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Uk Property: How Low Can It Go


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HOLA441
This is fantastic. Bravo to Frizzers et al at commodity watch radio. Please pin this mods!

Worthy of a pin, I've listened to it twice so far. I've also sent it to a BTL'r to ponder over. Maybe I should wander round the city centre with it playing out over loudspeakers.

Clear, concise, accurate. Well done all involved.

VMR.

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HOLA442

I posted the link on MSE yesterday.

So far I have not been shot, impaled, or even banned.

... though I did ask one of their regular posters to not respond.

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HOLA445
Well done. Thanks, Laura.

Does anyone here post on Motley Fool? If so, you couldn't post a link to this could you?

Yes I do and No I won't as it's kinda frowned on. TBH Laura's got you potentially better exposure for your business on MSE, suggest you get in touch with David Kuo at The Fool yourself and the guys at Moneyweek...oh 'ang on MSW can help you there. ;) Use FP to get a shoe in at R4, not sure how your model fits, but if you get enough respected talking heads it could be a fascinating pitch.

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HOLA4411

"How Low Can It Go"

Well if you work out that the average family mortgage/rent affordability is £ 500- £ 600 a month. This would equate to

£ 80K to £ 90K loan over 25 years at 7% with paying some principal off . Seems we have a long way to go before FTBs will flood the market again, remember last CRASH it took about 3 years even after bottoming out before confidence was restored and this coincided with the IT boom . Cheap Credit and Investors have created a Unsustainable Bubble which has now burst.

Edited by joey
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HOLA4412
Test

Test indeed ;)

It's now attached to my sig over at ykw

The things I do for little or no reward. It must be the way I was brought up. "Always put other people first child, if everyone did that it would be a fine world..........As you sew so shall you reap...................There's never been a better time to buy"

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HOLA4414

Although I've already posted on the excellence of the show, I've got a question kinda like the title of this thread.

The majority of forecasts seem to now be around the -30 to -40% range. As a FTBer, myself and most of my friends who routinely debate this at work and the pub are all in the position where we cannot see being able to afford a normal repayment mortgage even with prices falling by those kind of amounts. The consensus for us is that we need at least 50 to 60% falls to have a hope.

Edited by Khayl
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HOLA4415
Cool .

What is ykw?

Sorry Frizzers, my age is showing again

You Know What

or

You Know Where

ie MSE

Will we only speak code one day??

________________

Khayl

You will get your 60% & more.

Edited by Laura
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HOLA4416
Khayl

You will get your 60% & more.

God I hope so. I guess saying 30% falls in the mainstream media is about as far as people can stick their neck out at the moment.

Yet another example of HPC.co.uk giving me hope! Thanks Laura!

average house 180k average salary 23k-median.currently 7.82 times long term average 3.5 = 80.5k.......................

and thats if the average salary doesn't go down into the recession.

Beautifully clear way of putting it. You're so right. Thanks Reaper!

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HOLA4417
average house 180k average salary 23k-median.currently 7.82 times long term average 3.5 = 80.5k.......................

and thats if the average salary doesn't go down into the recession.

I've been doing the same kind of calculations for Mrs FTBagain.

If you take a slightly bullish set of numbers say salary at £26k at 3.5 multiple you get £91k, or with two salaries at 2.5 multiple you get £130k. These would be modestly above average mortgages in a sensible market at todays wage levels.

Now compare these figure against the prices for the average UK home, widely regarded as the classic 3 bed semi. Here in Bath, which has very little going for it in economic terms as far as I can see (some MOD establishments that could well be closed down in the nearish future and tourism). Semis in Bath are going for anything between £200k and £400k. Median price from what I saw yesterday on Rightmove is in the region of £250k to £300k. To get even close they are going to have to fall by 50%.

The chances are, of course, the market will over shoot.

That takes us into the 60 to 70% drops over 3 to 4 years from peak. We are nearly a year in already so the market has got to get moving. Maybe that is why we are seeing such big MoM drops at the moment. If the market is to achieve such big total drops over the normal cycle period then it is going to have to drop quickly.

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HOLA4418
average house 180k average salary 23k-median.currently 7.82 times long term average 3.5 = 80.5k.......................

and thats if the average salary doesn't go down into the recession.

Possibly more as those with average salary will have to get out of debt, weather credit crunch etc . As the system purges we will overshoot to the downside.

Laura LOL

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HOLA4419
Bump

MSE wiped my sig because it was live.

Rules must be obeyed, regardless.

God how I loathe low-level system servers.

Let 'em vanish up their own squeaking posteriors; I'm watching this one from afar <_<

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HOLA4421
That takes us into the 60 to 70% drops over 3 to 4 years from peak. We are nearly a year in already so the market has got to get moving. Maybe that is why we are seeing such big MoM drops at the moment. If the market is to achieve such big total drops over the normal cycle period then it is going to have to drop quickly.

Round my way we are 15% down already. I know NW and Halifax are only (!) 8-9% down from peak, but in real time we are right on track.

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HOLA4422
Although I've already posted on the excellence of the show, I've got a question kinda like the title of this thread.

The majority of forecasts seem to now be around the -30 to -40% range. As a FTBer, myself and most of my friends who routinely debate this at work and the pub are all in the position where we cannot see being able to afford a normal repayment mortgage even with prices falling by those kind of amounts. The consensus for us is that we need at least 50 to 60% falls to have a hope.

Yes, I think you will get your sixty per cent. Not sure you will get a mortgage though.

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HOLA4423
Yes, I think you will get your sixty per cent. Not sure you will get a mortgage though.

Yeah I agree. I suppose if most can't get a mortgage, even a sensible one, that just means house prices fall further. I'd apply the same thinking to unemployment actually.

I honestly think that if the concept of the 'Mortgage' had never been invented. We'd all just buy based on what we can save. Ie. house prices much lower. Maybe with a bit of legislation to stop the landed gentry swallowing up all the land.

If this last decade teaches us anything, its that the availabilty of credit pushes up asset prices.

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HOLA4424
Yeah I agree. I suppose if most can't get a mortgage, even a sensible one, that just means house prices fall further. I'd apply the same thinking to unemployment actually.

I honestly think that if the concept of the 'Mortgage' had never been invented. We'd all just buy based on what we can save. Ie. house prices much lower. Maybe with a bit of legislation to stop the landed gentry swallowing up all the land.

If this last decade teaches us anything, its that the availabilty of credit pushes up asset prices.

Depends on what type of property you will be looking at as well. I can see 60% on flats easy, maybe small houses though will not be as good/bad. Who knows though really.

Anyway, you've got a couple of years to put away a big deposit now.

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HOLA4425
Depends on what type of property you will be looking at as well. I can see 60% on flats easy, maybe small houses though will not be as good/bad. Who knows though really.

You do not have to dig that deep to see an unstoppable (short of a miracle) trend, so why question? :blink:

Unless you are adviser to HM Govt?

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