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Wiki - new graph!

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New article, let's get cracking with the content for it. Either edit the Wiki directly or reply to this post.

[url="http://www.housepricecrash.co.uk/wiki/What_happened_during_the_last_house_price_crash"]http://www.housepricecrash.co.uk/wiki/What...use_price_crash[/url]

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I've added a graph of the last house price crash to the [url="http://www.housepricecrash.co.uk/house-price-crash-graphs.php#last_house_price_crash"]graphs page.[/url]

It might also be a good idea to pull together some personal memories of the last house price crash just to show people how bad it was. Add them to this thread or to the [url="http://www.housepricecrash.co.uk/wiki/What_happened_during_the_last_house_price_crash"]Wiki page[/url].

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[quote name='Webmaster' post='352424' date='Apr 19 2006, 11:58 AM']
I've added a graph of the last house price crash to the [url="http://www.housepricecrash.co.uk/house-price-crash-graphs.php#last_house_price_crash"]graphs page.[/url]

It might also be a good idea to pull together some personal memories of the last house price crash just to show people how bad it was. Add them to this thread or to the [url="http://www.housepricecrash.co.uk/wiki/What_happened_during_the_last_house_price_crash"]Wiki page[/url].
[/quote]
1989 - Bought my 1st home - a 1 bed flat for £43K
1992 - Sold it (by the skin of my teeth) for £37K (15% loss + expenses). A friend held on to his having paid £44K for it. At one point similar flats we selling for £24K.
1992 - Got married and bought a repossessed house (unknowingly) for £67K. Previous owner had paid £100K for it in 1990.
1996 - Sold up for £72K.

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[quote name='othello' post='352431' date='Apr 19 2006, 12:04 PM'] Can't see any graph. [/quote]

The graph is on the [url="http://www.housepricecrash.co.uk/house-price-crash-graphs.php#last_house_price_crash"]graphs page[/url] at the bottom of the screen with a link to it on the Wiki page.


[quote name='STR2004' post='352437' date='Apr 19 2006, 12:08 PM']
1989 - Bought my 1st home - a 1 bed flat for £43K
1992 - Sold it (by the skin of my teeth) for £37K (15% loss + expenses). A friend held on to his having paid £44K for it. At one point similar flats we selling for £24K.
1992 - Got married and bought a repossessed house (unknowingly) for £67K. Previous owner had paid £100K for it in 1990.
1996 - Sold up for £72K.

[/quote]

Thanks STR2004 this is the type on content that we need. I've added yours to the Wiki.

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[quote name='STR2004' post='352437' date='Apr 19 2006, 12:08 PM']
1989 - Bought my 1st home - a 1 bed flat for £43K
1992 - Sold it (by the skin of my teeth) for £37K (15% loss + expenses). A friend held on to his having paid £44K for it. At one point similar flats we selling for £24K.
1992 - Got married and bought a repossessed house (unknowingly) for £67K. Previous owner had paid £100K for it in 1990.
1996 - Sold up for £72K.
[/quote]


So what is going to happen in 2006 that replicates the events of 1992?

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[quote name='nodumsunreader' post='352464' date='Apr 19 2006, 12:21 PM']
So what is going to happen in 2006 that replicates the events of 1992?
[/quote]
I thought this thread was simply about recollections - I wasn't aware that I was supposed to draw comparisons with todays market. I don't remember saying "it's the same this time" in my last post - I was simply stating the facts as they were for me. If nothing else it shows that property doesn't [u]always[/u] go up.

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[quote name='STR2004' post='352564' date='Apr 19 2006, 12:25 PM'] If nothing else it shows that property doesn't [u]always[/u] go up.
[/quote]

I bet that £72K flat from 1996 is worth a hell of a lot more now though.

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Hi Webmaster

Sorry to be a pain but this is incorrect
[i]
Mortgage Equity Withdrawal
Spend, spend, spend. New kitchens, new cars, exotic holidays...the list goes on. The British homeowner released vast amounts of equity from their homes and went on a spending spree[/i]

Spending on New Kitchens isn't MEW as the money is invested in the housing stock.

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I don't know if any of this will help, I'm too young to have been directly affected by the last crash but I remember people who I have worked with in the past telling me anecdotes.

a. An ex-boss had a house he loved somewhere near Liverpool but re-located to the Essex/Herts area for work. He was made an offer on the house which he thought was ridiculously low and rejected it at once. No further offers were made for a year. Finally he sold the house at far less than that first offer after paying the mortgage for over a year and rent on his Essex/herts property.

b. A couple I used to work with bought a flat in Somerset at the height of the property market. They then moved to the Essex area for work but were in bad negative equity, I think the value of the property more or less halved. They rented it out at a loss I believe and rented a property to live in themselves. The value finally caught up enough for them to sell it in about 1999/2000.

