Spoony

On at least a weekly basis in the staff tea room the house price debate is started by somebody (usually not me!) As usual, I am one of the few people in the room who believes it will crash.! I was debating (or maybe more like arguing) with a girl with whom I work. She thinks that house prices crashing is impossible. Here are some of her opinions: "Houses won't crash because the government won't let it" "Interest rates won't go up the government will see they won't" "They are building more houses here all the time so they won't crash" "House prices aren't falling" "The area is becoming more popular all the time so they won't crash" Amazing! Its like most of jo public can't imagine it happening and compare it to winning the lottery in its probability. This all despite the fact I told her that prices have been falling for 7 months now. "They don't look any lower to me", she said, going through the latest property paper. Now thats the bit which is difficult to measure, because I see houses advertised which do look cheaper than recently, but equally, I still see many way over priced (even by todays standards) houses on sale. I know 2 people at work who have overstretched themselves to buy. One had to take out a loan for the deposit and has more loans out on top of that. Another who has taken out an interest only mortgage but not arranged an endowment to cover for it. They expect inflation to take care of it or maybe 'sort it out later'. I have a friend who has done the same and now is overdrawn when they should have saved a packet. I try to keep an open mind as I have heard some very good bull arguements lately but these are signs that I have seen myself. Despite what the estate agents say they are as quiet as hell. I walked past about 10 of the the other week and they were dead, no customers at all. They looked very bored! Anybody else having the same experiences as myself?

Every Thursday the free local paper comes with a HUGE property section. And every week I laugh with amazement and disbelief at at least 3 estate agents advertising stories. Actually the front page always has a HEADLINE that reads 'so-and-so estate agents says transactions are slowing but it is still a health time for the estate agents books, we've sold loads of properties and now is a good time to buy' etc etc. Its always a different version of spin of the same claptrap that they trot out every week Amazing. Then 5 mins later, everybody in the staff tea room starts to discuss house prices and as usual, I am the only one of the few people in the room who believes it will crash.!

I bought a house at 22, worked out ok it was the right thing to do in 1996. Whats too young? Anyway I don't think he would be at the stage in his life when he would be interested in travelling the world, if he has landed a well paid job at that age and wants to move for it. I wouldn't use that as a tactic to persuade him not to buy. Best off telling him that property will at best only rise 5% this year, but more likely to fall 10% so he has nothing to lose by waiting.

Your suggestion that immigration concerns are racist cannot make sense. This is fuelling racism itself! So the net immigration figures I have read all over the media (not just the papers) are wrong are they? They appear to disagree with yours! I think the TV programme to which I was referring is an example of the British public being quite happy to publicly admit they are not happy with the amount of bogus Asylum Seekers entering this country. And there is nothing in the slightest that is racist about that.

Leave off LauraJon a moment. I don't agree totally with him but surely the insults are a bit much? My opinion is that there are far too many asylum seekers entering this country and I think the majority of the UK population would say the same. Does anyone remember the TV prog on asylum where people voted if they should send the families packing back to their countries or not. And legal immigration is taking jobs away from our current workforce. I admit that managed immigration is required but Labour appear to be totally unmanaged in the dept. Tony will probably win - but I won't vote for him. I'll go for the low taxation party everytime. I am not happy with the rise in taxes under labour with absolutely nothing to show for it. My few bobs worth.

LOL @ The Monkey and TTRTR. Good luck hope all goes well.

I have been thinking of buying a house in the USA as an investment for a long time. Have been put off for a long time by my belief that the real estate will crash. But with the weak dollar it is very tempting to take the plunge now. Saying that the dollar may fall further, I have read elsewhere on here that the dollar may strengthen and the pound will fall so does anyone have any advice?!?

Raven could you tell me/us what you said. I'll complain too. Complaining to ASA does work - I complained about a misleading and inaccurate council park and ride scheme radio ad. The local tinpot GWR cloned radio station had to pull it from air and rescript it!

"Grant Thornton calculates that paying for an increase in base rates to 5.5pc, instead of their current level of 4.75pc, would absorb more than a quarter of average household surplus income in the United Kingdom." In case you missed it read the full article Those borrowing figures are horrendous!

Update: Its starting... Having read this weeks property supplement in the MK Citizen, I have seen lots of new on the market houses, but a lot of 'new price' or 'reduced' One agent even is having a "January Sale"! A whole double page spread of £5 - 15 K off here and there. Now when has an EA ever had to have a Jan Sale? Jan is traditionally a boom month. Things are serious. Of course the paper is also full of the paid for EA blurb trying to convince us all about how last year was a bumper year for the agent, how theres never been a better time to buy now prices have fallen a bit, how they expect rises this year of 5% etc etc Yeah right!!!

