House Market Crash

[davieG]

Question:

if there was no such thing as the media (newspapers, tv and radio), how would the every day person know whether to ask for more or less on their house?

I'm sure there are economic equations to work all of it out, but at the end of the day it seems as though whent he media says jump we say how high (or how low at the minute)

Noticeable isn't it?

[Benji]

Noticeable isn't it?

Sorry, what I said about the media is noticeable or how to work out how much is?

I honestly have no second clue of how most of it works and comes together and I would have thought a large proportion of the population would be the same, hence relying on the media/estate agents

[davieG]

Sorry, what I said about the media is noticeable or how to work out how much is?

I honestly have no second clue of how most of it works and comes together and I would have thought a large proportion of the population would be the same, hence relying on the media/estate agents

Sorry I meant

it seems as though when the media says jump we say how high (or how low at the minute)

was noticeable. I didn't maek it very clear but then I'm not in the media

[Benji]

Sorry I meant

was noticeable. I didn't maek it very clear but then I'm not in the media

phew, thought I may be shot down in the space of minutes, I await an economist to put me right.

[Guest]

That seems logical but repossessions seem to start fairly early on and sometimes even before a slump gets up a head of steam.

Repossessions happen all the time. Nobody bats an eyelid until the papers start pointing them out again.

[andyh1884]

We moved house at the start of June, we sold our house for more than we expected to, but had to pay the asking price for our new one.

The house over the road has recently gone on the market for £30,000 less than we paid for ours, but I'm not in the least bit bothered. I love our new house, it's perfect for us & we plan to stay in it for a while, plus our mortgage is 80% of the amount we paid for it so everything's fine.

You could argue we paid too much/should've held on for a bit longer before moving, but I wouldn't change a thing.

[Daggers]

I'd imagine the houses crashing would have something to do with the dreadful weather we've been seeing lately.

The government should sort it out - I'm sure it was sunnier when Blair was in office.

Gordon Brown should get a hadron collider, they sort loads of things they do.

I saw it on Jeremy Kyle.

[Narborough Bod]

We moved house at the start of June, we sold our house for more than we expected to, but had to pay the asking price for our new one.

The house over the road has recently gone on the market for £30,000 less than we paid for ours, but I'm not in the least bit bothered. I love our new house, it's perfect for us & we plan to stay in it for a while, plus our mortgage is 80% of the amount we paid for it so everything's fine.

You could argue we paid too much/should've held on for a bit longer before moving, but I wouldn't change a thing.

This is exactly the correct attitude. House prices will always fluctuate but as with all inflation related purchases, over a long period of time they rise. You draw a line of best fit through a graph of average house prices over the last 50 years and you'll see a steady increase, even taking into account the slump of the early 80's.

Newspaper talk of negative equity etc is only ever relevant to a small proportion of people who are looking to sell houses they couldn't afford in the first place. If you're a speculative investor and wanted to make a quick buck, then no chance, but a real buyer such as yourself will be fine.

The main problem has been that the banks have been willing to vastly increase credit / mortgage debt over the past years, yet, as soon as there is a sign trouble they put a stop to lening, rather than gradually reducing it. Thus, people who put everything on the never never and don't think long term are now have to realise that maybe they shouldn't have been so aggressive with their spending.

Anyway, credit crunch, house market crash, petrol price rises - all a smokescreen so that the Govt can promise to spend £2bn on Nuclear power and no one will bat an eyelid (until they decide where to put the power stations).

Oh, and 2 days after announcing this investment, the hospitals complain of a lack of 'radioactive materials' to be able to provide scans / x-rays etc.

[DB11]

What if you've not bought a house yet? Then it's good cos you'll be getting a house for cheaper no????

[Narborough Bod]

What if you've not bought a house yet? Then it's good cos you'll be getting a house for cheaper no????

Yes and no, at the moment prices are plateuing (?) rather than plummeting so we're not in a downward spiral yet.

The problem is the banks have lost / are concerned of losing so much money in bad debt that they are asking for larger deposits and are giving less ludicrous mortgages out - on a positive note it's less likely that people will land themselves with 100 - 120% mortgages and be trapped for the rest of their lives.

