Prices will fall by 50% in four years

PasturesNew

Paul_N wrote: »

The average house price was 3.5x the average salary once.

I'd imagine the average house (which isn't a ftb house) was bought from somebody who bought their ftb house and then saved more/got promoted/earned more until they could move up the ladder into the average house.

If the average house had been that affordable even back then, there'd have been no need for 1-bed, 2-bed and studio properties in years gone by.

A ftb house is not an average house.
An average house is the 2nd or 3rd one that most people would expect to aspire to if they applied themselves. imho.

To be average, it isn't at the bottom of the range, nor at the top... it's average.

Paul_N_4

PasturesNew wrote: »

I'd imagine the average house (which isn't a ftb house) was bought from somebody who bought their ftb house and then saved more/got promoted/earned more until they could move up the ladder into the average house.

If the average house had been that affordable even back then, there'd have been no need for 1-bed, 2-bed and studio properties in years gone by.

A ftb house is not an average house.
An average house is the 2nd or 3rd one that most people would expect to aspire to if they applied themselves. imho.

To be average, it isn't at the bottom of the range, nor at the top... it's average.

Yes I understand what you're saying, but regardless, there was a time when you could borrow only 3.5x your salary based on your ability to pay the mortgage repayments. That could easily happen again, which would put the sort of downward pressure on prices being discussed in this thread.

PasturesNew

Paul_N wrote: »

Yes I understand what you're saying, but regardless, there was a time when you could borrow only 3.5x your salary based on your ability to pay the mortgage repayments. That could easily happen again, which would put the sort of downward pressure on prices being discussed in this thread.

Yes, 3.5 evolved from years of experience.
They should never have started over-competing by creating new mortgages at silly money and letting anybody fill in a form and walk away with a house.

Annpan

Microstar wrote: »

Not quite.
You sound about the same age as me. Let us not forget that we bought houses during a period of high inflation (both prices and earnings). A few early years of 'pain' were soon followed by much more manageable mortgage payments as inflation whittled the sum owed down to something very sensible. Thus the 'housing ladder' appeared before us. You may also remember something called 'MIRAS'? In effect people of our generation had their houses bought for them (in part) by the rest of society.
The historically atypical low inflation conditions that have predominated in recent years have meant that house buying has become more expensive and difficult for the younger generation, they have not been able to count on high inflation to eat away at the debt - although that may now be changing.

I remember Mortgage Relief At Source, or somat and I also remember interest calculated yearly so if you did happen to have a lump sum to pay off, you had to do it at the end of the year. We didn't have any money as we were always down to the wire at the end of the month with nothing spare to save. I see the difference with many young people now is wanting it all straight away. I can't see many of them making do as we did but that was the same comparison with our parents. We have to take some of the blame for what's happened over the last few years with this attitude of if you want something, get it now, just borrow now and pay later.
Hope we all learn the lesson and things get back on track so that all you holding back and renting can get on with your lives and buy without worrying.

esbo

!!!!!!? wrote: »

Ahem... HBOS shares are now below the level they plunged to in the wake of the alleged 'short selling' plot a couple of months back.

Therefore, the evidence would tend to suggest that there were very good reasons for their fall in value, not just some sort of alleged dodgy dealing behind the scenes.

The real action hasn't even begun yet - look for plunges in the value of sterling, large drops in the stock market, job losses and industrial unrest in the coming year.

So...it's not as bad as it seems :rolleyes:

IveSeenTheLight

brit1234 wrote: »

You will see over the next few months that 50% falls in house prices will increasingly spoken of as reality sets in. Inflation is rising and the days of low interest rates are over. That means traditional lending again which will bring prices back to normal.

:j

The article has said that they predict house prices will fall by 23.5%

cut values by 23.5% when they hit rock bottom in 2011

While "in real terms" the percentage is higher, the actual price is what people will need to utilise when working out affordability and when getting a mortgage

IveSeenTheLight

Snooze wrote: »

There is no price crash. It's just a blip. It'll all be over in a couple of months.

Signed,

Pickles110564, Mr. Broderick, IveSeenTheLight, Dan:, BTLnewbie, etc

I have never said the above, why do people insist on mis-quoting others?

frank.hopper

IveSeenTheLight wrote: »

I have never said the above, why do people insist on mis-quoting others?

To obtain a few brownie points! sad, innit.



The Following 6 Users Say Thank You to Snooze For This Useful Post: Show me >> brit1234 (Yesterday), dopester (Yesterday), jamescredmond (Yesterday), MrDT (Yesterday), neverdespairgirl (Yesterday), Pobby (Yesterday)



Brownie points are a hypothetical social currency, which can be accrued by doing good deeds or earning favour in the eyes of another superior.


From Wikipedia,

IveSeenTheLight

frank.hopper wrote: »

To obtain a few brownie points! sad, innit.



The Following 6 Users Say Thank You to Snooze For This Useful Post: Show me >> brit1234 (Yesterday), dopester (Yesterday), jamescredmond (Yesterday), MrDT (Yesterday), neverdespairgirl (Yesterday), Pobby (Yesterday)

Brownie points are a hypothetical social currency, which can be accrued by doing good deeds or earning favour in the eyes of another superior.

From Wikipedia,

Gave you a brownie point but I dont think of you as my superior

Who is Snoozes superior?

IveSeenTheLight

PasturesNew wrote: »

Yes, 3.5 evolved from years of experience.
They should never have started over-competing by creating new mortgages at silly money and letting anybody fill in a form and walk away with a house.

I'm interested, what was the multplier pre 1980. Was it also 3.5 times?
Any links to see what the multipliers was in historic years.

I see lots of people quoting this multiplier and to an extent I can understand why. However, the world has evolved and maybe this means the multiplier evolves as well i.e. multiplies on joint incomes (and not 3.5 times one and a single of the other, as this was maybe the multiplier defined due the the second wage being vastly different to the first)

Edit:
http://www.shiredirect.com/mortgage-glossary/income-multiplier.html (I know its not the best link but one which I found to show old multiple income ratios)
This first multipliers were apparently used in 1960 with a 2.5x ratio

Mortgage funds were very tightly controlled by the societies, which operated income multiples of 2.5x basic income and disallowed overtime and bonus payments. Event at these low levels, mortgage rationing and mortgage queues were not uncommon

Does anyone think there will be a return to these multiples?
the important thing to undersand is that multiples were not governed to ensure that the borrowers could afford but that the lenders were willing to risk and hence why the risk can be moved depending on the business requirements, not the borrowers

I'm not advocating, people take gospel this link or use them, some of the article I would not recommend, however I do agree with this paragraph

How much can I borrow on mortgage?

Well, put simply, you should only ever borrow what you can comfortably afford! To do otherwise would be sheer folly!