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Jonnybegood

Prices Are Going To Fall, By How Much Is Anyone Guess

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Just a quick thought, Prices are going to fall (They are now) at best they are going to stabalise after a quick short fall of maybe 10-15% but on the other hand we could be looking at 4-5 years of falling prices maybe bottoming out at around 30% nominal falls, 50% in real terms and then not rising again for another 5 years.

But many are still going to be screwed and it will not be the dream they all hoped for, When someone on here says prices will be 30% less in 4 years times its not like going to the January sales and picking up a genuine 30% reduction on a electrical item which you pay cash for.

Unless you are able to pay cash for a property then in reality the end of the month you will have pretty much the same amount of money in your pocket as you would now.

Just take this example:-

Going back to January this year average house prices according to L.R - £177,000

A 100% mortgage = £1046.54pm Repayment over 25 years @ 5% fixed for 15 years

So if we look at average property bottoming out in January 2011 @ £124,000 (30% less) then a repayment over the same period at 7% =£886.70pm

A difference of £160 in your pocket each month.

Now I guess from previous scenarios that a 100% mortgage would not be an option so 20% deposit would be required and fixing would not be something many would not want to do so SVR would be the preferred option for many unsure of which way rates are heading, meaning that over the same 15 year period the £160pm in your pocket may be more or maybe less at times.

If you look at the bigger picture and wait a possible 4-5 years for prices to bottom many will need to either rent or stay at home during this time, So there is cost associated with this as well, Higher inflation will eat into any savings people have for a deposit.

Personally I would prefer to pay less for a property and have a higher IR even if it does mean the same payments each month (I.e Less Debt) but there are so many ifs and maybes that whatever the outcome its not going to be for many the dream ticket if prices fall 30%.

Mortgage repayments will still remain a large part of your monthly take home pay.

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Guest Bart of Darkness
But for many it will be the same end of each month

Depends a lot on where IRs are going over the next few years.

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The aforementioned senario will still bring about some form of movement to greater parity within the economy instead of the current situation whereby the current priced out generation will not be so far behind the people who got in just in time or indeed boomers.

This can only be a good thing for the uk economy going forward. Plus interest rates will fall again in the long run.

My current thinking is that I will live a little - use the opportunity of being priced out to do things I wouldn't have done such as working in other countries.

I will have the opportunity to experience life while still relatively young and then look to purchase in the uk in the next 4-5 years.

Cheers

WR

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My current thinking is that I will live a little - use the opportunity of being priced out to do things I wouldn't have done such as working in other countries.

I will have the opportunity to experience life while still relatively young and then look to purchase in the uk in the next 4-5 years.

Cheers

WR

Great attitude. Owning a property isn't the be-all and end-all.

No one knows where property prices will be in 4-5 years though. Personally I wouldn't assume anything.

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Great attitude. Owning a property isn't the be-all and end-all.

No one knows where property prices will be in 4-5 years though. Personally I wouldn't assume anything.

Couldn't agree more. Will anyone here be truly surprised if prices are 30% higher in 5 years?

I know I won't. This market has been irrational for a looooong time. :(

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Couldn't agree more. Will anyone here be truly surprised if prices are 30% higher in 5 years?

I know I won't. This market has been irrational for a looooong time. :(

Good point. I think the market is much more likely to fall in Leeds than in London as there are already signs of a slow down from my observation of the area around where I live.

(I don't just mean the thousand of city centre apartments which are clearly going to fall)

We have a strong financial services sector in Leeds but nothing like the city, and we don't have the international interest to keep pushing prices up.

Cheers

WR

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