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Jonnybegood

Paying The Same In 2015 As 2005

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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%.

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What you describe is what the politicians and the BofE are trying to engineer and is part of the reason why interest rates have remained where they are. So far they have been sucessful in maintaining the market at unsustainable levels

The problem with no nominal fall in prices when house prices are at 5-6 times median wages and the cost of living is increasing with static wages and rates at 0.5% with limited funds to lend there is no further margin to maintain house price levels where they are.

I see nominal falls ahead unless the BofE start printing money again.

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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.

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.

Yes, prices haven't fallen 10% since Summer 2010. Lending is rising. Int rates will fall again. Unemployment will fall.

The economy is strong. Repos will diminish. £ will weaken again v €. Banking will grow stronger.

Look, pink pigs are flying.

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An interesting post Jonnybegood, and many of the points you make resonate with me, but why is it fantasy to expect house prices to fall 50% and yet isn't fantasy to expect them to double or triple? If the answer is inflation they I agree that some of the falls that many expect in property prices will be on an inflation adjusted basis but with inflation running at 4% and UK property regarded by various respected international commentators as being 30% overvalued inflation is only part of the answer. Grant Schapps said recently that he wanted property prices to decline gradually over the next 20 years. I don't criticise him for saying it but I think we've all heard promises of 'soft landings' in the past and the implications of allowing housing to remain unaffordable to FTBs for an entire generation are not politically or socially acceptable. I still think a comfortable, gradual unwinding of astronomical property prices is unlikely - and interest rates are still at 0.5%. A tiny increase would sink many homeowners.

Edited by Orsino

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A tiny increase would sink many homeowners.

That I think is what they want you to believe.....I would guess that homeowners losing money and paying more money is not a priority....they were not worried in the past upping the rates to borrowers.....this time the biggest borrower is the country and the biggest potential losers are the banks. ;)

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When oil prices were high in the 80s they were never going to go lower but they went right down to $10 per barrel and then they were never going to go up again.

Same with house prices in those days.

Same with dotcoms. They were projected by some to go ever upwards.

In the 80s gold was never going to go down again and then in the 90s gold was never going to go up again.

and so on.

They all had their VIs wanting to keep the prices up (or down) but it didn't work and policy priorities can change overnight. One day the oil sheiks wanted very high oil prices and the next they were happy with very low prices - for a variety of reasons, in political terms it happened "just like that".

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I swear to you that if I saw a house around here for the same price as in 2005 I would buy it now. I'd say selling prices are 25% higher now in this area (Brighton) than six years ago and I currently see no reason for that to change very much, unemployment notwithstanding. If you can't afford to pay a mortgage at present (and likely future) interest rates, you certainly can't afford to rent anywhere nearly equivalent. Sad but true.

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I swear to you that if I saw a house around here for the same price as in 2005 I would buy it now. I'd say selling prices are 25% higher now in this area (Brighton) than six years ago and I currently see no reason for that to change very much, unemployment notwithstanding. If you can't afford to pay a mortgage at present (and likely future) interest rates, you certainly can't afford to rent anywhere nearly equivalent. Sad but true.

I could afford to 'pay a mortgage' at present, I could also afford to pay cash, but it's cheaper to rent.

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  • 311 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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