Jump to content
House Price Crash Forum
Sign in to follow this  
rentslave

Three Years Since The Credit Crunch Began And Still No Hpc

Recommended Posts

Although I am in complete agreement with all the uber bears on here that house prices can only really fall in the long-term, I find myself almost at the end of my tether and seriously considering "buying" into a share ownership arrangement.

I think we were broadly right about the shape and nature of the crash, but I never foresaw the actions of governments and central banks that would completely skew this price-correction process. I didn't foresee QE or 0% interest rates or bank bailouts or mortgage market bailouts or the myriad other measures that have been put into place primarily to keep house prices high. With the election of the new government I now realise that this response will continue in one form or another for the forseeable future (although perhaps not as forcefully as under the last gov't) and see no point in holding out any longer.

It's great to be able to say I was right about the housing market and credit bubble, but my friends who go it wrong are sitting in nice properties that they can treat as their own, with low mortgages courtesy of BoE while I pay more for a rented flat that is noisy and freezing in winter. I will now concede that it has been a pyrrhic victory.

I like to think of myself as a cool-headed, rational person and I told myself when the credit crunch hit in the summer of 2007 that I would wait 3 years before I bought, figuring that it would take that long for the full effects to be felt. Well, three years on asking prices (for sale properties and for rental properties) are higher than ever where in am (West London).

And so here is the real choice I face.

1. Tolerate the status quo ("Be patient" lots of people on here keep saying). Pay around £1,300 for a small 1 bed flat above a noisy restaurant and all bills including travel pass, council tax, utilities, broadband etc

2. 'Buy' 35% of a 2 bedroom, 2 bathroom flat with balcony and car parking space (admittedly in South London), use my savings to put down a 40% deposit on the bit that I buy, keeping the mortgage element low and ending up with a comparable monthly cost of about £1,050 (more or less fixed for at least 5 years)

The key to the finances of option 2 is that the bit that you rent from the housing association (i.e. the bit that you don't own) is hugely subsidised, so if you view it as a long-term subsidised rental arrangement rather than a "step on the property ladder" arrangement, then it actually looks financially attractive.

I know if I do it then I will probably be stuck with it for 10 years or more, but I have lived in 19 different addresses in the UK in the last 19 years (rarely repeat a winter in any rented flat, they're all such poor quality), so being a bit more settled does seem quite attractive right now.

I also think that the subsidy element of these schemes is a outrage. I don't agree that the taxpayer should be subsidising the rent of someone like me (on a salary that's around double the national average), but I haven't made these rules, so what can i do??

Anyway, i suppose I'm posting this here in the hope that you guys can dissuade me, but I honestly don't think I can hold out much longer. The lack of stability in my home life is beginning to seriously undermine every other part of what is a pretty good life :angry:

Share this post


Link to post
Share on other sites

Although I am in complete agreement with all the uber bears on here that house prices can only really fall in the long-term, I find myself almost at the end of my tether and seriously considering "buying" into a share ownership arrangement.

I think we were broadly right about the shape and nature of the crash, but I never foresaw the actions of governments and central banks that would completely skew this price-correction process. I didn't foresee QE or 0% interest rates or bank bailouts or mortgage market bailouts or the myriad other measures that have been put into place primarily to keep house prices high. With the election of the new government I now realise that this response will continue in one form or another for the forseeable future (although perhaps not as forcefully as under the last gov't) and see no point in holding out any longer.

It's great to be able to say I was right about the housing market and credit bubble, but my friends who go it wrong are sitting in nice properties that they can treat as their own, with low mortgages courtesy of BoE while I pay more for a rented flat that is noisy and freezing in winter. I will now concede that it has been a pyrrhic victory.

I like to think of myself as a cool-headed, rational person and I told myself when the credit crunch hit in the summer of 2007 that I would wait 3 years before I bought, figuring that it would take that long for the full effects to be felt. Well, three years on asking prices (for sale properties and for rental properties) are higher than ever where in am (West London).

And so here is the real choice I face.

