What makes you think housing is going to become ''easily'' affordable?

mitchaa

Throughout these boards there are continual threads on how properties are going to fall 30-40 and even 50% in the impending ''housing crash''

If this were to happen, then housing surely would become stupidly affordable and buck the trend on current thinking that property is expensive? Agreed?

£180,000 average priced homes dropping to £90-£100k is what some of you lot are predicting??

I am a young one at 25 and was too young to remember the last crash, but the young generation of today, myself included have always accepted that buying a house is going to be financially difficult. Everywhere you go and every youngster you ask about the housing market and they will reply with 1 word.......Expensive!!!

If average priced homes today are going to drop 40-50% then housing is going to become stupidly cheap and change the whole current believing that buying a house is expensive.

A FTB couple with an ''average'' today mortgage of £125,000 will then be able to jump straight onto the ladder into an average 3bed semi detached home and skip the 1bed/2bed flats/terraces/maissonettes etc below them.

Or a FTB may be able to purchase 2 or even 3 one bedroom flats for their £125,000 outlay

Doesn't make much sense to me if i'm being honest.

Granted a correction is needed, especially down south but i dont think the 4-5x annual salary calculation is ever going to go away like a lot of you think it will.

So to the people who are predicting the 30/40/50% crashes in house values please explain why you they think they will and to the points ive raised above?

I am not going to pretend i know a lot about the housing market, i'm just intrigued to find out why a lot of you think housing is going to become easily affordable?

Mitchaa

dubsey

As you say - too young to remember the last crash.

A girl I worked with had bought a new build one bedroom house for £70k. She sold it at around the bottom for £29k.

Now tell me it can't happen.

THSHARIF

i am going to go ahead with the purchase of a house, I have waited for over two years for a decent house to come up on the market at a realistic price.
129000, has been accepted, I am fed up of saving , and renting.
I am not going to sell this house for at least 5 years.
i am putting a deposit of 25% on his house.
if prices were to drop pepole will not sell, but wait for them to go up agian. especially in high demand areas , people will not sell but rent out thier property until this crisis is over.
by this time the number of people waiting will increase, thus meaning sellers bieng able to get what they ask for.

buying know rather than waiting for things to happen is based on assumptions from the past.

landlords who have bought houses for buy to let , will not sell but benefit further from this crisis.

right or wrong ?

IveSeenTheLight

I understand your points.

Dropping by 30, 40, 50% would make it affordable to single people to by 3 bed semi attached, let alone families.

Demand would soar

oldMcDonald

We bought a 3 bed EOT Q2 of 1994 for £29,999. We had to sell in Q3 1996, put it on at £25,500 and sold for £20,000 (after several price drops). 30% lost in 1.5 years. We had put down £18k so were lucky that we could drop until we reached a price that people would pay, others who were not so lucky were stuck in -ve equity and could not move....many I knew were reposessed.

That same house had sold to the previous owners in 1989 for £45K.

It can and does happen.

IveSeenTheLight

dubsey wrote: »

As you say - too young to remember the last crash.

A girl I worked with had bought a new build one bedroom house for £70k. She sold it at around the bottom for £29k.

Now tell me it can't happen.

did she upgrade, if so she would have saved on the larger property.
How much is that one bedroomed house now?
How much would a 50% drop make it?

oldMcDonald

THSHARIF wrote: »

if prices were to drop pepole will not sell, but wait for them to go up agian. especially in high demand areas , people will not sell but rent out thier property until this crisis is over.h

There are many people who are not in the lucky position to be able to decide to sell or not. If a recession or inflation hits, people can lose their jobs - many are forced to sell or be reposessed.

If you are unable to pay your mortgage and the bank wants to repo, they are not going to wait for you to find someone who will rent to you with your bad credit reference, and then for you to find someone equally suitable to rent from you.

The bank wants their money NOW.

THSHARIF

to many people say thier will be a drop, max drop will be 10%, if you can negetiate a good price with the seller in this current time , you can aviod loosing any of your deposit in negative equity.

it is hard to get a mortgage at the moment but if you worry about rates giong up or down by 1%. you might as well not buy at all.
the kind of money you need as deposit is thousunds, compared to £40 or $50 quid each rises in interset rates month.
if you got they money in the bank use it know to your advantage.

kristianwilliams

The problem with this assumption is that the credit will be available for ftb to get that mortgage.

The joint income of my girlfriend and I (im never sure if its "and I " or "me and" ) is £25,000 pa. South wales.

Using basic knowledge, a 5x mortgage would = £125,000 correct? thats if we go for an all we can get top end one mortgage. "Whats the most we can borrow?? lets go for that one"

As has been seen, any major changes in inflation would screw us over, and leave us with very little to live on.

The lower prices are in relation to lower credit. The banks wont lend us the money, so we cant buy the house at that price.

If the bank goes "you can only get 4x your annual wage" that leaves us with £100,000.

We are looking at saving a nice deposit of £15,000 before we start looking. So we can pay at least 10%.

Looking at current trends, even 10% is hard to get, and some are asking for a larger deposit.

The larger the deposit needed, the lower the price we can afford. The lower end houses then become our target. People trying to sell 3 bedroom houses to ftb's would need to lower their prices to match what the banks are able to lend us. They wont do that. So us FTB's will still have to look at the smaller end of the market.

A house is still going to be a HUGE effect on finances of FTB's no matter how cheep they get. Because we live in a society where credit is cheep, we dont understand the word "save". When we get told "sorry, you have to save thousands of pounds before we'll even look at you" how many will go "oh well, the houses are still super cheep!! look its only £125,000." when they have to save £20,000 for a deposit???

Sisyphus

Look at the auction thread - many properties not selling at reserve prices - they may have to come back with more realistic prices.

4littleone

I don't believe that house prices will drop anything like the 30% and upwards that some are predicting.

The current crisis is a different situation to the crash we saw previously.
Last time around there was a huge surplus of housing coupled with high unemployment, a stock market slump and lack of flexability in mortgage and lending criteria.

This time around there is less housing which has led to the vastly inflated prices we see now. The issue doesn't come from the stock market, it comes from the lack of fluidity in the lending market. This started in the USA when mortgage lenders suddenly found they couldn't borrow more money to lend to the general public as they had oversold to sub prime candidates who had begun to default on their existing loans.
The rot has spread as the institutions behind the mortgage lenders come under pressure as they have to write off more and more bad credit.
The situation is compounded by the fact that due to all the cheap credit available an awful lot of people have really overstretched themselves.

First time buyers won't benefit from all of this because they are a higher perceived risk and they can no longer get the 100% or even 90% mortgages that were available.
So in other words, most first time buyers have less disposable income, less chance of saving a decent deposit so less chance of being accepted for a mortgage.

All of the above is only my humble opinion though. :rotfl: