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House Price Crash Forum


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  1. Most of this site is mad as hats, but if you start to treat all the info with a pinch of salt you learn to make up your own mind. Anyone who can tell you when a bubble will burst is lying. Pointing out that it is a bubble is possible though. I can't see how this site could be "wrong" as no one has ever agreed about the slightest thing. Broadly speaking it has thrown up some interesting bits of news and there are occasionally really good insights. I don't think many people thought that mass printing of money was really likely ( even if it was mentioned by a few people) I agree about the bias and the tone totally slams the credibility of the site. The permabears probably do more to make this unreadable some days than even the most blatant trolls. It is a shame though as this could be a far more usefull site; take peak at the irish propertypin site for comparason. I've been shouted down for voicing what counts as a moderate opinion ( for hpc anyhow) but pah, what do I care., I avoided a sword of damocles rental agreement after reading about it here and heavily used property bee and zoopla while negotiating a price for a house that I'm still pleased with, so all in all I've learned enough form this site for it to be one I come back to.
  2. Broadly I agree and drive old cars ( one is even old enough to be tax free!) but I've had a couple of instances where the converse was true. Bought a new car in 2004, just b4 xmas, just before they released a new model, qualified it for fleet pricing and sent the same fax to every garage in range asking for the lowest quote ( and including the current one) Got a genuinely killer deal. Sold it 18 months later for 85% of what I paid, probably in hinesight could have easily got 90-95% The official estimate I paid for valued initialy valued it at 15% more than I paid new and even when I complained they were still saying it had lost nothing. So yeah It can, sometimes work if the planets are all aligned. ( plus I got to pick the colour!) 2 years ago bought a standard repmobile in good nick from a company that buy out corporate lease vehicles and put them on ebay. (Auction entry costs are high enough as a one off bidder to provide them with their margin) Basically totaly above board, standard second hand cover from a registered dealer but at a market price ( 4 k compared to about 6k being asked for for similar private sale cars, same cars werte going for 3.5-4.5 at ebay at the time) It's almost 10 years old so all the depreciation should have been eaten up but nope, weirdly the price has been tumbling since then and it's now worth about a grand judging by similar cars back on that eternal bell weather ebay. So even without taking into account an expenseive cam belt change at 100k, my 10 year old car lost £1500 a year which is a shocking 33%. Strange but true. ( but I bet there is one at a dealers that still has a 6k sticker on it)
  3. Hmm, I meant has it already happend like Ireland with 30% down or has it somehow ( even if its temp, and fiddled via a devaluing the £) stayed teetering on the brink of where it was in 2007 like the UK.( at least withing 10%) I'm also in the think australia is a bit differnet camp btw. In the UK and particularly in lreland rents were out of wack with sale prices, that's not quite the same in oz is it. I know it's crazy expensive but if people can afford and a re willing to pay that in rent, why not mortgage payments. My pre crash rent in ireland for instance would have amounted to a 1.5% yield compared to the asking price Q. Have rents come down? or does the yield still roughly match the cost of borrowing My other thing that makes me a milder bear is the feeling was that if you compare the actual "average house" you get for the crazy multiple of your salary then the aussie one still tends to be an OK house which is not the case back here in the UK/Ireland.
  4. Ahh the thread that just won't die. Just checked at my old local on the lower north shore , they have a menu on line that includes drinks. http://www.oakshotel.com.au/ Schooners start at 5.10 What has actually happend to the market? I know I should read all 2000 posts but in a nutshell, has it come off the boil? Does it look like Ireland or the UK
  5. Thanks for all the posts, slow response as I've been on holiday ( paid for by my house of course ) Like I said at start of my post if your an investor then this wouldn't make sense. To clarify a couple of things I only posted this after I exchanged, so yes I really did buy it. I wanted an offset as I need to do some renovation work and am unsure how much it will cost. When I ran through the numbers the only other viable alternative was to take out a larger HSBC mortgage and use their 6 month grace period to draw down what I spent and make a guess to the extra I needed before they locked the final mortgage amount after the 6 months, then bank any extra until I remortgaged in a couple of years. ( that actually wasn't that bad an option believe it or not) Cost was just over 330k, 4 bed semiD To the people asking why now the answer is because for this house it was now or never, my LL decided to sell. The main point of my post was to point out that if your looking for a home, not an investment then the wrong house at the right time is no better than the right house at the wrong time. ( right house for me means it's actually at market price, right location, right type of house, right size of house, right condition) Cheers, hope whatever your plans are work out for you.
  6. Bit of a contrary thing to admit to on this site but hey, thought I'd post the details to add a bit of colour and a real example. Firstly, I still think houses will fall in real terms. I bought a house to live in. Am I still allowed to call my self a bear I also quite like decent houses, sometimes we forget that on here. If I didn't give a dam I'd have bought some gastly new build and got on with my life. If you are an investor this will seem like madness. Prior to joining here I read and then posted on the propertypin as I was living in Ireland. We moved there in 2006 and thought something was weird only to watch it start to slide, so for background sake take it as read that I understand the general points of this site that we mostly agree on. Broadly I'm of the opinion that the drop would initially be steep and then settle into a slow drawn out decline, (I can't really buy into the eotwawki scenario but if everything goes completely madmax I have to face up to the fact that I' a soft city dweller who won't last long anyhow so why even plan for it.) The thing to take into account is that on any day on any street in and city there will be houses that are a good deal and a bad deal. There tend to be more bad deals as the good ones sell. Secondly finding a house that is the right style,rough value, location and condition usually ends up as compromise or a very long wait. Trying to time all that for what you perceive to be the bottom of the dip is going to be a big call. At that point you may end up say buying a house which is what you want but has a big garden you don't care for. Sure you got it a a good price but you paid more than it would really have been worth to YOU. I bought the house we have been renting directly from the LL. He approached me (but yes it still takes two to tango.) In 2007 I had an idea in my mind what a local EA would market it at, what it was worth market rate and what it was worth to me. ( I even posted that somewhere on here for the record!) I need to stay in the same school catchment to avoid my kids getting put in different schools Prices in the area dipped early summer and have recovered quite a bit, rents in the catchment for family homes have gone way up and there is next to nothing to rent. We had about 2/3rds of the cost sitting in a few bank accounts mostly £ but 30% in other odds and ends. I agreed to buy it without setting a price and told him I'd see what the surveyor ( detailed, actually did his job) thought it was worth. He also brought in the local EAs. The standard zoopla pricing was always going to be slightly wrong as one of the recent purchases was parent to child sale at way below the norm and that was clearly skewing price models. So the survey came in lower than we would have called the market rate. 2 out of the 3 EAs had a valuation of about +15% that and when I asked them they told me places were exchanging at about 10% below asking. The third was about 20% higher again! (interestingly the lowest was from the EA who were the most agressive on the way up, the high one was from the NKOTB) So with both him and us being reasonable folk we threw out the high asking price and dealt with the others. We agreed a price a 2-3 % above the valuation with an agreement to carry out some required work prior to the sale. It was slightly below the figure we originally had in our heads of what it was worth to US.( and about 20% down on my guess of the 2007 MR.) So that bit I think worked out well. We managed to work out something close to the current market rate without him having to kick us out and put it up for sale. I get a house I like with no surprises. Mortgage wise... would have been no issue with the hongkers and shanghai bank but we wanted an offset ( more on that at the end) despite being about the most eligible home buyers in britain ( established family house, married, kids, 10 years in same job, 30% ltv 2.5 x a single salary, never even returned a library book late) they went nuts due to us having lived overseas. Kept demending more and more unusual bits of proof for various things. We gave up, set up appointment with the old bank of hongkong and gave an ultimatum to woolwich at which point they finally cracked issued the full offer. Contingency plan if rates go way way up due to continued printing is that I have some well geared stock options that would hopefully get carried up at the same time and due to the gearing they should allow me to clear the debt in full via the offset. Yeah there is a chance that rates go up while the market crashes but hey it reduces some of the risk. If I hadn't bought I'd have to protect the value of our deposit and that seems to be tough right now and there is a fair bit of risk required on that front even if your just trying to stay still against inflation. We did ok on that front in the last 4 years but largely that was luck truth be told. TIme will tell. Bring on the folks calling me a troll :-)
  7. And the other part of the con. It only costs the same today in year 1 of the mortgage. Salaries will increase at something not a world away from the interest rate. Houses were initially just as un affordable 30 years ago but people knew as long as they could hang on for a few years ( with almost no spare income after housing and food) then it would decreases right down as the debt was devalued. As there was always a mix of people at different stages it meant there was still spare disposable income in a good proportion of households. These days you're stuck with punatively high payments for years and years and it the % of people in that situation will continue to creep up.