1. Tolerate the status quo ("Be patient" lots of people on here keep saying). Pay around £1,300 for a small 1 bed flat above a noisy restaurant and all bills including travel pass, council tax, utilities, broadband etc

2. 'Buy' 35% of a 2 bedroom, 2 bathroom flat with balcony and car parking space (admittedly in South London), use my savings to put down a 40% deposit on the bit that I buy, keeping the mortgage element low and ending up with a comparable monthly cost of about £1,050 (more or less fixed for at least 5 years)

The key to the finances of option 2 is that the bit that you rent from the housing association (i.e. the bit that you don't own) is hugely subsidised, so if you view it as a long-term subsidised rental arrangement rather than a "step on the property ladder" arrangement, then it actually looks financially attractive.

I know if I do it then I will probably be stuck with it for 10 years or more, but I have lived in 19 different addresses in the UK in the last 19 years (rarely repeat a winter in any rented flat, they're all such poor quality), so being a bit more settled does seem quite attractive right now.

I also think that the subsidy element of these schemes is a outrage. I don't agree that the taxpayer should be subsidising the rent of someone like me (on a salary that's around double the national average), but I haven't made these rules, so what can i do??

Anyway, i suppose I'm posting this here in the hope that you guys can dissuade me, but I honestly don't think I can hold out much longer. The lack of stability in my home life is beginning to seriously undermine every other part of what is a pretty good life :angry:

I think you consider the coming job cuts - the spending review that happens in the Autumn and, between now and then, the Government obviously plan to butter us all up on the coming cuts. Hardly a day goes by without them warning about the coming cuts... but then very little happens... so it is very confusing... being told doom, doom, doom but seeing very little of it.

So, whilst I cannot advise you, I would suggest you consider waiting 6 more months. If things have not changed for the better, or worst, then maybe do what you need to do.

We are told that 600,000 jobs are to go in the public sector in the next 5 years - I am only aware of one sizeable cut so far which has been the BECTU QUANGO with the loss of 400 jobs. So we are yet to see the large scale cuts happening. Give it 6 months and if they have not happened you know what to do.

Share this post


Link to post
Share on other sites

Well you could move further out. When you said £1300 per month, was that for all your expenses. Meaning your flat is about £900 PCM?

How much savings do you have roughly?

You know what the really screwed up part about that is, I have just sold my flat in W3 where I was paying £600 pcm on the mortgage and it is now being rented out for £1214.

Go figure

It defies logic, but people pay the rent.

All I can say is do what is right for you. As long as you are employed and happy then that is what counts, not the marginal loss you might make in the short term.

Good luck

Share this post


Link to post
Share on other sites

You describe the situation very well young Padawyn!

A Phyric (or whatever the **** it was) victory indeed.

There is not doubt that the general bear argument of this site has been right all along, it continues to be right, and will be right for some time to come.

But sadly everyone underestimated just how badly Gordon wanted to keep the bubble going.

So my advice is, you've waited this long, at least wait to see what effect a Tory government is going to have, and buy next summer if prices are still bumbling along and the arguments here still seem sound, because they could keep being right for some time to come, and life is short

Just make sure you can afford the place you buy even if rates rocket and you experience employment difficulties, you need to protect yourself from a housing market collapse as best you can

Share this post


Link to post
Share on other sites

I didn't read all that but are you not watching the house price indicies slowing and now falling up to four consectutive months? This is the continuation of the HPC.

Share this post


Link to post
Share on other sites

I think you consider the coming job cuts - the spending review that happens in the Autumn and, between now and then, the Government obviously plan to butter us all up on the coming cuts. Hardly a day goes by without them warning about the coming cuts... but then very little happens... so it is very confusing... being told doom, doom, doom but seeing very little of it.

So, whilst I cannot advise you, I would suggest you consider waiting 6 more months. If things have not changed for the better, or worst, then maybe do what you need to do.

We are told that 600,000 jobs are to go in the public sector in the next 5 years - I am only aware of one sizeable cut so far which has been the BECTU QUANGO with the loss of 400 jobs. So we are yet to see the large scale cuts happening. Give it 6 months and if they have not happened you know what to do.

