House price drops

[Dave-G]

I know we're coming into a recession and this will be a majar disaster for some of us, but what do you make of the falling house prices?

 

I personally know several people, including my kids and grandkids would be unable to consider buying their own home if prices remain as they are. Wages and employment prospects have fallen far behind the cost of our homes and most would agree a fall was or is inevitable.

 

Despite having a mortgage to complete I personally feel a little relief that my kids just might manage to buy a home at some time in their lives. At the risk of needing a tin hat I actually hope they fall significantly.

 

Your thoughts ladies and gents?

[salisburykeeper]

I think we have been in reccession for a while now the government are unable to confirm this until january though

 

it can only have a psitive impact really unemployment will rise thus forcing substancial numbers of foreign jobtheives back home and will put the house prices back to a realistic figure

 

first time homebuyers havnt got a chance these days but for the few who have a fair income it will give them a chance to get on the ladder

[kdubya]

we used to have council houses and "starter" homes you know small terraced houses that allowed you to get your foot on the ladder, and a borrowing system that meant saving first IE you could not get that which in reality you could not afford! then we sold off the councils houses for peanuts,encouraged 100% mortgages, and the humble terrace house was no longer a desire!and forward thinking councils either let them sink into unscrupulous landlords hands, who rented them to scum and with no concern to the local community , or they simply knocked them down.

 

greedy stinking builders went on a legoland spree,building chipboard and mdf **** at inflated prices, green belt land swallowed up, and borrowing went through the roof ( just lie about your income was the well versed shout) then bang someone realised it was unsustainable,as peoples pay never kept up with prices,mortgage arrears started hitting the big lads, and the plug was pulled?

 

now we have few council properties /starter homes, even less people who want them, stagnation in house sales and a major recession.

 

BUT thanks to the British way IE WE MUST own our own home,prices WILL settle then rise again, if only we were more European and grasped rental a bit more,but that takes insight and forethought, plus a little consideration, something sadly lacking in our MUST HAVE society.

cheers KW

[triscrx]

we used to have council houses and "starter" homes you know small terraced houses that allowed you to get your foot on the ladder, and a borrowing system that meant saving first IE you could not get that which in reality you could not afford! then we sold off the councils houses for peanuts,encouraged 100% mortgages, and the humble terrace house was no longer a desire!and forward thinking councils either let them sink into unscrupulous landlords hands, who rented them to scum and with no concern to the local community , or they simply knocked them down.

 

greedy stinking builders went on a legoland spree,building chipboard and mdf **** at inflated prices, green belt land swallowed up, and borrowing went through the roof ( just lie about your income was the well versed shout) then bang someone realised it was unsustainable,as peoples pay never kept up with prices,mortgage arrears started hitting the big lads, and the plug was pulled?

 

now we have few council properties /starter homes, even less people who want them, stagnation in house sales and a major recession.

 

BUT thanks to the British way IE WE MUST own our own home,prices WILL settle then rise again, if only we were more European and grasped rental a bit more,but that takes insight and forethought, plus a little consideration, something sadly lacking in our MUST HAVE society.

cheers KW

 

Sums it up quite well really. I think they needed to drop a bit as nobody can afford to get on the ladder nowadays, I have my own house have owned it about 3-4 years now so I hope they dont drop so much that I have negative equity. It has been on the cards for some time though..

[Mungler]

Kdubya, spot on really.

 

House price increases have gone way beyond relative earnings.

 

The real crash will kick in when unemployment increases and inflation ticks up (as well as interest rates in due course) - daft self certified mortgages are fine as long as interest rates remain low and you have wages to pay the monthly bills.

 

I blame the lendors - had they stuck to the time honoured 3.5 times annual sole income or 5 times joint income we wouldn't be in this mess. They have now slammed the stable door shut on most lending, long after the horse has bolted.

 

Add on individual greed driven by propery "investment" shows on the telly where in a rising market every muppet was making.

 

And the final nail in the coffin was from our own government by announcing a stamp duty freeze - the problem is they didn't specify when this would take effect or who would be eligable - the net result is no one is doing anything. Indeed, it was this move by the government that cemented my view that they really do not know what they are doing - no brains and no real world experience.

[vole]

I have a substantial mortgage and feel utterly trapped by it. I would love to be renting and the cash I save invest it for my girls future. This countries obsession with home ownership is a bit mad,especially in view of its instability. My house value has dropped which I will take on the chin and if a few folk can take advantage of prices coming down then fair play to them.Especially if it means rural folk being able to stay put. When I go home to Cumbria I can feel a foreigner in the pubs being the only person with a local accent.The homes being bought up by rich incomers.

[Disco Stu]

I think 50% falls from peak 2007 prices, and prices continuing to fall into 2011/2012. It is brilliant for me as I have been saving up a deposit for the last few years. I refused to entertain borrowing more than 3.5 times my salary, or taking out any form of Liar Loan. Historically average house prices have been roughly 3-3.5 times average salary. It was only the lax lending and availability of cheap and easy credit that drove the bubble upwards to nearly 6 times average salary for the average house I read a book by Fred Harrison a few years ago (2004/2005) that predicted the house price bubble continuing into late 2007 / early 2008 so I used that as my main reason for not buying.

