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

giger

I am also voting E, but I think it could also be D or F.
Another rate cut will help things and make things more affordable for FTBs. I think things have got better as I know ppl who are looking to buy their first place right now. What is happening these days is that ppl save longer for a bigger deposit, accept that houses cost more and when rates start to come down they buy houses.

A lot of ppl would benefit from a crash, but if prices were to drop 10% a year it wouldn't take long for many homes to drop back to or below the price they were sold for 2, 3 or 4 years ago. Crashes don't just happen overnight and go away, recovery would take years.

I think also the average person is not seeing a clear unbiased view of what is happening (I fall in to that category btw!). One report contradicts another on average house prices, growth etc so it is difficult to get an accurate view

irishwench69

I voted 'C' - even if there's a correction, I think this will just slow growth down.........maybe I'm biased, being based in the home counties / London area

IW x

jedk

irishwench69 wrote: »

I voted 'C' - even if there's a correction, I think this will just slow growth down.........maybe I'm biased, being based in the home counties / London area

IW x

Can you explain how this bias works - is it because it will be easier or harder in home counties / London area if a property crash occurs?

srvr

My instinct is that demand still outstrips supply and therefore prices will not crash. I think there will be no or little growth however for 2008 as the prices have exceeded the ability of the first time buyer to easily get onto the ladder. My feeling is that flat growth in, which given inflation is a relative drop in prices will result. This will enable over a year or three for wages to increase to better cope with prices. Flat growth over three years would equate to a relative but not actual 10% - 12% drop over three years, so static prices.

Althoough demand still outstrips supply which should lead to continued growth the aforementioned limitations on first time buyers, the unwillingness of banks to lend to sub prime or even near sub prime will control the market. We should also not forget the 800,000 empty houses out there owned that people will want to shift before any drop in the market which will, in the short term, increase supply and we should aslo not forget the buy to let brigade may be forced to sell some properties rather than remortgage with high rates which will also increase supply.

So in summary, supply will be increased in the short term reducing demand and therefore prices rises.

Lending will be tighter reducing house price inflation due to reduced demand

People will hol;d out for a crash reducing demand.

Therefore in the short term, demand will be lessened by market conditions, supply will increase due to market conditions but neither can effect the prices beyond teh point of instigating a period of flat growth (relative price drop) due to the underlying general long term supply / demand relationship in the market

curriej99

BLOO_LOO wrote: »

Well, they may be hit, but thats what happens when you get panicked into buying because you will "miss out". Classic bubble mentaility Im afraid.

Martin himself has said many times, only buy if you can afford it. Even these guys, in negative equity, IF theyd followed this advice, would not fear a drop in the most expensive asset they are liekyl to buy

Good point -but if you plan on sticking around for a few years then the money has to be on buying property. even if there is a crash, then sit tight and in a while things will come round. Don't be greedy, you greedy young pup! If you can afford it, BUY IT.

zdenka

We are in a situation where we had to move across the country so fed up with toing and froing we decided to rent instead.

We sold our house and short term renting seems to be changing to longer-term. The interest from the house sale money is more than paying for the rent so with this uncertainty in the market, we don't see a point of re-entering it.

Where we are the only properties that seem to be selling are terraced houses or properties that need doing up. We want neither.

Unless I see a real reason to buy in a short term I'm staying put.

Occy

Just very quickly, I am becoming firmly of the opinion that we are about to see a radical realignment of the housing market, far to much of house price inflation is caused by Profit making in redevelopment or buy to let purchases. In the current and soon to be current economic climate I foresee those forces dwindling especially as credit will become harder to get.

I suspect it all depends on where you are now but would a 25% reduction in house prices be a bad thing? For a start we all would save a fortune on stamp duty.

One last thing having mentioned stamp duty, why was there all the fuss about inheritance tax but no one mentions the unfairness of stamp duty, personally I plan only to die once whereas I might want to purchase a new house more often.

golddustmedia

I think the important factor to look at is "What type of property is experiencing a price drop?".

Yes I can agree we may see a drop in the price of family homes like 4 bed houses, however there remains demand at the lower end of the market for small houses and flats. Especially with factors like divorce etc where a couple owning a 3 or 4 bed house split and subsequently buy 2 smaller homes for themselves.
In the last year I've seen the value of my 3 bed home remain fairly static with a rise of perhaps 5%, however the 2 bed flat I own and rent out has seen a rise of over 30%.

The_President_2

Stagnation or even a lowering of prices in the first two quarters and then a correction and poss growth in the second two quarters of the year.

That is my prediction. It's also what I am banking on.

Obviously certain areas that have had rediculous growth will see reductions and certain types/sizes/prices will see differing changes but overall, I think, my original prediction will hold sway.

pennysavedpennyearned

as a buy to let landlord and developer, I believe property prices will decline for the next 2-3 years, based on several observations;

builders are finding conversion work harder to come by,and competing for less work means lowering their prices or entering the new build market, which has maintained high costs partly due to experienced labour shortages. This lowers new build costs/prices. and also lowers the builders spending power at the tills, increasing the possibility of a recession.

Lenders are reluctant to lend as "generously" as in the past ( the last property crash was, i believe, started by lenders refusing to extend large loans to developers etc..sound familiar? ),this limits first time buyers as well as developers, hence lower offers/lower prices.

Many new buy-to -et people have bought at market value, and are struggling to meet payments, as are many first time buyers with large credit debts.

As the decrease in prices takes hold, many more properties will come on the rental market at lower rents to attract tenants.this will add to the rush to sell for people in trouble already, reducing their prices.

at the end of february the loans at a large buy-to-let lender become due, and they are currently having trouble finding investors at 1/25 the value of shares. this may cause a slight panic in other lenders, adding fuel to the credit crunch.

the capital gains tax changes in april will probably cause major portfolio holders in the buy-to-let market offload large amounts of properties on the market, increasing supply of mainly 1-2 bed flats, allowing prices to drop.

all the above observations are evident to all if you look, but interpretation has differred probably depending on individual needs.

But cheer up, even if there is a drop in the property market of 15% over 2 years, most experts agree that property prices will return to current values in 5 to 10 years, so only people who have tried to profit financially from the market ( like me )will lose significantly-people who need and have bought a home will recieve help from the government.