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Am I a dreamer? Will house prices come down?


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21 minutes ago, Frugal Git said:

Ok. Out of the three typical life goals (home ownership, children and retirement) it is doable for most to achieve only 1 or 2 (and retain a decent standard of living) out of 3 at the moment if you play conventionally.

Now a little story which you might want to research.

Two families.  Both have identical circumstances apart from income. 2 kids, rent. One has a household income of 50k, one 18k. 

gross difference 32k in salary.

net difference - 8k.

Huh? That can’t be right.....

the key is universal credit. Taxes taketh away the earnings from the 50k earners. 

universal credit tops up the 18k earners, including paying practically their entire rent.

But .... pension contribs are 100% deductible from earnings for the purposes of UC. 

So, 50k earner Salary sacrifices 32k into pension every year. The whole lot goes into the pension. And they qualify for the same amount of UC as the other family.

now they have kids, their housing is paid for and their retirement is. Yes, they have to economise, but it’s doable.

DYOR. I could be wrong and this is not advice. 

You're sort of right. I have a friend who has her own business and so does her husband. They have 2 kids and claim tax credits as they own their own house. 

They seem to be doing quite well. I think they fiddle their accounts. 

I also have other friends who earn lots of money. They seem to be doing ok, all working from home. 

I dont know. All of them have bought a house, well before me. 

The prices they paid is alot less in what I'll be paying for today. 

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22 minutes ago, Timm said:

Of course prices will fall, and are already doing so.

When measured in value, such as strawberrys.

 

I hope so. Did you ever watch the Paul Hollywood eat the world's most expensive strawberry at £350?

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21 hours ago, Rachel88 said:

Are the house prices going to come down?

I feel like I've been waiting forever and they just keep going up, up and up.

People have been putting an extra £30k/£40k on their houses, over the past few months. 

 

Sounds like you have done lots of research across a wide range of economic factors with views across Bitcoin, furlough, interest rates, unemployment and therefore know most things. Question almost sounds like a trap....my son is looking to buy his first house and even with a degree and good job doesn’t know any of the mechanics. 

So assuming you are really a FTB I think the key points have been covered but for what it is worth: 

1) if you are looking at say £200k then spread the net. The same type of house in the same area can range from maybe £155k to £265k. Sometimes the difference is a massive down to brick renovation and to be avoided (ie false economy). Sometimes it’s an old lady house with new wiring, new boiler, new bath and kitchen albeit not super modern design. But with swirly carpets, old lamp shades, dusty curtains and dated furniture....buy that one. The one at £265k is selling the dream with Stiffkey Blue kitchen, chrome handles, Cornforth white walls, shutter blinds, light grey carpets and a wicker suite in the garden. Avoid...in a years time it will look ordinary with all your things in it. 
So buy well and the bandwidth opportunity protects against falls. 
 

2) yes they will fall, they always go up and they always fall. Don’t expect falls to be advertised on a bill board. It’s often discreet, things stop selling and EAs start ringing. Some people will just stick with their price and won’t sell until the market then picks up...others need to sell. Drive a hard bargain so on the example above you now can get a scruffy on AND extended for only £165k. 

3) unless you are getting a deal I would exercise extreme caution right now. Pandemic is real, it’s uncertain and whilst things may blip up and down overall it won’t have a positive effect on the economy. 

The bulls and trolls will say some on here have been waiting 20 years...they probably haven’t but they may have been moaning about daft prices for 20 years and who hasn’t. 

So do you buy now?....well I agree with trolls and I wouldn't wait 10 years because the way rent v mortgage works. Even if prices fall in real terms it’s possibly better for the ‘average person’ to pay £200k and own half that house in 10 years (even if it’s then only worth £180k) rather than still be renting.  I say ‘average person’ because technically there are other places to put your money outside property....but most of us won’t  

Would I buy in the back of this little rally in the summer of 2020, nope. I would hold fire at the very least until stamp duty is resolved and maybe things settle. If the market is balmy with 10 viewers it’s easy to get caught up in the heat.....don’t. 

Sentiment changes quickly and then better opportunities arise. All little rallies will subside, houses may not fall (they should but let’s assume they don’t) but a poorer sentiment could easily give a significant saving if you find a motivated seller. 

It’s not all about money and it’s not an investment but a bad buy can add 10 years on your working life and a good buy can take 10 years off it. 

Hopefully this probably reflects what you knew already. 🤔

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There are markets within markets within markets - movement you see in one could be the opposite to what you would see in another.

For example, a pretty, uniform, quiet street of period houses that are well maintained and have views of other period houses is always going to be in demand. There aren’t many that tick all of these boxes, so when houses come up there are plenty of buyers for them and they are less susceptible to price drops.

The next street over might be a busier road, have various estates and ugly buildings filling gaps left by the war and the houses might largely be flats/rentals and therefore tatty. This type of street is common and therefore there will always be less demand and houses will be more susceptible to price drops.

