Is negative equity likely?

natwill_3

Kez100 wrote: »

The figures above hide one important matter in this - they need the annual rate for 1985 to 1990. Without that, the worst drop cannot be seen

Yes, we went through the last downturn.

We bought in 1991 after the biggest falls had already happened for 52250. Sold in 1994 for 48000. Had to fund our way out of negative equity to move.

We bought, in 1994, a house for 75k that had been on the market without a buyer for quite a few years starting at 120k. Not quite a drop of 50%, but it did get close.

Yes that sort of thing is what frightens me

Kez100

natwill wrote: »

Yes that sort of thing is what frightens me

If you get to the stage where prices have dropped by half you are still OK and your next house will be cheaper. Obviously, you may have been better selling now and renting but that is a whole different gamble. No one can say if having 200k in the bank is worth, to you, the disadvantage of renting and not knowing what the market will do. If you look at it as your home and it falls then so will your next home.

This is what I have disliked about this whole 'how much is your house worth' discussion which has been going on for years. People have talked themselves into being wealthy when, in fact, for most people they have a roof over their head and are in exactly the same position as they were four years ago.

We thought the market was at the bottom when we first bought at 52250 (that had been on a few years earlier for 69950) and were gutted when we 'lost' 4k. We saved ourselves out of it and bagged a bargain in 1994 at what was - in hindsight - the bottom of that market. We bought the best possible house we felt we could afford (I don't mean top of our budget) but we looked for ability to extend, lots of parking, schools (even though we didn't have children at the time) , gardens, sea views .... all the sort of things that made us want to stay there forever and not get caught up in the stressful practice that is UK home buying and selling.

natwill_3

Kez100 wrote: »

If you get to the stage where prices have dropped by half you are still OK and your next house will be cheaper. Obviously, you may have been better selling now and renting but that is a whole different gamble. If you look at it as your home and it falls then so will your next home.

This is what I have disliked about this whole 'how much is your house worth' discussion which has been going on for years. People have talked themselves into being wealthy when, in fact, for most people they have a roof over their head and are in exactly the same position as they were four years ago.

We thought the market was at the bottom when we first bought at 52250 (that had been on a few years earlier for 69950) and were gutted when we 'lost' 4k. We saved ourselves out of it and bagged a bargain at what was - in hindsight - the bottom of that market. We bought the best possible house we felt we could afford (I don't mean top of our budget) but we looked for ability to extend, lots of parking, schools (even though we didn't have children at the time) , gardens, sea views .... all the sort of things that made us want to stay there forever and not get caught up in the stressful practice that is UK home buying.

Thanks, what you say makes sense, I could happily stay here for the next 5-10 years. If IR went up to 12% it would be hard but not impossible so I should stop worrying I guess. Not prepared to sell and rent as self employed with pets makes me a pariah

seven-day-weekend

I agree, negative equity is only a problem if you want to sell (assuming you can pay the mortgage with no problem.).

My neighbour in the UK is always obbsessing about what his house is 'worth' and having the vapours about house prices going down.

My own take on it is that he has over 50% equity in it, what the heck does it matter?

(And the one time he put it on the market he priced it so highly that ther were no takers (only one viewing in seven months) and he took it off again).

So, only a poroblem if you sell.

natwill_3

Thanks All,

I just wanted to know if I did sell I could, (unlikely but who knows).

Got to live somewhere so next home would be cheaper as you say and it seems 50% drops not that common