How far will house prices fall [volume 4]

[turbobloke]

superkartracer said:

kingston12 said:

turbobloke said:

We're close to resembling that remark! Empty nesters with more bedrooms than we need but in no particular hurry to swap bedroom space for garage space. Not just yet anway

One guy I know who is a lot older is going to have to start paying out for gardeners and cleaners for his big place that he probably wouldn't if he downsized. It is still an investment in a way, because it will cost him less in a week than his house has been appreciating in a day!

Chap next to me has just dropped dead @ 58 , he was holding onto his 8 bedroom manor house hoping a gain more money , it's on the market for 2.5 million , but he's dead .

I know/knew many people that have made the same assumptions of living a long heathy life .

A valid point. While in general one of the problems associated with inadequate planning for the future involves under-estimating lifespan and the period of time which must be financed from a pension and/or savings, this is statistical talk and on an individual basis a number can be up at any time. If it was materially important and a critical risk rather than icing on the cake then taking action a bit sooner would make sense.

[superlightr]

kingston12 said:

p1stonhead said:

Also moving areas can mean you can use increased equity to get a bigger place. Unless you are firmly stuck in a reasonably small zone, its perfectly possible even in the South East (ive done it).

Sorry to labour this point, but I am genuinely interested.

I can see what you mean, but doesn't it make you worse off overall, i.e. have you got a bigger mortgage now than you would have done if you had bought the larger house straight away when it was worth less? (rhetorical question, I am not expecting you to divulge you own financial affairs on PH!)

I think he means that you sell your property in a "great" area for say £850k and move to a larger property in a "good" area for £750k which I would agree is do able.

[kingston12]

superlightr said:

kingston12 said:

p1stonhead said:

Also moving areas can mean you can use increased equity to get a bigger place. Unless you are firmly stuck in a reasonably small zone, its perfectly possible even in the South East (ive done it).

Sorry to labour this point, but I am genuinely interested.

I can see what you mean, but doesn't it make you worse off overall, i.e. have you got a bigger mortgage now than you would have done if you had bought the larger house straight away when it was worth less? (rhetorical question, I am not expecting you to divulge you own financial affairs on PH!)

I think he means that you sell your property in a "great" area for say £850k and move to a larger property in a "good" area for £750k which I would agree is do able.

I could be getting him confused with someone else who commented on this thread, but I thought he had definitely upsized in both property size and value when moving from outer London to Surrey.

[p1stonhead]

superlightr said:

kingston12 said:

p1stonhead said:

Also moving areas can mean you can use increased equity to get a bigger place. Unless you are firmly stuck in a reasonably small zone, its perfectly possible even in the South East (ive done it).

Sorry to labour this point, but I am genuinely interested.

I can see what you mean, but doesn't it make you worse off overall, i.e. have you got a bigger mortgage now than you would have done if you had bought the larger house straight away when it was worth less? (rhetorical question, I am not expecting you to divulge you own financial affairs on PH!)

I think he means that you sell your property in a "great" area for say £850k and move to a larger property in a "good" area for £750k which I would agree is do able.

Yep, sold a small flat in zone 4, moved to the surrey hills and got a 3 bed house for the same money (well just £8k more) in still a great area but was not yet in the london bubble (it is now).

Since moved again and taken on a lot bigger mortgage but the rise in value of the flat allowed us to get the 3 bed house without increasing mortgage. But as said, only works if you can move area.

Also as a side issue, and whilst its not always a good idea to solely focus on repayments per month, increased equity gets you into a bigger house if you know you can afford the repayments but cant necessarily save that additional equity.

Increased house value also kicks you into lower LTV brackets, reducing interest on your deal. My current house has gone from 80% to 60% and I havent done anything to it other than remortgage. Instantly get better deals because of increased value to loan ratio. My interest rate is actually less than inflation at the moment.

Lots of benefits but lots of negatives depending on individual circumstances.

Edited by p1stonhead on Wednesday 10th May 10:19

[hyphen]

superkartracer said:

Chap next to me has just dropped dead @ 58 , he was holding onto his 8 bedroom manor house hoping to gain more money/greed , it's on the market for 2.5 million , but he's dead .

I know/knew many people that have made the same assumptions of living a long heathy life .

The 'you only live once' stuff is overrated. People are living longer and those who don't are the minority exceptions. Yes that one guy has dropped dead at 58, another x,000,000 people have not.