Another problem is the speed of the housing market over the last 10 years, with prices rising far more quickly than salaries, Hence it's harder and harder to stump up the cash for the ever increasing deposit.

If you've not got a house yet, I'd still try to get on the ladder, beacuse long term, the price will go up. You just need to ensure you are financially stable enough to be comfortable paying the mortgage now and when you come out of any fixed period you may be in.

[act smiley]

The main problem has been that the banks have been willing to vastly increase credit / mortgage debt over the past years, yet, as soon as there is a sign trouble they put a stop to lening, rather than gradually reducing it. Thus, people who put everything on the never never and don't think long term are now have to realise that maybe they shouldn't have been so aggressive with their spending.

The reason they put a stop to lending is because they hadn't got a clue what quality the debt they were owed at that point actually was - it would be pretty irresponsible of them to keep offering out deals if there was no way they could even cope with the debt that was currently on their books.

[Jon the Hat]

That seems logical but repossessions seem to start fairly early on and sometimes even before a slump gets up a head of steam.

I think as a lender you reach a point where you pretty much have to reposses to avoid giving the impression that not paying your mortgage is acceptable. There are rumours that a number of major US lenders are quietly allowing mortgage holders to miss payments without any action, simply to avoid having them classed as defaulters. If you increase default then that obviously devalues the mortgage from the lender's perspective. I am not convinced this is a brilliant survival strategy. <_<

[Narborough Bod]

The reason they put a stop to lending is because they hadn't got a clue what quality the debt they were owed at that point actually was - it would be pretty irresponsible of them to keep offering out deals if there was no way they could even cope with the debt that was currently on their books.

I agree it's irresponsible, but to have have gotten into this position in the first place is also very poor management.

My point is that it's as if the banks as a collective have put up the shutters (which in a sense is sensible) without any due regard for the impact it will have on the economy.

[Babylon]

Yes and no, at the moment prices are plateuing (?) rather than plummeting so we're not in a downward spiral yet.

A plateau is a straight line is it not....

That's one funny straight line!!

Drops are around 2% a month (£3000 a month on a house worth £150,000). These are the biggest/quickest falls since the last crash and we haven't even gone into recession yet. Prices are only going one way unfortunately no matter what the government do.

If you've not got a house yet, I'd still try to get on the ladder, beacause long term, the price will go up. You just need to ensure you are financially stable enough to be comfortable paying the mortgage now and when you come out of any fixed period you may be in.

Prices will go up... in the very long term, it's going to take quite a while to reach the peak of 2007 again. With many estimating as much as 10 years!! It's only a good time to buy if you can secure a BIG reduction in asking price!!!! IF a house is on the market now for £150,000, I personally wouldn't pay more than £135,000. And that's me being generous.

I'm planning to buy around May/June next year. I will still benefit from the stamp duty break, but i'll also benefit from any further falls (i'd estimate another 8-10% minimum if the climate continues) For those who need to buy there's no problem, as long as it's viewed with realism that it might be a decade before the price of your house shows any gains worth mentioning.

[Dr The Singh]

A plateau is a straight line is it not....

That's one funny straight line!!

Drops are around 2% a month (£3000 a month on a house worth £150,000). These are the biggest/quickest falls since the last crash and we haven't even gone into recession yet. Prices are only going one way unfortunately no matter what the government do.

Prices will go up... in the very long term, it's going to take quite a while to reach the peak of 2007 again. With many estimating as much as 10 years!! It's only a good time to buy if you can secure a BIG reduction in asking price!!!! IF a house is on the market now for £150,000, I personally wouldn't pay more than £135,000. And that's me being generous.

I'm planning to buy around May/June next year. I will still benefit from the stamp duty break, but i'll also benefit from any further falls (i'd estimate another 8-10% minimum if the climate continues) For those who need to buy there's no problem, as long as it's viewed with realism that it might be a decade before the price of your house shows any gains worth mentioning.

If you've got some spare cash, next year wil be a good time to buy!! Although mortgages are abit more difficult to get and to get decent rates require a large deposit, things are not too bad!!

