A Good Time For First-time Buyers?

neverdespairgirl

Gibber wrote: »

We only have about a 5% deposit at the moment so we've decided to batton down the hatches, save like crazy and see how things look in say, six months. I think I'll have to get used to the taste of tea rather than beer at the weekends...

Sounds very sensible - best of luck with the savings!

Guy_Montag

Property snake reports 89 asking price reductions for SE19
& 60 for SE20.

http://propertysnake.co.uk/site/postcode/se19

EdInvestor

dolcevita wrote: »

If you were a ftb with a 10k deposit, by borrowing 95% you can afford a 200k house.If the LTV were reduced by just 5% to 90% then your 10k will only buy you a 100k house.That puts massive downward pressure on house prices.

This wouldn't put downwards pressure on the price of 200k houses.Rather, it would put upward pressure on 100k houses due to increased demand.

carolt

EdInvestor wrote: »

This wouldn't put downwards pressure on the price of 200k houses.Rather, it would put upward pressure on 100k houses due to increased demand.

That's pants. Who would all the people with 200K houses sell to? How could it not put downward pressure on house prices? Are all those people looking for say 3 bed houses in an OK area suddenly going to say, 'You know, this is silly, let's just buy that 1 bed in the sink estate instead, that's all our money will fetch..' instead?

No, of course they're not. They'll either not buy, while they're saving up more deposit/waiting to see if prices weaken further, or they'll make lower offers in line with what they can now afford under the new rules.

PRICES WILL FALL.

baileysbattlebus

It will be interesting to see what the next couple of years brings, I was there during the crash of the early 90's. People had been encouraged by Mrs T to buy their own homes, the right to buy etc, and house prices in general rocketed (at least here in the south east).
The value of our house fell by 40% - or should I rose by 40% and then fell, as did a lot of others, some by more some by less. We bought the house for £80k in 1988 and sold it in 1995 for £80k, it had gone up to £135k, we had friends who bought at £135k on more or less a 100% mortgage.
During our time in the house our mortgage payments went from around £350 per month to about £700 and lot of people couldn't afford the increases in payments that seemed to be happening every couple of months. So interest rates were high and unemployment was high, thousands of people were being made redundant every month.
The difference between then and now is that interest rates are low and employment is high, so for most people, even if they have very large mortgages, if inflation and interest rates stay fairly stable and they can pay their mortgaes now, they will still be able to pay their mortgages unlike the early 90's. So even if prices do fall, as long as you haven't bought your house to make a quick buck, you just sit tight and stay where you are, there will just be less houses for sale.

Sapphire

baileysbattlebus wrote: »

The difference between then and now is that interest rates are low and employment is high, so for most people, even if they have very large mortgages, if inflation and interest rates stay fairly stable and they can pay their mortgaes now, they will still be able to pay their mortgages unlike the early 90's. So even if prices do fall, as long as you haven't bought your house to make a quick buck, you just sit tight and stay where you are, there will just be less houses for sale.

Another if to add to your 'ifs' above - if the moneylenders don't increase their costs to borrowers. It seems to me that the moneylenders are certainly not lowering their rates to reflect the BoE's lowering of interest rates about as much as it safely can. In the past the moneylenders always lowered or raised their interest rates to reflect the BoE's actions. Now they have an 'excuse' not to lower them - yet another scam by financial institutions. :mad:

Generali

EdInvestor wrote: »

This wouldn't put downwards pressure on the price of 200k houses.Rather, it would put upward pressure on 100k houses due to increased demand.

If you wanna talk supply and demand (and like Love 'n' Marriage You Can't Have One Without the Other), then my take is that the current situation vis-a-vis credit restriction, banking crises and so on is that the demand curve is in the process of taking a big shift to the left. What that will ultimately mean for market prices will depend on what happens to supply.

http://en.wikipedia.org/wiki/Demand

If people that yesterday wanted to buy a £200k place can no longer afford it, my guess is that people in the market for a £100k place will find themselves similarly straightened if they're trying to borrow to buy.

neverdespairgirl

Sapphire wrote: »

s. Now they have an 'excuse' not to lower them - yet another scam by financial institutions. :mad:

Bit simplistic, that. It was in the news this evening that a big British bank is *borrowing* money at not far off 10%.

MiserlyMartin

beinerts wrote: »

As for the market being 35-50 inflated, well the wide range tells you that the figure is little more than a guess and at any rate it is due to a housing shortage in the country and unless that changes (more houses or less people!) it is unlikely to change much. Finally, I don't see how high inflation will have a downward effect on nominal house prices (it may do on the value in "real" terms). Only time will tell if the market falls and if so, by how much. It would be interesting to revisit in 1 year. I would say by then prices will have remained largely static and people will still be predicting imminent doom. I suppose no one knows for sure though...

1. Housing 'shortage'. There is a shortage of affordable housing, but there is no shortage of housing. When the recession kicks in, all the Polish builders and other types of immigrant workers will go home. That will leave even more vacant houses. Not to mention all the buy to let investors offloading as the crash and new capital gains tax rules kick in. The non-dom's tax will also lead to more selling.

2. High inflation will cause prices to lower if it prevents Labour's MPC from cutting rates or even causes another rise. It also means less money in homebuyers pockets.

Deadman_2

There's a lot of people in the 'denial' stage on here.

There WILL be a crash and it WILL be significant.