[okgo]

Isn't as simple as borrowing money is far easier than saving it? So having a 'free' load of cash in your pocket from your house is appealing vs the fairly small extra outlay borrowing it would cost month to month - which is probably how many people are thinking given they know (but don't) that their LTV will come down as it goes up in value anyway?

[kingston12]

superkartracer said:

kingston12 said:

turbobloke said:

We're close to resembling that remark! Empty nesters with more bedrooms than we need but in no particular hurry to swap bedroom space for garage space. Not just yet anway

One guy I know who is a lot older is going to have to start paying out for gardeners and cleaners for his big place that he probably wouldn't if he downsized. It is still an investment in a way, because it will cost him less in a week than his house has been appreciating in a day!

Chap next to me has just dropped dead @ 58 , he was holding onto his 8 bedroom manor house hoping to gain more money/greed , it's on the market for 2.5 million , but he's dead .

I know/knew many people that have made the same assumptions of living a long heathy life .

Edited by superkartracer on Wednesday 10th May 10:03

That's certainly a good example of when it doesn't work out, but was there any downside to him keeping the house?

If he had downsized from the £2.5m house to a £1.5m one what would he have done with the extra £1m? It would only be a benefit if he was a keen investor who felt he could beat returns on the housing market or if he had no other money so the £1m would be used to fund his lifestyle.

Most of the people I know in similar positions have plenty of money doing nothing in cash and healthy pensions coming in. Their house is their best performing investment so they won't cash it in. Most have children so want to leave the biggest possible inheritance as well.

[superkartracer]

turbobloke said:

superkartracer said:

kingston12 said:

turbobloke said:

We're close to resembling that remark! Empty nesters with more bedrooms than we need but in no particular hurry to swap bedroom space for garage space. Not just yet anway

One guy I know who is a lot older is going to have to start paying out for gardeners and cleaners for his big place that he probably wouldn't if he downsized. It is still an investment in a way, because it will cost him less in a week than his house has been appreciating in a day!

Chap next to me has just dropped dead @ 58 , he was holding onto his 8 bedroom manor house hoping a gain more money , it's on the market for 2.5 million , but he's dead .

I know/knew many people that have made the same assumptions of living a long heathy life .

A valid point. While in general one of the problems associated with inadequate planning for the future involves under-estimating lifespan and the period of time which must be financed from a pension and/or savings, this is statistical talk and on an individual basis a number can be up at any time. If it was materially important and a critical risk rather than icing on the cake then taking action a bit sooner would make sense.

It's a tricky one to balance and all geared around health i reckon , i'd rather risk early retirement @ 55 ( maybe 50 ) and running out of cash but have a good 15/20 years of health than hang on hoping to gain more money to then spend 70-94 hobbling about doing little but wondering what if..

Personally the saddest case for me and one that changed my thinking , my boss ( good friend ) 10 years ago.. worked insane hours and sold the business netting 15+ million aged 46 , playing tennis felt a pain in his stomach and was dead with liver cancer 4 weeks later.

[kingston12]

p1stonhead said:

superlightr said:

kingston12 said:

p1stonhead said:

Also moving areas can mean you can use increased equity to get a bigger place. Unless you are firmly stuck in a reasonably small zone, its perfectly possible even in the South East (ive done it).

Sorry to labour this point, but I am genuinely interested.

I can see what you mean, but doesn't it make you worse off overall, i.e. have you got a bigger mortgage now than you would have done if you had bought the larger house straight away when it was worth less? (rhetorical question, I am not expecting you to divulge you own financial affairs on PH!)

I think he means that you sell your property in a "great" area for say £850k and move to a larger property in a "good" area for £750k which I would agree is do able.

Yep, sold a small flat in zone 4, moved to the surrey hills and got a 3 bed house for the same money (well just £8k more) in still a great area but was not yet in the london bubble (it is now).

Since moved again and taken on a lot bigger mortgage but the rise in value of the flat allowed us to get the 3 bed house without increasing mortgage. But as said, only works if you can move area.

Also as a side issue, and whilst its not always a good idea to solely focus on repayments per month, increased equity gets you into a bigger house if you know you can afford the repayments but cant necessarily save that additional equity.

Increased house value also kicks you into lower LTV brackets, reducing interest on your deal. My current house has gone from 80% to 60% and I havent done anything to it other than remortgage. Instantly get better deals because of increased value to loan ratio.

Lots of benefits but lots of negatives depending on individual circumstances.

Edited by p1stonhead on Wednesday 10th May 10:15

Thanks, that makes it easier to understand.

