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If House Prices Start To Crash, When Will You Buy?


Dylan
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Whilst I'd like to think I'd be patient enough to wait until prices hit rock bottom, as a FTB looking for a home rather than an investment I will probably jump in when the price of a decent property approaches 3.5 times my salary. So how will those of you who are currently sitting out the housing market time your entry if prices start to fall?

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Whilst I'd like to think I'd be patient enough to wait until prices hit rock bottom, as a FTB looking for a home rather than an investment I will probably jump in when the price of a decent property approaches 3.5 times my salary. So how will those of you who are currently sitting out the housing market time your entry if prices start to fall?

But you're making that statement with your current sentiment of frustration, in that you're a FTB who would like to buy a home rather than a cash dispenser. Bit like me really. If prices do drop significantly your sentiment may well change to one of opportunism. If it becomes clear that you can get what you want for significantly less by waiting a few more months I think the temptation may be to wait ("After all, I've waiting this long already....") rather than jump in when prices reach a particular level.

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As in trading stocks and shares, just when you think that the market can't go any lower, the market always surprises you. Personally I would start paying attention when the market crashes by more than 30%. At 40%, I would start to get quite interested in buying. There is no rush though, time will be on your side for sure. Don't make the mistake though that interest rates are going to stay near this level forever

Best,

L

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I'd probably jump in if I saw a house that I liked and could afford comfortably if it the price might fall a bit more before hitting bottom. You have to live somehwere and I think renting sucks - it doesn't suck as much as paying a king's ransome for a pile of junk but it still sucks.

Edited by CrashedOutAndBurned
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I'll buy when I can afford a decent two-bed apartment with a loan that isn't so big that rises interest rates and unavoidable living costs represent an immediate threat. I'm not bothered if it carries on going down after I've bought, all I care about is having a place of my own that I can safely expect to afford to continue living in whatever life throws at me (within reason, of course).

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My measure is house prices being around +/- 10% of the Nationwide historical moving average, which the publish in their report every month but seems to get zero interest from the press. Their chart looks like the chart on the front page of HPC with with a moving average line - currently shows prices approx 35% above that line, and if there's a crash I expect it will overshoot and go 10%-20% below the historical moving average, but there is of course some utility value for me moving into a new house so hence my +/- 10%.

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Whilst I'd like to think I'd be patient enough to wait until prices hit rock bottom, as a FTB looking for a home rather than an investment I will probably jump in when the price of a decent property approaches 3.5 times my salary. So how will those of you who are currently sitting out the housing market time your entry if prices start to fall?

Why are you obsessed with ownership? What is wrong with renting?

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Property Guru has already tried to tell me on another thread some months ago that he his cronies are going to be clever enough not to buy too soon but to wait until the bottom is reached. Ye right.

My moderate amount of common sense tells me that people will buy at all levels of the crash (if one comes) and will effectively slow the crash to a long slide.

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opportunism. There's a word.

good spot

if i saw a property i liked at a price i liked, i would buy now e.g. saw one in march for £250k - if i could get it for £200k or less, i would, even now - of course it may well fall to £150k or less, but i would be happy with the price i paid so no problem

as the market falls there will be many houses that just don't sell as the owners can't or won't drop the price - others may be an absolute bargain - i suspect it will be a case of spotting individual value properties

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Property Guru has already tried to tell me on another thread some months ago that he his cronies are going to be clever enough not to buy too soon but to wait until the bottom is reached. Ye right.

no he hasn't. He's told you that there will be opportunities almost immediately that will allow you to get near-bottom prices within the first year of the crash. I MAY have a go if it's falling fast enough and the fear factor is high enough, that's when the ratio of bargains to stubborns gets good (in favour of th ecash rich buyer).

My moderate amount of common sense tells me that people will buy at all levels of the crash (if one comes) and will effectively slow the crash to a long slide.

agree - it will be a long slide. 10 years or more most likely.

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Personally i think it will be adviseable to buy at different times accross the country.

Im skeptical they will fall by much here (or in the south east, south west, east anglia, london) at all over any time line. Parents bought current house in beginning of 1994 for £90000, assuming a long term average growth of 8%, similar to wage growth over that period, (and prices from that start date were if anything undervalued), beginning of 2007, house should be worth (by my calcs, most likely wrong) £244766. It was a new build, and a house of same design is currently up at £290,000. Given 94% of asking price seems typical someone might pay £272000. Thats therefore above what would be expected, but not extremely so, given we're supposed to be at the height of a bubble. That being said, most people in my town/village commute the 8 miles or so cambridge, and there always seems strong demand from young families leaving cambridge.