[Zingari]

my house has reduced dramactically in value over the last few months

i'm not letting the missus decorate again

[Tommy G]

Prices will go up... in the very long term, it's going to take quite a while to reach the peak of 2007 again. With many estimating as much as 10 years!! It's only a good time to buy if you can secure a BIG reduction in asking price!!!! IF a house is on the market now for £150,000, I personally wouldn't pay more than £135,000. And that's me being generous.

I'm planning to buy around May/June next year. I will still benefit from the stamp duty break, but i'll also benefit from any further falls (i'd estimate another 8-10% minimum if the climate continues) For those who need to buy there's no problem, as long as it's viewed with realism that it might be a decade before the price of your house shows any gains worth mentioning.

It may fall even further in say in 2 years from now. Judging the right time would be difficult though. if you are a first time buyer then you would be mental to buy now, as Babylon said the economy hasn't gone into recession yet. If when that happens then you would expect even shaper falls.

[Tabou]

It may fall even further in say in 2 years from now. Judging the right time would be difficult though. if you are a first time buyer then you would be mental to buy now, as Babylon said the economy hasn't gone into recession yet. If when that happens then you would expect even shaper falls.

That is so wrong it is untrue.

Now is the PERFECT time to buy a house. Houses will not be cheaper than they are now, no stamp duty to pay , mortgage interest rates of under 7% (realistically, cheaper than any other borrowing, bar student loan).

[Tommy G]

That is so wrong it is untrue.

Now is the PERFECT time to buy a house. Houses will not be cheaper than they are now, no stamp duty to pay , mortgage interest rates of under 7% (realistically, cheaper than any other borrowing, bar student loan).

When was the last time they were OVER 7%??

So you are definately saying that house prices will not fall from now on, the market has hit rock bottom? We have yet to hit recession and you are disagreeing with what 99% of the experts in the know say about house prices.

The stamp duty holiday is a smokescreen, politically poplular spin to try and entice people to buy. If you can't afford the £1,750 (maximum) in tax then you shouldnt be buying the house.

I wonder how much people pay for you're advice? Hopefully not much.

[Tabou]

When was the last time they were OVER 7%??

So you are definately saying that house prices will not fall from now on, the market has hit rock bottom? We have yet to hit recession and you are disagreeing with what 99% of the experts in the know say about house prices.

The stamp duty holiday is a smokescreen, politically poplular spin to try and entice people to buy. If you can't afford the £1,750 (maximum) in tax then you shouldnt be buying the house.

I wonder how much people pay for you're advice? Hopefully not much.

About as much as you spend on maximuscle to look like a cube. Fool.

This is a manufactured 'crash'. It can be turned off/on very easily.

Agreed, stamp duty has being suspended will not go nearly far enough to enitice people to buy property. The problem is , people like yourself, are waiting foryour average house to be £30,000 or so again, something which is not going to happen.

House prices are relative. It doesn't matter if your house is worth a fiver, unless your looking to sell your house, it is really irrelevant. Truth of the matter is, for over 75% of the popeulation who are just looking at remortgaging are better off staying on their current lenders' variable rate, as moving will cost them more in the long run than their short term gains.

I don't forsee house prices falling any further than they have done, and yes, I think it has hit rock bottom (In Leicester/Northants at least).

You say we have 'Yet to hit the recession'. True. Are you saying that this is an inevitaility? Because it's not. 99% of so called 'Experts'. I'm hoping that you are not including jokers like martin whats-his-face from the Sun newspaper in this?

I think your problem is you know just about enough information to be dangerous.

[James.]

About as much as you spend on maximuscle to look like a cube. Fool.

This is a manufactured 'crash'. It can be turned off/on very easily.

Agreed, stamp duty has being suspended will not go nearly far enough to enitice people to buy property. The problem is , people like yourself, are waiting foryour average house to be £30,000 or so again, something which is not going to happen.

House prices are relative. It doesn't matter if your house is worth a fiver, unless your looking to sell your house, it is really irrelevant. Truth of the matter is, for over 75% of the popeulation who are just looking at remortgaging are better off staying on their current lenders' variable rate, as moving will cost them more in the long run than their short term gains.