  8. The fact that you see lots of people doing well financially who bought a house 30 years ago is a form of confirmational bias. There are plenty who did not make out like bandits but they don't own that house anymore. A slightly different challenge would show that. If you solely relied on rent to cover interest payments what % of investors for any given year fail to pay the mortgage at some point in the 30 years. Historically rates and deposits were higher, recently rents were much to low ( because all the BTL investors relied on HPI to make up the differnence) Most failures will be in the first 3 years but anyone buying just before one of the huge interest rate spikes like in the 70s would get nailed as well. Timing is everything
  9. Keep reading, assume everyone is both crazy and has an adgenda but entertain their ideas and make up your own mind based on what you think is reasonable :-) Then tell us so we can call you crazy. Making those sorts of changes is expensive so If you are going to STR as a gamble you would want to be pretty sure. If you plan to downsize then now would not be a bad time but the market is a little weird and you would be talking about setting up a chain where your buyer would most likley have to sell their property, rather than a FTB. That sort of change would be equally expensve for your daughter and if you are confident enough in a downturn being around the corner to STR then you should definately advise her to rent and wait and see. Personally I don't think either side is compelling enough to force a move right now, but other factors could push you either to sel or buy. Long term, in real terms prices will go back down but when that will be and whether you can effectively maintain the real value assets you have now ( without them being taxed to death) is not particularly clear.
  10. Thinking seriously about buying the house which I know normally turns a thread into a flame war but lets avoid that point and assume I've been reading here for the last 2-3 years and have my eyes open. On to mortgages then. The general consensus here seems to be get a longer term fix as things can only go one way but seeing as we own a print press and any likely government will continue to take the easiest path it may not be a done deal, at least in the time frame you can get a fix over so.. Surely the cost/risk of an increase is already figured into the much higher fixed rates by the bank. On top of that am I going to have to pay some aditional premium on top for them to lower the risk to me. As reasonably cash rich buyer I have a pretty low LTV, low salary multiple and have other investments that I am confident will outperform any interest rate ( the only likely scenario where they don't is the injin sceanario in which case paying my mortgage is the least of my worries) I am reasoning that I'm beter of taking a tracker as I have a healthy buffer and can cope with some pretty big swings. ( If I cashed in all investments to reduce the amount I plan to borrow I could still cover the interest at iceland's current rate) Other than the fact I'm thinking of buying at the top of the bounce :-) does the rest of my thinking make sense?
  11. Accidental Land Lords not even being aware when they are breaking the law while thinking they are moraly in the right cos it is "their home". The BS involved in pursuadeing them to sort their act out while keeping them on side. AHhhhhhh Lack of tenure. First kid in particular school, tenancy comes to end and there is nothing I would want to live in in the catchment for the next year when the next kid will start to attend. Grrrrr One Landlord ( in ireland for the record.) put up rent by ~30%. We made it clear that was ilegal and found enough suporting evidence of identical properties from the same rental agent to suport that. Spoke to the agency and mentioned that Shelter would throw it out and fix the rent but when push came to shove it was less work to move than follow it through and then have to live under the bastads roof still giving him money, I mean it was not like we couldn't easily find somewhere else ( which is what the law was in place to guard against.) Next week letting agency takes out an add in the local rag advertising "rents only ever negociated up" it was unlet for about 6 months. Makes you blood boil. Renting sucks in the UK, you are a second class citizen and law upholds that. Wish it weren't true. The laws are written to control really bad tennants and really bad landlords but here is nothing in place if either of you are essentialy honest. Stuff like a noise problem... get real. the man on the street would say to just move and in truth you would do just that but why in the hell should you. Don't think it will ever change here either
  12. 0% interest rates and QE. If any one had predictedTHAT anywhere they would have been looked at as a lunatic. Belief in HPC was crazy but come on, illogical interest rates and printing of money on a massive scale in the UK? That would never happen. Luckly for the government most people don't get it; the numbers are so big it is meaningless and there is this weird belief that it is somehow the governments money not mine.
