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Paulo Mancini

The Crash Is Here!

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As a watcher of this website for what must be 3 or so years now, i thought it was about time i posted something!

Ive been waiting and waiting patiently, believing i was right when i said the prices couldnt go on forever and all my friends said the opposite..............but i kept believing, even though its cost me five years renting, i still kept believing.

Im hoping the crash is coming at the right time too as ive just married and my wife is now expecting our first..... i kept telling her, trust me this price madness cant go on forever, but after five years renting, its wearing thin with her, and understandably too.

ANYWAY, the price decreases that i longed for for so long are finally here and i can continue planning my life soon if they continue to fall as quick as they are already are.

I'm very confident now that my time of 'I told you so' will soon come.

The good news is that i'm seeing price decreases DAILY in Hertfordshire, with up to 10-15k being taken off of houses in the 250k-350k bracket in the 15 roads that weve narrowed it down too (yep weve done our homework thats all sorted, we know where we want to live, convenient for our work etc and finally start our nest). The question is, at what point do i jump in, as we'd like to buy somewhere before the little 'un is born. We've saved up a good deposit, but obviously i dont wanna blow all our hard saved cash if the market is going to fall to unprecendented levels. I would love some of your opinions on this. If one of these houses was already reduced from say 300k to 285k what would you realistically offer, without taking the michael, or should i wait til the summer? Also theres 5 houses in the same road that we like for sale- could i play them off against each other, these houses have been sitting on estate agents books for well over a month now and some have been reduced by 10k. Plus ive not known a time in the last 5years where ive seen so many new properties coming onto the market in that area - nothing is selling.

All weve ever wanted was a house to live in, not as an investment. If houses hadnt been so unaffordable i would probably have been a dad at 30 and not 38, so the government must be held ultimately responsible for all this mess and for most of us being older parents to our children.

BUT REJOICE! THE CRASH IS NOW WITH US. FINALLY.

Paulo Mancini

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The good news is that i'm seeing price decreases DAILY in Hertfordshire, with up to 10-15k being taken off of houses in the 250k-350k bracket in the 15 roads that weve narrowed it down too

The question is, at what point do i jump in, as we'd like to buy somewhere before the little 'un is born.

I would love some of your opinions on this. If one of these houses was already reduced from say 300k to 285k what would you realistically offer, without taking the michael, or should i wait til the summer? BUT REJOICE! THE CRASH IS NOW WITH US. FINALLY.

Paulo Mancini

PM - howdy.

Why on earth do you believe you have to buy before Guiseppie arrives? Get a 2 year lease and stop worrying.

Prices will fall as far as we've said they'll fall and possibly further.

What's this nonsense about waiting a few months? Years is what you should wait.

fp

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The good news is that i'm seeing price decreases DAILY in Hertfordshire, with up to 10-15k being taken off of houses in the 250k-350k bracket in the 15 roads that weve narrowed it down too (yep weve done our homework thats all sorted, we know where we want to live, convenient for our work etc and finally start our nest). The question is, at what point do i jump in, as we'd like to buy somewhere before the little 'un is born. We've saved up a good deposit, but obviously i dont wanna blow all our hard saved cash if the market is going to fall to unprecendented levels. I would love some of your opinions on this. If one of these houses was already reduced from say 300k to 285k what would you realistically offer, without taking the michael, or should i wait til the summer? Also theres 5 houses in the same road that we like for sale- could i play them off against each other, these houses have been sitting on estate agents books for well over a month now and some have been reduced by 10k. Plus ive not known a time in the last 5years where ive seen so many new properties coming onto the market in that area - nothing is selling.

Paulo Mancini

Unfortunately this is nowhere near long enough for the owners to be panicking - 8 months perhaps. Also, it's only just dawning on vendors that the party is over. In your shoes I would go round the houses you like making low but not absurd offers - £215 -£225K say. They will be rejected; but keep going to the estate agents and asking if any vendors have changed their minds. The agents desperately want commission; they will see you seriously want to buy and may well start trying to lever the vendors into accepting. Remember, they know which vendors NEED to sell, you don't.

I wouldn't let the fact that you are expecting your first determine this- for a start, for most women there is an incredibly powerful nesting instinct that takes over (usually at about 5 months)and after that the mum-to-be needs heavy machinery to move her from where she is! If it was before she became pregnant it would be a different matter.

I think the ideal time to go in with a low offer is when the house has been on the market 6-9 months. Most vendors will have mentally budgeted for about 2-3 months (unless they are totally detached from reality, in which case they are a waste of time anyway) but by 6-9 despair is setting in. If it's any longer, whatever the reason for moving was, tends to have gone away - if they wanted to move to a particular house, they've lost it; if it was a divorce they've found some way of coping; if they were emigrating they've had to put it on hold.

