How far will house prices fall [volume 4]

[p1stonhead]

Magog said:

Sheepshanks said:

p1stonhead said:

Exactly.

Also, the people I am talking about have mostly already made masses of money through rising property prices over the last 30 years. Some downsized and put money into pensions and have big pots waiting to go. Undoubtably some will be able to buy a few.

It may prop things up for a while I think especially for cheaper properties which again, is what FTB's are trying to get - they just wont be able to compete with cash rich older people unfortuantely.

I suppose it depends on where you (it needs to be local if people are going to want to touch and feel and it) but for "old" people, do the net yields on BTL make sense?

Presumably with BTL property, it also gives those of pensionable age the chance of handing down a capital asset to their children in a manner that isn't possible if they've simply purchased an annuity.

Id say a lot will be going straight into the names of their children.

[Sheepshanks]

p1stonhead said:

Id say a lot will be going straight into the names of their children.

Really? That's a can of worms.

[Justayellowbadge]

Magog said:

Presumably with BTL property, it also gives those of pensionable age the chance of handing down a capital asset to their children in a manner that isn't possible if they've simply purchased an annuity.

I believe pensions can, post reform, be handed to beneficiaries and are outside of IHT.

[Mark Benson]

Magog said:

Sheepshanks said:

p1stonhead said:

Exactly.

Also, the people I am talking about have mostly already made masses of money through rising property prices over the last 30 years. Some downsized and put money into pensions and have big pots waiting to go. Undoubtably some will be able to buy a few.

It may prop things up for a while I think especially for cheaper properties which again, is what FTB's are trying to get - they just wont be able to compete with cash rich older people unfortuantely.

I suppose it depends on where you (it needs to be local if people are going to want to touch and feel and it) but for "old" people, do the net yields on BTL make sense?

Presumably with BTL property, it also gives those of pensionable age the chance of handing down a capital asset to their children in a manner that isn't possible if they've simply purchased an annuity.

We're also talking about unmortgaged, so yields are somewhat higher than your average BTL......

My wife has her old house rented out on a BTL repayment mortgage with 10 years or so to run, the rent covers the payments and provides a small income for repairs etc. Currently in real terms the yield doesn't really make sense but the real benefit will come when we retire when the £500pcm less running costs will be an income, not servicing a mortgage.

[p1stonhead]

Sheepshanks said:

p1stonhead said:

Id say a lot will be going straight into the names of their children.

Really? That's a can of worms.

Is it? Why?

[AstonZagato]

I know one son who is suing his parents for the cash equivalent of his share of a house they built together (he has 1/3rd in his name). He wants to buy his own place.

Any divorce of your offspring also becomes a minefield.

[Sheepshanks]

p1stonhead said:

Is it? Why?

As mentioned above, divorce. Could be just the ticket the kids other half is waiting for.

Could also be tricky if the parents circumstances change and they need to realise the capital and the kids aren't keen to see their inheritance spent.

Tax treatment of the income gets messy.

[Sheepshanks]

Mark Benson said:

We're also talking about unmortgaged, so yields are somewhat higher than your average BTL......

Well, yields are usually expressed as percentages so whether it's mortgaged or not doesn't make any difference.

Mark Benson said:

My wife has her old house rented out on a BTL repayment mortgage with 10 years or so to run, the rent covers the payments and provides a small income for repairs etc. Currently in real terms the yield doesn't really make sense but the real benefit will come when we retire when the £500pcm less running costs will be an income, not servicing a mortgage.

Sure - if you bought a while ago then the yield (as a percentage) looks great against the original purchase price. The house behind me is still owned by its original 1967 purchases who paid £4000 for it. It rents solidly for £800/mth now so that's pretty good against £4K. It's not so clever against its current value of nudging £300K but she's resisted all attempts to get her to sell.

[Mr Whippy]

anonymous said:

[redacted]

This is why all those sites and their numbers are just arse.

Even in higher turnover areas, most houses are too different. Outlooks, neighbours, quality of interior yadda yadda.