How can you work out his gross yield? I ought to tell this to my BTL mad friend

But the media has been talking about falls in London and elsewhere for months yet asking prices in Bedford have not really reduced. Its the same in Milton Keynes. Complete stalemate, buyers not buying and sellers refusal to drop. Some are even taking homes off the market in disgust at their 'loss'

Thanks for all your replies. I was about to say that maybe the 50K bloke can rent cheaper in MK than in London, but if you reckon £800 for a flat in N London then maybe my friend is truely deluded. I agree that his thinking is flawed, taking great note of the example posted about somebody buying at the last peak not making anything until 2000. I have found a direct link to this development. Do you think it is worth £150-170K??! How does it compare to luxury flats in London, and is this that luxury? http://www.bloorhomes.com/housetype.php?ho...evelopmentid=88 Good points about why would they want to rent somewhere so far away

Cheers. I agree, theres no point in buying anything now. I have waited all these years to buy or move up, property values can either stay the same or fall further. They will not go up anymore, even the Halifax admit this. My friend is buying the flat because somebody told him why stay in the 4 bed detached all on your own when you could buy a flat for yourself and rent the house. He is acting on this alone and has not factored in a house price drop. To zzg113...why would anyone earning 50K want to live in Milton Keynes? Probably because they can't afford to buy a shoebox in London at silly money. My friend earns more and commutes and he lives in MK. Its a nice place actually have you ever visited>? Shopping visits do not count, for all one sees is the shopping center which is nice but one does not see the city properly. Van said I don't understand this. Rents in London are rising. If a crash happened then demand to rent will rise surely along with rental prices?

.Its possible I may have got his figures wrong, however the flat is a new build in Milton Keynes. He said the development is aimed at the bachelor who gets the train to London everyday and earns 50K, so going by that he should get a good rent. I have been looking at rents online. I have seen a similar 4 bed house in a simliar area up for £1100 but can't find any flats in the area he is buying. Though I have found a posh flat going for £975 that is also for high flying commuters. "HUNTLEY CRESCENT, CAMPBELL PARK, MILTON KEYNES FOB5119F Duplex Apartment. Entrance hall, second bedroom, shower room, stairs to upper lever, large sitting room/dining room with curved feature wall, kitchen with cooker, fridge/freezer, dishwasher, washer/dryer. Master bedroom and further bathroom. Gas central heating, underground parking for two cars." Can't post a direct link but this is the page its on: http://www.faulknerproperty.co.uk/searchresults.php?t=2f Well he told me that all his mortgages are repayment! I guess. Well they are repayment, still undecided

Now I have always believed that we are in for a crash and that the BTLers will be burned. However having had a lengthy conversation with a friend who is just about to buy his 5th property I am somewhat confused. Perhaps one of you guys can analyse his situation and tell me if he is being deluded or not. He lives in a 4 bed detached that he bought a few years ago for £190K, now that is worth about £300K. He wants to let that one out and buy a posh 2 bed bachelor pad flat for £150K to live in. Or if he has trouble letting out the house he will stay there and let out the flat instead. He expects to let out the house for £1200 PCM, or the flat for £800 PCM. He is financing it with a buy to let mortgage that as far as he explained it, works on the principle that the just the rental income is used to finance the mortgage. I think the other 3 houses are financed in the same way. I asked him what would happen if property values fall. He said that he is not worried because he is in it for 25 years. He asked me what are the chances that in 25 years time that property prices will be less than today...Pretty unlikely I admitted. So not much I could say after that one. So then I asked what would happen if the rental market slumped and he could not get tenants. His answer was he has a savings pot of 10K for those times to cover empty periods. He also said he would reduce the rents in difficult times. His theory is, that in 25 years time, RPI inflation alone will have increased house prices and he will be sitting comfortably on a few houses that are now paid for and they can be his pension, he even advised me to go buy a flat now and do a BTL myself. I said "what would be the point now, prices are falling, I've missed the boat". He doesn't seem to worry because as he said again, he is in it for 25 years. I personally am a STRer and am worried I made the wrong decision. I sold in 2002, if I had hung on to the old house it would be worth £40K more by now. I want to move to a bigger house, have been hanging on for years because I believe prices will crash. Can anyone advise please??

I live in Milton Keynes. The falls don't seem to have filtered through much yet. I know someone at work who is buying a Terraced house for £140K. I told them to wait but it all fell on deaf ears. They know the market is falling but they don't seem to give a toss! Are these the people who will get stung? I think so.

Is that article a load of rubbish to talk the market back up? I thought AUS was falling.

Been trying to find info about Aus. Tired now and going to bed! Will look more later. But if anyone knows whats going on over there please post in this thread Cheers