The areas I have been looking at fall into the first category and out of interest I had a look to see what these houses on certain streets did during the financial crisis in the late noughties. Prices never went down and have just kept going up and up. I suspect this will happen in 2021 and beyond as well, whilst less desirable, common properties might struggle.

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10 hours ago, satsuma said:

I have no idea what’s going to happen. I saved enough cash to buy the place I want for cash but the prices in the area have gone up 30% in the last year. So a drop in some areas only brings us back to where we were. At the moment it seems madness to buy in these areas as there is a shortage of supply as anything for sale sells fast. I assume these people are not on Furlough. What is possible is that many of these houses never compete before the SD holiday ends. People may then pull out of sales as Furlough ends and things get harder.

30% increase. Was this Hong Kong? It’s easy to think prices have risen quickly but a lot of it can be froth. 

I viewed a house with my son last year in the boom and it was £279k but worth £245k and had 10+ viewers. I know the agent well. 

It sold for £292k and fell through in December. Back on in December at £279k and still no viewings and EA rang me....he knows viewings ‘might’ pick up as weather improves but the seller is looking to sort. It’s empty. Yum, yum.

He wanted to know if we were still interested and knows we will be at £245/250k. 

As with any quick uplift in prices the reality is many prices don't really go up....some people will have completed and they have just over paid. It was sunny and exciting, unfortunately these people bought a house in the excitement rather than a new TV...never mind. 

Prices aren’t not now falling near us rather they are settling back to pre covid level and a more realistic level  

To be fair we are tempted. It’s a great plot, it’s extended, lifestyle rear diner/kitchen with the patio doors etc and it’s an ex rental so has lost its shine but all the basic stuff has been done ie wiring, new bathroom and kitchen and heating. Similar house (without the extension) sold for £250k in 2014...so its not a bad deal. I would pay £210k but that’s my bearish HPC hat, reality is that it is an opportunity for a really nice home. We are circling but watching for other similar opportunities. Heavy snow and icy roads...no mad rush and no one viewing anything. 

I am not advocating buying now....but some people will want to or feel they need to (eg my son 🤦🏻‍♂️). We are just glad he didn’t jump in during summer and now this little uncertainty is often enough to get a ‘reasonable’ deal. 

Bargains maybe later in the year....but that another debate and one i think will be the case but who knows what the government will pull out of the hat 🤷🏻‍♂️

 

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10 hours ago, Rachel88 said:

It has to be affordable to my salary. And I wouldn't move away from my family and I don't think my partner would either.

I agree about the 30/40 year old be the ones who are moving. There are streets that I would love to live on but all- and I really do mean all are owned by older people 65+. I drive down the streets nearly every day. 

Go visit some real sht hole areas. Find nice secret street in sht hole area (they do exist, promise). When walking out of front door to visit shop always wear hoodie. 

Be happy. 

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20 hours ago, Mikhail Liebenstein said:

My conclusion is that they are only ever being allowed to fall in real terms (not nominal), otherwise the useless banksters would go bust and actually have to work for living.

As inflation is quite low then surely any real terms fall would also be nominal?

Or do you think we will have hyper inflation of everything other than houses?

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17 hours ago, Rachel88 said:

What about the amount of deaths from Covid, will that bring in more supply?

They cant go up much more, my salary is not increasing.

I have looked into the great rest thing.... people not owning anything but being happy. This would mean the government owning everything, so they would be buying houses but they're not. So I think it's an idea from klaus Schwab but not actually going to happen. 

I do think taxes will go up. Maybe council tax. I know quite a few older people, with saving but they only have about £20k which wont go far when taxes rise. Maybe this will make some down size. 

I have to agree about supply and demand. I have quite a few friends looking to buy. The new builds are £300k plus near me. But none of us can afford them. 

 

I don't think so it was 85,000 excess deaths a tragedy but shouldn't cause a house crash

https://www.bbc.co.uk/news/uk-55631693

 

BTW I don't want prices to stay at their current level - I just can't see a fall coming soon.

However I have no real idea.

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26 minutes ago, iamnumerate said:
17 hours ago, Rachel88 said:

 

I don't think so it was 85,000 excess deaths a tragedy but shouldn't cause a house crash

A tragedy, yes, and not on its own a house price crash. 
 

Assuming average household size of 2.3 ish and about 1.1 million homes per year sold this could represent an increase in supply of 3-4%. 
 

The other ongoing tragedy (of job losses, young careers not started, education missed and corporate insolvency) will be much more significant for house prices from the “demand” side. 

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31 minutes ago, 14stFlyer said:

A tragedy, yes, and not on its own a house price crash. 
 

Assuming average household size of 2.3 ish and about 1.1 million homes per year sold this could represent an increase in supply of 3-4%. 
 

