For Those Waiting For An Hpc

[swissy_fit]

Here's a typical "nice area" scenario :

Reasonable low-maintenance 4-bed 2-bath house in Exeter, nice area, asking price 260k, probable target price 250k.

Gross rent achievable approx 1500 pcm, possibly more, it's a popular area near the uni.

Purchase using mortgage, 4% fixed for 10 years, 70% LTV so 175k mortgage, 75k deposit.

Add 2% for repayment of mortgage, so 6% of 175k - interest plus repayment = 875 pcm.

Lost interest on 75k deposit = approx 3% = 187 pcm

Total including lost interest on deposit = 1062 pcm.

Over 10 years the mortgage will have reduced to approx 125k, total payments made inc lost deposit interest of 127k

If renting, total payments = 180k.

You have to be expecting very significant price depreciation to make waiting worth it if your job is reasonably secure. Many will not find it worth it.

The scenario in sh1tsville, North-West or North-East England, is not the same at all, anyone STR there should be laughing, prices there are going back where they always belonged.

Anyone with aspirations to live anywhere pleasant who has a significant deposit and is renting had better have a very good rental deal, otherwise they are deluding themselves IMO.

Without a bond crisis and interest rate rises, many of us have backed the wrong side. I'm grateful for my Swiss franc assets.

[exiges]

I guess the point of my question, wasn't to argue whether we think there will be an HPC of any note, there are plenty of those threads, it was more a hypothetical question what happens if we just get tiny annual nominal falls, are you going to keep waiting, or when will you give up.

Edited February 6, 2012 by exiges

[Shotoflight]

For the last year people have been waiting to see if the government had fired 6 rounds or only 5.

Do you feel lucky, punk? Well, do you?

I's gots ta know

[smiffy1967]

yeah, get on with your life.

not possible in a rented home.

I beg to differ, i have a secured tenancy from my housing association, for life that can go to my kids, in a nice rural part of Britain, my HA has 650 houses soon because of work injury i will be moving into a bungalow yippee

[Bruce Banner]

I guess the point of my question, wasn't to argue whether we think there will be an HPC of any note, there are plenty of those threads, it was more a hypothetical question what happens if we just get tiny annual nominal falls, are you going to keep waiting, or when will you give up.

I would continue to wait and perhaps never buy another house. My kids would have to make do with a cash inheritance.

[brickwall]

its been going on for long enough to force some die hard sellers to lower their prices by £10000 £20000 and some in the last month .problem is its getting harder to see this going on uless you are a right move regular, estate agents and sellers have got use to tools like the bee so most things that have been on the market for ages are showing initial entry's at Jan and Feb(the dirty b--tards)

[the_duke_of_hazzard]

My rent is £900pcm against a purchase price of £350,000 (was £400,000 when I moved in five years ago). South East by the way.

£1410pcm vs £650,000

[Milton]

A house in my local village was put up for sale in 2010 for £190k.

[An elderly couple. One died. One went into a home with Altzheimers. Children are paying £600 per week for the costs of the home]

Unsold, 2011, so reduced to £135k.

Still unsold 2012, new Estate Agent recommended putting it on market for £120k.

I'll buy it, when it reaches £75k.

Which is £10k more than its 1995 sold price of £65k.

I guess the point of my question, wasn't to argue whether we think there will be an HPC of any note, there are plenty of those threads, it was more a hypothetical question what happens if we just get tiny annual nominal falls, are you going to keep waiting, or when will you give up.

Your question seems to pre-suppose that the two thirds of taxpayers earning less than average wage, below a certain age, have a choice as to whether they can buy a house at their presently massively overinflated levels. [Only if they fall for the Governments SUCKER shared ownership, homebuyer direct/council mortgage approved slavery schemes]

Why work in the UK, and buy into a depreciating asset class, if you can work in a number of other countries, which have experienced 60% falls from peak?

Where the average house price is 3x average individual salary?

Where Utilities have not tripled in a decade, and Cuncil tax has not Doubled?

Which may offer a better quality of life and better weather?

It may take ten years to wind down UK house prices back to their long term average affordability as a proportion of income, but it will happen.

Edited February 6, 2012 by Milton

[TheCountOfNowhere]

I am amazed that people still think we've not had a massive house price correction.

The land registry data of ACTUAL SALES clearly show this. The real drop is in the order of 30%.

The crash is already here. We need more and more people to understand that.

Everyone on there should be out making reasonable offers ( i.e. 30% below silly asking prices ) and giving agents a hard time for sill asking prices.

As I said before, buy, but buy something at a sensible price. Ignore the asking price, that's just EA fantasy nonses, ignroe the EA sales bow-lax, for it's is recognisable as just that.

