House purchase thoughts in current market

If house prices drop by 50% you won't be worried about buying anything. You'll be trying to survive. Even if house prices drop in doesn't make houses more affordable, as interest rates will be up and banks won't be lending money.
The only real issue is negative equity which is only an issue if you want to move.

What we need is house prices to stabilise for a decade or two and let inflation lower the price.
 
Interest rates are controlled by the BOE and are not directly affected by a drop house prices. Well from what i understand. Banks, don't necessarily lose money when house prices fall. The occupant of the house that has lost value still has the same mortgage, so the bank does not lose money. Even if they sell the house the banks still are due the full mortgage. The banks only lose out if the occupants walk away from the mortgage the banks still get to keep the property though and they don't make it easy to "walk away" from a mortgage. As banks don't lose money it would not necessarily negatively affect the availability of credit for mortgages. As house prices are down the deposits and the mortgages are less and as such banks are more likely to give out credit.
 
culvers said:
Added value is a myth cooked up by lame property shows like location, location, location. The only reason people made money buying houses and "doing them up" was because the market was rising, and not because they painted it and put some twigs in a vase. They would have made the same profit simply by holding the house and selling after the market had risen.

If you are not paying rent, even more reason to sit tight and watch the fireworks - grab your self a bargain a few years down the line once the numpties who joined the pyramid scheme at the end lose their shirt.
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I'm sorry but what is any of that founded on, are you seriously suggesting property development is some sort of myth?

Adding value to a house is very real if you know what you are doing and buy the right the house.
 
groen said:
Interest rates are controlled by the BOE and are not directly affected by a drop house prices. Well from what i understand. Banks, don't necessarily lose money when house prices fall. The occupant of the house that has lost value still has the same mortgage, so the bank does not lose money. Even if they sell the house the banks still are due the full mortgage. The banks only lose out if the occupants walk away from the mortgage the banks still get to keep the property though and they don't make it easy to "walk away" from a mortgage. As banks don't lose money it would not necessarily negatively affect the availability of credit for mortgages. As house prices are down the deposits and the mortgages are less and as such banks are more likely to give out credit.
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They might not be directly linked, but they are very much linked.

You can't have a 50% drop with out the **** hitting the fan, that means high interest rates, which pushes people into defaulting, banks less willing to lend. Which means less buyers, pushing money down. You would have a terrible economy with people being layed off left, right & centre.
Banks wouldn't get their money back. They get a house worth far less than mortgage and if the person can't afford to pay mortgage, how do you think they can pay the banks back.
 
I can understand that you want to get the most house for your money but where do you draw the line? Are you trying to make money from property investment or are you looking for a long term place to make your home?

If you're looking for the latter then get something you can comfortably afford and meets all your criteria for a home. Take into account potential interest rate rises and try and overpay a realistic sum of money each month, even a small amount can save you thousands in interest.

If property rates go down then yes you could miss out on something better but only if they drop a substantial amount, I say if you find something you like and can afford then go for it.
 
shadow_boxer said:
Good thread. Some interesting views/predictions. My fiancé and I are looking for a second property, we've found a 1930s house, 3 bed, semi detected, rural location which is in the market for circa £160K reduced from £170K after being in the market for a few months. We found out that the property was only purchased 14 months ago by a builder for £110I! Basically we let the estate agent know what we found out and within 10 minutes we had a phone call from back from them explaining the owner/builder wanted to show us around personally with photos/details etc of what work was done. It's certainly not had more than 25-30k spent on it from an aesthetic point of view (basic kitchen new bathroom, upvc windows and decorating. Plus were not in a chain and ready to buy at short notice. What kind of things should we be looking out for when viewing again with the builder? Sorry OP for slight thread hijack.
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Have a look round the house and see if you like it from an aesthetic point of view.

Then, get a home buyers survey completed on the property. A surveyor will be able to tell if there are any structural problems and/or damp, subsidence etc... that you would otherwise miss. In Portsmouth, a lot of the builders are in cahoots with estate agents - buy properties cheap, do a bit of cosmetic work here and there, and sell them on for more. Often problems with the house (wall ties need replacing, roof problems, rising damp) are not rectified.

