is more demand than supply. On top of this mortgage companies have realized how hard it is for first time buyers and have introduced other ways for people to get on the property ladder, these include 50% shares on property, 110% mortgages (although these are less common at the moment), and the fact more and more people are investing in property as an income, instead of investing into a home.

As an owner of 2 houses at 21 years old I believe a large problem people face when buying a first house is not a financial one but instead it is due to being closed minded. For example, it is very easy, even now, to get a £100k mortgage if your household income is over £18k. £100k will get you a house in many areas of the UK, often people just dont want to move away from their 'roots'.

Aslong as these trends continue property prices will increase, the only way prices will drop is if vendors begin to start accepting stupidly low offers on their property.

Another point for those people who are struggling to get on the property ladder is for them to look into property auctions. These are difficult to locate but i'm sure the discounts would be worth the hassle.

All the best.

Sooty

sdooley

I'm not sure about the 21 year-old with two properties. Yes that demonstrates that relatively lax credit has been available for a few years, which is a good thing in general especially compared to the 70s or earlier when people had to spend years proving they were a good customer of a building society to move out of the (then generally poor standard) private rental accomodation into their first (mortgaged) home. But I am not sure it demonstrates anything other than that - if Sooty became scrapped for cash following a tenant moving out I am sure Sweep might suggest selling the second house to reduce mortgage outgoings - especially if other priorities like a little Scrappy come along!

There will be many people in similar situations at the smaller end of the buy-to-let/investment property market.

At the top end, individuals who have built up a buy-to-let portfolio over many years will no doubt be salivating at their ability to sell properties bought in the early 90s (which even with a slight fall show a huge capital gain) and pay tax at only 18% (rather than 24-40%) from this April. So expect very few sales until then, when more property may come on the market.

John_Pierpoint

tryinhardtosavethepennies wrote: »

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Fortunately though, I qualify soon and get a nice pay rise which will allow us to borrow more sensibly this time round and afford a slightly bigger house in which we can "sit tight and ride out the storm"...should it come. I'm of the opinion, if we're going to get into negative equity, I'd rather be in a place that's big enough to put down roots and start a family - it'd be impossible in this tiny house.

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If you sell, why not rent for (say) 12 months until a good selection of property gets flushed out onto the market? For the first 9 months the sellers will sit on their hands hoping it is all a nasty dream and when they wake up "normality" will have returned .

I thought we were only allowed one house price thread:rolleyes::rolleyes::rolleyes::rolleyes:
and here it is:
http://forums.moneysavingexpert.com/showthread.html?p=8139913
Anyone thinking of buying and selling should read it first.

neverdespairgirl

rsooty wrote: »

Although this would be beneficial for first time buyers there are too many factors preventing a good fall in property prices. To start with, there is more demand than supply.

I don't agree with that at all.

A lot of "investors" have bought recently. Many places have stupidly low, or even negative, yields. That means they are relying on capital growth to make any money at all.

Therefore, new investors won't buy the same types of places at the same price in great numbers, as the capital growth AND income are low. And some landlords will get tired of subsidising their tenants, and sell.

Tracy_E_A

Well i am buying a house at the moment and have sold mine but i feel lucky because i bought mine 10 years ago when it was cheap. I think they will drop by 5% but what do i know

justin_1975

Tracy_E_A wrote: »

Well i am buying a house at the moment and have sold mine but i feel lucky because i bought mine 10 years ago when it was cheap. I think they will drop by 5% but what do i know

But if you are upsizing then you have already lost out because not only will you house have gained in capital, but the house you are buying will also have gained in capital (probably at the same %rate). Therefore the real money gap between the 2 properties is higher. So a house price increase has made your house worth less comparatively.

Tracy_E_A

If you say it like that Justin then yes i do lose out but it depends what i am buying for. I am only paying a little bit more for this house than i selling mine for. I dont plan on moving for a long time and i need 3 bedrooms for my kids. I dont mind losing money if my kids are happy and have room to play.

OddjobKIA

I belive they will drop significantly but not crash

you wont be able to pick up a decent 4 bed for £40k again like 10 years ago( down this way anyway) but they wont be above the £200k mark for much longer...


It drop enough to hurt those who brough in the last 5-6 years and help those who are trying to get on the ladder...but if you have owned your house for 10 years plus then it wont make any real difference

HarryPotter_3

Hi, we are selling at the moment, we need somewhere bigger.

As long as the intrest rates do not go sky high we can afford to pay our new morgage. If prices go down then our now house will not be worth what we paid but as long as we can afford that morgage payment we will be fine.

You can't help the market, if you can afford what you have got then any rise or fall with be in line with the market and the value of your property will be relatlve.

Our house now was £99k new, we paid £120k for it 5 years ago and now its worth about £160k so at least it has built some capital.

Rumors of a slow down should put new buyers off for a while, but they tend to be buying because they need to, newly weds, leaving home after uni ect.
If you dont have credit problems you should still be able to get a large morgage.
And they dont tend to be regular readers of this site or have a good understanding of the market, I think that comes after you take a leap in the financial unknown.