House prices down again in August

meanmachine_2

zag2me wrote:

I spoke to a friend who got caught in negative equity badly in the 80s, he said in hidsight he would do it again, as he wasnt forced to sell at the time, a house price crash didnt effect him in the slightest other than to make him "feel" less rich. He now lives in a huge 3 bedroom house in the nice area of town

He needs MUCH better hindsight.

In hindsight you avoid past mistakes. So therefore he should have waited a year or two and bought in the mid 90s. Then he would have avoided NE.

In fact, in hindsight, we'd all have bought in the troughs and not done so in the peaks. This isn't a speculative thing, but when you buy and sell your house can affect your long term wealth massively.

I might look back in three years' time and kick myself that I didn't buy now. Or I might be pat myself on the back. WHo knows?

It's best not to dwell on the past in either case.

kinesin_2

zag2me wrote:

I spoke to a friend who got caught in negative equity badly in the 80s, he said in hidsight he would do it again, as he wasnt forced to sell at the time, a house price crash didnt effect him in the slightest other than to make him "feel" less rich. He now lives in a huge 3 bedroom house in the nice area of town

If you don't have to sell you might be ok.. What happens if you lose you job, or the wife is expecting kids etc? The current downturn in houseprices and reduction in high street spending is already causing an increase in lay offs - and the negitive loop just feeds on itself.
It could all get very nasty in UK PLC, especially with oil prices forcing bills, and transport and everything else up in price! :eek:

dean_ham

Both of the previous 2 posts make sense.

I agree with you totally MM with the point - "when you buy and sell your house can affect your long term wealth massively.

I might look back in three years' time and kick myself that I didn't buy now. Or I might be pat myself on the back. WHo knows?"


I can afford to buy a house now. But i will be left with very very little of my income left after the mortgage payments household bills etc etc (im talking £200-300) a month remaining. I am taking a gamble by holding onto my money for another 1-2 years but if the gamble pays off my life will be alot more comfortable for me in the future..... And i cant see property prices rising sharply again for the next 2 years atleast, so it seems a low risk gamble in my eyes. If they drop 5-10% ill be happy, if they stagnate so what. Id have a bigger deposit and more money to spend on the property, i will have a larger paypacket and also i will be a qualified Electrician :P

In

odorus

Refering to the housing crash in the late 80's/early 90's is only useful if all the factors are taken into account.
Yes the market was overheated, but it was our fatal entry into the ERM that caused the problem. Norman Lamont raising the bank base rate to shore up the falling pound pushed mortgage payments over the edge. The economy was also cooling down and unemployment was rising, especially amongst the high wage earners.
Today the housing market is overheated and there is no doubt people have overstretched themselves with their mortgage. But that is where the similarities end. The pound is one of the strongest currencies at the moment. The Bank now makes the decisions over the base rate, removing inept politicians from the process. The economy is doing well, according to Tony and Gordon. O.k so that could be, and is, debated fiercly at the moment. Gordons low inflation does hurt peoples mortgages, as £100k will still feel high in a few years at the current level.
Have house prices gone up overall since the 60's? Like the stock market there are fluctuations but overall the index has risen.

GDB2222

I agree with that. Very true.

Nevertheless, house prices are very high on an historical basis, so this is probably not the best time to buy. Not much room for upward movement, but plenty of room for one of those downward fluctuations.

If you NEED a house to live in, that's one thing. You have to take a view.

However, buying now as an investment (maybe to rent out), that seems to be a really bad idea. I cannot prove it, but I would be really quite surprised if it shows a positive return over the next 5 years compared to the mortgage cost.

If you have cash to invest in a BTL, think about buying a spread of shares on the London Stock Exchange. Roughly a 50% return over the last couple of years.