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spanky

Crash Price Drop

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Basically I'm in the process of buying a house which needs work for140k. Houses in the area generally go for around 160+ in this area (for the same house but modernised).

I'm putting down 15k and mortgaging the rest. The amount is just less than x4 salary on a fixed 3 years deal @ 4.6%.

When/If the crash does happen how much do you believe house prices will drop by. Basically if i go into negative equity by a couple of grand I dont mind. Its if the price drops by say 30% then I'll be a little more concerned

What percentage did house prices drop by last time round? As an average percentage nationwide?

Thanks in advance.

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Basically I'm in the process of buying a house which needs work for140k. Houses in the area generally go for around 160+ in this area (for the same house but modernised).

I'm putting down 15k and mortgaging the rest. The amount is just less than x4 salary on a fixed 3 years deal @ 4.6%.

When/If the crash does happen how much do you believe house prices will drop by. Basically if i go into negative equity by a couple of grand I dont mind. Its if the price drops by say 30% then I'll be a little more concerned

What percentage did house prices drop by last time round? As an average percentage nationwide?

Thanks in advance.

Have a look here

Nationwide historical

and here

Halifax historical

which show a drop of around 20% from Q3 1989 to Q1 1993

Edited by Nick T

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Have a look here

Nationwide historical

and here

Halifax historical

which show a drop of around 20% from Q3 1989 to Q1 1993

£160,319 --> £115,031

Seems a huge drop in price.

Unless salaries drop surely this means that housing becomes really affordable to everyone... Could this lead to a shortage in housing?

Ofcourse there will be people who have to sell up as they cant afford what they currently own but there will be people like myself who will stay put.

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Unless salaries drop surely this means that housing becomes really affordable to everyone... Could this lead to a shortage in housing?

Only if lending remains as lax as it is today. Which it won't.

From the last low point in the mid-nineties, it was very hard to honestly borrow 3 times joint salary. As the banks get burnt (metaphorically) in the coming years and cheap money cannot be sourced, they will lend smaller amounts and tighten criteria.

It is a difficult time to buy at present because of the multiples that people are taking on (10x salary anyone?) But at the bottom of the market, it is equally difficult because the banks behave responsibly.

Xil.

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Only if lending remains as lax as it is today. Which it won't.

From the last low point in the mid-nineties, it was very hard to honestly borrow 3 times joint salary. As the banks get burnt (metaphorically) in the coming years and cheap money cannot be sourced, they will lend smaller amounts and tighten criteria.

It is a difficult time to buy at present because of the multiples that people are taking on (10x salary anyone?) But at the bottom of the market, it is equally difficult because the banks behave responsibly.

Xil.

One of the most sensible posts I have read on this forum; lending criteria will change dramatically in the short to medium term.

For anyone contemplating buying at the moment please re-read the post and take careful note. Then consider the affect on future property prices in an era of restricted (and sane) lending policies.

Edited by Red Baron

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When/If the crash does happen how much do you believe house prices will drop by.

spanky - no point in asking this question anywhere, and particularly not on here (or on a forum dedicated to HPI either).

No one knows if a crash will happen. And if a crash does happen, no one knows how deep it will go. There's every chance that no crash will happen. Again, no one knows. If we did, we'd all be wealthy people.

Personally, if your mortgage deal is a repayment mortgage, I'd go ahead. A 3 year fixed means you won't be battered by a crash anytime soon. I'd be reluctant to take out an I/O mortgage at this time however.

Beyond these criteria, ultimately I'd say that if you're planning to live in the house and regard it as a long-term partnership, then go ahead. If you learn to love your new house, you can ride out any short term price dips. If it's only a short-term financial transaction, I wouldn't take the risk.

Best of luck.

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spanky - no point in asking this question anywhere, and particularly not on here (or on a forum dedicated to HPI either).

No one knows if a crash will happen. And if a crash does happen, no one knows how deep it will go. There's every chance that no crash will happen. Again, no one knows. If we did, we'd all be wealthy people.

Personally, if your mortgage deal is a repayment mortgage, I'd go ahead. A 3 year fixed means you won't be battered by a crash anytime soon. I'd be reluctant to take out an I/O mortgage at this time however.

Beyond these criteria, ultimately I'd say that if you're planning to live in the house and regard it as a long-term partnership, then go ahead. If you learn to love your new house, you can ride out any short term price dips. If it's only a short-term financial transaction, I wouldn't take the risk.

Best of luck.

Nice advise from all but:

"I'd say that if you're planning to live in the house and regard it as a long-term partnership, then go ahead" Sums it up for me.

At the end of the day we are buying in a desirable area on the basis that desirable areas will always remain desirable. Hopefully it wont be hit as hard as people will still want to move there.

