How far will house prices fall [volume 5]

[Helicopter123]

stuckmojo said:

Helicopter123 said:

When does paying rent stop please?

Silly logic. The point is until a couple of years back this level of indebtedness wasn't required.

Whatever you borrow now will feel like a pittance after three decades of even modest inflation though.

What did a house in London cost 35 years ago? What will it cost in 35 years time? Some fret about the short term but over that time horizon buying is still the only sensible choice.

[Sheepshanks]

stuckmojo said:

Yes. And as above, 35 years mortgages. This is it until retirement. Longer for more.

Buyer don't have to let it run for the full term - modest overpayments would shorten the duration significantly.

[kingston12]

Shnozz said:

Algarve said:

You can't reason with those house crash people at all.

They dig themselves so far in they can't admit they were wrong.

If they give up and buy a house at more than they could have before they started all the doomsday hoping, they'll need to admit they were wrong.

If they don't buy they can just stick with the party line of they're right and its just not happened, yet.

I feel a bit sorry for them really. Once you've been in the crash gang for 5+ years there's not a hope in hell they're ever going to be right now. A lot of these people are now destined to never own anything at all due to their stubbornness and ignorance.

I think ignorance is harsh. I don’t think many could have foreseen the measures that the government introduced over the last decade to protect house prices at all costs seemingly. Furthermore, the ingenuity that the financial services sector has created and flexed products to allow previously unsustainable borrowing to be maintained.

It’s clearly no longer a free market and had it been I very much doubt this one way bet would have been so one sided.

Totally agree, but this widespread and unprecedented ‘rigging’ of the property market started over a decade ago now.

Those who still believe in a significant crash now also think that the government are going to step away from the support model. That seems quite unlikely to me after all we have seen.

The interesting part will come when they can’t kick the can any further. There are far fewer options to keep the plates spinning - lower interest rates and longer mortgage terms seem to have been fully explored already.

A good, sustained period of wage inflation could do it of course, but the government seem as wedded to keeping wages low as they are house prices high.

Edited by kingston12 on Thursday 31st December 10:37

[Ari]

Completely agree with the above. I was another that absolutely expected another 90s style crash, it seemed inevitable. But I also didn't expect the unprecedented level of government meddling.

Also agree with the notion of, what levers do they have left to pull? Dropping interest rates was always the big one but there's nowhere to go with that.

I still think it could happen and that it could be big! However I'm extremely grateful that it doesn't really affect me, having bought a place years ago. Trying to make a decision now (or indeed any time over the last 20 years) of whether to buy when so much of the time it really felt like 'surely this sky high price madness can't go on?'

It's very very easy to sit here with hindsight saying 'those people were idiots for their concern over house prices'. It was a valid concern (and it still is), no one wants to be the one that bought at the very peak just before it all came tumbling down.

I'm happy to hold my hands up and say I've called it wrong. Even happier that it was from the sidelines and not a potentially financially life-changing decision.

[CoolHands]

A.J.M said:

But, it’s a cracking 3 bed semi detached, quiet area, retired couples for neighbours and a long drive for my land rovers..

What area of the country?

[Fusion777]

If you're looking to buy, you should do so rather than wait.

That said, we're not immune from price drops. After the last crash, prices dropped despite large decreases in interest rates and supply being constricted. From 2010 this happened under a largely Conservative government. If the market decides that they will drop, then they will. Governments might be able to lessen the impact of the drops, but they can't prevent them from happening.

Prices are so high now though that a modest drop would still see them elevated by historic standards.

Edited by Fusion777 on Thursday 31st December 10:44

[Burwood]

Fusion777 said:

If you're looking to buy, you should do so rather than wait.

That said, we're not immune from price drops. After the last crash, prices dropped despite large decreases in interest rates and supply being constricted. From 2010 this happened under a largely Conservative government. If the market decides that they will drop, then they will. Governments might be able to lessen the impact of the drops, but they can't prevent them from happening.

Prices are so high now though that a modest drop would still them elevated by historic standards.

And that's the key element which is often forgotten. Waiting for what, 2-3,4 years, you need a 20% fall just to get back to where you were. The odds are stacked against you 50:1. If you can afford to buy, get it done would be my free advice.

[kingston12]

Burwood said:

BMW A6 said:

So an average annual 7.5% price growth, represents an average >£18,000 price increase for an averagely priced £250,000 property.