[Dr W]

I think the problem with renting is that when you come to retire you don't have an asset which you can live in without continuing to pay and so this will stretch your pension even further and you don't have much control over rent increases and the risk they'll sell your home.

 

Owning a property at least forces you to save rather than spending the extra and in my case a mortgage wasn't much different to the monthly rent I was paying before I bought.

 

As for prices falling yes they need to so 1st time buyers can afford to buy. If you're already on the ladder and you want to move then you're not really worse off as the place you are buying should also fall. It's really only those wanting to get off the ladder or investors who will suffer.

[Cranfield]

The personal effect of property rises and falls, depends largely where you are in the market.

 

As a mature, no mortgage individual, it doesn't mean a lot to me.

If my place is worth less than a year ago, so will the next place be if I look to move.

Its almost a status quo situation.

Don't forget there are a great many "baby boomers" in the same position as me.

[rocksaplenty]

Glad you mentioned the "baby boomers" - If you look at the UK demographics it looks like the economy is due for a 2nd hit when the "baby boomers" start to retire and deservedly (in most cases) start to become dependants.

 

I remember my geography teacher at school telling us all not to worry too much about qualifications as around 2010 onwards lots of job opportunities would start to open as the "baby boomers" retired.

[Dr W]

I remember my geography teacher at school telling us all not to worry too much about qualifications as around 2010 onwards lots of job opportunities would start to open as the "baby boomers" retired.

 

Interesting career advice

[Dirty Harry]

My house would have to loose 110k before I start to worry. I purchased my house in 99 before the prices went up. I have friends who rented and waited for the prices to come down but thet never happened.

 

Harry

[Maiden22]

.

Edited March 9, 2009 by Maiden22

[Staffs-Shooter]

Dinner Party favourite topic "my house is worth £X more than i paid for it" Absolute rubbish.

 

The value of your house (nee Home!) is only relevant if you have to sell.

 

On the subject of prices relative to earnings & the ability of first time buyers being able to buy - go back in time & its always been a similar problem.

 

I bought my first house & had to really stretch myself (come to think of it i have every time I've moved). That's the major issue that society doesn't want to stretch itself, it wants all the frills hence why the country is racked with high levels of personal debt.

 

Rant over.

[Fatcatsplat]

"I bought my first house & had to really stretch myself (come to think of it i have every time I've moved)."

 

I think that's the trouble - When i bought my first house in '91, we got to see loads of repos that had come on to the market, caused by the first big crash. At that time, i was offered 5 x my personal salary, but chose not to go that far. Bought my 2nd house in a rather more buoyant market 6 years later which subsequently capitalised enough (Being based about 1/2 a mile from the 2012 Olympics site) to let me upgrade to my current house without too much financial pain.

We are now looking for somewhere bigger and just starting to see some serious haggling going on, plus....laods more repossessions coming on to the market. Interestingly enough, a lot of the repos seem to be from building firms/small developers who have bought them to convert and turn a quick buck, but have run out of money half way through - Just wish i was a bit handier with a trowel!!

[Evilv]

I blame the lendors - had they stuck to the time honoured 3.5 times annual sole income or 5 times joint income we wouldn't be in this mess. They have now slammed the stable door shut on most lending, long after the horse has bolted.

 

Add on individual greed driven by propery "investment" shows on the telly where in a rising market every muppet was making.

 

Bang on the nail there. When the boom in house prices started it was obviously being fueled by endless amounts of money being thrown at lenders. When I bought my first house in 1975, the bank made it perfectly clear that they would allow 3.5 times the man's wage and would take a dim view of what his wife earned since she would likely have a family before too long. That earnings lending ratio gave you limits beyond which you couldn't go, but until recently, they were pouring silly money in front of people. I've heard tell of well over seven times earnings. People will pay whatever they can get hold of for a house. The only limit is the availability of cash. Then there were the 110% mortgages in terms of loan to value. How ridiculous was that. It was bound to prod the prices upwards. I'm not finished either - the buy to let 100% mortgages meant that any ***** waster could buy a portfolio of houses and put them to rent at high values. More and more money chased up the prices.

 

The result of this is that kids of the age mine are will have a VERY much more hard up time than I did, which is a shame. When I started out, I could pay my bills quite easily and was able to rent a cottage on the farm I had shooting on as well. We had a good life while our kids will be grafting hard and getting nowhere.

 

As for the ********* who bought a half a dozen properties at the peak of the market and now can't cover the rent - F ck them! They deserve what they get. As for the banks, the slimy gets seem able to slither away without taking responsibility for impoverishing a generation and get baled out from the public purse.Adam Applegarth in less restrained times than now would have been strung up from a lamp post and beaten to death. Instead, he walks away from NR with a severance package and a pension pot in the millions!

 

House prices need to come down by at the least 50%. I hope they do. This may seem hard on people who just bought, but it isn't. They still have the house at the price they thought it was worth. When they move up to a new and better one, it will cost them less than it would have done if prices had remained at ridiculous levels.

