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29929BlackTuesday

When Will Houses Be Cheaper?

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I'm expecting 10% nominal declines by the end of 2008 (a bit more for flats, a bit less for houses), and an additional 10% by the end of 2009. After that further declines will be real rather nominal, ie actual house prices will be static but inflation (which will be increasing by then) will nibble away at the real prices.

That's pretty much what happened last time around and I don't see why this time will be very much different. Top end London properties may fall more as city bonuses dry up with the credit squeeze, and the BTL boom may mean bigger falls for two bedroom flats; but for the mainpart of the house market I'm forecasting about 20-25% nominal price falls by 2010. In other words the average house which sells for £200k today will sell for £150-160k in 2010, and will probably still be selling for £150-160k in 2012 or even 2014.

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I know it will happen soon. But how soon? I reckon a lot sooner than Doctor Bubb's 18month builder bellweather timing.

This is the question isnt it! It all depends on just how many people have overstretched themselves and this at the moment is an unknown because no one ever tells anyone (even their own familys) what their financial health is EVER until the baliff is knocking at the door and they they say oh yes we are screwed by the way did'nt you know!

My advice is save your cash, enjoy your life and sit back and wait for a bargain.

Mark.

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2-3 years before -40% prices.

even then i might ask myself - do i really want to bother anyway.

they wasted 5 years of paying off a mortgage while i awaited the correction.

we will be in a state of poor economy and job prospects.

sadly even if theres the right prices it might be better to continue renting that join the bankruptees of england.

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I think you will see bigger drops much quicker this time. I have just had a leaflet from a local estate agent with Reduced on half the propertys, some as much as 25,000 on 300,000 houses

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Do you think the prices will drop a bit faster/larger if the lenders are cutting back from 7x, 6x, 5x salary to only 3x and 4x?

Just a 10% in the next year wouldn't make a bit of difference if the people can only borrow 60% of what they could. In all price brackets.

Sellers are having to price not only for lack of confidence in a falling market - but the inability of buyers to secure sufficient mortgage funds.

Last month if somebody could borrow 5x £40k = £200k, today they might get only 3x £40k = £120k

The pool of potential buyers and pool of potential sellers have not changed.

Only the amount that can be borrowed (and confidence).

So a house of £200k today might need to drop to £160k quicker to keep things moving.

The same people (buyers) still want/need to be able to buy the same houses from the sellers.

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Guest Yeahbutnocrash
I know it will happen soon. But how soon? I reckon a lot sooner than Doctor Bubb's 18month builder bellweather timing.

--------------------

Jesus would have been a bear. He's going to kick your Bull butt when he comes back. He's LIVID.

Bovis’s property market dampener comes after a string of surveys highlighting the way in which house prices have come off the boil over the past three months.

No - Jesus is an ultra bull expecting people to make the most of their chances :P

He would be cross at anyone who mis-manages or is wicked

Remember the bible story about investing for a return? - It was the one who merely protected what he had and didn't attempt to increase it who was criticized

Edited by Yeahbutnocrash

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I think you will see bigger drops much quicker this time. I have just had a leaflet from a local estate agent with Reduced on half the propertys, some as much as 25,000 on 300,000 houses

EA leaflets do not a property crash make.

Last time we had much higher unemployment and the property market still took two and half years to deliver about a 20% nominal decline. Actual prices then remained flat, but inflation accounted for about a further 20% fall in "real" prices. I don't see any reason to assume that it'll be faster or deeper this time, except possibly that this crash will be skewed more towards flats as the BTL fiasco unwinds itself, so maybe flats will fall a bit more, but then houses might equally fall a bit less.

Edited by silver surfer

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EA leaflets do not a property crash make.

Last time we had much higher unemployment and the property market still took two and half years to deliver about a 20% nominal decline. Actual prices then remained flat, but inflation accounted for about a further 20% fall in "real" prices. I don't see any reason to assume that it'll be faster or deeper this time, except possibly that this crash will be skewed more towards flats as the BTL fiasco unwinds itself, so maybe flats will fall a bit more, but then houses might equally fall a bit less.

I live in the South East and I have not seen any price reductions of this scale for years. So belive me the tide has changed and quickly and this will carry on as there is nothing to support it anymore

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They will fall around 40% over the next four years, however the interest rate will increase to 11% by 2009.

So its important if you are dependent on a mortgage to weigh it up, buy expensive today but with cheap fixed interest rate of 5.5% or buy at a 40% discount in four years at a variable mortgage of 11%, as fixed rates will become a thing of the past.

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They will fall around 40% over the next four years, however the interest rate will increase to 11% by 2009.

So its important if you are dependent on a mortgage to weigh it up, buy expensive today but with cheap fixed interest rate of 5.5% or buy at a 40% discount in four years at a variable mortgage of 11%, as fixed rates will become a thing of the past.

