House Price Crash!

John_M_Business

meanmachine wrote:

Depends entirely on where you live, of course. In my neck of the woods (SE) I've saved around 3K by not buying. END OF STORY.

Hey... let's start up the 'well how much has it cost you to rent' discussion...

devils_advocate

ag359 wrote:

Thank you, I am fully aware of that - my original post was not without a little touch of the devil's advocate. However, the replies baffled me a little, so I couldn't let them go unanswered...

Again, thanks for your kind advice.

Never touched him! Honest, ref!

greenwich

It's worth remembering what Merryn Somerset Webb says in her Sunday Times articles: it's not enough to look at prices alone, you also have to look at volume. Suppose a year ago 1,000 houses sold at £100K each. This year, one house sells for £110K and all the rest remain unsold. If you look at prices alone, you'll think that the market has gone up by 10%, which is a very false impression.

I have seen perfectly good houses in London not selling or taking many months to sell. So even though prices may be rising a little, it doesn't mean the market is in great health.

deemy2004

greenwich wrote:

It's worth remembering what Merryn Somerset Webb says in her Sunday Times articles: it's not enough to look at prices alone, you also have to look at volume. Suppose a year ago 1,000 houses sold at £100K each. This year, one house sells for £110K and all the rest remain unsold. If you look at prices alone, you'll think that the market has gone up by 10%, which is a very false impression.

I have seen perfectly good houses in London not selling or taking many months to sell. So even though prices may be rising a little, it doesn't mean the market is in great health.

Yeh, and theres a cost associated with the delayed sale thats not being taken into account. Less money sloshing aroudn the system for DIY, estate agents pockets, and further along the food chain.

meanmachine_2

Let's be honest - house prices today are the hangover from a stable economy and high employment.

After eight years of rises, no wonder they've ended up so ridiculously high.

But in the last few weeks two of my mates have lost their jobs, and they've told me there's nothing out there - at least not before Xmas.

Luckily for them, they both bought before 2000, and so have manageable mortgages.

But god knows what anyone else would do - particuarly those who bought recently.

I'm also almost prepared to admit that banks and EAs aren't to blame for rampant house price inflation. The general public have, for years, been perfectly willing to "pay more than the next man".

Right now I'm not sure where the market's heading. The recent rise in borrowing does point to a stabilisation. But if the economy continues to suffer, bills keep going up, then house prices will reflect the wider picture.

Let's be honest - for homeowners, it's been a lovely long party. But if people don't have jobs, they can't buy property - at any price!

mystic_trev

http://news.bbc.co.uk/1/hi/business/4366376.stm

The trend appears to be following 88/9 i.e. the last Property crash. I know people will say "things are different this time" with Interest rares being low etc. However the Economy is not in good shape and Unemployment is rising.

rozeepozee

John_M_Business wrote:

Hey... let's start up the 'well how much has it cost you to rent' discussion...

Ho-hum, I swore I wasn't gonna get drawn into this one but I cannot help myself :rolleyes: John, are we forgetting the cost of mortgage payments here again???

Ember999

rozeepozee wrote:

Ho-hum, I swore I wasn't gonna get drawn into this one but I cannot help myself :rolleyes: John, are we forgetting the cost of mortgage payments here again???

Yes, but the difference between rent payments and mortgage payments is that after the term of the mortgage YOU OWN THE HOUSE, with rent, the Landlord owns the house! Surely that is the major factor here is it not? Someone in their 50's who bought years ago now owns their house, no mortgage, life of riley, tons of money (like my parents) however, same couple had they rented house, they would STILL BE PAYING rent until their dying day, poorer, less secure and no-doubt moving house every year/six months as tenancies ran out! There is no economic sense to renting! None at all!

wibble68_2

mystic_trev wrote:

http://news.bbc.co.uk/1/hi/business/4366376.stm

The trend appears to be following 88/9 i.e. the last Property crash. I know people will say "things are different this time" with Interest rares being low etc. However the Economy is not in good shape and Unemployment is rising.

Economically and socially things may well be different this time.

However, house price inflation for the lead up to the peak of each boom is no different.

Halifax data

1984 7.2 --- 1999 7.2
1985 9.1 --- 2000 9.8
1986 11.0 --- 2001 8.5
1987 15.4 --- 2002 17.4
1988 23.3 --- 2003 22.4
1989 20.8 --- 2004 18.3
1990 0.0 --- 2005 3.0

rozeepozee

Ember999 wrote:

Yes, but the difference between rent payments and mortgage payments is that after the term of the mortgage YOU OWN THE HOUSE, with rent, the Landlord owns the house! Surely that is the major factor here is it not? Someone in their 50's who bought years ago now owns their house, no mortage, life of riley, tons of money (like my parents) however, same couple had they rented house, they would STILL BE PAYING rent until their dying day, poorer, less secure and no-doubt moving house every year/six months as tenancies ran out! There is no economic sense to renting! None at all!

I admire your passion, Ember, but I beg to differ. You do not own your house until the mortgage is paid off (and that could be in 25 to 50 years, if at all?) and for the majority of mortgages the early years are spent paying off loan interest to the bank, the money is not going towards reducing the capital owed. In a stagnant or falling market, so long as your rent is the same or less than the mortgage payments, you'd be far better off saving the difference, with your deposit money in the bank earning you interest, rather than risking it in a potentially depreciating asset. In my mind in the current economic climate, all 'buying' amounts to is renting your house from the bank.