The people who bugger things up are those who buy and pay more cos zoopla says they should, so they self fulfill the rising prices prophecy...

And in the end it's all irrelevant.

Own a home, not an investment, and prices could fall 75% tomorrow and it shouldn't make any material difference to any sensible home owners except give them more freedom.
But too many idiots believe rising prices are good for them! Nope, only for investors riding the bull.

Personally I hope the lot crash 50% in affordability terms.

[anonymous-user]

Mr Whippy said:

anonymous said:

[redacted]

This is why all those sites and their numbers are just arse.

Even in higher turnover areas, most houses are too different. Outlooks, neighbours, quality of interior yadda yadda.

The people who bugger things up are those who buy and pay more cos zoopla says they should, so they self fulfill the rising prices prophecy...

And in the end it's all irrelevant.

Own a home, not an investment, and prices could fall 75% tomorrow and it shouldn't make any material difference to any sensible home owners except give them more freedom.
But too many idiots believe rising prices are good for them! Nope, only for investors riding the bull.

Personally I hope the lot crash 50% in affordability terms.

In your dreams lol! Anyway, the HPC website is waiting for you

[Justayellowbadge]

I see no downside whatsoever to owing the bank £750,000 on an asset that is suddenly worth £250,000.

Clearly it would make no material difference to the financial systems of the country either.

Just more freedom.

And rainbows, unicorns and kittens.

[Ari]

If you're happy with the payments so what? It still keeps the rain off the same no matter what nominal figure someone puts on it.

[Justayellowbadge]

Ari said:

If you're happy with the payments so what? It still keeps the rain off the same no matter what nominal figure someone puts on it.

Seriously?

Because every bank will be fathoms underwater on their loan books. So they fail.

It's what caused the financial crisis.

UK residential property is currently valued at circa 6 trillion sterling.

A 75% drop makes 4.5 Trillion pounds simply vanish.

4.5 Trillion gone.

It would galactically screw us all.

Cheaper houses for everyone doesn't help when everyone is eating each other in the blood drenched streets, human sacrifice, cats and dogs living together...

Edited by Justayellowbadge on Friday 1st May 23:44

[Pork]

Ari said:

If you're happy with the payments so what? It still keeps the rain off the same no matter what nominal figure someone puts on it.

I agree with the sentiment, unfortunately no only would it kill the economy it will kill dinner party conversations up and down the land. The Brits, particularly those aged above 40 ish, are obsessed with how 'well' they've done out of property.

I think a drop would be good for the market, longer term, but how much is open for debate.

[Ari]

Justayellowbadge said:

Seriously?

Because every bank will be fathoms underwater on their loan books. So they fail.

It's what caused the financial crisis.

UK residential property is currently valued at circa 6 trillion sterling.

A 75% drop makes 4.5 Trillion pounds simply vanish.

4.5 Trillion gone.

It would galactically screw us all.

Cheaper houses for everyone doesn't help when everyone is eating each other in the blood drenched streets, human sacrifice, cats and dogs living together...

You've fallen for the scam that is (or was, during the mega boom time) the British economy - that house value is somehow wealth. It isn't.

My house has gone up over £100,000 since I bought it. Am I £100,000 better off? Of course not.

I still earn what I earn, pay what I pay and my house keeps the rain off. And if it drops £100,000 of that mythical money I never had, so what? You can point to a computer screen and scream that me and millions like me are collectively trillions of pounds 'worse off' but we're not, and more than we were trillions of pounds better off when our houses soared to these stratospheric prices.

Sure, I could sell it, stick the £100,000 in the bank and live in a tent. But I'm not going to do that, I'm going to buy another house, and guess what? And if I'm upgrading then the £100,000 I've made will be more than offset by the £200,000 the house I want has gone up in the same time.

Its all a big con, no one is really 'richer' because of rampant house price inflation, save for a few developers and estate agents. They're just made to believe that they are so they'll borrow more money and lease a bigger Audi.

I'm old enough to remember the eighties boom/nineties crash. I bought a property for 40% off the peak in the early nineties. It dropped that much in four years! Don't recall any blood drenched streets...