  13. Congratulations. I am sure that as a HPC reader you went into the deal with your eyes wide open and do not labour some crazy notion of the house earning you money. I am sure you were armed to the teeth with real information regarding mortgage afordability, property bee info, previous sale history and bullet proof EA bllsht armour. One of the fundamental sentiments that is often pushed to the background on this site is that houses should be for living in, not investing in. If you were buying a second "investment house" then I would agree that now is not exactly an ideal time but a home is different. It will cost you x000 a month in loan repayments for 23 years and you seem comfortable with that. In return you have some thing that will allways be worth exactly 1 house and for most of your life you are going to need one of them so the exchange rate between houses and £s ( or hours worked for that matter) doesn't have to matter a whole lot. if you buy a car you do not continually worry about it's future worth and I tend to think in a similar way with a home. ( similar not the same) As already mentioned, and as should be patently clear to anyone who can think for themselfs house price indicies are very rough aproximations to somethign that is dynamic right down to the individual street level there are always good and bad deals and trends moving in different directions. Bad parts of town get gentrified, school catchment zones can change etc. Even more so you have to factor in how closely a house meets your ideal requirements, the right house at the wrong time may be no worse than the wrong house at the right time. If your buying on a large newish estate then house may be fungible but for the most part they are not. Personally I would not want to buy a house that had been renovated ( I think most people's taste and concpet of liveable spaces is terrible) and when coupled with location, size, timing and a realistic seller I know that finding something that is 100% right is tall order. 90% right is probably doing well but that could include overpaying for an ugly extention, proximity to a school if you have no kids or even buying at a point in the market when you think there is a good chance further falls. Case in point, a good friend bought what to my eye was a turnkey house 6 months ago and got a good deal, but she subsequently undertook major work to modify it to what she really wanted. Although she bought at the bottom of the dip from a vendor with a gun to their head ( divorce + relocation) the net result is not hugely differnet to if she bought today. It's a home, enjoy it.
  14. Regional doesn't even do it justice. In the small town I live in houses on one side are selling like there is no tomorrow while you can't give them away on the other side. No huge difference between the two area's the one selling is slightly posher but the town on the whole stands out in the area, there have been very few redundancies ( all public sector) and ALL the schools are excelent. All this just a stones throw from the mass of unsold flats in cardiff bay which you think would stand as a warning but it seem nope. The EAs I've spoken to admit it is all over the place, vendors have no idea either. The ea I see selling the most was the highest priced on the way up but seems more realistic the last few months. Another EA admited that they have to price the house above another EA in order to get it on their books ( but not too high to maket unsellable or for it to seem unrealistic to the seller) and in doing do they are all pushing it above the market price they would like to see it on at. Actuall sales are roughly 10% lower than asking but there is no pattern; some go for 20% less others for asking price. The asking price is after all just guage of the sellers sentiment not really anything to do with how much it is worth to a buyer. Valuations from surveyors are being set at end of 2005 pricing. Rental yields ( at least for the few I know) are 3-4%)
  15. It is not quite the same as the uk or the worst bits of the US in that while houses are crazy exepensive so are rents. People are choosing to spend that much money to put a roof over their heads rather than being conned into justifying it as some sort of investment. Secondly, Australia has been property speculation mad since it was first invaded, its the old oldest game in town and as a result people are not quite as nieve about it. The amount of money doesn't make sense but then it didn't in 98 when I moved there either so that hasn't really changed.
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