House price question

beer_tins

Walter J, what planet are you on? You think a flat currently valued at 170,000 will be available for 100,000 in 3-4 year's time? The worst case scenario (from a professional) I heard was for a 20% drop from the highs last year. They said themselves that was on the pessimistic side of the scale. Do you really think there will be an "well over" 40% drop on top of what the price has dropped already? I know the consensus is that the market is slowing and prices are likely to go down. Experts are divided about how much that will be, but I'm afraid you're living in dream land if you expect drops like this.

m00m00

well even without a full on credit crunch some impressive drops have been seen

all four geographic areas (Central and Inner London; Outer London, South East and Eastern; Midlands, Wales and South West; Northern England and Scotland) the average drop for new build flats between the original Land Registry price and subsequent sale price at auction between January 2005 and February 2008 is -26%.

within those averages there will certainly be drops of well over 40% (I could actually dig out a few examples I know of)

flats will be hit hardest of all in any coming downturn, and virtually everyone with an ounce of economic knowledge can see one coming.

beer_tins

m00m00, that is for new build flats only. It didn't sound like the OP was talking about a new build

Walter_J

beinerts wrote: »

Walter J, what planet are you on? You think a flat currently valued at 170,000 will be available for 100,000 in 3-4 year's time?

Yes, I do!

In the crash of the early nineties flats fell by that amount. The crash that is just starting is going to make that one look like a tea party!

Price falls in the UK will also be worse than in America.

Oh, and if you mean by a 'professional' a snotty nosed kid with gelled hair who works for Foxton's well....



It is you who is on another planet - just wait and see!

m00m00

beinerts wrote: »

m00m00, that is for new build flats only. It didn't sound like the OP was talking about a new build

first the crash came for new builds, but I didn't buy a new build so I wasn't concerned .....


all flats get hammered.

by how much ? no one knows yet

if the strict mortgage rationing in place at the moment continues, and a return to strict 90% or less LTV, and 3.5x salary max, then prices could easily come down 40% or even more in real terms over an extended spell.

it certainly happened last time

HMCma

There is certainly signs of returning to 90% loan to value and some restrictions on income multiples. However, 40% is a significant drop to be suggesting. I think it is worth bearing in mind that any drops, particularly with flats are geographically dependent. Some inner city areas that have seen over development in the last couple of years are now seeing some dramatic drops in prices. Now more than ever you need to do some serious location research. Be cautious when developers are offering mortgage paid for a year, deposits etc as mortgage lenders are becoming stricter and stricter when examining these incentives. Many will essentially deduct the value of this incentive from the stated value of the property you can then pretty much guarantee that the property will be downvalued.

jamescredmond

Walter_J wrote: »

You are about to make the most disasterous mistake of you life and you a quibbling about 3 grand?

No-one with half a brain in their head would even consider buying a house at the moment - never mind a flat!!!

Values have fallen by around 10% since September and the falls are picking up speed. THAT is why your valuation has come in below the agreed price!

Walk away - NOW!!

Carry on renting for 3-4 years, saving a deposit in the meantime, and you will be able to pick up a flat like this for well under £100k. Buy now on a big mortgage and you will be trapped there by negative equity for 10-12 years - assuming you will be able to keep up the mortgage payments when they reset to the SVR in a couple of years time.

This is serious - WALK AWAY!

the argument about %age fall is academic.

a 40% drop prediction places you at the most pessimistic end of the scale.

wherever commercial property goes (down 15% since last year) residential is sure to follow, and apartments are always the first to get hammered.

I'm predicting 20/30% down on the next 3 yrs.

but, no matter.

the only certainty the OP can look to is neg. equity for years to come if they purchase now.

take the advice.

stay out of the market for now.

jamescredmond

HMCma wrote: »

There is certainly signs of returning to 90% loan to value and some restrictions on income multiples. However, 40% is a significant drop to be suggesting. I think it is worth bearing in mind that any drops, particularly with flats are geographically dependent. Some inner city areas that have seen over development in the last couple of years are now seeing some dramatic drops in prices. Now more than ever you need to do some serious location research. Be cautious when developers are offering mortgage paid for a year, deposits etc as mortgage lenders are becoming stricter and stricter when examining these incentives. Many will essentially deduct the value of this incentive from the stated value of the property you can then pretty much guarantee that the property will be downvalued.

I'm in agreement with the geo thing. some locations may actually see marginal increases, for a variety of reasons.

but any upward activity will be seen as 'bucking the trend'.
and the trend is definitely downwards.

no responsible mse'r should offer any encouragement in prop. purchase until the picture becomes a lot,lot clearer.

Davesnave

Perhaps a flat in Wembley won't be such a bad investment then in 2012?

mr.broderick

Walter_J wrote: »

You are about to make the most disasterous mistake of you life and you a quibbling about 3 grand?

No-one with half a brain in their head would even consider buying a house at the moment - never mind a flat!!!

Values have fallen by around 10% since September and the falls are picking up speed. THAT is why your valuation has come in below the agreed price!

Walk away - NOW!!

Carry on renting for 3-4 years, saving a deposit in the meantime, and you will be able to pick up a flat like this for well under £100k. Buy now on a big mortgage and you will be trapped there by negative equity for 10-12 years - assuming you will be able to keep up the mortgage payments when they reset to the SVR in a couple of years time.

This is serious - WALK AWAY!

I'd like to think i had nearly half a brain and i bought a house in december.
These kind of posts really worry me as they are influencing people who are buying at the moment. Hey we all know the market isn't great but posts like these really need to be looked at by the mods.