In the immortal words of John Cleese in "Clockwise" -" It's not the Despair. I can handle the despair. It's the Hope I can't deal with"

In short, hang on in there unless your present accommodation is absolutely impossible. If it is, personally I'd go in with an offer of 250K and be prepared to up it to 260K. And if successful forget about it. DON'T beat yourself up if prices then fall to £200K!!!! You've got what you wanted, enjoy it.

Edited by cartimandua51

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As a watcher of this website for what must be 3 or so years now, i thought it was about time i posted something!

Ive been waiting and waiting patiently, believing i was right when i said the prices couldnt go on forever and all my friends said the opposite..............but i kept believing, even though its cost me five years renting, i still kept believing.

Im hoping the crash is coming at the right time too as ive just married and my wife is now expecting our first..... i kept telling her, trust me this price madness cant go on forever, but after five years renting, its wearing thin with her, and understandably too.

ANYWAY, the price decreases that i longed for for so long are finally here and i can continue planning my life soon if they continue to fall as quick as they are already are.

I'm very confident now that my time of 'I told you so' will soon come.

The good news is that i'm seeing price decreases DAILY in Hertfordshire, with up to 10-15k being taken off of houses in the 250k-350k bracket in the 15 roads that weve narrowed it down too (yep weve done our homework thats all sorted, we know where we want to live, convenient for our work etc and finally start our nest). The question is, at what point do i jump in, as we'd like to buy somewhere before the little 'un is born. We've saved up a good deposit, but obviously i dont wanna blow all our hard saved cash if the market is going to fall to unprecendented levels. I would love some of your opinions on this. If one of these houses was already reduced from say 300k to 285k what would you realistically offer, without taking the michael, or should i wait til the summer? Also theres 5 houses in the same road that we like for sale- could i play them off against each other, these houses have been sitting on estate agents books for well over a month now and some have been reduced by 10k. Plus ive not known a time in the last 5years where ive seen so many new properties coming onto the market in that area - nothing is selling.

All weve ever wanted was a house to live in, not as an investment. If houses hadnt been so unaffordable i would probably have been a dad at 30 and not 38, so the government must be held ultimately responsible for all this mess and for most of us being older parents to our children.

BUT REJOICE! THE CRASH IS NOW WITH US. FINALLY.

Paulo Mancini

If you are buying a house as a home not as an investment why you care if it loses value? :ph34r:

I bet you wished you'd bought 3 years ago!

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Use it too your advantage. I have two children (one of them only two years old) and we have been renting for three years now. You have to get past the must be house owners mentality. Now during this time we have moved once, and we are using this chance to effectively "TRY OUT" the areas we would like to eventually buy in.

We can see what the shops, parks, schools are like. See what the locals are like, just generally get a really good feel for the area without any committments.

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Unfortunately this is nowhere near long enough for the owners to be panicking - 8 months perhaps. Also, it's only just dawning on vendors that the party is over. In your shoes I would go round the houses you like making low but not absurd offers - £215 -£225K say. They will be rejected; but keep going to the estate agents and asking if any vendors have changed their minds. The agents desperately want commission; they will see you seriously want to buy and may well start trying to lever the vendors into accepting. Remember, they know which vendors NEED to sell, you don't.

I wouldn't let the fact that you are expecting your first determine this- for a start, for most women there is an incredibly powerful nesting instinct that takes over (usually at about 5 months)and after that the mum-to-be needs heavy machinery to move her from where she is! If it was before she became pregnant it would be a different matter.

I think the ideal time to go in with a low offer is when the house has been on the market 6-9 months. Most vendors will have mentally budgeted for about 2-3 months (unless they are totally detached from reality, in which case they are a waste of time anyway) but by 6-9 despair is setting in. If it's any longer, whatever the reason for moving was, tends to have gone away - if they wanted to move to a particular house, they've lost it; if it was a divorce they've found some way of coping; if they were emigrating they've had to put it on hold.

In the immortal words of John Cleese in "Clockwise" -" It's not the Despair. I can handle the despair. It's the Hope I can't deal with"

In short, hang on in there unless your present accommodation is absolutely impossible. If it is, personally I'd go in with an offer of 250K and be prepared to up it to 260K. And if successful forget about it. DON'T beat yourself up if prices then fall to £200K!!!! You've got what you wanted, enjoy it.

I agree with all the above-just to, add mother with child is terribly emotive thing for the father to deal with-well it was for me anyway-you always think you are letting them down if she doesn't feel happy and relaxed,I was refurbing when the first was on the way.

My thinking is that at that stage-and not to sound chauvanist- try to stand firm in this maelstrom of hormones and think with your head.

