Prices will fall by 50% in four years

Kez100

jeepjunkie wrote: »

So you think you should be able to afford any house based on income alone?

Is that not one of the issues that caused the problem in the first place...

I don't understand what you are talking about? I am talking about our home, not any home. Our home is the sort of size I would consider to be commensurate with the jobs we have when also considering the number of years we have been in the housing market.

On the same basis a FTB home in our town, when reduced by 50%, would be about 75k. That ought be be affordable on a 3x family income where they are in full time local jobs.

Indeed, people on much lower incomes could still not afford a place - they never have. No shame in renting.

If you think sensibly - speculation and overlending have been the basis of underlying market change. It still is, except speculation has become negative and overlending reverted, to some extent, to mean. The latter could cause IMO a fall of 50%. However, as I have said there are other things in the equation which we do not know yet....

Will FTBs/BTLs jump back on too quickly and in big enough numbers to reverse the 'speculation' element to long term positive again?

Will lenders relax their lending criteria again?

Will interest rates rise significantly?

Probably a million other things I have not thought of.

dopester

mitchaa wrote: »

I can only assume wages go up, so the £25k average wage at moment will rise to around £30k in 5 yrs giving Mr and Mrs Average a 3x £60k

I do not think wages will drop, how can they, people are already on very tight budgets, if i for 1 was asked to take a pay drop i would walk with my feet straight into another job within that week.

These are very significant assumptions you are making. Those other jobs might be available to you now in your particular area, but not to everyone else. Payrises can't be magically given when the businesses/companies themselves are struggling to cope.

mrs_pepperpot_3

lolololololol rofl i own my house outright, feel bad for youngster i have three myself to find homes for. but im laughing at those arrogant ones who own lots of properties and charge stupid rents, or the ones who buy up small communities in cotwolds wales and such and ruin comunities with holiday homes lol , hope they cost a bomb and now worth peanuts
with the advent of broadband, i ould not see why i had to live in the south east so i moved from expensive brighton to cheaper lincs, bought outright and now house prices will level out, companies dont all have to be anywhere, transport lincs are important but so is rental costs, and broadband is making it easier to do anything anywhere.

mitchaa

dopester wrote: »

These are very significant assumptions you are making. Those other jobs might be available to you now in your particular area, but not to everyone else. Payrises can't be magically given when the businesses/companies themselves are struggling to cope.

We have London City bankers bumping up that average wage every year

Kez100

mitchaa wrote: »

We have London City bankers bumping up that average wage every year

With comments you make I am guessing you are relatively young.

You assume payrises. What about redundancy? Or liquidation of an employer? I'm not talking about you but the economy in general. What if we hit a recession?

What about the need for households to also fund out of their earnings - before they pay their mortgage - the rises in fuel, food and council tax?

What if inflation rises and so do interest rates? Suddenly the 'affordability' of a 90k, or 150k or 180k mortgage becomes less affordable or not affordable at all.

You think the banks will change their lending criteria. On what basis other than complete guesswork?

I have had negative equity and had to save to move. I have seen friends lose homes through repossession following redundancy (unions are no good when there is no money left). I have experienced very high interest rates. I have also experienced buying a home at the bottom of the market where house prices were not the problem - actually paying the monthly mortgage at 13% was. It can happen. It has. I may seem an old cronie to you but my son is only 10........I am not that old.

SingleSue

mitchaa wrote: »

At the moment you can still get a joint mortgage based on 4-4.5 times joint salary.

Go onto any high street mortgage lender, pop in your details and they will still lend you 4-4.5x income multipliers.

If things do tighten up through a credit crunch, i would expect this to drop back down to 3x multiple. (Why hasn't it already?)

50% falls equate to a price around £90k.

I can only assume wages go up, so the £25k average wage at moment will rise to around £30k in 5 yrs giving Mr and Mrs Average a 3x £60k

I do not think wages will drop, how can they, people are already on very tight budgets, if i for 1 was asked to take a pay drop i would vote with my feet and straight into another job.

I was awarded a 5.45% annual inflation increase last week. My company do a Jun-Jun FY. Police/armed forces/nhs etc all have annual payrises as do most people.

Big companies have unions to fight for them, (Mine does hence 5.45%)

So i dont think a drop in the average wage is on the cards if im being honest, as i doubt anyone can realistically afford to take a pay cut. If they were asked to do so, i would imagine a lot voting with their feet.

They may go up but not by much..... I could walk into a job paying the same amount now as in 1994, exactly the same job that is, same hours etc.

Salaries have not risen in quite a few areas of the country, the average salary around here is approx 16k with the occasional 50k which rather swerves the figures.

My last pay rise was in line with official inflation as were my 6 previous ones (so approx 2.1% om average) whereas in the late 80's, early 90's, even though they were inflation plus extra, you could expect a minimum of 16% annual payrise.

I have worked in extremely large global companies but not union orientated ones, those dominated by unions are not as thick on the ground as some people think.

SingleSue

pickles110564 wrote: »

Have you got it yet? Has the penny dropped? Can we talk about something more exciting? Like how Ipswich Town will be in the premiership in season 2009/2010.

Now I know you are quite mad! :rotfl:

*Near Ipswich lass myself

tradetime

dopester wrote: »

Trouble is, whilst mymatebob has treated his house purchase, and the mortgage payments as for a "home", and not an investment...

how many others who should now be in a similar secure position of comfortable full ownership of their house.... have MEWed some of their considerable (imagined) "equity" to help their children on property ladder, or to buy flash new cars, few luxury holidays, new kitchen and conservatory, or used it as security for getting in to BTL?

True, and that is a very worrying situation

neas

pickles110564 wrote: »

Glad to see you are still wishing for misery on normal home owners, cant wait for the bad luck to hit you.
By the way a curse is on you until you stop wishing misery on others.;)

Will pickles be as 'wealthy' when houses drop 50%, I dont wish misery on him, but his own spite and venomness could equally be reversed on himself.

Give it a few years and pickles will have had a life experience meaning he is not such an a$$

Dan:_4

dopester wrote: »

Would that be you egg credit card... given they've withdrawn millions and even the Economics Editor of the Telegraph was recently refused a new credit card recently

Methinks you are not understanding what a credit crunch is.

I applied for a personal loan over the weekend from my bank (Halifax) for 25K and was accepted stright away. Just been down to the branch to sort out the paper work and the funds will be transfered to my Current Account tomorrow.

What credit crunch?