Sorry I can't be more specific, I've lost touch with the people involved.

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[quote name='Londoner' post='352580' date='Apr 19 2006, 01:39 PM']
I bet that £72K flat from 1996 is worth a hell of a lot more now though.
[/quote]
There's no doubt about that although justifying its present value is another thing altogether. There's little doubt in my mind that in the long term property values rise (as you'd expect as salaries et al rise) but on shorter timescales the trend isn't continually up - there are large peaks and large troughs. The critical issue is timing and if you buy at the wrong time you can find yourself in -ve equity or in a position where you've lost all of your deposit.

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[quote name='kingofnowhere' post='352600' date='Apr 19 2006, 01:47 PM']
Hi Webmaster

Sorry to be a pain but this is incorrect
[i]
Mortgage Equity Withdrawal
Spend, spend, spend. New kitchens, new cars, exotic holidays...the list goes on. The British homeowner released vast amounts of equity from their homes and went on a spending spree[/i]

Spending on New Kitchens isn't MEW as the money is invested in the housing stock.
[/quote]
Well what's the difference between buying the kitchen with money - shall we say - "extracted" from the house, as opposed to buying that same kitchen with money saved from earnings.

In both cases the kitchen "contributes" value to the house, but only one results in debt.

You seem to know what you're talking about on this, but I never understood your distinction.

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[quote name='kingofnowhere' post='352600' date='Apr 19 2006, 01:47 AM']
Hi Webmaster

Sorry to be a pain but this is incorrect
[i]
Mortgage Equity Withdrawal
Spend, spend, spend. New kitchens, new cars, exotic holidays...the list goes on. The British homeowner released vast amounts of equity from their homes and went on a spending spree[/i]

Spending on New Kitchens isn't MEW as the money is invested in the housing stock.
[/quote]

KON, I know this is one of your bugbears and I am not denying the strict correctness of your argument as to what is or is not "officially measured" MEW (detailed ad nauseam in other threads -) but if someone theoretically installed a new kitchen every year in their house and, in a period of low interest rates and increasing house prices (eg 2000-2006), used remortgaging as the tool to fund the cost, surely there is a limit to how much of that cost (+ borrowing) is really reflected in the investment in housing stock? This would not count as official MEW? But to all intents and purposes the borrowing has not been invested in the housing stock, only a small portion of it (reflecting what a buyer would pay for the house - he would not recognise the "value" of 4 previous kitchens over the last 4 years).

And it is not wholly theoretical. I know someone who is on their second kitchen in 4 years. Another example is the purchase of a property and immediate replacement of kitchen by new owners, followed by the same again a couple of years later by another purchaser. The cost of these kitchens is funded usually through mortgage tack-ons or refis but at some point it ceases to add value to the housing stock and is closer to the generally received version of MEW being withdrawal of cash to fund lifestyle.

Alternatively, if I bought my kitchen on finance from Magnet and then, a year or two later, repaid that finance deal by increasing my mortgage and using the funds to do so ("consolidation of debts") - is that MEW or not? It would not be recognised as such would it (officially) - but the real effect is the same. I think what I am saying is that official MEW can be misleading(ly low) as there is not a commensurate increase in value of the housing stock for the "investment" represented by the "MEW".

Finally, when friends of mine remortgaged (using new valuation to gear up), part was used to replace their kitchen, part to consolidate debts and to buy a car. All was declared as "home improvements" to the B.Soc. All they needed to show was quotes (not invoices) for the work (eg kithen, bathroom, conservatory etc) - but didn't go ahead with most of it, just the kitchen. All this does not count as official MEW?

I understand the official MEW line (I think) but still I believe it does not tell the whole story.

Just curious.

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A kitchen is worth the sum of material + labour, since there would never be any incentive to pay more than this. It also depreciates with use.

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[quote name='kingofnowhere' post='352600' date='Apr 19 2006, 01:47 PM'] Hi Webmaster

Sorry to be a pain but this is incorrect
[i]
Mortgage Equity Withdrawal
Spend, spend, spend. New kitchens, new cars, exotic holidays...the list goes on. The British homeowner released vast amounts of equity from their homes and went on a spending spree[/i]

Spending on New Kitchens isn't MEW as the money is invested in the housing stock.
[/quote]

OK, I'll fair enough, I'll take kitchens out.

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I've just been enjoying Tempest's analysis again as a new year treat.

It also seems to me that a kitchen might be subject to the law of diminishing returns in that a decent new kitchen might add a decent amount to the house's value whereas a fantastic one might add value that is more than decent but less than fantastic.

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