[Ari]

Pork said:

I agree with the sentiment, unfortunately no only would it kill the economy it will kill dinner party conversations up and down the land. The Brits, particularly those aged above 40 ish, are obsessed with how 'well' they've done out of property.

I think a drop would be good for the market, longer term, but how much is open for debate.

There is a theory that the economy is already dead, it's just being kept alive by artificial means. And that eventually we'll run out of electricity to power the machines...

As to how much of a drop is open to debate - I'm not sure we'll get a say in it.

[Sheepshanks]

Ari said:

There is a theory that the economy is already dead, it's just being kept alive by artificial means. And that eventually we'll run out of electricity to power the machines...

I think people should think seriously about whether it's a good idea to bring children into the world now.

[wc98]

Ari said:

You've fallen for the scam that is (or was, during the mega boom time) the British economy - that house value is somehow wealth. It isn't.

My house has gone up over £100,000 since I bought it. Am I £100,000 better off? Of course not.

I still earn what I earn, pay what I pay and my house keeps the rain off. And if it drops £100,000 of that mythical money I never had, so what? You can point to a computer screen and scream that me and millions like me are collectively trillions of pounds 'worse off' but we're not, and more than we were trillions of pounds better off when our houses soared to these stratospheric prices.

Sure, I could sell it, stick the £100,000 in the bank and live in a tent. But I'm not going to do that, I'm going to buy another house, and guess what? And if I'm upgrading then the £100,000 I've made will be more than offset by the £200,000 the house I want has gone up in the same time.

Its all a big con, no one is really 'richer' because of rampant house price inflation, save for a few developers and estate agents. They're just made to believe that they are so they'll borrow more money and lease a bigger Audi.

I'm old enough to remember the eighties boom/nineties crash. I bought a property for 40% off the peak in the early nineties. It dropped that much in four years! Don't recall any blood drenched streets...

spot on.

[Justayellowbadge]

wc98 said:

Ari said:

You've fallen for the scam that is (or was, during the mega boom time) the British economy - that house value is somehow wealth. It isn't.

My house has gone up over £100,000 since I bought it. Am I £100,000 better off? Of course not.

I still earn what I earn, pay what I pay and my house keeps the rain off. And if it drops £100,000 of that mythical money I never had, so what? You can point to a computer screen and scream that me and millions like me are collectively trillions of pounds 'worse off' but we're not, and more than we were trillions of pounds better off when our houses soared to these stratospheric prices.

Sure, I could sell it, stick the £100,000 in the bank and live in a tent. But I'm not going to do that, I'm going to buy another house, and guess what? And if I'm upgrading then the £100,000 I've made will be more than offset by the £200,000 the house I want has gone up in the same time.

Its all a big con, no one is really 'richer' because of rampant house price inflation, save for a few developers and estate agents. They're just made to believe that they are so they'll borrow more money and lease a bigger Audi.

I'm old enough to remember the eighties boom/nineties crash. I bought a property for 40% off the peak in the early nineties. It dropped that much in four years! Don't recall any blood drenched streets...

spot on.

It's borderline valid, of you are talking about an individual, in an unmortgaged house.

I wasn't.

[Ari]

Justayellowbadge said:

It's borderline valid, of you are talking about an individual, in an unmortgaged house.

I wasn't.

Fine. So you're fifteen years in to the mortgage on a house you bought in 2000 for £150,000 now worth, what, £250,000?

Tomorrow property values tank, suddenly - shock horror - it's 'only' worth £200,000.

So what?

On Tuesday you'll go to work and when you get home it will still be there, keeping the rain off your head. At the end of the month you'll get paid, that months mortgage payment will go out, and you'll maybe pop out for a pint and a pie. Your wife will continue to look at the holiday brochures and when the PCP runs out in your Audi in eighteen months you'll get a new one, maybe upgrade to a Sportline.

The world will keep turning, streets won't run with blood, and cats and dogs will maintain casual indifference toward each other.

As the youngsters would have it - meh.