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

Paul_N_4

I think what is being missed is that if houses do drop significant amounts like 30%+, it will be because other living expenses have gone up, meaning less disposable income to service a mortgage. As has been said above, house prices are set by what people can afford. If mortgage rates continue to increase, and the cost of living through increased fuel bills, food bills, other inflationary pressures, then the amount of money spare to spend on a house will drop, and thus house prices will drop. To say "if they fall 40% surely everyone will be snapping them up" you're assuming the cost of living, including servicing a mortgage will remain as it is today, which is unlikely.

boinging_2

THSHARIF wrote: »

it is becoming stupid, first they lend to anyone then they start becoming over disciplined in thier lending

It's called the credit crunch.

The danger for you with your high deposit is when house prices are falling, the bank don't share the loss. The loss all comes from your equity so 25% desposit soon becomes 10% of value etc.

Turnbull2000

Dan: wrote: »

sh*te snipped

This forum could to with some troll tags.

phil_b_2

I agree with you mitchaa. I'm starting to think those predicting 30, 40 or even 50% drops are a bit warped.

The market would go insane at those prices. People seem to have unrealistic notions that they SHOULD be able to afford a good home, but I question why?

Those that keep mentioning the crash last time round maybe need to consider the fact that was then and this is now. The situation isnt exactly the same. I know people who were a matured age in the last crash and they say this feels nothing like that one. It just sounds like an excuse to me.

I can afford and get a mortgage on a £180k house now. If prices crashed by 40-50% I would be buying 2. There is no way in my mind houses can become anywhere near that cheap, the market would be set on fire again before they even got close.

neas

Even if mortgage rates would rise... so its 'just the same'... Would you prefer to have 5 years 'low rate' on a 30% overpriced house

or.. would you rather start on the higher rate on the lower priced house?

Because... once your initial fixed rate comes to an end on the expensive version... you WILL be paying more than if you waited... because at the end of both fixed deals both will have similar Levels of interest.

abaxas

Dan: wrote: »

I wouldn't take too much notice of the nonsense that is sometimes aired in this forum.

It is always going to be difficult to buy your first home, but that has always been the case - it makes me laugh when some people reckon it was a piece of p!ss to buy a house 10/20 years ago.

These days FTB set their expectations way to high. They come out of Uni, get a job with a salary of 25K and expect to be able to buy a 3-bed semi with a double garage. When they discover they can only afford a 1-bed in a less desirable area of town they complain they are priced out of the market.

Start at the bottom.

I agree it has always been difficult, however you have to remember that housing ladder does NOT exist in the same way as the 60/70/80s. We no longer have the level of inflation to make payments easier over time.

kristianwilliams

Dan: wrote: »

I wouldn't take too much notice of the nonsense that is sometimes aired in this forum.

It is always going to be difficult to buy your first home, but that has always been the case - it makes me laugh when some people reckon it was a piece of p!ss to buy a house 10/20 years ago.

These days FTB set their expectations way to high. They come out of Uni, get a job with a salary of 25K and expect to be able to buy a 3-bed semi with a double garage. When they discover they can only afford a 1-bed in a less desirable area of town they complain they are priced out of the market.

Start at the bottom.

True! im lucky to be living in an area where house prices have in the most, not gotten too stupid. a friend has gotten a house with his GF for £135,000. Its in a nice area, and has 2 bedrooms.

I've come out of uni, and am currently renting with my GF, to pay off debts from Uni, and then save for a deposit. I'd like to think im starting from the bottom

But I also know that when houses have gotten to a point where they are NINE times the salary of local earner, that something is wrong. No matter how low you have to go, that there is a stupid figure. I dont complain about the house price crash because I want to get onto the ladder, the prices are simply damaging to the economy and the country as a whole. We are living on borrowed money. Money that actually does not exist. That is not a good thing. Being told by a mortgage specialist, that after she has worked out all the bills and the mortgage, we would be left with £50 a month for "ourselves" and that this is a good thing, is shocking.

I hate to use the word "correction" because its a buffer word. A word to buffer the impact of what is happening, which is a "crash". The word is though, correct. We dont need a "crash" we need the prices to return to a level of normality. What we have experienced over the last few years, is a level of abnormality. Which has lasted for such a long time, many see as the norm. It is not. Which is unfortunate to my generation, as we are in for quite a shock.

boinging_2

phil_b wrote: »

I agree with you mitchaa. I'm starting to think those predicting 30, 40 or even 50% drops are a bit warped.

The market would go insane at those prices. People seem to have unrealistic notions that they SHOULD be able to afford a good home, but I question why?

Those that keep mentioning the crash last time round maybe need to consider the fact that was then and this is now. The situation isnt exactly the same. I know people who were a matured age in the last crash and they say this feels nothing like that one. It just sounds like an excuse to me.

I can afford and get a mortgage on a £180k house now. If prices crashed by 40-50% I would be buying 2. There is no way in my mind houses can become anywhere near that cheap, the market would be set on fire again before they even got close.

Yet you may not have a job by the time we hit 40% price cuts, the mortgage companies may require a 40% deposit and the cost living be running god knows what.

It's all speculation and forecasting, but there are some pretty serious facts out there which has to make you worry for house prices. If lenders are moving to 90% max loans, that in effect is the bank edging prices will fall by 10%. The banks aren't stupid they use your deposit to insulate any falls. As this ratio increases it give a good indication on what they are thinking. This actually then influences the prices as people need the money to buy from the banks.

Within the South West 10% drops on prices are real and here today on property versus Aug 2007.

Turnbull2000

phil_b wrote: »

I agree with you mitchaa. I'm starting to think those predicting 30, 40 or even 50% drops are a bit warped.

If you believe wanting a lower cost of living is "warped", then I suggest you leave MSE.

phil_b wrote: »

The market would go insane at those prices. People seem to have unrealistic notions that they SHOULD be able to afford a good home, but I question why?.

Pre-credit boom, the historical average price was 80K. The current average is 180K. Prices are unrealistic, not buyer expectations.

phil_b wrote: »

Those that keep mentioning the crash last time round maybe need to consider the fact that was then and this is now. The situation isnt exactly the same. I know people who were a matured age in the last crash and they say this feels nothing like that one. It just sounds like an excuse to me.

I can afford and get a mortgage on a £180k house now. If prices crashed by 40-50% I would be buying 2. There is no way in my mind houses can become anywhere near that cheap, the market would be set on fire again before they even got close.

Umm, how will everybody afford two if the mortgage finance on offer fell 40-50%?

Paul_N_4

phil_b wrote: »

I can afford and get a mortgage on a £180k house now. If prices crashed by 40-50% I would be buying 2. There is no way in my mind houses can become anywhere near that cheap, the market would be set on fire again before they even got close.

No, you can currently get a mortgage on a £180K house. If house prices were to drop 40% it would be because of a mulitude of reasons that could include tighter lending criteria, higher mortgage rates, much higher deposit required, the cost of fuel, food and every day living going through the roof meaning people have little money left over to purchase a house. And that's if you keep your job. So you won't be "buying 2", you'll be too busy spending your money on your current mortgage, keeping yourself warm and feeding yourself.