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dredwerker

Does A Crash Matter?

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I have been waiting for an HPC for about 10 years. Some of that time I was just getting on with my life whilst it was ripping away.

The house I rent was £170k in 2003 now the last sale for the similar thing was 2010 £234,950. Even if it returned to £170k - so what - I haven't exactly beaten my landlord by not buying as we still pay £925 per month.

Now I am 40 - last chance saloon for getting a 25 year mortgage( I suppose retirement ages are going up).As it turns out - now I have no work and no deposit either - so I am less able to buy a house than I was at the peak(still the peak as far as I can see).

Even if I had paid over the odds, the low interest would have been better for us as a family now.

It feels very odd to still be bearish and feel like I might as well buy a house. It would take longer to get chucked out instead of getting chucked out by the landlord.

The point is there seem to be two parts to buying a house 1) The price 2) The ability to actually do it.

I think a lot of FTBs come in to category 2 so when they see a 100% mortgage/borrow deposit from X they will take it if they can as you might not get a chance later on.

The price matters more to the STRs and the retirees. I am starting to wonder whether I pay £175k or £200k makes a blind bit of difference if I am dead waiting.

PS - I am not encouraging getting in to NE on some sh1tty flat that people will want to move out of. I am talking about a bog standard house.

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What about £100k? It happened in Japan.

Yeah - that extreme matters but not as much as never buying a house and being smugly right even though you're paying more monthly than the person who got theirs for £200k.

Its just a strange world. I thought that we lived in a capitalist market. We don't seem to. We live in a feudal society. I appear to be on the wrong side of that gamble - whatever I do now.

This isn't bear turning bull as I can't buy now and I don't think its a great investment now suddenly. Just odd that's all being right doesn't mean you are actually right.

When will this £100k happen ? When I am 55 and I really can't get a mortgage any more.

PS This mostly applies to me and other 40 yr old gits :)

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I have been waiting for an HPC for about 10 years. Some of that time I was just getting on with my life whilst it was ripping away.

The house I rent was £170k in 2003 now the last sale for the similar thing was 2010 £234,950. Even if it returned to £170k - so what - I haven't exactly beaten my landlord by not buying as we still pay £925 per month.

Now I am 40 - last chance saloon for getting a 25 year mortgage( I suppose retirement ages are going up).As it turns out - now I have no work and no deposit either - so I am less able to buy a house than I was at the peak(still the peak as far as I can see).

Even if I had paid over the odds, the low interest would have been better for us as a family now.

It feels very odd to still be bearish and feel like I might as well buy a house. It would take longer to get chucked out instead of getting chucked out by the landlord.

The point is there seem to be two parts to buying a house 1) The price 2) The ability to actually do it.

I think a lot of FTBs come in to category 2 so when they see a 100% mortgage/borrow deposit from X they will take it if they can as you might not get a chance later on.

The price matters more to the STRs and the retirees. I am starting to wonder whether I pay £175k or £200k makes a blind bit of difference if I am dead waiting.

PS - I am not encouraging getting in to NE on some sh1tty flat that people will want to move out of. I am talking about a bog standard house.

In those renting years, were you saving the difference between what you'd have been paying on mortgages, house insurance, maintenance, and the like (probably at least the same as your rental payments, if not more)?

If so, then you'd be sitting pretty on a nice little pot of gold by now all ready to pounce on an available house, when you find one that is on sale for the price you'd like to pay.

Or did you splurge your lovely discretionary income on anything and everything?

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Yeah - that extreme matters but not as much as never buying a house and being smugly right even though you're paying more monthly than the person who got theirs for £200k.

Don;t put up with high rents. Move every 2-3 years, after taking out a 2-3 yr lease. Benefit from rents trending down.

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Yeah - that extreme matters but not as much as never buying a house and being smugly right even though you're paying more monthly than the person who got theirs for £200k.

Its just a strange world. I thought that we lived in a capitalist market. We don't seem to. We live in a feudal society. I appear to be on the wrong side of that gamble - whatever I do now.

This isn't bear turning bull as I can't buy now and I don't think its a great investment now suddenly. Just odd that's all being right doesn't mean you are actually right.

When will this £100k happen ? When I am 55 and I really can't get a mortgage any more.

PS This mostly applies to me and other 40 yr old gits :)

The way things are going it will be inflation that erodes any significant values of house prices.

Like you I will have to get on with life soon and like all still think houses are over priced.

As mentioned today on another thread, I was hoping that the crash would have happened and we were seeing the bottom of it by now but the powers that be intervened.