The urge to get buying and get everthing sorted is overwhelming ,especially after waiting for so long -but as you know from this site ,in purely financial terms later on you may regret not waiting as long as feasibly possible.A difficult position-but good luck with it all

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Guest KingCharles1st

Thing is Paulo- living in Herts too I see the house price madness every day.

I also see a situation looming fast- WEA RE NOW DEFINITELY IN THE DENIAL STAGE

People will deny the fact they can't pay, or the fact the c.c. company calls their loan in. this is happening now, and nothing is going to get any easier for joe public. Next door to me, I have a 1 year old home that is actually quite a nice little two bed for a couple or very small family. After the people who bought it (mortgage advisor and hairdresser wife) got rid of it after trading up to a bigger place on a new estate by dint of some sort of house swap with new estate builder) it was put on the market for the builder by the EA for 210K. they reduced it to 199K in October- and it has sat there unviewed ever since. It is WAY overpriced- Places like this have to be worth around 150 absolute max- realistically not much over the 120-140 it would have been three years ago to be honest.

There have to be places like this all over Herts, you have a deposit- flash it- go into all the EA's, make crazy offers on places- see what the raction is- even leave a photocopied slip with your name address and renting details and credit record on it- but SCREW them- SCREW THEM down into the dirt- walk out wit hyour head high and let THEM CALL YOU- Tell them what YOU want to pay, and just to really rub it in- put them on YOUR mailing list- ho ho

Edited by KingCharles1st

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Guest Steve Cook

Hello Paulo

My advice is the following:

If you can manage to stay comfortable enough in your present reneted home, you should stay put for another year at least. Yes, you will be continuing to pay "dead" money to the landlord. However, I am confident that the accelerating crash that has now undoubtably started will easily outstrip such losses to rent....by a massive margin...

I think that we are now looking at the very real possibility of 30%....40% or even greater lossess in value to real estate over the next 12 to 24 months

The whole point of your not considering buying before now is because you thought that this house of cards would eventually collapse. You were correct. The collapse, though, has only just begun.

Keep the faith in your original motivations for your actions. Good luck to you.

Steve

Edited by Steve Cook

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I know it is tempting as soon as you see falls to wade in with a warm glow of contentment at the tens of thousands you've saved. But of course this downtrend in prices has about 18 months to go so that warm glow will soon fade when next door sells in a years time for much less than you paid..

Why don't you find somewhere really nice to rent even if its quite a bit more expensive - I think the savings over the next 12 - 18 months will prove more than worthwhile.

The tightening of mortgage lending criteria didn't really happen much until Feb and so I don't think the full credit tightening effects have yet been seen in the market. People coming off fixed rates starts in earnest in March, April and May 08 but you'll need to let them struggle for a few months before they start defaulting in a manner which will lead to repossession. This time next year the Spring Bounce won't have materialised for the second year and that's when I think widespread bargains will be seen in all area and price brackets. Of course by then you may well need MORE than a 10% deposit to get the best deals but if the next year allows you to save such a deposit you will be an even stronger position.

Try sitting down with the Mrs with a paper and pencil and run the number on saving say 15% off your current ideal home. Then show how much lower the mortgage payments would be. Then show how that money would grow tax free in a Child Trust Fund. Point out that little Henry will be oblivious to where he slept his first 365 nights on Earth but sure as hell will benefit from having £1200 a year for 18 years compounded into a healthy sum with which to buy his first home...

ANDY

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If you are buying a house as a home not as an investment why you care if it loses value? :ph34r:

I bet you wished you'd bought 3 years ago!

Because many of the people who bought 3 years ago did so by over-stretching themselves when rates were low. They're feeling the pinch now and, IMHO, will see prices fall to waaaay below what they paid for those homes.

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If you are buying a house as a home not as an investment why you care if it loses value? :ph34r:

I bet you wished you'd bought 3 years ago!

Yes, 2005 would have been a good time to buy ... in a way. Prices in Hertfordshire in 2005 were WELL BELOW 2003 levels (following the 5 interest rate rises and the stalling of the market) and have recovered now to 2003 levels.

If you believe the VI lies and spin you will argue that this is not true. It isn't true in London. That much is true. Prices in London have continued to rise - until very recently. But in the South East - the indices I look at show that house prices in the Home Counties are pretty much level NOW with where they were in 2003. If they have gone up at all, it is certainly less than inflation.

So, for someone buying in Hertfordshire, not buying in 2005 is not the end of the world. Property in Hers may have 'gone up' by 10" to 15% between 2005 and now. BUT, it really does look now as if property is going to have to go down to normal affordability levels - courtesy of the credit crunch. I think prices will halve over the next few years and the OP should take FP's advice and negotiate a 2 year lease and sit tight.

Madness to buy now. Absolute madness.

