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I Think House Prices Are Crashing...

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#16 ccc


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Posted 29 December 2011 - 08:10 AM

Well yes if it takes too long then money spent on rent may add up - but as already noted on this forum in another thread - just a 5k fall in price of an ftb flat covers about 2 years rent (inc interest) - never mind maintenance and fees and the rest - so the 30k + falls within 3 years covers 12 years rent easily - more than worth waiting for most ftb's. For larger houses it may be different - you have to do the sums though
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#17 wurdoomed


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Posted 29 December 2011 - 10:28 AM

So my concern is that in the UK prices can be held 'articifically' high through interest rate policy and an agreement amongst banks+government to avoid an uncontrolled crash by exhibiting greater forbearance. Polictically expedient for the government and financially important for banks with large mortgage books that they can't afford to have collapse completely.... for the time being at least.

That said, I think we are in a slow period of decline. Trouble is, it's so slow that the economics of renting may not add up - if you have to rent for 5 years you may well have spent the reduction in house price you get at the end of it :( And you've had the inconvenience of renting to boot!

Can someone give me reasons to be more optimistic!!?

Not really, and thats why I have recently purchased. There were a number of factors, in no particular order :

  • the prices in the nice areas we were interested in are not crashing, indeed in some niches are actually increasing;
  • We are buying for the long haul , so fluctuations over the next 5 year are not really an issue
  • the risk of those areas accelerating forever out of reach outweighed the benefit of the slow grind down
  • getting on with our lives, as opposed to it being on hold, whilst everyone from HMG down sought to prop up prices
  • not having a big wedge in a bank that could fold overnight is a big weight off the mind
  • sometimes you just have to make a decision and get on with it, rather than wait for years just to prove a point
  • it was good to buy in a soft market, and avoid the usual frenzy of boom times

That was our view, maybe not relevant for everyone, but on the whole it still feels like the right move for us.

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