House prices: 50% falls before fair value

dopester

mitchaa wrote: »

The average price of a home in the UK as of May 2008 is £176k

Does anyone really believe this figure is going to fall to £88k :rolleyes:

Some people are in the clouds.

>>> Hello mitchaa - and how is the air up there? <<<

12 years of boom = 198% house prices versus wages up 63%
(and I would challenge the HPI to wages even more than their estimates)

You are more than happy to accept this lunatic HPI but not any reverse situation.

Prepare yourself for a credit-crunch and economic slowdown schooling.

snoopy78

PhilDS wrote: »

There's plenty of cash out there, it just costs more. I put my and my wife's income into the Nationwide "How much can I borrow calculator" and was surprised at how much they would lend us in the current climate.

Income per year = £58k
Willing to lend = £246.5k

What's that...4.25 times salary. Our mortgage is currently way below that figure, so I'm not worried about remortgaging in October. The rate will be higher, but you have to expect that over 25 years or paying a mortgage!

Stop scare mongering.

Question is with interest rates sitting so high you'd struggle to get 5.60% at the moment, and at that rate you'd be paying around 45% (repayment mortgage over 25 years) of both your salaries (take home).

There is always money out (loan sharks for instance) question are you silly enough to spend almost 50% of wages just on your property, not much room for movement if something goes wrong.

People did get fooled by the starting interest rates, and struggled afterwards would those same people risk it given the economic state of the world (food & fule shortages hiking prices, which has nothing to do with the credit crunch so is unlikely to improve over the short term).

PhilDS

snoopy78 wrote: »

Question is with interest rates sitting so high you'd struggle to get 5.60% at the moment, and at that rate you'd be paying around 45% (repayment mortgage over 25 years) of both your salaries.

There is always money out (loan sharks for instance) question are you silly enough to spend almost 50% of wages just on your property, not much room for movement if something goes wrong.

People did get fooled by the starting interest rates, and struggled afterwards would those same people risk it given the economic state of the world (food & fule shortages hiking prices, which has nothing to do with the credit crunch so is unlikely to improve over the short term).

I'd never borrow that much...I agree that would be financial suicide (or at least self harming). The only point I was trying to make was that one of the top lenders is still willing to bung me a lot of money if I wanted it.

I don't think NW ever were willing to lend 9 times salary (or 100% mortgages?) as some have mentioned, so have they really tightened their criteria or just jacked up prices? They do still lend 95% tracker mortagages you know.

WTF?_2

HammersFan wrote: »

Which enough have to make it a very competitive market still when they see the time is right. There is a still a lot of money kicking around out there waiting for the right deal, its still going to be a scrap for FTB'ers IMO.

Which is just another way of saying prices won't drop.

We've already seen 7 months of falling prices and the YOY trend has reversed from +11 to -1 ... the market is already falling.

What's been holding it up is large amounts of cheap and easy credit plus public sentiment that buying property is a surefire winning proposition. Both now gone.

The next level of support will be FTBs returning en-masse. Without the ability to borrow massive multiples with a high LTV it will be quite a way to fall IMO.

LillyJ

Wooo if houses are going to be £0 I am going to get loads of them. One for my nan, one for my sister, one for the dog......

Lotus-eater

!!!!!!? wrote: »

The next level of support will be FTBs returning en-masse. Without the ability to borrow massive multiples with a high LTV it will be quite a way to fall IMO.

I don't know, I still know BTL'rs buying now, they are professional guys though and know what they are doing. I wonder about all the BTL'rs that have made money over the last few years and have it sitting around waiting for the right time to buy again.
Many on here think that BTL'rs are all idiots, but many are not, when margins are right again I can see them coming back into the market and not worrying about catching the exact bottom of the dip.

snoopy78

PhilDS wrote: »

I'd never borrow that much...I agree that would be financial suicide (or at least self harming). The only point I was trying to make was that one of the top lenders is still willing to bung me a lot of money if I wanted it.

I don't think NW ever were willing to lend 9 times salary (or 100% mortgages?) as some have mentioned, so have they really tightened their criteria or just jacked up prices? They do still lend 95% tracker mortagages you know.

Makes no difference what they are willing to lend people may not think long term buy they do think about paying there first mortgage payment, and at anything over 40% of take home pay people will think twice.

The HPI was not fueled by debt alone as debt has always been available, it was fueled by CHEAP debt. You can afford 4-6 times salary if rates are 4% or lower you can't if they are higher.

snoopy78

Lotus-eater wrote: »

I don't know, I still know BTL'rs buying now, they are professional guys though and know what they are doing. I wonder about all the BTL'rs that have made money over the last few years and have it sitting around waiting for the right time to buy again.
Many on here think that BTL'rs are all idiots, but many are not, when margins are right again I can see them coming back into the market and not worrying about catching the exact bottom of the dip.

Sorry but you obviously don't really understand how it all works, for BTL to increase they relay on the market value increasing, they are highly geared and need CHEAP debt to increase investments.

So they buy a house woth £50K, with a £10K deposit two years later the house is worth £60K, they release £10k from the 1st property add £2k and buy another property, with £12k deposit etc.

As you can see they are highly geared (meaning they have large debt figures than actual capital, own money, invested.) This is great while interest rates are low.

BTL are not fools and as such they know whilst rates are high, and we are talking about 6%+ for BTL mortgages they will not stretch themselves and will not increase investments. Cheap debt and raising house prices are what they look for, take away both cheap debt and raising house prices and many will not wish to increase there investment.

borntobefree

brit1234 wrote: »

I think a 50% fall is fair, thats what it would take to bring prices down to about 3.5 times salary here in London.

The way lending is going 50% is likely especially with far higher interest rates in the future due to massive worldwide inflation.

No chance - sorry. There are parents camping out at our local primary because they havn't got their children a place there for this September. They will pay any amount of money (it would seem) to live here. The idea that prices will not be affected by local factors is ridiculous IMHO.:p

HammersFan

snoopy78 wrote: »

As you can see they are highly geared (meaning they have large debt figures than actual capital, own money, invested.) This is great while interest rates are low.

.

By no means are the majority highly geared. There are lots with cash ready to go on the right deal. Money has not just diappeared from the these people.

But I do agree that the 6% BTL deals out there at the moment will put many off. I also think that as soon as some deals around 5.25-5.5% become available (with low fees at 80% LTV) then there will be a return (such figures would make sense in my area for instance).