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In those renting years, were you saving the difference between what you'd have been paying on mortgages, house insurance, maintenance, and the like (probably at least the same as your rental payments, if not more)?

If so, then you'd be sitting pretty on a nice little pot of gold by now all ready to pounce on an available house, when you find one that is on sale for the price you'd like to pay.

Or did you splurge your lovely discretionary income on anything and everything?

a) I lost my job in that time.

B) If I had a mortgage and it had been fixed I would have been paying a lot less.

c) I dont think there is anything in it £925 per month vs the mortgage which would be fairly similar for the house I am in.

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Don;t put up with high rents. Move every 2-3 years, after taking out a 2-3 yr lease. Benefit from rents trending down.

Trouble is the rents aren't trending down. Round the corner its £750 per month for a 1 bed flat.

None of it makes sense.

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a) I lost my job in that time.

B) If I had a mortgage and it had been fixed I would have been paying a lot less.

c) I dont think there is anything in it £925 per month vs the mortgage which would be fairly similar for the house I am in.

A £170k house, if you'd have managed to get a 5% IO mortgage, would have been costing you £8,500 per year. The payment to save up enough to pay off the the mortgage at the end of the 25 years is another £6,800 per year.

On top of that, you're looking at in the order of 5% p.a. for house maintenance costs. Lets say for sake of argument that's another £5k per annum in total for all other bits.

That's also not taking into account the "moving in" costs that you'd have (unless you were planning on doing NOTHING to the house when you moved in. New carpets, decorating, garden maintenance, that new kitchen, bathroom....

NOW you're complaining that you haven't saved up anything? Oh right - you lost your job. Think yourself lucky that you didn't have a house - imagine the nightmare that would have been! I reckon you'd probably have been on the brink of bankruptcy, if not actually insolvent, had you "bought" instead of renting.

The abount of money you've *saved* by NOT buying is significant

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Depends where you want to live, if you want to stay in the South East then be prepared to pay for it.

I think up North is the next boom in concert with the south collapsing as they face their economic mines closing.

You can get a house for 100K or rent for even less.

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I have been waiting for an HPC for about 10 years. Some of that time I was just getting on with my life whilst it was ripping away.

The house I rent was £170k in 2003 now the last sale for the similar thing was 2010 £234,950.

Ten years ago was 2001. House prices in 2001 were rather affordable even in historical terms. There was no suggestion in 2001 that a downward correction in house prices was either desirable or likely.

So why didn't you buy in 2001 when, at age 30, you were probably at the perfect age to be buying your first home?

You missed your golden chance. I'll reserve my sympathies for the generation behind you who have not had a chance yet...

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Hi Dredwerker,

I'm in a similar boat to you, wondering whether to buy or when the crash might come. I am in my FTB house wondering when to trade up to more space and a decent school nearby for my family.

My decision has been to give up waiting and buy now, even though I'm convinced there will be a drop coming. For me it was a decision about providing for my family in the end. There are a couple of current factors that make it a less bad time to buy: some people are willing to listen to low offers and interest rates on long term fixed are pretty good.

How much will houses drop and when? I have no idea. When the drop does come, will many of us have a job? Will interest rates be sky high? Will the banks be able or willing to lend? Will the baby boomers buy all the cheap houses up for BTL?

Sometimes the timing of the "markets" don't suit the timing of life...

Good luck!

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Im still a few years off 40 but I thought along the same lines when I bought a few years ago. I get that this purchase might not be "optimal" in the sense that with hindsight and a calculator I could clearly work out when the best time to buy was (who knows when I retire I might just do that!).

So maybe I could have bought my place 50k cheaper? Not a big deal over a working life - break that down to a monthly figure and I prob spend more on beer. So I came to the conclusion that ownership was more important than any potential saving. It turns out that IRs have been helpful (so far) so as Joseph said to Pharaoh, time to stock pile whilst I can - it may change (although long term fixes are at record lows, so may go for that, we'll see). Knocked a few years off the mortgage, certainly doesn't seem a "bad" route to take unlike some of the warning I got when I said I was going to buy many moons ago!

I figure what's the point in being the richest person in the cemetery? But good luck to anyone who calls it perfectly and makes the optimum buy, I genuinely doth my cap to you.

Don;t put up with high rents. Move every 2-3 years, after taking out a 2-3 yr lease. Benefit from rents trending down.

I think the people who want to buy a house are the types who want to put down roots and prefer stability? I moved about 5 times in my 20s and it wasn't a problem, some stuff in boxes and off I went. I've done in once with the family and I really hope I never have to do it again!