And to the person who said 'if you're buying as a home, not an investment - who cares if the price goes down' I would say 'That's fine if you have absolute certainty you won't lose your job in the forthcoming recession. If your job is bullet proof, and you think your health is too ... i.e. if you are absolutely convinced that come what may you can pay your mortgage then, fine, go ahead. But if you can't ... I saw a lot of people who had never been unemployed in their life made redundant in the last crash (me included) and, at the time, I was bloody glad I had sold up and downsized when I saw the storm approaching.

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dont quite understand this one: youve waited for 5 years whilst HPI has run at around 15%+ each year

Oh dear ... absolute, complete, total BOLLOXX!

5 years at 15%.

So we start at the property I sold for 400k 5 years ago and add 15% a year do we?

400k

Year 1 460k

Year 2 529k

Year 3 608k

Year 4 699k

Year 5 804k

As you can see 15% a year means property prices double every 5 years!. Which is bloody odd. A house 3 doors along from my old one is on the market now for £415k - and has been on the market for about 4 months with no takers. Wonder why they are SELLING IT FOR HALF PRICE.

It may be true that desirable London property has doubled in the last 5 years - the sort you need to be a millionaire to own. But, for 99% of the country, the aggregate situation over the last 5 years is that prices are about the same as they were 5 years ago.

And please don't point me to any VI charts. I prefer the 'what can't speak can't lie' indices of actual selling prices. None of the VI indices showed the price FALLs in this area in 2004/5. Which is weird because houses in the 400k-500k were having to drop best part of a HUNDRED GRAND to sell.

New flats on the market for £230k eventually sold 12 months after completion for £180k etc. None of this shows up anywhere.

If your picture of the housing market is formed by what the Nationwide, Halifax and Estate Agents tell you ... then you truly do believe in fairies.

Edited by Lets' get it right

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As a watcher of this website for what must be 3 or so years now, i thought it was about time i posted something!

Ive been waiting and waiting patiently, believing i was right when i said the prices couldnt go on forever and all my friends said the opposite..............but i kept believing, even though its cost me five years renting, i still kept believing.

Im hoping the crash is coming at the right time too as ive just married and my wife is now expecting our first..... i kept telling her, trust me this price madness cant go on forever, but after five years renting, its wearing thin with her, and understandably too.

ANYWAY, the price decreases that i longed for for so long are finally here and i can continue planning my life soon if they continue to fall as quick as they are already are.

I'm very confident now that my time of 'I told you so' will soon come.

The good news is that i'm seeing price decreases DAILY in Hertfordshire, with up to 10-15k being taken off of houses in the 250k-350k bracket in the 15 roads that weve narrowed it down too (yep weve done our homework thats all sorted, we know where we want to live, convenient for our work etc and finally start our nest). The question is, at what point do i jump in, as we'd like to buy somewhere before the little 'un is born. We've saved up a good deposit, but obviously i dont wanna blow all our hard saved cash if the market is going to fall to unprecendented levels. I would love some of your opinions on this. If one of these houses was already reduced from say 300k to 285k what would you realistically offer, without taking the michael, or should i wait til the summer? Also theres 5 houses in the same road that we like for sale- could i play them off against each other, these houses have been sitting on estate agents books for well over a month now and some have been reduced by 10k. Plus ive not known a time in the last 5years where ive seen so many new properties coming onto the market in that area - nothing is selling.

All weve ever wanted was a house to live in, not as an investment. If houses hadnt been so unaffordable i would probably have been a dad at 30 and not 38, so the government must be held ultimately responsible for all this mess and for most of us being older parents to our children.

BUT REJOICE! THE CRASH IS NOW WITH US. FINALLY.

Paulo Mancini

Sit tight. In six months time you'll have more to choose from, and will have saved thousands more. Think of it as 'earning' a large amount of money each money that you will 'collect' when you buy.

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Paulo,

You asked for advice, so here it is;

I envisage house prices falling for the next 3 or 4 years, resulting in a drop of around 40% overall.

So, find yourselves a nice rented house, raise your kiddy and maybe make another one. Put aside as much money as possible (!) and get ready to buy in about 4 years time.

What's the rush?

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Keep renting, keeping earning interest on your savings, and whatever you do, please wait until prices are at least below the 3% stamp duty threshold to ensure Darling doesn't get all your hard earned and saved money.

Show your good lady these websites - there are plenty of us here that are renting with a view to buying at the bottom of the crash, and many of us have families too. Personally, having been a home owner, I love renting - no stamp duty on moving, no costs when fixing the property, no urges to spend money 'doing up' the place, loads of money in the bank, low cost compared to buying, and best of all, watching the HPC is just great fun.

Hold on in there!

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  • 298 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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