For those diligent first time buyers, having to find another £18,000 seems madness.

Where does that math come from and housing has never been so affordable

Maths seem fairly sound to me? A house worth £250k at the start of 2020 has now increased by £18,750 if prices have gone up by 7.5%.

I’d say it makes it a little less affordable than at the start of the year - there’s a £2,500 stamp duty saving of course, but not much else seems to have changed. Comments on here seem to suggest that actual mortgage rates are higher now as well.

[A.J.M]

CoolHands said:

A.J.M said:

But, it’s a cracking 3 bed semi detached, quiet area, retired couples for neighbours and a long drive for my land rovers..

What area of the country?

Carluke, South Lanarkshire in Scotland.

The 35 years is to get us on the ladder as cheaply as possible with our current jobs.
When I change jobs, it will boost our take home income massively which will let us adjust the mortgage when the fixed term expires.

[MG CHRIS]

A.J.M said:

MG CHRIS said:

A.J.M said:

I got approval for my mortgage on the 23rd.
Like MG Chris, it’s a 35 year deal, but at 3.19 instead of his 2.30.

We got a bit of help from our folks to fill in the gap between our deposits and the final bit needed.
Keys collection is 12th February so have time to sort everything else and get looking for furniture etc.

A little later onto the ladder than I would have liked but I didn’t meet the one till later than I would have liked..

The good news is now I can change jobs now we have the approval. So once we get out of Nippys Tier 4 then I can hopefully get that rolling.

Great news mine was 2.5% tsb was the lowest by a big margin. Already started on the home improvements bedroom is almost finished. I never realised what such a drawn out process the whole thing is the mortgage application went through quick but my god did the surveys, solicitors etc drew the last 3 months out.
I would have liked to have a shorter term but as im on my own thought it was best to go lowest monthly figure just to see out the first few years.
It was the best feeling when you final can pick the keys up and open the door and go this is mine. Its been one of the very few good points of this year. The 17k for the deposit and all the fees was a bit of a kick to see that vanish from my account though.

Good luck and hope it all goes well and you can get the keys in feb.

Ours has been from 9th November, it’s been rather quick at getting more or less sorted.
Still need to sign for the house etc but everything else is hopefully in place for it. Barclays was the cheapest for us.

21k deposit was a sore one to find given 1 year ago it would have been 14k.

We went for 35 to get lower payments but it’s still over £450 a month, the weak link in the chain was me, my job isn’t well paying and she’s self employed so when I can change it will make thing a lot more comfortable.

But, it’s a cracking 3 bed semi detached, quiet area, retired couples for neighbours and a long drive for my land rovers..

Mine took from late august when I put the offer in till 2nd week of December. Yea the 15% was a hit for me spent all summer and autumn working my ass of hitting the bonus in work to gain that extra bit. Did backfire after a drop in workload and me getting quiet awkward in work ended up being told to leave. In hindsight that job killed me physically and the commute was way to long now closer to home with less hours and only a slight drop in wages but less fuel cost and a easier job.
Things are much better now and looking forward to moving in end of feb after I sort out a few things in the house.

Mine has a garage as well which was the main point I wanted.

[MG CHRIS]

stuckmojo said:

Shnozz said:

I think ignorance is harsh. I don’t think many could have foreseen the measures that the government introduced over the last decade to protect house prices at all costs seemingly. Furthermore, the ingenuity that the financial services sector has created and flexed products to allow previously unsustainable borrowing to be maintained.

It’s clearly no longer a free market and had it been I very much doubt this one way bet would have been so one sided.

Yes. And as above, 35 years mortgages. This is it until retirement. Longer for more.

Yes however working years have increased too my generation wont retire till our 70s. Swings and roundabouts.

[stuckmojo]

MG CHRIS said:

Yes however working years have increased too my generation wont retire till our 70s. Swings and roundabouts.

True. Both negative things, really. Working until your 70's to pay off a mortgage taken out in your 30's while your parents could do with a single salary and retired at 60 or earlier and they had much bigger houses with things like garages and gardens.

Not exactly progress, but that's a wider debate.

[Helicopter123]

A.J.M said:

CoolHands said:

A.J.M said:

But, it’s a cracking 3 bed semi detached, quiet area, retired couples for neighbours and a long drive for my land rovers..

What area of the country?

Carluke, South Lanarkshire in Scotland.

