Prices will fall by 50% in four years

PasturesNew

Dan: wrote: »

Well you are wishing misery Brit beacuse if house prices were to fall 50% many familys who brought in the last few years may end up in Negative Equity and so they will be trapped.

They're trapped anyway if nobody else can afford to buy it off them.
They're trapped through choice though; choice of choosing to buy that house at that price.

Unlike those priced out who are trapped by not having the choice due to lack of afforability for them.

It's better if house prices are low and stay low, so people of all sorts are free to buy/sell when they want/need to, if they wish to.

Lotus-eater

Dan: wrote: »

As far as im concerned it only becomes a 'debt' when you can't afford to pay it back. Otherwise it is just borrowings.

Of course its debt, if you could afford to pay it back, you wouldn't have borrowed it in the first place..... what you mean is, I can afford to pay it back as long as nothing happens and my life stays exactly the same.

PasturesNew

Dan: wrote: »

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?

This is out of context. You'd need to say what your financial position was for it to be seen as a credit crunch existing or not. What's it for? What's the security?

My bank are always trhowing money at me, which I refuse. But I bet if I were to try to fill out forms with people who I didn't have a 15 year history with (never overdrawn) they'd have a different take on my ability to pay them back.

PasturesNew

Lotus-eater wrote: »

Of course its debt, if you could afford to pay it back, you wouldn't have borrowed it in the first place..... what you mean is, I can afford to pay it back as long as nothing happens and my life stays exactly the same.

This is something most people do seem to assume: my life stays the same.

I have, unusually, experienced a LOT more change/upheaval and change than most people ever do. Averaging it out, I've been in two jobs a year every year for about the last 20-25 years. And when you are between jobs you've nothing, so it's a rollercoaster of: job, no job/no income, get another job, catch up from the bit where there was no job, oops no job again .... a cycle of it.

I always expect my life to change.

Every morning I wake up knowing that anything can happen. Anything.

I could wake up tomorrow to find all of my current online earnings are suddenly £0/day, never to be revived.

I could equally take a phone call asking if I am interested in being put forward for a job. And any such call (which may or may not ever come) could be at a salary anywhere between £15k and £100k and from 3 miles away to 200 miles.

Change is the only constant in life.

And a great deal of change is coming to most people in homes near you in the next 3-5 years.

Paul_N_4

phil_b wrote: »

As far as I can tell, in most parts of the country families can climb on the ladder

Lets say we have 2 parents earning even a low-end wage of £15k each, 30k joint. they bring home nearly 2k after tax. They save up 20k for a deposit

Cause that will be easy for a family on £30k joint income.

and buy a £140k house (lots of those knocking around from what I can see).

£140,000 for a family home? Family homes round my way (3 bed house) go for average £200,000. You might be able to dig out something from Rightmove for that price, but £140,000 for a family house it certainly not typical. i.e. the average house (which you could argue is a typical family home) according to Nationwide is about £180,000.

Mortgage is £750 a month on the 120k borrowed, what is so unaffordable there?

I just cant see it ever being 'easy' to buy a good house for yer below-average joe. that makes no sense to me. At a 50% average price cut it would be more than easy to buy a house.

You can't envisage a world where it costs more to live? Where more of your wage packet goes on day to day living? It seems people have taken the last several years for granteed believing cheap food, cheap fuel, low mortgage rates, etc are the norm. Almost the same as believing house prices only ever go up.

Houses at 50% will not be cheap if you have to spend three/four times what you do now just to get by. No one told you the 'nice' decade is over?

Be prepared to spend more of your money on the essentials like food and fuel, and undoubtedly higher mortgage rates, leaving you less money to 'waste' on over inflated house prices. This will be the driving factor in cheaper house prices. 50% off today's house prices doesn't necessarily mean more affordable housing, just cheaper.

PasturesNew

phil_b wrote: »

As far as I can tell, in most parts of the country families can climb on the ladder

Lets say we have 2 parents earning even a low-end wage of £15k each, 30k joint. they bring home nearly 2k after tax. They save up 20k for a deposit and buy a £140k house (lots of those knocking around from what I can see).
Mortgage is £750 a month on the 120k borrowed, what is so unaffordable there?

To buy a £140k house, with 10% down, paying 6% on a repayment mortgage, the repayments would be £695/month (none of these crazy IO fixed deals, just a straight, honest mortgage)
http://www.tigertom.co.uk/ttcalc/mortgage.php?loan=120000&downpayment_percent=10&year=25&interest_rate=6&currency=%A3&periodicity=12&action=Calculate

Two people earning £15k is taking home £2000/month between them

Bills/maintenance on that house would be (let's say) £300

That leaves them a full £1000/month to have a great life, drive cars, travel to work etc etc.

I think the trouble is, they've loaded themselves up on credit card debt before they get to the stage of meeting somebody and 'setting down'.

Also - people believe what they read in the papers - and instead of actually looking at houses for sale, doing the maths and finding out how much they can get as a mortgage, they just say they can't afford it. I know quite a number of people that could have raised mortgages of this amount in the past 3-4 years but always said to me "we can't afford it" and had never done the maths/looked in their area at what was available. OR, they wanted to start with the 4-bed detached house at £250,000 so didn't want to bother buying the cheaper/smaller houses.

However, not everybody is a couple. Try to get that house as a single person on £15k (or even £25k) and it's all just that much more unachievable.

I'd say if you'd taken the credit cards off people 3-4 years ago, bought them a Property News and marched them down to a mortgage advisor and got them out viewing houses, many more will have realised that £140k can buy an OK house and they'd have done it.

But the combination of credit card debt, believing the media hype and wanting the 3rd house up the ladder for their first one stopped them even looking.

baby_boomer

dopester wrote: »

The City traders putting their money on it must be stupid or something.

Maybe they're just hedging their bets after buying expensive houses in the last few years?

It doesn't necessarily mean that they think a 50% drop will happen Just that they want to make some money, somewhere, should fear stalk the housing market.

Dan:_4

Lotus-eater wrote: »

Of course its debt, if you could afford to pay it back, you wouldn't have borrowed it in the first place..... what you mean is, I can afford to pay it back as long as nothing happens and my life stays exactly the same.

If I get made redundant I will get a big fat redundancy package.

I have accident/illness cover.

I have joint savings with my other half.

Im not gonna lose any sleep over it.

Dan:_4

PasturesNew wrote: »

This is out of context. You'd need to say what your financial position was for it to be seen as a credit crunch existing or not. What's it for? What's the security?

The loan is for various things.

No security - It is an unsecured Personal Loan

PasturesNew wrote: »

My bank are always trhowing money at me, which I refuse. But I bet if I were to try to fill out forms with people who I didn't have a 15 year history with (never overdrawn) they'd have a different take on my ability to pay them back.

Depends on your whole credit history. I have various financial companies trying to throw money at me.

pickles110564

Back to the thread.
It is negative equity which forces home owners to sell and it is only when the numbers of forced sellers reach significant levels that a market actually crashes. Using data from 80 per cent of lenders, Experian estimate 8,000 people are already in difficulty and more than 23,000 would be in negative equity if prices fell by 10 per cent. A 20 per cent fall would mean 78,394. Given that there are around 14.5 million owner-occupiers in the UK - I do not believe these numbers would bring about the type of market collapse being hyped up in the press. Yes - there will be pain felt in certain sectors, but it is by a relatively small number of people.
50% aint never gonna happen.