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House Price Crash Forum


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About Jonnybegood

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  1. Just shows how bad it would need to get here for prices to fall 50%, bad really bad. Ireland was built on nothing, Britain is different, property was not built on the same scale and the economy is far far stronger. Just not going to happen here folks..Move on
  2. If you think back to 2005 when we had the halt in the housing the market and the first false dawn of potential house price falls. Soon after the markets picked up again and house prices surged even higher to peak in 2007, since the peak there have been mixed reports of both rises and falls of house prices depending on the papers and reports that you read. However the main indices, Halifax , Nationwide and Land registry seem little unchanged over the past couple of years. (One month up one month down). Having looked at a number of different surveys , reports , trends I am of the opinion that house prices are not going to fall greatly from here and that by 2015 you will be paying similar money for a property that you would of in 2005 and that is where the market will bottom in average terms. That same £150k in 2005 will be buying the same property in 2015, so from an investment point of view it would of been a poor decision to hold on to the property for 10 years as many other investment opportunities would have returned far greater but from a buyers point of view, those in their early 20s in 2005 who maybe could not afford to buy into the property market and instead lived at home with parents are going to have accumulated 10 years worth of earnings and still be paying the same price for a property. Those who STRd in 2005 or earlier are not going to be any worse off unless the rental costs on their rented property were more than that of their STR fund annual interest or return on other investments. What people tend to forget is how quickly time is moving on, this forum is now over 7 years old and the housing market peak happened nearly 4 years ago, so to imagine 2015 is not that difficult, but If someone said to me in 2005 that I could buy a property in 2015 for the same money I would see that as a crash for the housing market in terms of other investment opportunities and potential to save money rather than spend on the interest of a mortgage by buying a property just to get on the ladder before its too late. That cash can then be used to put down a larger deposit. I think sites like this have run away with fantasy ideas of 50% physical falls in property prices, go to bed one night having looked at a property on right move for £200k and wake up the following and its £100k, the fact that people no longer say that next year this property will be 10% higher or wages will never keep up with house price inflation or 10 years time this house will be double in value is a victory, but just like fuel prices at the pump or Gas & Electric prices at home, once they get to a certain price and remain there for some time it tends to become the norm, I personally can never see fuel falling below £1 a litre again and people accept that even if they do not like or agree with it, the fall in energy prices 2 years ago everyone thought was great, prices went up 40% and came down 8%.
  3. Agree pain will not be felt until we are at 5% levels, it was not long ago we were at close to these levels and everything ticked along quite nicely. Personally I cannot see the rate going above 1.5% by year end and with a large percentage on fixed deals, discount etc there will be very little effect overall. Even if you have been told 3 rises this year, the BOE can still take action a month or 2 later and drop the rate back down once they have analysed the affect of the rise. Realistically they cannot rise to fast with tax rises coming our way, job losses and benefits being pulled, it needs to be a staged approached with a 0.25% rise per quarter on average over the next few years being the approach I feel they will adopted until they get us back to 5% by 2014-15 and the next elections. The market will not crash because of it, it will adjust with asking prices reflecting the higher borrowing costs but with inflation adjustments prices will be similar to those of 2005.
  4. I have a few friends who once worked at Tesco and done really well out of the free shares they got, obviously the further you were up the food chain the more shares you got. Admiral insurance another good example, their staff have received thousands in shares as the company expanded and made good profit, these people were just call centre type staff.
  5. Also don't forget many self employed will declare less earnings for obvious reasons... Many will do undeclared work on their days off Many claim benefits but also work Others get paid out in company shares and bonuses that are often not included in the figures Lots of variables - But I think a true picture is around £30k and even then people also get money from other sources to top up, stock and shares, BTLs, Ebayer etc etc
  6. If they have been sensible in their borrowing as you say they have been then I do not see any issues. They bought in rural Wales 2005 probably at a higher IR, so should now be paying less than they did when they first took out the mortgage. If they took the standard 25 year repayment mortgage with standard 20% deposit they should by now have around 30% equity, would not of thought that prices in rural Wales have fallen by more than 30% since 2005, so from my quick fag packet calculations they should at worst case be at break even if they were to sell up, i.e owe the bank nothing after the sale. Plus they have the option to let the property and/or go interest only / extend the term whilst they look for work. But if as Harry points out they were not sensible and bought a property with little or no deposit down and went for Interest only from day 1 then their options are limited and unlike you said earlier they have not been sensible. On the point of walking away its the worst thing they can do, if they declare themselves bankrupt it will be on record officially for 5 years which means no finance for those years, however there is ever increasing declarations that needs to be made on financial applications and even home/car insurance asking if you have ever been made bankrupt, its a good excuse for them to bump premiums and interest rates and little you can do about it.