The key part here presumably is that the Surrey Hills house went up more in value than the flat after your first move and that is what made it easier to jump to your current place? Otherwise, wouldn't it have been just as easy to move from the flat to your current house?

[superkartracer]

kingston12 said:

superkartracer said:

kingston12 said:

turbobloke said:

We're close to resembling that remark! Empty nesters with more bedrooms than we need but in no particular hurry to swap bedroom space for garage space. Not just yet anway

One guy I know who is a lot older is going to have to start paying out for gardeners and cleaners for his big place that he probably wouldn't if he downsized. It is still an investment in a way, because it will cost him less in a week than his house has been appreciating in a day!

Chap next to me has just dropped dead @ 58 , he was holding onto his 8 bedroom manor house hoping to gain more money/greed , it's on the market for 2.5 million , but he's dead .

I know/knew many people that have made the same assumptions of living a long heathy life .

Edited by superkartracer on Wednesday 10th May 10:03

That's certainly a good example of when it doesn't work out, but was there any downside to him keeping the house?

If he had downsized from the £2.5m house to a £1.5m one what would he have done with the extra £1m? It would only be a benefit if he was a keen investor who felt he could beat returns on the housing market or if he had no other money so the £1m would be used to fund his lifestyle.

Most of the people I know in similar positions have plenty of money doing nothing in cash and healthy pensions coming in. Their house is their best performing investment so they won't cash it in. Most have children so want to leave the biggest possible inheritance as well.

Without doubt most of these people you talk about have been under massive stress to get there or still are holding onto what they have , it gets you in the end ( stress ) always does.

I worked 36 hour days in my 20's , i'm early 40's now and have money/nice things/family etc , the stress from that past will get me at some point .

[kingston12]

superkartracer said:

kingston12 said:

superkartracer said:

kingston12 said:

turbobloke said:

We're close to resembling that remark! Empty nesters with more bedrooms than we need but in no particular hurry to swap bedroom space for garage space. Not just yet anway

One guy I know who is a lot older is going to have to start paying out for gardeners and cleaners for his big place that he probably wouldn't if he downsized. It is still an investment in a way, because it will cost him less in a week than his house has been appreciating in a day!

Chap next to me has just dropped dead @ 58 , he was holding onto his 8 bedroom manor house hoping to gain more money/greed , it's on the market for 2.5 million , but he's dead .

I know/knew many people that have made the same assumptions of living a long heathy life .

Edited by superkartracer on Wednesday 10th May 10:03

That's certainly a good example of when it doesn't work out, but was there any downside to him keeping the house?

If he had downsized from the £2.5m house to a £1.5m one what would he have done with the extra £1m? It would only be a benefit if he was a keen investor who felt he could beat returns on the housing market or if he had no other money so the £1m would be used to fund his lifestyle.

Most of the people I know in similar positions have plenty of money doing nothing in cash and healthy pensions coming in. Their house is their best performing investment so they won't cash it in. Most have children so want to leave the biggest possible inheritance as well.

Without doubt most of these people you talk about have been under massive stress to get there or still are holding onto what they have , it gets you in the end ( stress ) always does.

Most of the people I am talking about are retired and in their 60s or 70s. Some of them have had stressful jobs, but some of them have amassed good property assets and pensions whilst only ever having quite basic employment and minimal stress.

One example is a guy who had a local government job which would probably pay £35k today. Not too much stress for him, but he still has a house that is approaching £1m and a nice lifestyle funded my a final salary pension scheme.

It wouldn't be possible to do that today, but certainly was then.

[p1stonhead]

kingston12 said:

p1stonhead said:

superlightr said:

kingston12 said:

p1stonhead said:

Also moving areas can mean you can use increased equity to get a bigger place. Unless you are firmly stuck in a reasonably small zone, its perfectly possible even in the South East (ive done it).

Sorry to labour this point, but I am genuinely interested.

I can see what you mean, but doesn't it make you worse off overall, i.e. have you got a bigger mortgage now than you would have done if you had bought the larger house straight away when it was worth less? (rhetorical question, I am not expecting you to divulge you own financial affairs on PH!)

I think he means that you sell your property in a "great" area for say £850k and move to a larger property in a "good" area for £750k which I would agree is do able.

Yep, sold a small flat in zone 4, moved to the surrey hills and got a 3 bed house for the same money (well just £8k more) in still a great area but was not yet in the london bubble (it is now).