The inpact of the cuts will take at least a year to filter through to house prices, if you have lost your job you are hardly going to sell up in a depressed market and try and move (my view), you would do all you can to keep the property and generally renting where this guy lives is more expensive than owning.

Share this post


Link to post
Share on other sites

You describe the situation very well young Padawyn!

A Phyric (or whatever the **** it was) victory indeed.

There is not doubt that the general bear argument of this site has been right all along, it continues to be right, and will be right for some time to come.

But sadly everyone underestimated just how badly Gordon wanted to keep the bubble going.

So my advice is, you've waited this long, at least wait to see what effect a Tory government is going to have, and buy next summer if prices are still bumbling along and the arguments here still seem sound, because they could keep being right for some time to come, and life is short

Just make sure you can afford the place you buy even if rates rocket and you experience employment difficulties, you need to protect yourself from a housing market collapse as best you can

Lets be honest, what is going to make rates rocket in the next two - three years?

Share this post


Link to post
Share on other sites

The inpact of the cuts will take at least a year to filter through to house prices, if you have lost your job you are hardly going to sell up in a depressed market and try and move (my view), you would do all you can to keep the property and generally renting where this guy lives is more expensive than owning.

Yes, which is why I think many HPCers have either bought or are thinling about it. The cuts will probably nor begin until the Autumn at the earliest... more likely next year... then at least another year for the redundancy payments to be spent and... So we could be talking 3 years from now... that is a long time.

I cannot see IRs rising for years and even if they do theey will rise by a trifling amount.

Frankly, the only thing that is causing me doubt now is the constant ramblings of the likes of Pretcher. I hear that Cisco, the bellweather, has begun hiring again in the US and that is usually a sign of better times to come...

Share this post


Link to post
Share on other sites

WHat we need is a speedometer graphic in the top corner, so when the bears start to lose it, there's a quick sanity check. (or some clever regular poster can put it in their sig)

speedometer-1.jpg

Are we at crash cruise speed yet?

Like the Northern star guiding the three kings

Like a shepherd guiding his flock

Like a compass guiding a boat in stormy waters....

Share this post


Link to post
Share on other sites

Todays news not maintained your resolve? :unsure:

Ball park numbers - average price today - £160k

take 20%off, leaving you a reduction a £32k and a price of £128k

We saw what happened when prices droped in 2008/2009 we'll see the same if it happens again in 2010/11

ie it will be short lived

Share this post


Link to post
Share on other sites

Ball park numbers - average price today - £160k

take 20%off, leaving you a reduction a £32k and a price of £128k

We saw what happened when prices droped in 2008/2009 we'll see the same if it happens again in 2010/11

ie it will be short lived

Yes, I think that when any substantial drop comes it will be short-lived - a 6 month window at most. Unless of course we go into economic melt-down.

There is still an enormous disconnect between what the Coalition is telling us how bad things will be and people actually experiencing it. I don't want to turn this into another public sector thread but I am convinced that it is going to take some serious public sector job cuts to make a large sector of the population understand how broke the country is.

Share this post


Link to post
Share on other sites

Yes, which is why I think many HPCers have either bought or are thinling about it. The cuts will probably nor begin until the Autumn at the earliest... more likely next year... then at least another year for the redundancy payments to be spent and... So we could be talking 3 years from now... that is a long time.

I cannot see IRs rising for years and even if they do theey will rise by a trifling amount.

Frankly, the only thing that is causing me doubt now is the constant ramblings of the likes of Pretcher. I hear that Cisco, the bellweather, has begun hiring again in the US and that is usually a sign of better times to come...

ok I slightly mis read your post.

I have come to the conclusing you are going to pay stupid amounts for property no matter what happens, sure you might have your dips, but at that point you'll be so scared you wont watch to touch property and by the time you react it will be too late.

People keep banging on about 3 x earnings for property prices, it will never get to that point again

Share this post


Link to post
Share on other sites

ok I slightly mis read your post.

I have come to the conclusing you are going to pay stupid amounts for property no matter what happens, sure you might have your dips, but at that point you'll be so scared you wont watch to touch property and by the time you react it will be too late.

