Isn't anybody tired of hearing the same old

Paul_N_4

EdInvestor wrote: »

Actually I expect it to drift sideways for quite some time, certainly until the credit crunch sorts itself out. Most people will just wait, since there's not much point in trying to sell if buyers won't make reasonable offers and can't get mortgages, it's a total waste of time.

There may be some forced sellers, but that is likely to have only a local effect ( eg new build inner city flats). If people desperately need to move, they can always just rent out their PPR and use the income to rent another place for themselves in the new area.Things are much more flexible these days than they were in the early 90s.

Really? I don't think "most" people will have as a pessimistic view as you do. Most people, as in most home owners, have bought some time ago and if they're moving from house to house, the comparative drop in value of each property won't make a big enough difference to put off moving altogether. My parents being a prime example. And if Rightmove is anything to go by, in my area people certainly are not putting off selling their homes.

In fact, the only people who would be inclined to put off selling would be those looking to sell up for retirement maybe, and FTBers that bought maybe as much as up to 3 years ago (other than forced sellers). Overall that is a small percentage of home owners. As I say, the rest will simply move from house thats dropped in value, to next house thats dropped in value.

gabyjane

Hoario54 wrote: »

If you have cash available why bother with a mortgage?

I don't recall saying i had cash available..i can get hold of a lump sum if the worst came to it to tide us over..the rest is not long to come..didn't help me out 7 months ago though when we wanted to buy this house..and we wanted to buy this ourselves at the end of the day not rely on handouts!

Paul_N_4

teabelly wrote: »

Wow, so prices rise 300% in 10 years then drop back a bit? 50% crash, my bum. The average house will not be worth 110k in a few years time. The average house will be worth about at least 200k which is roughly where they are now! Losing a whole 10%...

You mean FTBers won't have it anywhere near as easy as you did? (see post #44)

teabelly

RHemmings wrote: »

Thank you Paul N. We often hear this glib claim that things were always hard for FTBs. Then we find out that the people making the claim bought at a time when it was infinitely easier to buy.

I can afford my current house on my current salary under current conditions. It would be about the same multiple as when I bought originally so it hasn't got any harder as far as I am concerned.

Paul_N_4

teabelly wrote: »

I can afford my current house on my current salary under current conditions. It would be about the same multiple as when I bought originally so it hasn't got any harder as far as I am concerned.

So you've been lucky enough to have pay rises that have not only kept pace with RPI over the past 8 years, but have been linked to HPI? Judging by your last post, that would be somthing like 240% increase in salary over 8 years.

gabyjane

I shall use 2 friends as examples here:

friend 1: Bought her house few years ago, not exactly sure what year..she found it hard at the time, really stretched herself..lived off beans on toast etc..she has re sold and now got a far nicer, bigger, better house that she can afford btw..if she was one who had listened to some of you lot saying 'wait wait wait' she would still be renting!
friend 2: Bought hers 2 years ago, has just had it valued and it has increased £38k..they are staying put as love the house, have got a long fixed deal and are happy..another one who would still be renting if listening to the nonsence on here!

I'll say it again....if you can afford it go for it..lifes too short to sit around worrying what everyone else 'predicts' might happen..if i wasn't mistaken id'e take some of you for mind readers!!

tr3mor: we have got a 25 year mortgage but our house is gorgeous and one that will suit us for years to come..that's why we never were able to buy in the last few years as everything in our reach i wouldn't put a dog in! Oh and for which house do you choose..well one you like, that suits you etc..it's not all about money.

teabelly

If you borrow 3x salary then to keep pace with HPI you need to have wage rises of approximately 1/3rd of HPI each year. If you are trebling the salary so another 1k will add another 3k to borrowing available. If you borrowed 4x then you'd need to keep up with a 1/4 of annual HPI. If prices rise 300% then you only need 100% wage inflation over the same time to keep pace on the multiples.

MrSafeGaz

gabyjane wrote: »

Anyway my outlook is if you can afford it buy, if not or it's going to stretch you then don't..common sense really..seriously all of you saying wait, people have brains and can decide for themselves wether to go for it or not can't they??

Regardless of how long people have been saying that house prices will fall so wait, the fact is, is that right at this moment they are falling. My outlook is, if there is a chance that prices are going to drop even slightly in the next 12 months then you should wait those 12 months...common sense really.

Aside from that, you are right that people have brains and can make decisions for themselves but as you can see from this website alone, there are so many financially naive and irresponsible people around that perhaps some advice does indeed help more people make the right decision.

Paul_N_4

teabelly wrote: »

If you borrow 3x salary then to keep pace with HPI you need to have wage rises of approximately 1/3rd of HPI each year. If you are trebling the salary so another 1k will add another 3k to borrowing available. If you borrowed 4x then you'd need to keep up with a 1/4 of annual HPI. If prices rise 300% then you only need 100% wage inflation over the same time to keep pace on the multiples.

Can you do the sums for me because I must be a bit thick. Lets assume you earn £20,000 in the year 2000 and the house you bought was 3x your income @ £60,000.

Give me 100% wage inflation on £20,000 and 300% HPI on the house, and maintain a 3x multiple?

boinging_2

teabelly wrote: »

Wow, so prices rise 300% in 10 years then drop back a bit? 50% crash, my bum. The average house will not be worth 110k in a few years time. The average house will be worth about at least 200k which is roughly where they are now! Losing a whole 10% when they have risen 300% in 10 years is hardly crash territory is it though? .

Okay so house prices going from 10% increase to 10% decrease isn't significant year on year?

Don't get hung up on the term "crash" - it has no meaning.

You are missing the point, in that noone can deny that buying a house 5 years ago was a great idea looking at HPI over this time. However now is a really really bad time to buy a house. People that bought 5 years ago may be able to ride the storm out but if you buy today at yesterdays prices you must be mad.