Are you (and those above) for real???

40% crash - YOU'RE HAVING A LAUGH!!

How's that going to work - is it:

1. Every house in UK reduces in value by 40%?

or

2. Average house price reduces by 40% so some will reduce by nought and some by 80%?

get a grip! If houses round my way are EVER 40% cheaper than they are today, I'll eat my hat!

10 - 15% followed by stagnation will affect the majority of DECENT housing over next few years AT MOST!

(Disclaimer: 2 bed city centre flats will be different of course!)

BUT 40% on decent housing in majority of this country - eg my street - NO CHANCE! Wake up and smell the coffee!

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Are you (and those above) for real???

40% crash - YOU'RE HAVING A LAUGH!!

How's that going to work - is it:

1. Every house in UK reduces in value by 40%?

or

2. Average house price reduces by 40% so some will reduce by nought and some by 80%?

get a grip! If houses round my way are EVER 40% cheaper than they are today, I'll eat my hat!

10 - 15% followed by stagnation will affect the majority of DECENT housing over next few years AT MOST!

(Disclaimer: 2 bed city centre flats will be different of course!)

BUT 40% on decent housing in majority of this country - eg my street - NO CHANCE! Wake up and smell the coffee!

Hmm, I am most certainly not.

I bought a property in 95 for 50k, sold in 99 for 95k, today its around 260k.

I think that property will fall to around 150k, and that would still require earning of around 40k pa to secure a normal affordable mortgage.

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The "discount" will depend on the motivation of the seller. I think there'll be plenty of bargains around by the end of the year.

BTW, did this site crash earler today, or was it something at my end?

Edited by Dubai

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Are you (and those above) for real???

40% crash - YOU'RE HAVING A LAUGH!!

How's that going to work - is it:

1. Every house in UK reduces in value by 40%?

or

2. Average house price reduces by 40% so some will reduce by nought and some by 80%?

get a grip! If houses round my way are EVER 40% cheaper than they are today, I'll eat my hat!

10 - 15% followed by stagnation will affect the majority of DECENT housing over next few years AT MOST!

(Disclaimer: 2 bed city centre flats will be different of course!)

BUT 40% on decent housing in majority of this country - eg my street - NO CHANCE! Wake up and smell the coffee!

When I bought my four year old detached house in a prime location on the Isle of Wight in 1994 I had the choice of six properties up for sale in a road of eight . When viewing one property (which I purchased) I was approached by occupants of three other houses to see if I was interested in buying theirs instead. A buyers market or what. The house I bought had dropped in price by 50% from its 1990 high and I could have bought any of the others on a similiar basis. Watch this space because its all about to happen again.

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BUT 40% on decent housing in majority of this country - eg my street - NO CHANCE! Wake up and smell the coffee!

Hit google "japan real estate bubble" and get a clue.

Anyway IMO we have entered the front edge collapse of this credit bubble. No-one has NO IDEA of what this crunch morph into. I think initially it won't be price declines but a locking up of the housing market because no-one will want to take up a huge mortgage when everythings going to shit. So sales will just halt more than anything else. All this will happen in concert with mass lay-offs, deflation, stock market collapse etc.

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forgot to say that two of the houses in my road never sold for another two years and actually dropped a further 15% when sold in 1996. This was a drop of 65% from the 1990 price. Probably caused by me moving in to the road. :lol:

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I viewed a house today which was reduced to 280K and has been on the market for 4 months which is quite a long time for round here. I offered 245K. Its vacant & needs work (South East). If vendor takes it, all well & good & if he dosent then my cash can just sit compounding interest. Interesting to see what happens - even the EA agreed with me, market is different from a few months ago. I'm waiting for a deal and am in no real hurry.

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Are you (and those above) for real???

40% crash - YOU'RE HAVING A LAUGH!!

How's that going to work - is it:

1. Every house in UK reduces in value by 40%?

or

2. Average house price reduces by 40% so some will reduce by nought and some by 80%?

get a grip! If houses round my way are EVER 40% cheaper than they are today, I'll eat my hat!

10 - 15% followed by stagnation will affect the majority of DECENT housing over next few years AT MOST!

(Disclaimer: 2 bed city centre flats will be different of course!)

BUT 40% on decent housing in majority of this country - eg my street - NO CHANCE! Wake up and smell the coffee!

Did you expect the prices to rise 40% in three years then???

Sounds to me thhat you up to you eyeballs in it and the panic is starting, enjoy your trip down and when you get to the bottom and the baliffs are a knocking, dont come to this website because all you will get is I told you so.