Since moved again and taken on a lot bigger mortgage but the rise in value of the flat allowed us to get the 3 bed house without increasing mortgage. But as said, only works if you can move area.

Also as a side issue, and whilst its not always a good idea to solely focus on repayments per month, increased equity gets you into a bigger house if you know you can afford the repayments but cant necessarily save that additional equity.

Increased house value also kicks you into lower LTV brackets, reducing interest on your deal. My current house has gone from 80% to 60% and I havent done anything to it other than remortgage. Instantly get better deals because of increased value to loan ratio.

Lots of benefits but lots of negatives depending on individual circumstances.

Edited by p1stonhead on Wednesday 10th May 10:15

Thanks, that makes it easier to understand.

The key part here presumably is that the Surrey Hills house went up more in value than the flat after your first move and that is what made it easier to jump to your current place? Otherwise, wouldn't it have been just as easy to move from the flat to your current house?

Since you seem interested, ill give you the numbers if I can remember them correctly;

First Flat - Bought £180k 2011 (£150k morrtgage), Sold £235k 2013 (£55k uplift)
3 bed house - Bought £243k 2013 (£150k mortgage - added £8k ourselves), Spent £20k refurbing, Sold £307k 2014 (£44k uplift after costs).
4 bed house - Bought £450k 2014 (£360k mortgage). Currently worth around £550k.

Basically the first two got us £99k after expenses on refurbing and the current one has gotten us another £100k so far. However, salary basically doubled in late 2014 so we borrowed a lot more to get current 4 bed house.

If we moved now we would have £200k equity from £30k deposit when we started 6 years ago. If we stay in the same area its pointless because all 4 beds cost at least £550k.

But if we moved somewhere cheaper, we could say get a 4 bed for say £350k and bank the £200k for other investments, or spend £550k again and get maybe a 4 bed with some land, or a 5 bed etc etc.

Only thing is now, unless we move a serious distance, no where is cheaper any more round me (you arent too far away so you know this). Whilst we did refurb the 2nd one fully from bare brickwork, we also got lucky with the timing of the market having started in 2011 and not a couple years later. Some of my friends who went to uni (I didnt and started working at 18) were a few years behind us (im 30 now), and missed the boat because things got really silly after about 2011 year after year.

Ridiculously our mortgage on the current house of £360k is only £300 a month more than we were paying on the £150k mortgage 6 years ago due to increased equity (and being able to get better rates) and lower interest rates.

Were not planning on moving now for a long time if at all so we are hammering the mortgage by an extra £1k a month. it should be gone by age 44 which will be nice. Dont get me wrong, we both work hard (both generally doing 55hr weeks), but also got lucky because none of my friends of the same age have bought or moved from their first places - I dont pretend I am some property genius or knew what the market was going to do over the last few years but we still benefitted hugely.

Edited by p1stonhead on Wednesday 10th May 10:55

[Burwood]

superkartracer said:

kingston12 said:

superkartracer said:

kingston12 said:

turbobloke said:

We're close to resembling that remark! Empty nesters with more bedrooms than we need but in no particular hurry to swap bedroom space for garage space. Not just yet anway

One guy I know who is a lot older is going to have to start paying out for gardeners and cleaners for his big place that he probably wouldn't if he downsized. It is still an investment in a way, because it will cost him less in a week than his house has been appreciating in a day!

Chap next to me has just dropped dead @ 58 , he was holding onto his 8 bedroom manor house hoping to gain more money/greed , it's on the market for 2.5 million , but he's dead .

I know/knew many people that have made the same assumptions of living a long heathy life .

Edited by superkartracer on Wednesday 10th May 10:03

That's certainly a good example of when it doesn't work out, but was there any downside to him keeping the house?

If he had downsized from the £2.5m house to a £1.5m one what would he have done with the extra £1m? It would only be a benefit if he was a keen investor who felt he could beat returns on the housing market or if he had no other money so the £1m would be used to fund his lifestyle.

Most of the people I know in similar positions have plenty of money doing nothing in cash and healthy pensions coming in. Their house is their best performing investment so they won't cash it in. Most have children so want to leave the biggest possible inheritance as well.

Without doubt most of these people you talk about have been under massive stress to get there or still are holding onto what they have , it gets you in the end ( stress ) always does.

I worked 36 hour days in my 20's , i'm early 40's now and have money/nice things/family etc , the stress from that past will get me at some point .

36 hour days? you must be stressed. You sound like you're ready to dig a hole and assume the position.

