Just when is the housing market gonna crash ?
Discussion
I don't think the housing market is going to crash because of the shortage of affordable homes/low increases in wages etc etc.
I actually think it will happen when everyone (and it nearly is everyone with a house) gets to the absolute limit of affordability on credit cards/loans/extended mortgages that is fuelling the consumer boom and realises they have no capital left in the house to spend, that the Barclaycard repayments mean there's no bread on the table and the £5,000 plasma tv that now adorns the lounge wall may well be repossessed, people will reign in the spending, realise they can't move and demand for houses will decrease.
However, I don't think there'll be a 'correction' the scale of the early 90s. There'll be a gentle downturn as seen currently in London & South East when prices get 'too' silly.
Edited to say I have just cut up all my credit cards, added the debt to my mortgage and are now about £350 a month better off... won't be moving in a while!
>> Edited by wanty1974 on Wednesday 29th October 10:51
I actually think it will happen when everyone (and it nearly is everyone with a house) gets to the absolute limit of affordability on credit cards/loans/extended mortgages that is fuelling the consumer boom and realises they have no capital left in the house to spend, that the Barclaycard repayments mean there's no bread on the table and the £5,000 plasma tv that now adorns the lounge wall may well be repossessed, people will reign in the spending, realise they can't move and demand for houses will decrease.
However, I don't think there'll be a 'correction' the scale of the early 90s. There'll be a gentle downturn as seen currently in London & South East when prices get 'too' silly.
Edited to say I have just cut up all my credit cards, added the debt to my mortgage and are now about £350 a month better off... won't be moving in a while!
>> Edited by wanty1974 on Wednesday 29th October 10:51
It was on the news last night that many mortgage brokers have been 'bending' the rules for self-certification, some people had 10x mortgages (
) and basically defrauding the lenders by overstating salaries. The undercover reporter managed to get a £220,000 mortgage with a £35k deposit and a £30k annual salary! I think this partly explains why prices keep going up, it appears that people are really overstretching themselves. If interest rates start to rise, which they almost certainly will soon, lots of people will be properly screwed. I don't think anyone can say when it will crash, I think it will be more of a gradual decline rather than a crash, but as GTA says if you look at the long term prices will always rise (although this will be no comfort when your mortgage payments are rising ££££ every month!).
) and basically defrauding the lenders by overstating salaries. The undercover reporter managed to get a £220,000 mortgage with a £35k deposit and a £30k annual salary! I think this partly explains why prices keep going up, it appears that people are really overstretching themselves. If interest rates start to rise, which they almost certainly will soon, lots of people will be properly screwed. I don't think anyone can say when it will crash, I think it will be more of a gradual decline rather than a crash, but as GTA says if you look at the long term prices will always rise (although this will be no comfort when your mortgage payments are rising ££££ every month!).elms said:
I'm not disagreeing with anyones opinion on here but would like to know as i'm in the process of house hunting, but how can anyone be confident that they wont crash?
Where are you looking?
I don't think interest rates are going to hit the 10-15% seen in the 70s & 80s but even a 0.5% increase will bugger the people on 6x salary mortgages (and above!)
This morning at 9.30 am the offficial mortgage figures were out;
data is official released by the bank of England.
"UK sept mortgage lending up £8.8 bln VS aug £7.7 bln"
"Uk september mortgage approvals highest on record"
Ok people may be taking equity out of their houses,but i would imagine that the majority of these new mortgages fuel housing purchases ahead of the seasonally quit period we are coming into..
Supply vs demand,,,,all the time there is this demand for mortgages,you are not likely to see much of a correction lower in house prices
data is official released by the bank of England.
"UK sept mortgage lending up £8.8 bln VS aug £7.7 bln"
"Uk september mortgage approvals highest on record"
Ok people may be taking equity out of their houses,but i would imagine that the majority of these new mortgages fuel housing purchases ahead of the seasonally quit period we are coming into..
Supply vs demand,,,,all the time there is this demand for mortgages,you are not likely to see much of a correction lower in house prices
agent006 said:
It'll only crash when people stop buying at silly prices.
From:
"£210k for a studio flat? bargain"
to:
"Dont be so stupid, it's a studio flat"
My Mum worked for Barnard Marcus in London in the late 80s (boom time, allegedly, oh, and lots of ponces in 911s) She sold a studio flat in Knightsbridge that was (no word of a lie) 10x12 foot with 6x4 foot shower room and 2x3 'alcove' kitchen for £170,000. That was in 1988.
In 1993 it sold for £85,000.
As has been said any crash will come when the absolute limit of debt serviceability has been met and passed by the consumer masses partnered by, ironically ,an improvement in the economy giving rise to inflation and interest rates going up to curb excess inflation.
Alternatively the collapse of the first-time buyer end of the market as prices escalate beyond what is even remotely affordable to well earning working couples.
Alternatively the collapse of the first-time buyer end of the market as prices escalate beyond what is even remotely affordable to well earning working couples.
You should look to the last time -ve equity hit. There was a correlation between the cost of lending and the cost of housing. My perception is that within the next 18 - 24 months we will see a base rate rise of ~1% which should be enough to swing housing back. Housing will probably find a new balance at <10% lower than prior to the base rate change. Quite rightly there will be significant variation between area and housing type with the higher end of the market seeing the biggest fall.
Ultimately if you want to buy a home then do it. If you want long-term investment then buy into middle-east construction or banking.
Ultimately if you want to buy a home then do it. If you want long-term investment then buy into middle-east construction or banking.
I would agree with those who believe the housing market will not crash. Some areas that have seen ludicrous appreciation over the last few years may correct downwards but over a five year period will still have shown an overall appreciation.
I do NOT think we will see appreciation levels of the late 90s for some time to come. Reason being until the economy starts delivering larger disposable incomes to first-time buyers again (which with the tax rises we've seen would take a lot) the "first-house" market cannot boom. That has a knock-on effect up the value chain as those selling "first-house" properties are unable to sell at the price they need to purchase the next property...
Factors which affect the disposable funds for property purchase upwards are still having a greater and greater effect though - vis two income families now the norm, smaller number of children inheriting more valuable properties and so on...
To sum up: No crash. No new boom either. Not for some time I expect.
I do NOT think we will see appreciation levels of the late 90s for some time to come. Reason being until the economy starts delivering larger disposable incomes to first-time buyers again (which with the tax rises we've seen would take a lot) the "first-house" market cannot boom. That has a knock-on effect up the value chain as those selling "first-house" properties are unable to sell at the price they need to purchase the next property...
Factors which affect the disposable funds for property purchase upwards are still having a greater and greater effect though - vis two income families now the norm, smaller number of children inheriting more valuable properties and so on...
To sum up: No crash. No new boom either. Not for some time I expect.
:fingerscrossedsmiley:
never. never ever. please.
As pensions are rapidly becoming worth less that two balloons and a goldfish i have wisely
invested in property for my future. so in answer to your question. never. otherwise i am royally screwed. i thank you.
other not so wise investments include fast cars... must stop that crap...
never. never ever. please.
As pensions are rapidly becoming worth less that two balloons and a goldfish i have wisely
invested in property for my future. so in answer to your question. never. otherwise i am royally screwed. i thank you. other not so wise investments include fast cars... must stop that crap...
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