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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?

Are you saying that Average House prices need to be 3.5 times Average earnings? If so, you are looking for them to drop by 40%-50% relative to earnings. This does not sound unrealistic. However, it might be a few years off yet.

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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 ;)

came into it a few months ago. i dont plan to buy at rock bottom but maybe 2/4 or 3/4 down, because when its going down you'll know you have more of a chance of getting it at the price you offer, if you wait till it bottoms out people will hold on to it hoping that it goes up again.

Edited by crash2006
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I'm buying when rent is roughly the same as a mortgage. More than likely a bit before. According to one property investment book (written way before the bubble even started) people start buying when the rent is the same as a mortgage.

I'm hoping that interest rates skyrocket before then. Why? Because a) I get a better return for my deposit and B) when I get a mortgage interest rates will be far far more likely to drop than to rise ;) Unlike now, people borrowed a lot of money when interest rates were at historical lows :rolleyes: who'd have thought they would rise :rolleyes:

I'm not going to try to second guess the market. I just want a home of my own to raise a family.

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No one wants to catch a falling knife. When prices are seen to be stagnant or falling, speculators will toddle off to the next big thing.

Prices will fall (faster than people whose 'wealth' is determined by that notional price want to admit), and we will have a reversion to mean.

Average house=3.5x true average earnings. That is when I will buy.

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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..........

No it is not secret knowledge, it is more widespread knowledge, but it is not put into practice on a widespread scale. The trick is to have the will power to enact the emotions that are required at the appropriate time. That is, to not get drawn into the greed and not to succumb to the fear. It is this that facilitates the graduation of the wealth.

If you can keep your head when all about you ... and all that.

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Im getting fed up with renting. I'll probably buy well before the bottom, but try to negotiate hard when prices start to fall. My target would be when prices fall to a level which would provide a minimally realistic rental return (say rentals of 11m per annum covering interest charges and servive fees/ maintenance).

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

Renting is fine and does have huge advantages over ownership, but if you are looking for some security then i would prefer to own.

Part of the problem with the coming BTL exodus is that as you can be turfed out at just a months notice (all flats I have rented after the first 6 months of the tenancy the contract changes to a rolling monthly one - this could be a Scottish thing) this happened to some of my friends and whilst they found somewhere else relatiivly they still had to move all their stuff and moving house is always a stress.

- though possibly not as much of a stress as buying a tiny one bedroom flat for £100,000+ on IO and rates on their way up! :)

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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?

When I can buy a nice place to live on my salary without destroying my lifestyle. I'm want to buy a home, not just a house.

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