The other ongoing tragedy (of job losses, young careers not started, education missed and corporate insolvency) will be much more significant for house prices from the “demand” side. 

As ever the squeezed middle and the young will pay the price. 

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When asking the question on house price crash should I buy now, you must consider the audience.

Everyone here will tell you to wait for the crash, god they've been saying this for over a decade.

There is nothing complicated around what is going on.

I'll explain to bring some clarity.

Every ten years we have a crash, if you can survive that crash, you win. The weak are then cast down the ladder as the cream rises.

The money supply is then increased, house prices appear to rise in price but most actually don't. However those with debt are given, a pat on the back as it's eroded.

When to buy? Honestly now... if you wait another year to buy, you'll be shocked to discover, interest rates are negative, wages have increased or prices are up. There's a new government backed scheme or half of Africa have been given passports.

Why? The government doesn't want a load of freeloaders dependent on the state, for housing. Having to repair and replace stuff, as people do not appreciate anything they've not worked hard for.

They rather we self manage and give rewards for doing so.

 

 

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10 minutes ago, Speed1987 said:

When asking the question on house price crash should I buy now, you must consider the audience.

Everyone here will tell you to wait for the crash, god they've been saying this for over a decade.

There is nothing complicated around what is going on.

I'll explain to bring some clarity.

Every ten years we have a crash, if you can survive that crash, you win. The weak are then cast down the ladder as the cream rises.

The money supply is then increased, house prices appear to rise in price but most actually don't. However those with debt are given, a pat on the back as it's eroded.

When to buy? Honestly now... if you wait another year to buy, you'll be shocked to discover, interest rates are negative, wages have increased or prices are up. There's a new government backed scheme or half of Africa have been given passports.

Why? The government doesn't want a load of freeloaders dependent on the state, for housing. Having to repair and replace stuff, as people do not appreciate anything they've not worked hard for.

They rather we self manage and give rewards for doing so.

 

 

agree, there will always be props

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17 minutes ago, Speed1987 said:

When asking the question on house price crash should I buy now, you must consider the audience.

Everyone here will tell you to wait for the crash, god they've been saying this for over a decade.

There is nothing complicated around what is going on.

I'll explain to bring some clarity.

Every ten years we have a crash, if you can survive that crash, you win. The weak are then cast down the ladder as the cream rises.

The money supply is then increased, house prices appear to rise in price but most actually don't. However those with debt are given, a pat on the back as it's eroded.

When to buy? Honestly now... if you wait another year to buy, you'll be shocked to discover, interest rates are negative, wages have increased or prices are up. There's a new government backed scheme or half of Africa have been given passports.

Why? The government doesn't want a load of freeloaders dependent on the state, for housing. Having to repair and replace stuff, as people do not appreciate anything they've not worked hard for.

They rather we self manage and give rewards for doing so.

 

 

Nah - ignore this. Wait for the crash lol

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4 hours ago, richmondtw said:

How long have you been waiting ? why did you not buy any years ago? 

 

We tried to buy before Covid. But didn't get the house the homeowners took the first offer. 

I think since 2009, I wouldn't say I've been waiting with was of cash but I have always been shocked that the interest rate went down and not up. I didn't expect it stay around 1% for 10 years.

In my own life, I went university was in a relationship after university where we rented but that relationship didn't work out. Moved home saved a bit and got into a new relationship, the one I'm in now.

I've never had a hand out or a big inheritance like other people I know. I've had to do it all myself. Which is fine.

But that's why im hoping to buy this year im 32, will be 33 later on this year.

 

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24 minutes ago, Speed1987 said:

When asking the question on house price crash should I buy now, you must consider the audience.

Everyone here will tell you to wait for the crash, god they've been saying this for over a decade.

There is nothing complicated around what is going on.

I'll explain to bring some clarity.

Every ten years we have a crash, if you can survive that crash, you win. The weak are then cast down the ladder as the cream rises.

The money supply is then increased, house prices appear to rise in price but most actually don't. However those with debt are given, a pat on the back as it's eroded.

When to buy? Honestly now... if you wait another year to buy, you'll be shocked to discover, interest rates are negative, wages have increased or prices are up. There's a new government backed scheme or half of Africa have been given passports.

Why? The government doesn't want a load of freeloaders dependent on the state, for housing. Having to repair and replace stuff, as people do not appreciate anything they've not worked hard for.

They rather we self manage and give rewards for doing so.

 

 

I agree and you made me laugh. If the 2008 crash was 13 years ago. Surely we a due another one? 

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people must know by now that the government will not let the housing market crash. I think it is worth more than the stock market. 

UN 2030 agenda is renting. over the last 2 years, pension funds have been registering as social landlords for build to rent.......bond market is dead, better returns for them is providing properties for rent. 

Rent will pay for most peoples pensions int the future 

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