How far will house prices fall before hitting the bottom?

[CIS121]

The IMF believes they're 40% overvalued:
http://business.timesonline.co.uk/tol/business/mon...

Looking at all teh stats such as returns on rental properties, prices against salaries etc 40% looks about right, but I don't think it will fall that far.

I'd put my money on 20-30% down over the next 2 years.

[Simpo Two]

It all depends on what people can afford. IMHO the real cost of a house is not the price on the tag, but how much a month the mortgage costs. If interest rates go up, prices generally go down and vice versa.

[Trax]

I think I can safely bet my house on the fact that prices will not decrease, they will just stop increasing as much.

[Vesuvius 996]

Trax said:

I think I can safely bet my house on the fact that prices will not decrease, they will just stop increasing as much.

Still taking the drugs, then Trax?




A million people last month admitted PAYING THEIR MORTGAGE WITH THEIR CREDIT CARD. What does that tell you?

Edited by Vesuvius 996 on Thursday 18th October 18:02

[Gorvid]

Vesuvius 996 said:

What does that tell you?

That they are fools. But there will be no crash

[pistonbroke PHd]

Might be worth watching a programme on BBC2 tonight (assuming it's not a repeat ) called 'The Truth About Property' which may address this question.

It's at 8pm I think

[ypauly]

its very hard to guess but thats all anybody
can do but if you throw the fact that gordon (the dictator) brown wants to build the equivelant of a city the size of liverpool every year for the next 13 years
that not only will they lose maybe 20- 30% that they will stay at that price fo a long time to com

[FourWheelDrift]

Vesuvius 996 said:

Trax said:

I think I can safely bet my house on the fact that prices will not decrease, they will just stop increasing as much.

Still taking the drugs, then Trax?



A million people last month admitted PAYING THEIR MORTGAGE WITH THEIR CREDIT CARD. What does that tell you?

What has that got to do with house values going up or down? That's just people not having the money to cover their mortgage which has either gone up (not a fixed rate mortgage) or they are people living on their credit cards and experiencing the credit carousel of constantly paying back interest which builds up.

[ronaldmacdonald]

pistonbroke PHd said:

BBC...'...Truth...'

Interesting concept.

[Vesuvius 996]

FourWheelDrift said:

Vesuvius 996 said:

Trax said:

I think I can safely bet my house on the fact that prices will not decrease, they will just stop increasing as much.

Still taking the drugs, then Trax?



A million people last month admitted PAYING THEIR MORTGAGE WITH THEIR CREDIT CARD. What does that tell you?

What has that got to do with house values going up or down? That's just people not having the money to cover their mortgage which has either gone up (not a fixed rate mortgage) or they are people living on their credit cards and experiencing the credit carousel of constantly paying back interest which builds up.

Well, it means that they are struggling. Which means that they'll get repo'd. Which means cheap proerty.

[CIS121]

ypauly said:

its very hard to guess but thats all anybody
can do but if you throw the fact that gordon (the dictator) brown wants to build the equivelant of a city the size of liverpool every year for the next 13 years
that not only will they lose maybe 20- 30% that they will stay at that price fo a long time to com

There are a lot of factors that are causing the correction, but a big contributor is that almost 40% of purchasers are buy to Letters and these are now dried up with teh falling market. This lack of buyers along with others who are renting plus the other factors such as pricier mortgages, dreadful Buy to let returns that don't make business sense etc are going to ensure a meaty drop.

Agreed, nobody knows how far it will drop, hence the topic of this post as I'm interested by people's opinions on this.

[kiwisr]

Just to add, I read the other day that close to 700,000 mortgage applications had been refused in the last 6 or so months. A 60% rise in the normal amount of refusals.

Baically that would have stopped 200,000 house purchase transactions so surely that would have an effect on the market?

[Broccers]

swerni said:

shit what a great idea!!

Interest free credit card for a year.
Put the cash in a high interest account
bobs your uncle and fannies your aunt.

quid in

a million people can't be wrong

The end is nigh I tell thee. I see no crash coming anytime soon - when Labour put up stamp duty thresholds in their next budget this will help fo sho.

