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Will Corona virus cause a house price crash?


reddog
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3 hours ago, Sprrite said:

Agreed that people should do what is best in their individual circumstances.

However the main issue for people on this site is affordability and getting hold of the deposit whilst paying sky-high rents. I've been earning decent money since I graduated but only managed to save enough during the pandemic (after moving out of London) to now be in a position to buy.

If you don't have the right background and with the support of BOMAD, it becomes much more difficult to get on the property ladder.

Agree.

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4 hours ago, dugsbody said:

This site initially confirmed my existing bias that houses were overpriced (this was from around 2005 onward when I went searching online to find out if my gut feeling was correct). 

I delayed buying when friends around me were doing so since 2004 onward using the 100%+ mortgages being given out. 

In hindsight, I should have bought, I would be retired or nearly retired by now, all else being equal. But who knows if all else would have been equal. Anyway, I did learn to start questioning my preconceived bias and started digging in more to understand why houses were expensive. I learned how credit drives prices and I also formed the view that secular interest rates were only headed one way in the modern developed world, toward zero. I also learned that the game is just completely rigged by governments in favour of the housing market.

Once I learned the game I was rigged, I wrote out a cash flow prediction spreadsheet, evaluated my assumptions and realised I should buy, so I did.

Waiting for the entire world to experience a huge property price crash so you can time the market perfectly to buy in at the right time is a fools game. 

Hindsight is fabulous and I agree with your evaluation.

There is something else that is becoming more relevant as time goes on, Being able to buy a home, that is comfortable to live in and near jobs that will pay for it.  Even if we decide that houses are overpriced but we need to buy. 

We have moved twice now once we made the decision to leave London. The first ended in redundancy and no other work available that we could find. The second try ended in being strung along and then an attempt by the seller to force us into paying more - a lot more (it did eventually sell but not at the price they wanted us to pay).

The longer we stay in one place the narrower is the type of property we can afford to buy. It moved very quickly in the last couple of years.  We feel as if we have been chasing a moving target.

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8 hours ago, dugsbody said:

This site initially confirmed my existing bias that houses were overpriced (this was from around 2005 onward when I went searching online to find out if my gut feeling was correct). 

I delayed buying when friends around me were doing so since 2004 onward using the 100%+ mortgages being given out. 

In hindsight, I should have bought, I would be retired or nearly retired by now, all else being equal. But who knows if all else would have been equal. Anyway, I did learn to start questioning my preconceived bias and started digging in more to understand why houses were expensive. I learned how credit drives prices and I also formed the view that secular interest rates were only headed one way in the modern developed world, toward zero. I also learned that the game is just completely rigged by governments in favour of the housing market.

Once I learned the game I was rigged, I wrote out a cash flow prediction spreadsheet, evaluated my assumptions and realised I should buy, so I did.

Waiting for the entire world to experience a huge property price crash so you can time the market perfectly to buy in at the right time is a fools game. 

I think you position a ‘bullish’ attitude fairly.

I went through the same thought process with my son and whilst we both feel prices were high with a little bit of ‘winter weather’ timing he managed to get something at a reasonable price (which probably allows for a decent 20% fall) and stopped waiting for a crash.

It is not that we believe a crash isn’t possible....it definitely is. It isn’t that we think generally prices are too much...they are. It’s just the government effort is now so visible that he decided the rent saving over the next few years v a fixed rate mortgage swung the balance. If prices fall say 40/50% (because he bought well) over the next 10 years he should still be in a better overall position.

This isn’t a general encouragement for others to buy, nor a belief prices are sound but rather in his position, on this house, with his job, in our town’s high rental prices and relatively affordable property then it works. 

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