  7. For a number of years on here people have kept going on about average uk house prices and average uk wages, officially average wages are around £26k per annum and uk house price £155k . So with a 20% deposit still leaves a 6 x income mortgage that is unaffordable. What these figures do not take into account are those people with second jobs, i.e Doing work on their days off and not declaring Self employed who do cash jobs and don't declare, these can often amount to extra thousands per annum and tax free. Those with large private pensions and still working Those with BTL and getting regular monthly income Benefit claimants doing additional work on the side Those on tax credits and earning above the threshold Those with tax havens living abroad I could give you many examples of the above, I had 2 guys working on my property over Christmas (Bit of rendering), legit building company who quoted £2800 to do the work over a 2 week period, this eventually ended up costing £2400 cash in hand with no paperwork and they got it done in just over a week. (Wonder how much of that Mr tax man will see). There are cleaners in the offices I work who tell me of their partners who do cash in hand jobs allowing them to still claim tax credits And there are engineers at work who work a shift pattern of 4 days in and 4 days off, on their days off they will do domestic electrical work, again the majority undeclared, one told me at a party over Christmas after having a few too many that last year he earned just as much on his days off as in work due to the none payment of tax, and he earns approx £50k per annum. Not sure how big a problem this is but surely it would throw the official figures, so maybe if all of this was taken into consideration then official average earnings figure would be more like £30k plus and when combined with low IRs make it easy to see how people afford these houses and how select numbers can buy 2nd, 3rd 4th properties to let out.
  8. If you look at 5-10 years then from peak of 2007 could be anywhere between 2012 - 2017. Take the average price of an house before the real boom took off in 2000 (£80,000) you will see that following the long term inflation average of 2.5% + 1% an average house price today should be in the region of £125,000, a 20-25% correction from current prices would be needed to bring us back in line. Inflation I believe over the next 3 - 5 years is going to be far higher than long term average, however I don't feel house prices will go up any higher in nominal terms over the same period so in real terms they will be depreciating and by the end of the inflationary period circa 2014 house prices will have come back almost in line with long term average: 2010 Actual average house price £168k - Long term average £125k 2011 £125k + 2.5% + 1% Long term average £129,375 2012 £129,375 + 2.5% + 1% Long term average £133,903 2013 £133,903 + 2.5% + 1% Long term average £138,589 2014 £138,589 + 2.5% + 1% Long term average £143,440 2015 £143,440 + 2.5% + 1% Long term average £148,460 These are only averages and each property area will have other reasons for growth and falls e.g those that have risen the most should fall the greatest if there was no fundermental reason for the rise, so as you can see there is still room for a 10% nominal correction on house prices, but if inflation does really kick in and wages follow that could quite easily be wiped out. I also see IRs below 5% over the same period, rising sharply end of next year, then 1% annually up to 2014 - 2015
  9. For me inflation is now a real risk to world economies and with the US continuing to flood the markets it just seems they will all do anything just to prop up the markets, be it housing or stocks. The DOW and FTSE have continued to rally since the summer when I thought it was going to fall and all indicators and normal logic would have agreed, but QE2 has lifted the market and recently so are the commodities, precious metals and energy stocks all on the rise (I am not moaning I have made significant profits from this sector) but I am now a believer without listing all articles , speeches and forum talk I have read and research I have undertaken that inflation is going to be much higher over the next 5 years. What it means for property? I feel the most likely outcome a stagnant market in nominal terms but heavy falls in real terms, its whether incomes increase around the globe as we accept this higher cost of living as a way of wiping out existing debts. Not forgetting we have a VAT increase in January, predicted to add an extra £500 to an average households bill annually and that is without taking into account those one off big ticket purchases and above inflation rises from the energy companies, an average family car will add an extra £350 alone. I was in the deflation camp 2 years ago, but for now and at least the next 3 years I see inflation as the dominant force, housing will become cheaper in real terms, its just that with all the other rises in the cost of living will they become any more affordable? My guess, only slightly. Its no longer acceptable to say that last time this and that happened and what is now happening is against logic, that may be the case but the markets are rigged and those at the top really are masters of the universe, and I believe now they may actually pull this one off, just check out the stock markets and commodity prices after the so called biggest recession of all time.