So get a survey done before you make your purchase. Thats my advice anyway!
 
I think is not so much the house pricing issue, it's more affordability.

Some lenders asking for 10% - 20% of the deposit price or LTV (Loan to value) people are thinking twice about getting a mortgage.

lets be honest not everyone has got 20k lying around in their pocket, and from what iv'e read in the news they are making it stricter for First Time Buyers. Stamp Duty is also being included for any houses under 200k from the end of march.
 
fLux_ said:
I'm sorry but what is any of that founded on, are you seriously suggesting property development is some sort of myth?

Adding value to a house is very real if you know what you are doing and buy the right the house.
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Going by how few non professionals make profit once all costs are deducted (going by the TV programs like property ladder etc), I'd say his point is very valid.

Ordinary 'chancers' on these TV programs pay far too much for a run down property & get way too personal, often spending thousands more than they should have done on the restoration.
I can probably count on one hand those who genuinely made a decent profit.

The way to make proper money is to either buy land & build property or buy a run down old place on a big plot, demolish & then build several replacements. Of course, this is beyond most peoples' ability.
 
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The reason why the house prices have stalled or fallen is because of the economy, wages are not rising, energy is going up every year, food is not as cheap as it was, petrol is quite high its only going to get worst, living costs are not going to come down, so people are not going to risk taking out a mortgage that puts them on the bread line, 2000s was the boom now we are in the bust decade.

I mean Halifax have just raised mortgage payments by 0.5% and BBC have said houses prices have fallen by 0.5%
 
xrs said:
Have a look round the house and see if you like it from an aesthetic point of view.

Then, get a home buyers survey completed on the property. A surveyor will be able to tell if there are any structural problems and/or damp, subsidence etc... that you would otherwise miss. In Portsmouth, a lot of the builders are in cahoots with estate agents - buy properties cheap, do a bit of cosmetic work here and there, and sell them on for more. Often problems with the house (wall ties need replacing, roof problems, rising damp) are not rectified.

So get a survey done before you make your purchase. Thats my advice anyway!
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Thanks bud. We'd obviously get a proper survey done of the property but were a little unsure of what to look out for. Thanks for the suggestions though. :)
 
MatteH Oxford said:
Going by how few non professionals make profit once all costs are deducted (going by the TV programs like property ladder etc), I'd say his point is very valid.

Ordinary 'chancers' on these TV programs pay far too much for a run down property & get way too personal, often spending thousands more than they should have done on the restoration.
I can probably count on one hand those who genuinely made a decent profit.

The way to make proper money is to either buy land & build property or buy a run down old place on a big plot, demolish & then build several replacements. Of course, this is beyond most peoples' ability.
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Good money can be made through straight forward property development if you actually have some sense though. In it's simplest terms...

1) Buy a property that is under valued for it's location and compared to other similar houses in the immediate area

2) Work out the value of the work required compared to the potential sale price and decide if the job is worth while

3) Don't be a numpty and know how to manage the budget

I would agree though, most people you see on TV and probably in real life just don't get it and make an absolute hash of it.
 
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Some more progress today but it's all a bit strange in Bristol at the moment. We're viewing a repossessed 4 bed today and it's the third one from about sixty 4 beds that have come on the market in the last five or six months. It seems that quite a few people are in difficulties at the moment. I was also speaking to an agent about two other properties that have been sold subject to contract since September. It seems not a lot is really moving at all.
 
Wait for inflation to do its job:

UK_Real_House_Prices.jpg


This is house prices in real terms. No prizes for guessing what direction they're headed.

Note the interesting correlation with demographics.

Data is taken from Halifax and Nationwide. Correction figure for real prices is Nationwide's - presumably taken from the RPI reported by the ONS.

2015 will probably be the bottom, based on demographics and the size / duration of previous crashes.

i.e. it's going to be an "invisible" crash - prices will stay the same in nominal terms, but drop steadily when measured in real prices. Lending rates also have only one direction to go and as we've seen, are starting right now.
 
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