[andy400]

There may yet be a crash, and I'm certainly no expert, but...

Weren't we/they all saying the same thing last year, and the year before, and the year before, and the year before....?

[Fort Jefferson]

pistonbroke PHd said:

Might be worth watching a programme on BBC2 tonight (assuming it's not a repeat ) called 'The Truth About Property' which may address this question.

It's at 8pm I think

CONSUMER: The Truth about Property
On: BBC 2 Midlands (02)
Date: Thursday 18th October 2007
Time: 20:00 to 21:00 (1 hour long)

A new three-part series on the difficulties of buying a home. Getting on and staying on the property ladder has never been so difficult. Whether you are buying, selling or trying to keep up with the mortgage payments no-one seems certain where the market is headed. Andrew Verity travels the country discovering just how far homebuyers stretch themselves to get on the ladder and questions if they are wise to do so now. And he meets those already there battling to keep their homes.
(Stereo, Widescreen, Subtitles)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Excerpt taken from DigiGuide - the world's best TV guide available from http://www.getdigiguide.com/?p=1&r=88555

Copyright (c) GipsyMedia Limited.

[Herman Toothrot]

I can't see them dropping, levelling out yes, I think we are at the higest they will go, but drop no.

Supply and demand + people who have bougft in the last year or two simply won't move so houses will not be on the market as much limiting choice furthur.

[Chainguy]

kiwisr said:

Just to add, I read the other day that close to 700,000 mortgage applications had been refused in the last 6 or so months. A 60% rise in the normal amount of refusals.

Baically that would have stopped 200,000 house purchase transactions so surely that would have an effect on the market?

Exactly. This is because the lenders know a crash is coming, and a sore one at that, and feel they are not going to get the money back they have lent if property X which they lent some fool £200k to buy is now worth £150k at auction.

A lot of people in this country have never had to live through a recession. They are about to find out what that is like when you do.

So, if your some metrosexual pleb who earns 14k PA and who has been spending 25K PA for the last 4 years, and who is looking for mummy and daddy to MEW to sort your life out.......oh dear

As for all the suckers who got ocean finance in to bale their asses out...oh dear again. They have been steadily increasing the rates on the loans, so hello repo city.

Its the same old game, all over again. Banks allow cheap money into the system, people borrow what they cant pay back. Banks then get to repo the property and own more of the country, and boost their fat profits. Then repeat to fade.

But then, the muppets that is the public in this country who get a hard on because their house is 'worth' 250K dont care that they are servicing a 250k DEBT that means they dont get to eat out 5 times a week like you can in other, less 'developed' countries, oh, and you have to wear lovely Tesco clothes because the cash you'd like to spend at Ted Baker is for paying your day to day living costs debt. But lets laugh at the foreigner when we go to Poland for example, anyways.

As Mervyn King, Governor of the BOE said, house prices are a matter of speculation, but DEBT is very real.

[cptsideways]

I thought our place was on the verge of expensive 6 years ago, going by my then income, calculations if the interest rate went up, bit of leeway if things went wrong etc. If I was buying now the criteria has'nt changed a lot tbh. So I'd say our house is overvalued by at LEAST 50% on that basis alone.

I will be the least surprised when it all comes crashing down to year 2000 levels.

[Chainguy]

cptsideways said:

I thought our place was on the verge of expensive 6 years ago, going by my then income, calculations if the interest rate went up, bit of leeway if things went wrong etc. If I was buying now the criteria has'nt changed a lot tbh. So I'd say our house is overvalued by at LEAST 50% on that basis alone.

I will be the least surprised when it all comes crashing down to year 2000 levels.

I feel the same. I honestly think property in this country is overvalued by 50%, and genuinely can see it coming down to half todays valuations. But then, thats heresay, yeah? Can never happen.

Happened before, not so long ago, in both Classic Cars and property.

Christ, i as in Hawaii in August. A two bed, beachfront apartment, was £77k. Compare that to most of the UK.

[Risotto]

Even if they drop 30%, that just means prices will be the same as they were three or four years ago - when everyone was complaining how expensive houses were!