[London424]

kingston12 said:

p1stonhead said:

Fastpedeller said:

kingston12 said:

most of the people I seem to talk to applaud a £100k increase on the value of their small house, even though it makes them further away from buying their next house which has gone up £200k.

Indeed - I've never understood why people feel they've benefited.

Because if you don't need to move (and I suspect people who absolutely are forced into moving by their circumstances is quite rare indeed) it's still an asset which has grown in value. Fairly simple.

If you don't need to move it's irrelevant what other houses have done. You can still sell for more than you bought it for. Simple fact is people like that feeling and it can provide in retirement if you want to downsize.

That's true for people in that position. Not many people need to move, but I know quite a lot who would like to.

For example, say a couple bought a flat 5-6 years ago for £250k because they couldn't afford the £500k house they really wanted. They still aspire to move to that house, but price rises now mean that their flat is worth £500k and the house is £1m. They are now much further away from buying the house that they want, but people I know in this situation still like price rises. If the market goes up 10% this year, they are £50k (less what they pay down on the mortgage) further away from getting that house.

If people are on their final move, either because they have got to where they wanted to or because the price bubble has prevented them from going any further but they are still happy where they are, then price rises are definitely positive, but I am not sure if there are that many younger people in that position.

It is interesting, because I raised this point earlier in the thread, and I am sure I got the reply that it is easier to move up in a rising market (I can't find the reply now!). Maybe I am looking at it wrong...

That does assume that prices are all rising at the same rate.

Where I am my house has probably increased by 30% in the last 5 years looking at sale figures, but the next step up seems to have stagnated somewhat. So for me, I'm loving that situation as it means that next jump is getting more realistic.

[superkartracer]

The lucky few , i was thinking more about the people that worked hard to get their ££. Farmers next to me have been handed down some 1000's acres of Warwickshire , still stressed and missable fkers tho.

Oh theres always a way , depends on how you feel about the law and what risks you are willing to take , i actually think theres never been a better time to make ££.

[superkartracer]

Burwood said:

superkartracer said:

kingston12 said:

superkartracer said:

kingston12 said:

turbobloke said:

We're close to resembling that remark! Empty nesters with more bedrooms than we need but in no particular hurry to swap bedroom space for garage space. Not just yet anway

One guy I know who is a lot older is going to have to start paying out for gardeners and cleaners for his big place that he probably wouldn't if he downsized. It is still an investment in a way, because it will cost him less in a week than his house has been appreciating in a day!

Chap next to me has just dropped dead @ 58 , he was holding onto his 8 bedroom manor house hoping to gain more money/greed , it's on the market for 2.5 million , but he's dead .

I know/knew many people that have made the same assumptions of living a long heathy life .

Edited by superkartracer on Wednesday 10th May 10:03

That's certainly a good example of when it doesn't work out, but was there any downside to him keeping the house?

If he had downsized from the £2.5m house to a £1.5m one what would he have done with the extra £1m? It would only be a benefit if he was a keen investor who felt he could beat returns on the housing market or if he had no other money so the £1m would be used to fund his lifestyle.

Most of the people I know in similar positions have plenty of money doing nothing in cash and healthy pensions coming in. Their house is their best performing investment so they won't cash it in. Most have children so want to leave the biggest possible inheritance as well.

Without doubt most of these people you talk about have been under massive stress to get there or still are holding onto what they have , it gets you in the end ( stress ) always does.

I worked 36 hour days in my 20's , i'm early 40's now and have money/nice things/family etc , the stress from that past will get me at some point .

36 hour days? you must be stressed. You sound like you're ready to dig a hole and assume the position.

Ha , should have said stints ( and knew some smart-harse would pick that up ) , nar... i spend my time chilling these days , in the gardens or on my boat

TBH , those days were good fun .

[Burwood]

Big boat fan here

[turbobloke]

Burwood said:

Big boat fan here

Same here...big V8 fan too (in cars).

[superkartracer]

I better start a thread on the barrelback classic mahogany v8 runabout i'll be building at some point then .

[kingston12]

p1stonhead said:

If we moved now we would have £200k equity from £30k deposit when we started 6 years ago. If we stay in the same area its pointless because all 4 beds cost at least £550k.

That certainly sounds like a sensible set of moves and you have done well by making them.

If you had taken your £150k mortgage in 2011 and bought a £180k house in your current area (instead of zone 4) and not moved again, do you think that you be in a much worse (equity) position now?