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In those renting years, were you saving the difference between what you'd have been paying on mortgages, house insurance, maintenance, and the like (probably at least the same as your rental payments, if not more)?

If so, then you'd be sitting pretty on a nice little pot of gold by now all ready to pounce on an available house, when you find one that is on sale for the price you'd like to pay.

Or did you splurge your lovely discretionary income on anything and everything?

Blame the victim, blame the victim.

Yes he should have spent the past ten years eating beans on toast only to have the gov't deliberately reinflate the housing market when things went pop.

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Ten years ago was 2001. House prices in 2001 were rather affordable even in historical terms. There was no suggestion in 2001 that a downward correction in house prices was either desirable or likely.

So why didn't you buy in 2001 when, at age 30, you were probably at the perfect age to be buying your first home?

You missed your golden chance. I'll reserve my sympathies for the generation behind you who have not had a chance yet...

It wasn't sympathy I was after. I asked 'Does a crash matter?'

I could in to my circumstances but I am not sure any more info would help the question.

As somebody posted @ £100k when you are looking at £210k houses then maybe it does. Does it at the margins - is a diff question.

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A £170k house, if you'd have managed to get a 5% IO mortgage, would have been costing you £8,500 per year. The payment to save up enough to pay off the the mortgage at the end of the 25 years is another £6,800 per year.

On top of that, you're looking at in the order of 5% p.a. for house maintenance costs. Lets say for sake of argument that's another £5k per annum in total for all other bits.

That's also not taking into account the "moving in" costs that you'd have (unless you were planning on doing NOTHING to the house when you moved in. New carpets, decorating, garden maintenance, that new kitchen, bathroom....

NOW you're complaining that you haven't saved up anything? Oh right - you lost your job. Think yourself lucky that you didn't have a house - imagine the nightmare that would have been! I reckon you'd probably have been on the brink of bankruptcy, if not actually insolvent, had you "bought" instead of renting.

The abount of money you've *saved* by NOT buying is significant

That's 5% in 2003 and very likely the Mortgage IR would have been lower by now. So it would have departed in the downward direction compared to the rent which is £11,100 now.

Trust me our landlords haven't been paying 5% a year for upkeep. We would be able to do up the house with as much money as we had to do the house up with - they arent fixed costs.

We still have to pay our rent even though I have lost my job. I didn't say my wife had lost her job. Again its not sympathy but I am just making a point - does it matter in the £10-50k range crash - 50% may make some difference but not if you can't get a mortgage.

I don't think it is that cut and dried but you make some interesting points.

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Can't the OP take a 20 year mortgage?

Except I am competing against 25 year mortgages - IO mortgage people etc. Unless I significantly up my salary then I am up against all that lovely housing benefit lifting the market at the bottom.

he could probably get a 30 year mortgage...

V. funny :)

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When you have a family renting and finding yourself unemployed (both of you rather than one partner) it is a nightmare. Imagine you are renting a 4 bedroomed house which suits you, the better half and the 2 children nicely, enough space for furniture and the children to have a room each, perhaps the box room is a study for the computer and work related bits and pieces, school projects etc. Maybe there's a garden for the swing or trampoline.

Get made redundant and as a renter somebody else will decide you have far too much space and it's downsizing to a 2 up 2 down for your family. Usually in a dodgy area as you no longer have the luxury of choice. If you own that property (or have a mortgage) then you've two years to get your shit together and one of you working again before the question of how big your home is even asked.

Pets and renting don't mix and children like those, then there's the schools issue, most schools don't even believe you live in the house without a 12 month tenancy and still they are dubious if the school is a very good one.

We bought, paid too much I'm sure as have many but the children have a secure home, even if/when the worse happens, as it did to us they still have their familiar surroundings and that's important.

Edited by iLegallyBlonde

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Hi Dredwerker,

I'm in a similar boat to you, wondering whether to buy or when the crash might come. I am in my FTB house wondering when to trade up to more space and a decent school nearby for my family.

My decision has been to give up waiting and buy now, even though I'm convinced there will be a drop coming. For me it was a decision about providing for my family in the end. There are a couple of current factors that make it a less bad time to buy: some people are willing to listen to low offers and interest rates on long term fixed are pretty good.

How much will houses drop and when? I have no idea. When the drop does come, will many of us have a job? Will interest rates be sky high? Will the banks be able or willing to lend? Will the baby boomers buy all the cheap houses up for BTL?

Sometimes the timing of the "markets" don't suit the timing of life...

Good luck!

Thank you - Its just an odd situation to know something is economically wrong but to do it anyway for other reasons.