The 35 years is to get us on the ladder as cheaply as possible with our current jobs.
When I change jobs, it will boost our take home income massively which will let us adjust the mortgage when the fixed term expires.

Congratulations, Carluke is a lovely town.

[Fusion777]

MG CHRIS said:

Yes however working years have increased too my generation wont retire till our 70s. Swings and roundabouts.

No, it's the worst of both worlds. I'm 35, got on the ladder at 31, but with a 25 year mortgage. It's not a big mortgage though and I should be able to pay it off a fair bit earlier. Even to pay it off by 50 is decent- leaves plenty of time to hopefully earn/save good sums mortgage-free, and gives more options regarding early retirement. Not keen on the idea of paying a mortgage in your 60s.

[stuckmojo]

Fusion777 said:

No, it's the worst of both worlds. I'm 35, got on the ladder at 31, but with a 25 year mortgage. It's not a big mortgage though and I should be able to pay it off a fair bit earlier. Even to pay it off by 50 is decent- leaves plenty of time to hopefully earn/save good sums mortgage-free, and gives more options regarding early retirement. Not keen on the idea of paying a mortgage in your 60s.

same situation and same thinking.

[MG CHRIS]

stuckmojo said:

MG CHRIS said:

Yes however working years have increased too my generation wont retire till our 70s. Swings and roundabouts.

True. Both negative things, really. Working until your 70's to pay off a mortgage taken out in your 30's while your parents could do with a single salary and retired at 60 or earlier and they had much bigger houses with things like garages and gardens.

Not exactly progress, but that's a wider debate.

Yes but my parents generation started working at 16 where as my generation or the others after wont until well in to there 20s also we will live longer generally speaking than our parents and do less physically demanding jobs. Talking about parents I got my house at the same age as when my dad got his first house with my mother. Both me and my sister bought our house on our own. My parents could never dream of doing that if they were single well my mother couldn't anyway.

My house has a garden and a garage as well and is a 2 bed house the same as what my parents first house was.

[Fusion777]

stuckmojo said:

same situation and same thinking.

How do you mean?

[mwstewart]

As a counterpoint I'm not at all interested in early retirement. I like my job and I've watched too many people get bored in retirement - it seems to be a few years of constant holidaying and then the novelty wears off. I've seen others get ill and not be able to enjoy it.

Everyone is different I suppose. I like to aim for a good work/life balance and plan to keep that way until I simply can't work anymore.

[rovermorris999]

mwstewart said:

As a counterpoint I'm not at all interested in early retirement. I like my job and I've watched too many people get bored in retirement - it seems to be a few years of constant holidaying and then the novelty wears off. I've seen others get ill and not be able to enjoy it.

Everyone is different I suppose. I like to aim for a good work/life balance and plan to keep that way until I simply can't work anymore.

After good health, getting paid for doing something you enjoy is the greatest gift one can have. You are a lucky person.

[Burwood]

MG CHRIS said:

stuckmojo said:

MG CHRIS said:

Yes however working years have increased too my generation wont retire till our 70s. Swings and roundabouts.

True. Both negative things, really. Working until your 70's to pay off a mortgage taken out in your 30's while your parents could do with a single salary and retired at 60 or earlier and they had much bigger houses with things like garages and gardens.

Not exactly progress, but that's a wider debate.

Yes but my parents generation started working at 16 where as my generation or the others after wont until well in to there 20s also we will live longer generally speaking than our parents and do less physically demanding jobs. Talking about parents I got my house at the same age as when my dad got his first house with my mother. Both me and my sister bought our house on our own. My parents could never dream of doing that if they were single well my mother couldn't anyway.

My house has a garden and a garage as well and is a 2 bed house the same as what my parents first house was.

I grew up in NZ. In the past 10 years all everyone talks about over there is property. It's an obsession. There is essentially zero capital gains tax no matter if you own 100 properties. Flipping has been stopped by taxing sales inside 2 years as of last year but the damage has been done. There were cases of houses being flipped 10X in a year.The house I grew up in and my parents still own cost 185K in 1982. They renovated it extensively but i'd say it it would have risen to 1m by 2000. 1.5 by 2005. It's now worth 6m. The government opened the flood gates in the early 2000s to anyone with money and the wealthy flocked and grabbed as much land as they could using money from dubious sources in many cases. The young can not buy in Auckland now and it is very much a contentious issue.