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zag2me

What Happens To The Cheapest Properties In A Crash

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I bought a studio appartment a while back and was wondering how a house market crash would effect its price and the cheapest properties in general.

Its pretty much the cheapest thing I could buy at the time and was the only thing I could afford with mortgage multiples.

So what would be the effect on my flat during a crash? am I in a better position than the people who streched themselves buying 200k 2 bedrooms or will my property loose even more value?

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I bought a studio appartment a while back and was wondering how a house market crash would effect its price and the cheapest properties in general.

A Brother of mine bought a studio for £60000 just before the last crash. By 1991 )approx) he had it up for sale at £19000, but no takers. He was repossesed after he gave up bothering to pay the debt. The ose exact same properties were selling at £110000 in Spring 2004 (I had one as a B2L). Today they are selling at £96000.

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I had a one bed flat in the last crash, it was in a block with a mix of studios, one and two beds. The prices before and after were:

Studio £55000 down to £28000

1 bed £65000 down to £42000

2 bed £75000 down to £48000

Money wise, the studios and 2 beds lost the same amount, percentage wise, the studios lost the most.

I remembered at the time thinking they probably were not selling, due to the fact that most ftb's could afford to go straight to 1 and 2 beds, or houses.

SW Herts.

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I would imagine it will be even worse this time, with so many 'two bed executive apartments' built in the last few years...

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During/after a crash depending on the local market FTB's vault the studio flats I'm afraid and it is back to the 2 bed terrace/small houses that sell. In numerical terms they can all drop a lot - just that percentages can be a higher for the studio sector. Same goes for all property in obviously bad areas - nobody wants to move there when sanity returns.

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I bought a studio appartment a while back and was wondering how a house market crash would effect its price and the cheapest properties in general.

Its pretty much the cheapest thing I could buy at the time and was the only thing I could afford with mortgage multiples.

So what would be the effect on my flat during a crash? am I in a better position than the people who streched themselves buying 200k 2 bedrooms or will my property loose even more value?

Bet you're glad you asked now! Sell quickly. Forewarned is forearmed.

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Money wise, the studios and 2 beds lost the same amount, percentage wise, the studios lost the most.

I remembered at the time thinking they probably were not selling, due to the fact that most ftb's could afford to go straight to 1 and 2 beds, or houses.

SW Herts.

Not what I wanted to hear after paying 85k for a 5 meter shoebox :) but thanks for the info. I think the only thing going for it is that its in a really nice area. Dont regret buying at all, as I escaped my parents at 26 years old but I like to be prepared for the worst.

Edited by zag2me

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bottom end properties get PUMMELLED in a crash.

...they are the properties that the last onto the ladder get because that's all they can stretch to...or so it was last time.

but they are usually bought on high income multiples(sound familiar),by folks on relatively low incomes.....hence increasing the risk of default when costs rise(as they are now)

....the situation really isn't that different now....instead of the banks having major exposure to bad debt,it now rests firmly with private landlords!.....oops!

so this time it's different??????????

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bottom end properties get PUMMELLED in a crash.

...they are the properties that the last onto the ladder get because that's all they can stretch to...or so it was last time.

but they are usually bought on high income multiples(sound familiar),by folks on relatively low incomes.....hence increasing the risk of default when costs rise(as they are now)

....the situation really isn't that different now....instead of the banks having major exposure to bad debt,it now rests firmly with private landlords!.....oops!

so this time it's different??????????

You've got that one right.

To take a local Japanese example and compare two properties. The first is a detatched house about 1 km away from a railway station on the main trunk line into Tokyo (about 50 km to the capital). The second house is out on the fringe by the rice fields, about 6 km from the same local center and a half-hour's bus ride through the teeming rush-hour streets to get to the station.

As the market slides, the price of the first house will sag a big. But there will be no interest at all in the second house.

In other words, good-quality, useful real estate will maintain its value far better than 3rd-grade rubbish tacked up during the bubble to catch desperate souls wanting to get onto the "property ladder."

The cheaper stuff will take a far greater pummelling, especially if the number of buyers falls.

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Odakyu-sen - I was talking to my LL this afternoon discussing the housing situation in Japan.

He says he was there 2 years ago and there is no property problem except in a shortage of properties which is maintaining prices.

He also said that Japanese business men find it that hard to get on the property ladder that they live in the subway and out on the streets with their clothes neatly hung on hangers etc.

Sorry if I am sounding stupid here but never been to Japan. A bit difficult to have a reasoned argument if the guy is saying he saw it with his own eyes a couple of years ago.

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  • 301 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%



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