House prices: 50% falls before fair value

WTF?_2

merlinthehappypig wrote: »

I'm just hoping that things might just get to the point where we can buy with little or no mortgage. One more shove might just do that. If that happens I couldn't care less what prices do in the future. People forget that even if prices increase by 100% making them rich on paper, they still have to pay back the mortgage they took out - that doesn't change.

Yep - mortgage free is the way to be and once you are in that position in your home, who gives a monkey's about price rises or falls. A real weight off the mind.

The thing about mortgages is that people don't seem to appreciate that they are debts. Therefore they don't seem to put much thought in before borrowing lots of money - probably the most money they will ever borrow - via a mortgage. Even worse, there seems to be a widespread delusion that MEWing is somehow just getting your own money back, which is ridiculous. And of course when the asset you borrowed against is always rising in value you don't tend to worry too much about paying it all back.

Debt has been really easy to service in the last few years. It's about to get very much harder to service in the next few (especially as price inflation hits) and I think quite a few people are going to be reminded that mortgages and MEWing isn't 'free money'. We haven't even begun to see this crisis unfold yet in real human terms.

WTF?_2

snoopy78 wrote: »

Yes but they also have to write the figure down to 85K in the Balance sheet at the end of the year and meaning the company is worth 15K less. Do this for all there houses.

That is the whole credit crunch problem, people will not lend money to each other baised on mortgages as security as they believe that they are overvalued. They are basically glorified !!!!!! brokers, would a !!!!!! broker give you £100 for a watch worth £50 even if he thought you'd come back?

I take it you mean 'pawn' broker .... or was that a Freudian slip

Jonbvn

snoopy78 wrote: »

They are basically glorified !!!!!! brokers, would a !!!!!! broker give you £100 .....

Sounds like my dream job!:rotfl:

dopester

snoopy78 wrote: »

Yes but they also have to write the figure down to 85K in the Balance sheet at the end of the year and meaning the company is worth 15K less. Do this for all their houses.

snoopy78 wrote: »

would a pawn broker give you £100 for a watch worth £50 even if he thought you'd come back?

Great way of explaining it snoopy (despite the spelling).

Austin_Allegro

borntobefree wrote: »

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

Ah, the old 'prices won't crash in my area because of schools/olympics/city bonuses/insert feeble estate agent reason here/ argument

Local factors might make small differences but regardless of location prices can only stay high if people have the money to pay high prices - at the moment they don't because of credit contraction and rising utility/commodity costs, and nobody knows how long this will last.

This is why prices are falling in prime London as well as everywhere else.

snoopy78

!!!!!!? wrote: »

I take it you mean 'pawn' broker .... or was that a Freudian slip

LOL Yeah probably was .

Lomion

We own our house (3 bed semi). We have a nice little 2 bed flat that we rent out for just under £450pcm (no letting agent).

We were planning on buying another 2 bed to rent out, but are now holding off to see if we can buy a 3 bed of some kind, or maybe a nice flat somewhere in London. Most people I've discussed this with seem to think that it will be mostly new builds or flats that get spanked the hardest. Family homes are apparently in more demand.

Think there are probably quite a few in the same boat waiting to see what happens. Spoken to a few colleagues/friends and that seems to be pretty much the consensus. I'm guessing (hoping ) 20-25% should do the trick.

If they do drop any further, we might just upgrade our own home to something a little bigger and rent out the old place.

DaveyDave_3

firsttimetom wrote: »

Scare Mongering?
Houses are vastly overpriced. End of Story. They will come down, but no one is sure how much by. I would happily predict 30% from peak.

What about this graph?. Given an undershoot from the red trend line, I estimate we are in for a 35% reduction based on previous crashes, but it looks like it'll take 4-5 years. Roughly speaking I believe this crash will be just part of a normal economic cycle and will no doubt repeat itself again in 18-20 years time.

PasturesNew

PhilDS wrote: »

I was merely disputing the fact given that "there is no money around". There is. It just costs a little more.

You can punch in your details all you like, it doesn't alter the fact that at the end of the day you have to fill out the forms and pass their test:
- do you have a 10% deposit? Y/N
- how much credit/debt do you have at present?
- how is your overall credit rating?

The online "how much can I get" guesstimate would be a maximum... you still have to qualify.

Which will exclude many people from obtaining a mortgage now.

And, yes, it costs more.

But for some, it doesn't matter how much it costs if they're not allowed to get their sticky paws on it.