I don't forsee house prices falling any further than they have done, and yes, I think it has hit rock bottom (In Leicester/Northants at least).

You say we have 'Yet to hit the recession'. True. Are you saying that this is an inevitaility? Because it's not. 99% of so called 'Experts'. I'm hoping that you are not including jokers like martin whats-his-face from the Sun newspaper in this?

I think your problem is you know just about enough information to be dangerous.

Sorry chap but a lot of that is nonsense. Particularly the bit in bold.

[Tabou]

Sorry chap but a lot of that is nonsense. Particularly the bit in bold.

I think this is going to be a case of 'agree to disagree'.

A combined and focussed effort by the entire British media, telling everyone how now is the perfect time to buy a property, would almost certainly kickstart the market.

This won't happen, however, because property prices have risen over the past 5/6 years by a ridiculous amount.

I believe the average wage in leicester is about £20k? Based on the fact most bank/building societies will lend around 4 times an income, assuming the average person has NO other commitments, means they would lend circa £80k. Bar a cheap flat (which you would need a 20-25% deposit for in todays mortgage criteria) you would struggle to buy a house for that amount of money. A 'typical' 2 bed terraced house in Newfoundpool/Tudor Road was (pre 'Credit Crunch') for sale at £115-120k. It was becoming impossible for first time buyers to get on the ladder.

We get a huge amount of of industry press in this game, of which, for reglatory purposes, we do have to read a certain amount of. The general consensus is that, whilst it is bloody difficult times for businesses and individuals alike, things will get better and recover (albeit slowly) to where they were before.

[andyh1884]

House prices are relative. It doesn't matter if your house is worth a fiver, unless your looking to sell your house, it is really irrelevant. Truth of the matter is, for over 75% of the popeulation who are just looking at remortgaging are better off staying on their current lenders' variable rate, as moving will cost them more in the long run than their short term gains.

Our fixed-rate deal ended at the end of July. Having discussed things with an independent financial advisor (not tabou), we let our rate lapse & went onto the Nationwide's (our lender) standard variable rate as there were only 2 deals on the market offering lower rates, but they involved product fees etc of between £500 and £1,000, which would have wiped out the amount saved on the rate over the period of the fixed rate.

[Tabou]

Our fixed-rate deal ended at the end of July. Having discussed things with an independent financial advisor (not tabou), we let our rate lapse & went onto the Nationwide's (our lender) standard variable rate as there were only 2 deals on the market offering lower rates, but they involved product fees etc of between £500 and £1,000, which would have wiped out the amount saved on the rate over the period of the fixed rate.

<_<

This is becoming the norm. Which is not good news for us, as we don't get any business. There is a big problem with dual pricing at the moment (banks offering better deals in house than the deal they allow an IFA to offer).

Another silver lining in this housing crash is that there will be alot of poor IFA firms and Estate Agencies that pack up and fook off. Wheat from the Chaff sort of thing.

[andyh1884]

The government have committments to increasing the number of new homes to house the ever-increasing population in this country. This is done by the goverment allocating areas of brown/green field that can be turned into areas of residential accommodation. This land is then sold to property developers such as Taylor Wimpey, Miller, Barratts, David Wilson Homes etc, who build the houses.

If house prices continue to fall, there will be no point of these developers building new homes, as their margins are being squeezed to death at the moment as it is (unless, of course the land & construction costs fall in line with the house prices, which is extremely unlikely).

Most of these developers have already cut back on future land purchases & are even suspending work on their current developments - you have prime examples out in Kibworth, where DWH have downed tools and at Freemens Meadows by the Walkers, where Barratts have stopped building halfway through the construction of the new block of apartments.

With a lack of new homes being built, this would cause the government a lot of problems meeting their targets for increasing housing levels to support the expanding population, and would also see demand for 'old' houses increase considerably. What effect do you think this would have on the house prices?

The government has a vested interest in ensuring the housing market doesn't go tits up and it is for this reason that I don't imagine house prices will, in the long term, fall much further than they're currently at.