:lol::lol:

Oh and by the way enjoy your hat, they dont taste nice every body has to eat humble pie at times and now its yours

Edited by tackle2004

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The 1st wave will drop their prices a bit and most likely sell, the problems come when the 2nd wave starts to under cut each other this is were the market will enter freefall, i think the 1st wave starts end of this month or autum.

btw look at my past posts been correct so far now need 6% and my predictions have been spot on.

Edited by crash2006

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Are you (and those above) for real???

40% crash - YOU'RE HAVING A LAUGH!!

How's that going to work - is it:

1. Every house in UK reduces in value by 40%?

or

2. Average house price reduces by 40% so some will reduce by nought and some by 80%?

get a grip! If houses round my way are EVER 40% cheaper than they are today, I'll eat my hat!

10 - 15% followed by stagnation will affect the majority of DECENT housing over next few years AT MOST!

(Disclaimer: 2 bed city centre flats will be different of course!)

BUT 40% on decent housing in majority of this country - eg my street - NO CHANCE! Wake up and smell the coffee!

You must know something that the Division of International Finance, Board of Governors of the Federal Reserve do not. Maybe you should phone them?

Fed_Prediction.PNG

Also the medium term interest rates are in reality more hawkish than those used in this simulation.

Basically we will do as Japan have done.

However our falling prices and production capacity will result in the far east consuming the resources we can no longer monitise. The West is going to slowly fade. Get used to it.

post-3701-1186848012_thumb.png

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My guess:

-50%+ in real terms over 5 years

-30%+ in nominal terms over the same period

UK houses never to be as expensive again in our lifetimes...

Well that depends on your age and health, I'm a fifty year ex-smoker but I think there's a fair chance I'll still be around to witness Great Crash III in 2030, when the average house will be more than double today's £200k.

Still, I'm not far from your forecasts for Great Crash II, I see

-40% in real terms by 2012

-20% in nominal terms by 2009

One reasonable forecast though is that if it's going to happen then BTL will surely be the catalyst, and in that case there's a fair chance that Great Crash II could be all about collapsing flat prices, and that houses don't fall nearly as much.

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Well that depends on your age and health, I'm a fifty year ex-smoker but I think there's a fair chance I'll still be around to witness Great Crash III in 2030, when the average house will be more than double today's £200k.

Still, I'm not far from your forecasts for Great Crash II, I see

-40% in real terms by 2012

-20% in nominal terms by 2009

One reasonable forecast though is that if it's going to happen then BTL will surely be the catalyst, and in that case there's a fair chance that Great Crash II could be all about collapsing flat prices, and that houses don't fall nearly as much.

I don't think they will be as expensive again in the lifetimes of anyone reading this forum; as per ?....!'s post of the Federal reserve predictions above: demographics and the transfer of wealth to the east will ensure this.

Nominal terms is impossible to guess - depends on the money helicopters. If for some reason competitive devaluation does not continue, could be over 50% nominal falls.

We shall see :)

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Did you expect the prices to rise 40% in three years then???

Sounds to me thhat you up to you eyeballs in it and the panic is starting, enjoy your trip down and when you get to the bottom and the baliffs are a knocking, dont come to this website because all you will get is I told you so.

:lol::lol:

Oh and by the way enjoy your hat, they dont taste nice every body has to eat humble pie at times and now its yours

Up to my eyeballs in it??? What like owing LESS on my Mortgage than what I've got in cash in the bank?

Yes you're probably right. Fool.

There MAY well be a HPC - I hope so, but quality housing in LARGE areas of this country is NOT going to fall by 40%. In some areas maybe - but I don't think they will be the majority. For many many people in this country a HPC will mean nothing other than there houses have some less abstract value than what they had last week/month/year - so what???

Too many on here seem to think every house on every street will suddenly become available and affordabe to those renting and/or who've missed the boat for one reason or another.

40% crash nationwide - NO chance!

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Up to my eyeballs in it??? What like owing LESS on my Mortgage than what I've got in cash in the bank?

Yes you're probably right. Fool.

There MAY well be a HPC - I hope so, but quality housing in LARGE areas of this country is NOT going to fall by 40%. In some areas maybe - but I don't think they will be the majority. For many many people in this country a HPC will mean nothing other than there houses have some less abstract value than what they had last week/month/year - so what???

Too many on here seem to think every house on every street will suddenly become available and affordabe to those renting and/or who've missed the boat for one reason or another.

40% crash nationwide - NO chance!

When I wanted to know how bad things are going to get, I did some reserch. Have a search on google for housing bubble.

Apparently, we are statistically going to lose 70% of the bubble gains. So, if a house has went up by 100% during the bubble, it will lose 70% of that gain. This is what has happened in other housing bubbles - not my speculation. The question is - when did the bubble begin and how big were the gains?

Atleast people are no longer saying that - there will be no crash. Now the discussion has moved onto - how bad will it be!

Edited by Belfast Boy

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