I suppose its like buying a dvd player from currys at christmas when you can get it on amazon cheaper but making everybody happy coz they can watch <insert nice film title> :)

Im still a few years off 40 but I thought along the same lines when I bought a few years ago. I get that this purchase might not be "optimal" in the sense that with hindsight and a calculator I could clearly work out when the best time to buy was (who knows when I retire I might just do that!).

So maybe I could have bought my place 50k cheaper? Not a big deal over a working life - break that down to a monthly figure and I prob spend more on beer. So I came to the conclusion that ownership was more important than any potential saving. It turns out that IRs have been helpful (so far) so as Joseph said to Pharaoh, time to stock pile whilst I can - it may change (although long term fixes are at record lows, so may go for that, we'll see). Knocked a few years off the mortgage, certainly doesn't seem a "bad" route to take unlike some of the warning I got when I said I was going to buy many moons ago!

I figure what's the point in being the richest person in the cemetery? But good luck to anyone who calls it perfectly and makes the optimum buy, I genuinely doth my cap to you.

I think the people who want to buy a house are the types who want to put down roots and prefer stability? I moved about 5 times in my 20s and it wasn't a problem, some stuff in boxes and off I went. I've done in once with the family and I really hope I never have to do it again!

Yeah - exactly - I really can't keep moving with a family's worth of stuff.

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Thank you - Its just an odd situation to know something is economically wrong but to do it anyway for other reasons.

I suppose its like buying a dvd player from currys at christmas when you can get it on amazon cheaper but making everybody happy coz they can watch <insert nice film title> :)

Yeah - exactly - I really can't keep moving with a family's worth of stuff.

When we rented we moved every year for 3 years at £3,000 a time, that could have paid our stamp duty :(

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Does A Crash Matter? Not a troll

Yes. I'm halfway through Alastair Darling's "Back from the brink". He doesn't hide the fact that the government doesn't want houseprices to fall. House prices fall, home owners feel poorer, they spend less on the economy.

I quote "The position in the UK was nothing like that in the US, but because of the size of the housing market here, some of our banks were very exposed. Home ownership in the UK is much wider than it is in Europe. That means that what ever happens in the housing market not only affects the banking system but also the wider economy, including the business sector, since if house prices fall home owners spend less money." p116

This what we on HPC feared years ago, that houseprices were the backbone to the UK economy, much more so than in the 90s. Now it's out in the open - prop up the housing market to prop up the economy. The "It's the economy, stupid" quote is in there too.

Edited by Money Spinner

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Does A Crash Matter? Not a troll

Yes. I'm halfway through Alastair Darling's "Back from the brink". He doesn't hide the fact that the government doesn't want houseprices to fall. House prices fall, home owners feel poorer, they spend less on the economy.

I quote "The position in the UK was nothing like that in the US, but because of the size of the housing market here, some of our banks were very exposed. Home ownership in the UK is much wider than it is in Europe. That means that what ever happens in the housing market not only affects the banking system but also the wider economy, including the business sector, since if house prices fall home owners spend less money." p116

This what we on HPC feared years ago, that houseprices were the backbone to the UK economy, much more so than in the 90s. Now it's out in the open - prop up the housing market to prop up the economy. The "It's the economy, stupid" quote is in there too.

I meant does it matter in the sense will it help those who can't buy a house. Not yes it matters in regards to the entire economy as it is a different but nonetheless interesting problem.

I am not sure who makes me more angry Darling or Brown - actually - Poss Blair thinking about it - brought in IR35 and Brown. arggggghhhh

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Does A Crash Matter? Not a troll

Yes. I'm halfway through Alastair Darling's "Back from the brink". He doesn't hide the fact that the government doesn't want houseprices to fall. House prices fall, home owners feel poorer, they spend less on the economy.

I quote "The position in the UK was nothing like that in the US, but because of the size of the housing market here, some of our banks were very exposed. Home ownership in the UK is much wider than it is in Europe. That means that what ever happens in the housing market not only affects the banking system but also the wider economy, including the business sector, since if house prices fall home owners spend less money." p116

This what we on HPC feared years ago, that houseprices were the backbone to the UK economy, much more so than in the 90s. Now it's out in the open - prop up the housing market to prop up the economy. The "It's the economy, stupid" quote is in there too.

For as long as 50% or more people own homes or pay mortgages government will rescue them whatever the cost. They will continue to use bailouts, inflation, devaluation, mass immigration, benefits and taxation to prop up house prices. The tricky bit is that they will do this right up until the point that the country is completely bankrupt and then they will suddenly pull the rug. At that point house prices really collapse, probably just as many on this site have given up hope and bought a house.

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  • 284 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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