View a graph of the last crash
Here's what happened to some of the forum members during the last house price crash:
Forum member: STR2004
- 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
Forum member: SirGoogle: This cautionary story illustrates the long term knock-on effects of buying at the moment a housing bubble bursts
{{main}Template:As aewly married couple straight out of University we experienced nearly 11 years of negative equity after buying our first house in 1988. We brought a 50K house with a 90% mortgage at around 4 times my salary. The interest charged was 9%, however within a couple of years we were paying out at 15%. I paid the mortgage and my wife fed us (people should remember that interest rates can go this high). By 1991 the value of the house had plummeted to 38K. We had brought a house because we were desperate to get onto the housing market as we could not afford the local rents and could not get onto a council house list (because we had jobs and the Government was selling off the housing stock). After 6 years of this hand-to-mouth existence, and to try and rectify matters we left the UK in the mid 90s with the express intention of saving and investing so that we could eventually afford a home in the UK. We also moved country to start our family (a decision that had also had to be delayed). Sadly our financial decisions seem to have a sad and familiar pattern to them. We sold the (millstone) house in 1998 when it finally cleared what we had paid for it (this is because we had had some difficulty in renting it out and the mortgage had to be switched to a more expensive landlord mortgage). By this time we had some savings, and invested these in bonds around the time of Sept 11th 2001. Suffice to say these dropped (a lot) in value, although are creeping up now – but not to what they would have made if we had simply put the money in a building society (or under the mattress). The 40-year(!) endowment mortgage that we had to take out in 1988 and later a 25 year endowment in 1996 will also only deliver half of what the building societies had said these investments would cover (just as well we don't have a mortgage now). We have taken independent professional advice at every turn but now do not trust anyone. Interestingly nobody said we should not have sold in 1998 as there were no indications then of the impending hike in house prices, in fact at the time this was seen as a "good decision". We have watched since in dismay as house prices back in the UK have reached ridiculous levels, effectively pricing us out of returning (N.B. most of us rent here on "the continent"). We have also puzzled over the fact that we (who are on good wages) have not been able to save at the rate the prices have increased. Where on earth will all this money come from when a first time buyer’s starting salary is 18-20K??.