Its capital repayment @700 a month which is easily covered. IF the rate went to 10% worst case scenario the repayments would be 1100 approx which again isnt that drastic (as long as our salaries dont go to pot).

I think going through all the major points we are pretty covered. In around 5 years time we'll only be borrowing x3 my salary (if my salary stayed the same) so I think we are pretty covered.

We've been looking/holding off for nearly 2 years, it can become soul destoying. Now we have finally found a place we both really like I think we'll go for it :D

Thanks again to everyones comments :)

Edited by spanky

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Nice advise from all but:

"I'd say that if you're planning to live in the house and regard it as a long-term partnership, then go ahead" Sums it up for me.

At the end of the day we are buying in a desirable area on the basis that desirable areas will always remain desirable. Hopefully it wont be hit as hit as people will still want to move there.

Its capital repayment @700 a month which is easily covered. IF the rate went to 10% worst case scenario the repayments would be 1100 approx which again isnt that drastic (as long as our salaries dont go to pot).

I think going through all the major points we are pretty covered. In around 5 years time we'll only be borrowing x3 my salary (if my salary stayed the same) so I think we are pretty covered.

We've been looking/holding off for nearly 2 years, it can become soul destoying. Now we have finally found a place we both really like I think we'll go for it :D

Thanks again to everyones comments :)

Going on that additional information, I'd say yes, go for it. Mortgages, and particularly on your first property, always seem incredibly daunting but believe me, a couple of payments in, it just becomes the norm, and you get on with it.

We may well have a price dip, and there's even a chance of a full-blown crash, but if you keep the faith, then history suggests that you'll not lose out in the long term.

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Hi Spanky,

To be brief.. ;)

If you've come to a site called "Housepricecrash.co.uk" looking for advice, it appears that you are unsure of whether to proceed. This is a decision only you and your partner can make together.

Think of it this way - if you buy a house tomorrow for £180K and they are selling for £135K in two years time, how would you feel?

Bubbles always burst, always have and always will. This one has gone on for much longer than anyone thought, but that does not mean it will go on forever. If it did - then before long, no one would be able to afford a house! End of ;)

Whatever you do, I wish you good luck....

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Unless salaries drop surely this means that housing becomes really affordable to everyone... Could this lead to a shortage in housing?

Urm... a house price crash doesn't happen in isolation! The 30% fall will be accompanied with massive rise in unemployment. I lot of people on the site seem to think that house prices will come down on their own, I don't think so. The house price bubble is just a small part of a much large economic disaster.

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Think of it this way - if you buy a house tomorrow for £180K and they are selling for £135K in two years time, how would you feel?

i d shrug my shoulders and get on with my life

IF it was a number of my BTL pensions/portfolios that were losing money, then it would be an absolute disaster

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Urm... a house price crash doesn't happen in isolation! The 30% fall will be accompanied with massive rise in unemployment. I lot of people on the site seem to think that house prices will come down on their own, I don't think so. The house price bubble is just a small part of a much large economic disaster.

This is a really good point.

Basically alot of the people waiting to buy will find that they may not end up buying after all because they dont have a job to pay their payments with!

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Have a look here

Nationwide historical

and here

Halifax historical

which show a drop of around 20% from Q3 1989 to Q1 1993

Falls were nearer 37%. Of course areas are different but some on here could recount personal stories of 50%+ falls in 'value.' Don't be fooled by the spin, I personally expect real term falls of 30%+ over about 4-6 years. Flats will fare worse, just like last time.

Have a look here

Nationwide historical

and here

Halifax historical

which show a drop of around 20% from Q3 1989 to Q1 1993

And don't forget there were even more severe falls from 93-95.

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I'd be very wary about buying a house currently, unless I needed to buy and was getting a very good reduction.

This site is of course going to be biast about house prices, but looking at recent events you'd have to say a lot of bulls are turning to bears - inflation is high world wide, interest rates are firmly on the upwards path, and nobody is denying house prices are likely to be hit.

Seeing as we are pretty much at the top of the biggest house price bubble in history, if you bought now and the market crashed heavily - you'd be kicking yourself for many years to come, wishing you'd waited only a little longer and got twice the house for your outlay.

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Only if lending remains as lax as it is today. Which it won't.

From the last low point in the mid-nineties, it was very hard to honestly borrow 3 times joint salary. As the banks get burnt (metaphorically) in the coming years and cheap money cannot be sourced, they will lend smaller amounts and tighten criteria.

It is a difficult time to buy at present because of the multiples that people are taking on (10x salary anyone?) But at the bottom of the market, it is equally difficult because the banks behave responsibly.

Xil.

You also have to add to this that PROPERTY becomes VERY UN-POPULAR. People would not talk about it like they do today.

It's a bit like "You only sing when your winning"

You wont hear people in the pub saying "Good news my house is worth less than what I paid for it" ;)

TB

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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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