 

Also... planning laws prevent building where people want to live and force all new building into ever denser cities. Meanwhile, every waster on the planet can walk in here and declare that someone was nasty to his brother and be granted leave to remain here. Even if he isn't granted leave, he can remain anyway and will be competing with our kids for the ever shorter supply of houses.

Edited August 18, 2008 by Evilv

[Fatcatsplat]

Evilv - You just said it so much better than i did!!

[Staffs-Shooter]

Bought my first one in Apr 88, a repro, for 22950, house two doors away sold in the Oct that year for 26k. in the 12years i lived at the house adjacent ones sold upto £60k, upon moving i sold for £47k.

 

It went up it came down but so did what i bought.

 

You get nothing for nothing!

 

I could have rented & paid someone else's mortgage?

[rocksaplenty]

Last year I tried to buy an old working men club in a village nearby it was a run down old building on a .3 acre plot, I wanted it for storing a few things.

 

The estate agent then advertised it as a potential building plot, to be fair in their spec. they included a letter from the local authority indicating that the site would never get planning permission.

 

The site went at auction for 330k which would make it £1 million per acre.

 

This sort of stupidity couldn't carry on - I am pleased prices are dropping

[Jonsey]

Mungler makes a very good point around the lenders and how much they are willing to loan customers but it’s not the only problem.

I got my first mortgage 1989 and I was strictly only allowed to borrow £17.5k I’d been left some money by a grandparent and my parents also loaned me some money and I was able to buy myself a very small 1 bedroomed flat. I was working full time and I was also studying. It was hard getting them to lend me the money because of my age and whether I was going to have an children shortly etc etc. It was quite an ordeal. It was a plain old repayment mortgage with standard variable rate and I was beholden to the interest rate, there were no such things as fixed rate then. The payments were a struggle for the first couple of years, the interest rate fluctuated and I had a few scary months, but I sold my car and went without quite a lot of things. It was a massive struggle. My dad used to drop by on his way home from work with Red Cross parcels otherwise I really don’t know how I would have managed sometimes.

Some of my friends have only just been able to get on the housing market over the couple of years, they have mortgages they can afford for the fixed rate term and then they are well over stretched. I worry for them. They’ll have to re-mortgage when the fixed rate term comes to an end, if they possibly can. I notice though that their priorities are very different. Brand new furniture, kitchens, bathrooms, wooden floors, all in the first few months of owning the house. They are not thinking ahead of what might be in the next few months. I also have a couple of friends with 100% mortgages, their fixed rate is nearing the end and the house has lost some of it’s value. They are stuck in a poor situation.

 

All of the lenders have a phenomenal amount of mortgage products these days. One of the major building societies have over 300 different products. I now work in the mortgage industry and to say I don’t understand them all is an understatement. Mortgages are being mis-sold right, left and centre and coupled with people’s outrageous sense of planning ahead it’s no wonder there are millions of people struggling. The banks alone cannot be held responsible, we have to take some of that responsibility ourselves. In the paper yesterday the FSA stated that 1 in 50 mortgage advisors (Banks and IFA) were giving incorrect information where ½ failed to even provide 1 correct statement. Now that’s a sorry state of affairs. I’m convinced people look at the monthly payment only and how long they can fix it for. They look no further than that. Stretch themselves to the limit on a low rate but then what’s to say will happen next week, next month, next year.

 

I’ve been on the housing market for many years and am lucky that I am mortgage free now. I probably wouldn’t be able to afford my current house at todays prices unless I had a very large sum of money to put down. It’s not a huge house either.

[Maiden22]

.

Edited March 9, 2009 by Maiden22

[Staffs-Shooter]

The purchaser also is part of the "blame pie".

 

You decide to buy a house, you then decide to take on the debt & the "you" sign the mortgage.

 

A home/house is the single largest (usually!) item bought in ones lifetime therefore why sign something you dont understand?

 

Simple choice buy or rent. The fact people think prices are too high are irrelevant. The price of any commodity is set by what the market will pay.

[MJN]

Bought my first one in Apr 88, a repro, for 22950, house two doors away sold in the Oct that year for 26k. in the 12years i lived at the house adjacent ones sold upto £60k, upon moving i sold for £47k.

 

It went up it came down but so did what i bought.

 

You get nothing for nothing!

 

I could have rented & paid someone else's mortgage?

SS one too many noughts on your first figure, but I get the Idea, my first house bought in 76 for 7k sold 3 years after with a little work for 14k (Coventry) the next house bought 20k sold after 2 years for 24k IMO in the long term buy your own house whenever possible. As for price fluctuations if you are on the ladder and do not have to sell your house due to debts/divorce etc. it shouldn't affect you as anything you buy will do the same. If you can't save money for a deposit, then maybe you shouldn't be looking to buy at the moment.

I do feel sorry for first time buyers at the moment due to the cost of housing, but bargains will come available for those that look. As for mortgages, within a year or two they will also become easier to obtain.

M.

[duncan]

mortgage was paid up in april so no worries ,but feel sorry for the young couples trying to get a start today

[J@mes]

not bothered as long as I can carry on paying the mortgage. its a place to live, not a cash cow.