  10. I must say the shift patterns these guys along with the ambulance service and police work do not make much sense to me, its like for half the year taking into account holidays they are off work. Or over the 5 different shift crews 3 are always off work whilst the other 2 work the day and night shift between them. What I have found over the past number of years is that lots of these guys have secondary jobs on their days off, Plumbing , Building etc. Now times have changed and tightening of the belt all round is needed then I think its fair to question the shift patterns and are we getting value for the money spent, could a shift be knocked off? Shorter hours but more days in work etc etc etc. Maybe what we got is the best, but like everyone else they should still be as flexible as the rest when it comes to change.
  11. For all those struggling there are still many with lots of cash. Take Wales for example, probably one of the cheapest places in the uk to buy overall. Take the last 10 years away and before then you could have a nice public sector job in Wales paying upwards of £25k and buy a decent 3 bed home for less than £60k, so for those with a decent job in Wales property was cheap (I know I have lived through those days). So many either had nice lifestyles (Holidays, Nice cars) or large families or bought in additional property for buy to let (A typical buy to let back in late 90s £35k) and if it was in Swansea near the universities it would reel in large amounts of cash for little outlay. There are still large numbers of these people in Wales, 2 or 3 properties under their belts, mortgage free, they have just taken a few years out from buying more property (Prices went silly in Wales 2003 onwards IMO) and just waiting to buy back in. Many friends of mine who left Wales in the early 90s to work away retained their Welsh properties and now either continue to rent out or have since returned mortgage free. Then there are those who have their properties on the market for silly money with no intention of moving unless their asking price is met, don't really need to move are mortgage free but would downsize if they got the right money, I know a few of these down Gower way, they all have their properties on the market for £330k plus, quite happy to stay put, in their late 60s, kids keeping telling them to get something smaller. TMT Wales is not like it was 20 years ago, west wales used to be dirt cheap to buy, now with the internet and better transport you can be earning London wages whilst living in a cottage surrounded by beautiful scenery of the West Wales coastline. Friends of ours live just outside Saundersfoot, he's an electrician and she works for Lloyds TSB in London 3 days a week and from home the other 2, between them they earn well over £100k a year whilst their home in Saundersfoot they bought 9 years ago cost just under £150k, 5 bed, 2 bathroom etc etc. Other friends now living in Derwen Fawr Swansea can't believe the house they have for £380k (Bought around mid 2005 after selling up in Brighton), she's a Dental hygienist (£35 per hour) covering 3 practices in Swansea and he just day trades shares and part time financial advising from home after quitting his banking job in 2006. I could go on, surprisingly the Wales of 20 years ago is not as unattractive these days, its only when you have been away for some time that you realise what you have in Wales and compared to other places what you get for your money.
  12. What a load of tripe.... Falling house prices have a negative effect on bank cash flow hence the situation in the US in 2008, its where banks have the majority of the lending tied up and 10 years of excessive lending, 125% mortgages, self cert the banks can not afford to see prices fall to levels where walking away and handing back the keys becomes widespread. They are not concerned with making money out of those who have bought in the last 2 years, the numbers are insignificant, they are making enough money now with low IR, paying savers pennies whilst pulling in ££££ from borrowers. An old bank manager friend once told me, as long as people keep borrowing, and those borrowers keep repaying the banks will never lose, regardless of IR.
  13. i am fully in support of MIS, as a working couple who have never claimed any kind of benefits (except child benefit) and having paid taxes for over 20 years why should you not have any support if you lose your long term employment.
  14. A similar calculation to what I was making... Average house price £135k minus 20% deposit = £108k Average wage £30k x 3.5 = £105k Plus when you add to this a possible 2 income household etc there is support for an average house to cost £130 - £135k even in a tighter lending environment. I am not a fan of comparing IRs because they can change, but at current rates the percentage of outgoings towards a mortgage will be well below average. I know that often 2 income families become 1 for a period when children come along, but like anything else, if your a single income household chasing a decent sized property you will always have competition from 2 income families and from a banks point of view I would of thought that 2 income families are less risk then single income. With regards to other posts: An average size 3-4 bed new build detached costs approx £80k to build by a large developer and around £100k for a small local builder, then you have land costs, utilitys , street lighting, roads, park and play areas etc that large developers have to provide to the properties.
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