People keep banging on about 3 x earnings for property prices, it will never get to that point again

I disagree, we will have 3x income again.... BUT interest rates will be 15%, the houseprices will be higher but so will your wage. 100k PA average UK wage, 300k average house prices, and the currency will be toilet paper

£3867 per month mortgage

£5,400 wage after tax

$1 to £5, it is a possibility (but now less likely because Gordon isn't at the helm)

Edited by AteMoose

Share this post


Link to post
Share on other sites

Yes, I think that when any substantial drop comes it will be short-lived - a 6 month window at most. Unless of course we go into economic melt-down.

There is still an enormous disconnect between what the Coalition is telling us how bad things will be and people actually experiencing it. I don't want to turn this into another public sector thread but I am convinced that it is going to take some serious public sector job cuts to make a large sector of the population understand how broke the country is.

it would be interesting to see what the market is doing in the likes of Greece, Spain and Italy at the momebt. I know they have had there drops but what has the last 3 months been like?

Tend to agree with your comments about the government and their bluffing.

Interestingly enough I saw a job for a construction manager to build new schools under the BSF programme the other day. Not a bad salary too!!

Share this post


Link to post
Share on other sites

Stay focused..

http://www.dailymail.co.uk/news/article-1291203/Warning-second-credit-crunch-lenders-warn-worsening-mortgage-drought.html?ito=feeds-newsxml

Warning of second credit crunch as Bank of England predict loans will plunge over next three months

Britain could be on the brink of another mortgage drought, the Bank of England warned yesterday.

Lenders expect the number of loans to plunge over the next three months, research published by the Bank showed, as fears of a second credit crunch grow.

The claim will alarm millions of homeowners who need a loan, young people hoping to climb on to the property ladder and those looking to sell.

Banks and building societies fear that they will not be able to get hold of the money they need to lend because of the return of banks' reluctance to lend to each other.

Several support schemes to encourage lending are due to end next year.

But any mortgage squeeze is likely to enrage taxpayers, whose money was used to rescue banks including Halifax, one of Britain's biggest lender of home loans, and Royal Bank of Scotland.

These are subject to targets on lending to homeowners, but many customers say rates are too high.

Melanie Bien, director of mortgage broker Private Finance, said: 'Fears of a second credit crunch are growing among lenders.

http://www.thesun.co.uk/sol/homepage/news/money/3046597/House-prices-drop-36-a-day.html

House prices drop by £36.00 a day

HOUSE prices have fallen by their biggest amount for FOUR MONTHS — Britain's biggest mortgage lender claims.

Halifax today said average prices — from a bedsit to a family home — dropped by 0.6 per cent to £166,203 last month.

That's a drop of £36 A DAY.

Halifax said the slowdown was to be expected and blamed an increase in the number of homes coming on to the market.

But the fall will trigger fresh fears about a slump in property as concerns about the economy begin to grow.

Edited by Crashman Begins

Share this post


Link to post
Share on other sites

I disagree, we will have 3x income again.... BUT interest rates will be 15%, the ouseprices will be higher but so will your wage.  100k PA average UK wage, 300k average house prices

Ok, that is fine

When are we going to get 15% interest rates?

Share this post


Link to post
Share on other sites

Stay focused..

http://www.dailymail.co.uk/news/article-1291203/Warning-second-credit-crunch-lenders-warn-worsening-mortgage-drought.html?ito=feeds-newsxml

Warning of second credit crunch as Bank of England predict loans will plunge over next three months

Britain could be on the brink of another mortgage drought, the Bank of England warned yesterday.

Lenders expect the number of loans to plunge over the next three months, research published by the Bank showed, as fears of a second credit crunch grow.

The claim will alarm millions of homeowners who need a loan, young people hoping to climb on to the property ladder and those looking to sell.

Banks and building societies fear that they will not be able to get hold of the money they need to lend because of the return of banks' reluctance to lend to each other.

Several support schemes to encourage lending are due to end next year.

But any mortgage squeeze is likely to enrage taxpayers, whose money was used to rescue banks including Halifax, one of Britain's biggest lender of home loans, and Royal Bank of Scotland.

These are subject to targets on lending to homeowners, but many customers say rates are too high.

