How can house price's fall so much??

PasturesNew

What is surprising is if you look at this graph:
http://www.housepricecrash.co.uk/graphs-average-house-price.php

Look at the prices in the peak of 1975: £70k
To the peak of July 2007: £185k

That is the most surprising statistic I see there.
In 1975 I was earning 84p/hour.

tryinhardtosavethepennies

So, if in 1974 prices were averaging £70k, and let's say 84p/hr was an average wage (no idea as wasn't born!), then if today we're averaging 185k & minimum wage is £4.60, does that mean we're substantially better off these days?

magicdogsbrain

dannyboycey wrote: »

I'm talking about the widespread availability of statistical information from a variety of sources, for which there was a general consensus. You can't just pick up a quote or statistic and run with it. I think we've already had two dates pass this year when the world was supposed to end. I just wish people would take some responsibility for their actions rather than pretend they have no control. I sold my house at the right time - not through luck, or divine intervention, but because it was pretty damn obvious that prices were about to fall. I really don't want to appear smug, but I made an informed decision about when to sell based upon the information available to me. This is not top-secret stuff - the same info is available to everyone. I am now sitting in wait whilst this crash passes (the one that apparently isn't happening) until I re-enter the market at a price acceptable to me. Arguing over trivialities like 'will it or wont it happen' is ultimately pointless, as it is our actions that really matter.

It has been said before, but lots of people in the late 90s, me included, weren’t quite as thorough as you in our interpretation of the house price situation. We either sold or refrained from buying in anticipation of an impending crash. Prices just continued to rise unabated.

While I was waiting for a crash – 3 bed semi in my area rose almost 100% in about 18 months.

Year on year – over a decade – house prices have lost any sense of reality. One way traffic – not matter what. Friends announce they are going into the BTL business and you think that they will lost money. Years later – they are millionaires! Then after many years some young whippersnapper just joins the place where I work goes into the BTL business. I think he worked there 2 years before retiring!

I think the younger folks that didn’t experience the initial 10 years of the bubble – and its relentless progress – find it hard to understand why us slightly older people think they are being smug when they profess to have worked it all out.

Not saying that nobody work it out - or that any particular person was smug - just illustrating that its perhaps not simple to predict a crash even if it looks obvious.

Now its very evident but 7 or 8 months ago - no more obvious than 8 years ago IMHO

magicdogsbrain

PasturesNew wrote: »

What is surprising is if you look at this graph:
http://www.housepricecrash.co.uk/graphs-average-house-price.php

Look at the prices in the peak of 1975: £70k
To the peak of July 2007: £185k

That is the most surprising statistic I see there.
In 1975 I was earning 84p/hour.

The graph accounts for inflation - i.e. its in todays money. My parents house was 3k in 1970 and it was a 3 bed detached.

Sir_Humphrey

tryinhardtosavethepennies wrote: »

So, if in 1974 prices were averaging £70k, and let's say 84p/hr was an average wage (no idea as wasn't born!), then if today we're averaging 185k & minimum wage is £4.60, does that mean we're substantially better off these days?

84p/hr in 1975 is roughly £5.25-5.50 today if that is any help.

3k in 1970 is about 30k now. :eek: Of course, our parents had it just as hard as us! NOT

PasturesNew

tryinhardtosavethepennies wrote: »

So, if in 1974 prices were averaging £70k, and let's say 84p/hr was an average wage (no idea as wasn't born!), then if today we're averaging 185k & minimum wage is £4.60, does that mean we're substantially better off these days?

No, 84p/hour was what you got if you had 2 O levels and left school.

PasturesNew

magicdogsbrain wrote: »

The graph accounts for inflation - i.e. its in todays money. My parents house was 3k in 1970 and it was a 3 bed detached.

Ah, I did wonder, but for where I lived £76k then and £185k now still looked doable.

Incisor

Hairy wrote: »

I cant help but notice that there seems to be loads of scaremongering on this site. People saying house prices will drop by over 50% in some cases.

I may be wrong here, but how is that possible. Let me explain.

If you owned a house worth £300k and all you could get for it was £150k you simply wouldnt sell. So how the heck are house prices going to drop that much? People simply wont sell. Even if prices drop by 25% I doubt many people would sell, they would stay put, surely?? I am by no means an expert, but isnt this common sense??

I can't help but notice that there seems to be loads of naivety on this site. People saying house prices should rise by over 50% in some cases.

I may be wrong here, but how is that possible. Let me explain.

If you had £150k in cash and mortgage offers and all the houses cost £300k you simply wouldn't buy. So how the heck are house prices going to rise that much? People simply won't buy. Even if prices rise by 25% I doubt many people would buy, they would stay put, surely?? I am by no means an expert, but isn,t this common sense??

Your logic is fine, apart from your starting point : "If you owned a house worth £300k and all you could get for it was £150k you simply wouldn't sell". But some people do have to sell and they take the £150K they can get for it. Now all houses in the £300K bracket are worth £150K

tryinhardtosavethepennies

Ah, thanks! Hadn't thought of that! No, I know what you mean. It does seem that it used to be easier, but then I wonder if it really was?

I was discussing this with my mum who pointed out that they only had one car (which was a company car) - we run two - and their TV was a hand-me-down (actually so is ours). Interest rates were at the astronomical 15% when I was a kid - and all I thought was that it was unfair that my school friends were jetting off to sunny France, Tenerife, etc. whilst we holidayed year after year on the south coast where my grandparents lived.

I do think that, in this day in age, we are used to a lot more in the way of luxuries. And I think you can buy clothing and homewares at a relatively lower cost than you could back then (Primark, etc....mind you, What Everyone Wants was pretty cheap, wasn't it?!)

lisyloo

I do think that, in this day in age, we are used to a lot more in the way of luxuries

I definitely think you are right.
I grew up in the 70s.
We had 1 family car (dad would cycle to work).
We were not driven to school.
We did not have a TV to begin with.
Hardly ever went out for meals, take aways, cinema etc. A real treat would be fish & chips but that wasn't very often.
Had hand-me-down school uniforms.
Had one holiday a year in the UK with caravans or tents.

We never felt poor (I think that's relative) beacuse we didn't have lots of consumer stuff and couldn't drive everywhere.

I think some people don't know what it was like and other people forget.
The only time I felt like I was missing out on something was when richer friends at school stayed in hotels abroad for their holidays but you had to be rich to do that.