Why does everyone talk to say 'there won't be a crash'?
It's all to do with talking a good game and wishful thinking. You'll find that anyone that says there won't be a crash will have a vested interest in house prices not crashing. Most people who have bought a house and seen the value of it rise astronomically give themselves a pat on the back saying that they were wise to buy when they did.
They have also probably taken out equity on their new found paper wealth and used it to go on that special holiday, splash out on a new car or add a conservatory/bathroom/kitchen/extension so they feel 'wealthy'.
This 'wealth' is only on paper though. It's a paper profit. If anyone spouts on and on about how much their property has gone up then ask them what it actually means to them. Here are a few good questions for those dinner party bores:
- Q 1. Don't you think that with house prices going up as much as they have that it's going to be difficult for you to upgrade to a larger property?
- Q 2. Now that you've released equity in your property for that trip around the world, do you realise that it will take you longer to pay off your mortgage.
- Q 3. How much would your mortgage payments be if the base rate rose to 7%.
- Q 4. If you hadn't released equity in your property and the base rate rose to 7% what would the difference in your mortgage payments be?
- Q 5. If house prices crashed, and you lost your job in the economic turmoil, would you regret having taken out all this equity in your house?
- Q 6.. Do you think there will be a house price crash? (We all know what their answer will be to this one, but just smile and let them think that. Remember, it'll be you that has the last laugh.)