North of Leciester or so i think prices are seriously inflated, particularly in the North East, where IIRC there are less people living there than 20 years ago, yet prices have still boomed.

Course i could be wrong, and prices fall below long term mean, rather than slowing to meet it...

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The North East is an odd place......Most of my family live there and it is one of the few areas of the country where you rarely meet outsiders......You don't get retired people moving there and the economic situation doesn't attract workers from other regions......Also there are very few immigrants.....even Poles.......The population has indeed fallen yet i now notice HPs rose around 15% last year on Teesside meaning HP rises over the past 10years are comparable to elsewhere in the UK

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I MAY have a go if it's falling fast enough and the fear factor is high enough, that's when the ratio of bargains to stubborns gets good (in favour of th ecash rich buyer).

I agree with this sentiment. The trick at making big returns in investment is to SELL when general GREED levels are high and to BUY when general FEAR levels are high. Most people don't know this simple rule of the markets. That's why the wealth of the country is concentrated in the top 5%

Best,

L

Hah, I forgot to add a quote by Jesse Livermore (one of the most famous traders on Wall Street). To paraphrase Mr. Livermore:

"The first and last 1/8th cent on a trade prove the most costly to a trader. If all the lost profits incurred from chasing those 1/8ths were collected together, I could build a highway that would reach from one end of the Atlantic Ocean to the other."

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Whilst I'd like to think I'd be patient enough to wait until prices hit rock bottom, as a FTB looking for a home rather than an investment I will probably jump in when the price of a decent property approaches 3.5 times my salary. So how will those of you who are currently sitting out the housing market time your entry if prices start to fall?

I've gone back to college and hopefully when I start earning again will coincide nicely with much lower house prices - I won't be buying until 2011

Whilst I'd like to think I'd be patient enough to wait until prices hit rock bottom, as a FTB looking for a home rather than an investment I will probably jump in when the price of a decent property approaches 3.5 times my salary. So how will those of you who are currently sitting out the housing market time your entry if prices start to fall?

It's worth remembering that prices have risen much higher than anyone would have predicted before the current boom and they will likely fall much further than anyone might predict now before the coming crash. That's how cycles go...

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interesting.

Not willing to work all my life to pay out a mortgage and have a possibilty of having negative equity lasting 5 years or more when the crash comes, and it is gonna come just takes time. plus having that amount of money and only having a mortgage of 5-10% of my money would put me in a very good positon. Most of my mates think iam tight but i have a clear understanding of the value of money and how hard it is to get it and not interest in making others rich. when people understand that going to to debt makes others rich and its normally people that dont deserve it.

I have worked in banks and iam not willing to give my money to banks and the workers because i know what they are like.

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i have 207k in bank account so ill sit around and wait till the right time and buy it outright or maybe add 20-30k mortgage.

I won't deny that's a tidy sum of money. Did you str? The reason I ask is I wonder if banking the money will give the best returns and also have you only realised this money recently. If so fair enough. If not you may well have had even more in the bank ;)

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Whilst I'd like to think I'd be patient enough to wait until prices hit rock bottom, as a FTB looking for a home rather than an investment I will probably jump in when the price of a decent property approaches 3.5 times my salary. So how will those of you who are currently sitting out the housing market time your entry if prices start to fall?

I would consider buying when it's cheaper to buy than to rent; that will require a 30-40% correction in real terms.

Until then my money is safe in the bank earning more than enough in interest to pay the rent. Why risk capital on property ownership in a market which sooner or later will unravel?

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I agree with this sentiment. The trick at making big returns in investment is to SELL when general GREED levels are high and to BUY when general FEAR levels are high. Most people don't know this simple rule of the markets. That's why the wealth of the country is concentrated in the top 5%

Best,

L

It's not that simple........... That glaringly obvious truism you quote above is not secret knowledge that only the wealthiest 5% in the UK are privy to.

The reasons for the uneven wealth distribution in this country are many and varied; far more complex than you suggest above. I'd be very suprised if even the majority of the wealth owned by that 5% was as a result of their superior knowledge, ability, drive etc..........

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My moderate amount of common sense tells me that people will buy at all levels of the crash (if one comes) and will effectively slow the crash to a long slide.

You clearly have little common dog f... then.

In a rising market you get lots of buyers, who will even carry on paying at the highs because they see it moving up.

In a market that is in correction mode, most of the buyers will disappear despite their brave words now.

Look at the states, buyers are already stating they will wait and see, despite some fairly nice corrections.

Most people like to talk tough about buying into a diving market but when it comes to it they will end up waiting to see it climbing again.

Human nature.

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