[sponge]

i do feel it for the southerners even with a good sized crash, thier sttill gonna have to pay double for the same house in the midlands

thier are two groups on here the investors and they,ll wait until whenever as its all about money for them, then thiers people who want a home

i got my house just befor christmas waited 5 yrs got it 35k below and am very happy its certainly took alot of stress off my shoulders and the pause button off my life

[inflating]

I beg to differ, i have a secured tenancy from my housing association, for life that can go to my kids, in a nice rural part of Britain, my HA has 650 houses soon because of work injury i will be moving into a bungalow yippee

I think Bloo Loo's tongue was in the vicinity of his cheek

I am amazed that people still think we've not had a massive house price correction.

The land registry data of ACTUAL SALES clearly show this. The real drop is in the order of 30%.

The crash is already here. We need more and more people to understand that.

Everyone on there should be out making reasonable offers ( i.e. 30% below silly asking prices ) and giving agents a hard time for sill asking prices.

As I said before, buy, but buy something at a sensible price. Ignore the asking price, that's just EA fantasy nonses, ignroe the EA sales bow-lax, for it's is recognisable as just that.

I have been making such offers, in your backyard area last year, as it happens! Was rejected, but most of them are still for sale, only a few sold or perhaps were withdrawn

[rantnrave]

House prices have stopped going up - the goalposts have stopped moving, which in itself is a massive relief.

Two personal gripes about a lot of discussions on this forum come to mind though:

* Comparing salary multiples now to those of the mid 90s. They were caused by a freak economic situation (the UK aligning it's currencies with others in Europe). Those levels aren't coming back.

* Comparing the falls of 08-09 with now. Those were the fastest falls in house prices the UK has ever seen. They are also not coming back. 1% a month possibly, not over 2%.

I can save whilst renting. If house prices are static, things are still moving in the right direction. Every £1 added to the deposit is £1 less in borrowing and another £1 less (approx) in interest paid out. Each £1 added to the deposit in the past is also now earning compound interest too (the only rate of inflation I'm concerned about here is HPI).

In 2007, I could put a 20% deposit down on a family home where I am in the Mids. Savings combined with price falls have pushed that up to 60% now. I could've put a 40% deposit down on the two-bed I rented from early 2008. By the summer, I am on target to buy such a place with cash if I wanted.

Waiting has paid off for me. If you can't rent and save, then I guess it depends on how old you are. I would advise a 25 year-old to wait. I don't think I'd give the same advice to a 35 year-old though.

[TwoWolves]

In my area there's a crash going on, its a bit uneven but 20-25% drops are happening. We are seeing an acceleration now and many attractive properties that would have been sold within a week three years ago are now sitting on the market dropping 20-30K every three months.

The official indexes are just doing what every arm of government now does... lies.

[@contradevian]

I beg to differ, i have a secured tenancy from my housing association, for life that can go to my kids, in a nice rural part of Britain, my HA has 650 houses soon because of work injury i will be moving into a bungalow yippee

I agree + I have an extra £60 a week going into MY pension pot rather than my ex private landlord s.

[Bruce Banner]

i do feel it for the southerners even with a good sized crash, thier sttill gonna have to pay double for the same house in the midlands

thier are two groups on here the investors and they,ll wait until whenever as its all about money for them, then thiers people who want a home

i got my house just befor christmas waited 5 yrs got it 35k below and am very happy its certainly took alot of stress off my shoulders and the pause button off my life

I'm not an investor. When, and if, I buy a house, it will be my home. Until then I shall continue to rent my home.

[Milton]

If youre nearing retirment age, and Greece defaults again. [As they probably will] And returns to the drachma. You may be able to pick up a villa for 1980's prices in a few years.

[19 year mortgage 8itch]

I can save whilst renting. If house prices are static, things are still moving in the right direction. Every £1 added to the deposit is £1 less in borrowing and another £1 less (approx) in interest paid out. Each £1 added to the deposit in the past is also now earning compound interest too (the only rate of inflation I'm concerned about here is HPI).

Don't forget tax.

Every £10 I borrow is likely to cost £16-20(ish) to pay back which because of tax rates will be £25 to £30 of earned income. Knocking £10,000 off the price can actually save you the best part of £30,000.

[sundance_kid]

House prices have stopped going up - the goalposts have stopped moving, which in itself is a massive relief.

Two personal gripes about a lot of discussions on this forum come to mind though:

* Comparing salary multiples now to those of the mid 90s. They were caused by a freak economic situation (the UK aligning it's currencies with others in Europe). Those levels aren't coming back.

* Comparing the falls of 08-09 with now. Those were the fastest falls in house prices the UK has ever seen. They are also not coming back. 1% a month possibly, not over 2%.

I can save whilst renting. If house prices are static, things are still moving in the right direction. Every £1 added to the deposit is £1 less in borrowing and another £1 less (approx) in interest paid out. Each £1 added to the deposit in the past is also now earning compound interest too (the only rate of inflation I'm concerned about here is HPI).

Indeed.

Waiting has paid off for me. If you can't rent and save, then I guess it depends on how old you are. I would advise a 25 year-old to wait. I don't think I'd give the same advice to a 35 year-old though.

Right again. This thread topic is just to gauge opinion, i think it's good.