Melanie Bien, director of mortgage broker Private Finance, said: 'Fears of a second credit crunch are growing among lenders.

http://www.thesun.co.uk/sol/homepage/news/money/3046597/House-prices-drop-36-a-day.html

HOUSE prices have fallen by their biggest amount for FOUR MONTHS — Britain's biggest mortgage lender claims.

Halifax today said average prices — from a bedsit to a family home — dropped by 0.6 per cent to £166,203 last month.

That's a drop of £36 A DAY.

Halifax said the slowdown was to be expected and blamed an increase in the number of homes coming on to the market.

But the fall will trigger fresh fears about a slump in property as concerns about the economy begin to grow.

Great source of information.

Interesting to correlate the stress testing in the banks versus the up coming mortgage drought

Share this post


Link to post
Share on other sites

on).

And so here is the real choice I face.

1. Tolerate the status quo ("Be patient" lots of people on here keep saying). Pay around £1,300 for a small 1 bed flat above a noisy restaurant and all bills including travel pass, council tax, utilities, broadband etc

2. 'Buy' 35% of a 2 bedroom, 2 bathroom flat with balcony and car parking space (admittedly in South London), use my savings to put down a 40% deposit on the bit that I buy, keeping the mortgage element low and ending up with a comparable monthly cost of about £1,050 (more or less fixed for at least 5 years)

3. try to find a house-share with 3 female nurses from sweden so that you can save money on rent and bills

see how happy your mates appear to you then

Share this post


Link to post
Share on other sites

Ok, that is fine

When are we going to get 15% interest rates?

If/when we get the next currency crisis, could be within 2 years could be in 200 years. The big thing to learn from HPC is you cant wait, you make your own fate, if London is too expensive get out of London, if you dont get paid enough find a better job or get a second job. Oh and general inflation appears to be never ending, by waiting your fighting something very big...

Edited by AteMoose

Share this post


Link to post
Share on other sites

To respond to several of the posts at once...

My rent is about £900pcm, which is actually quite cheap for my area.

I understand that it's not always easy to sell and accept there would some some fall in prices in the next few years (my 40% deposit should cushion me to some extent). However, I read somewhere that the funding for these shared ownership schemes will dry up soon, so there might be a short window to get the subsidised rent arrangement that makes it viable. To service the interest on a £100k mortgage would cost about £5-6k per annum, to pay the rent on £100k you didn't own in one of these flats costs about £2k per annum. I don't understand how that is politically acceptable, but what do I know?

I was planning to make a decision early next year, at which point i will have a deposit of £40k-ish

Today's falls do make me think there will be further falls, but even if house prices in London fell by 50%, I would still end up having to pay 200k for a decent 2 bed flat - and in that situation the commerical interest rates/deposit requirements would probably be higher than now, thus pushing up my costs. In the event, my monthly outgoings might have to be more than they are now if I wanted to buy in that (very rosy bear) scenario. Lose-lose!

Plus I now think the falls will be dragged out over many years. This gov't wants to avoid major falls in house prices just as much as the last one and god knows what 'clever' ideas they will come up with to achieve this.

Probably good advice to wait until next year, but I feel like i've been waiting for this dawn for a bloody long time!

Share this post


Link to post
Share on other sites

I think you consider the coming job cuts - the spending review that happens in the Autumn and, between now and then, the Government obviously plan to butter us all up on the coming cuts.

We are told that 600,000 jobs are to go in the public sector in the next 5 years - I am only aware of one sizeable cut so far which has been the BECTU QUANGO with the loss of 400 jobs. So we are yet to see the large scale cuts happening. Give it 6 months and if they have not happened you know what to do.

watch this film - raining stones, set in the 80's recession......should give you some ideas on whats coming.

nicking sheep to sell down the pub, debt collectors kneecapping folk, mass unemployment.......watch this before parting within 200K !

caveat: if the US does stimuls#2, we will follow, the get the biggest mortgage the bank will give, watch the US carefully.

If they print, we will, they denominate commodities & inflation. If they print again it's either gold or a mortgage - no CGT on inflation (however there is the risk of a policy reversal)

Edited by concerned_money

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.