As long as prices stay static it's allowing me to 'catch up', reduce by potential mortgage in the near future and also helps insulate me from possible rate increases in the future. At 27 I'm not in a bad position, like I said though, two more years and that's my limit.

If there's people on here though who could afford to buy now, waiting for some potential 40% off crash seems a waste to me? Buy and get on with your life.

[brickwall]

I am amazed that people still think we've not had a massive house price correction.

The land registry data of ACTUAL SALES clearly show this. The real drop is in the order of 30%.

The crash is already here. We need more and more people to understand that.

Everyone on there should be out making reasonable offers ( i.e. 30% below silly asking prices ) and giving agents a hard time for sill asking prices.

As I said before, buy, but buy something at a sensible price. Ignore the asking price, that's just EA fantasy nonses, ignroe the EA sales bow-lax, for it's is recognisable as just that.

we just bought in nov ,got 25000 of asking 165000 had 115000 deposit got personal loan to finish of so became cash buyers we were worried some one my get in before us that's reason for the loan instead of morgage.we had to buy now as deposit was in danger of being spent we were really having to watch what we spent and still are its definatly getting tough for every day people.i believe you are right crash is gaining momentum.

[19 year mortgage 8itch]

If youre nearing retirment age, and Greece defaults again. [As they probably will] And returns to the drachma. You may be able to pick up a villa for 1980's prices in a few years.

My (Greek) wife and I are keeping our options open in the UK till the Greek situation is resolved.

[Unexpected]

I could pay cash, but I'd lose more in bank interest than I pay in rent.

Where I am in West London it seems to cost about 2k a month to rent something you could buy for 400 -500k. My landlord has recently decided to hike my rent up to £1400 for 2 bed flat probably worth about 320k. My savings only make 2.8% for which I have to pay tax.

I can get a 150K mortgage and buy a nice little house in a good area, use up my deposit and I'll only be paying £400/month. I get less than £200/ month from bank interest right now so I'll save £800/month if I buy and have a better place to live. Yes I know there are some disadvantages like flexibility to move and maintenence etc but the monthly amount I'll save seems to make it worth it IMO. I do expect prices to fall though so yes its still a gamble.

[JJJ]

Since you ask, I think the wish of some on here for a massive 30%/40%/50% overnight crash on here will never happen.

Ah, Northern Ireland. For once setting an example for the rest of the UK.

[goldbug9999]

But thats only true if you dont have a decent deposit saved up. I think many hpcers have a good deposit so they would be cheaper buying as far as their monthly costs are concerned. I was shocked at just how cheap it was to borrow 150k when I got a quote for a mortgage recently. It came to around £400/month on an interest only basis (interest only being quite good for people who can pay off their mortgage in chunks).

Only true if the amount you save in mortgage interest is more than returns on the same money invested.

Also if you have substantial savings then that brings certain lifestyle bonuses of its own: you never have to "worry about money", about paying bills or not working (for years at a time possibly), you never have to think "oh I cant afford xyz this month, Ill have to wait till next pay day" etc etc etc. I dont know about other people in the same position think but personally I'm not desperate to swap that position to being a net-debtor and having to live month to month with no cash reserve.

[inflating]

I agree + I have an extra £60 a week going into MY pension pot rather than my ex private landlord s.

How do I get this social (council?) housing then? I am fed up paying through the nose for a flat where most of the other neighbouring tenants are on HB anyway!

Can someone tattoo 'm u g' across my forehead just so there can be no misunderstanding in future. Thank you

[zugzwang]

I guess the point of my question, wasn't to argue whether we think there will be an HPC of any note, there are plenty of those threads, it was more a hypothetical question what happens if we just get tiny annual nominal falls, are you going to keep waiting, or when will you give up.

My definite hope in 2006/7 was for hefty nominal drops over a two year period, mirroring the US markets from 2005 onwards (it started in Florida), followed by a couple of years real negative growth a la 1989, and then buying circa 2011/12.

When McRuin began testing the water with his early 'Saviour of the Universe' intentions, I think a figure of around £90bn was quoted for bank losses, I did reconsider for a time. £90bn was a colossal sum, that would surely have a material impact on the housing market? Indeed a friend of mine bought in early 2009 with these considerations in mind.

As we now know the one-eyed rocking horse jockey was actually preparing to spend 10x that sum and more to keep the swillers and home bubblers upright, bankrupting the country in the process. And the pigmen didn't even have to make good their escape, they're still at the same rotten desks running the same rotten rackets. Having pulled off the greatest financial heist in all recorded history the City of London still remains Ground Zero of the global, junk bond freakonomics casino.

So, the perspective's changed. My expectation now is for a drawn out economic and political collapse. I believe the UK can neither grow nor inflate it's way out of Gordo's debt-trap and as such the price of putting a roof over one's head is becoming rather secondary & inconsequent. If we're lucky we'll get to repeat the Japanese experience. If we're lucky.

I can wait.