to feel seething resentment towards those who profited from the house price bubble and hot anger at the Governments who allowed it to happen?

[TartyMcFarty]

You'll have to forgive my naivety here - I'm ranting about something I don't really understand.

DH and I are stuck. In 2006 we bought a (modest) property on a 100% mortgage. Foolish in hindsight, I know, but based on the advice of our IFA, the unshakeable faith of our families and society that property ownership was the way to go, and the increasing pressure at the time to get on the ladder or miss out, that was the decision we made. We then found that the lender, bastard bastard Northern Rock were unwilling to remortgage based on our lack of equity, despite us having overpaid by several thousand pounds. We couldn't shift the place, and with the agreement of a different IFA, remortgaged against the equity in my DM's property (love her!). It gets more complicated than that, but that's all that's needed here. Now we still can't sell it , our tax credits have suddenly disappeared, my pension contribution has increased (DH doesn't even have a pension) and the tracker rate is slowly increasing. We're on interest only, and as I'm part time since the having DD, with another DC on the way, there's not much of a cushion.

What's really angered me over the last couple of days is the dawning realisation of how people just a few years older than us have profited from the massive increase in property 'values'. I'm still in touch with our ex-neighbour. She bought seven years earlier than us, sold at £120k profit after 10 years (this is not London!), her partner was in a similar situation so they have ended up comfortably in a property of twice the size, renovated to a really lovely standard. Obviously my resentment isn't directed at them personally - they're good people, have profited from a stupid market and good luck to them - but it's just an illustration.

How can we possibly hope to survive in a property market that boomed by more than 3.5x in this instance alone? We can't even afford to maintain our own home to a good standard. Pay isn't moving at all, and we're currently looking at less than .75 of a pension between us. I can't even bear to think about how we'll support our DCs through HE, and the risk to my DM's home if interest rates shoot up.

I just need a rant. Those of us stupid enough to be sucked in at high LTV rates towards the peak of the market are fucked all ways, whereas people just 5 years older than us are untouchable. I know I've only given one example for which I know the exact figures, but there are others I can think of in the same lucky situation. There just doesn't seem to be any point in trying when you compare our situation with those who profited so enormously in the 00s.

the problem is that sellers think about yesterday's prices, but buyers think about tomorrow's prices. The seller thinks he is selling cheap but the buyer worries he is paying too much and the house won't be worth as much in 6 months.

That's exactly it Pingu. When I look at houses, I look at how best to protect myself against negative equity because there is no way prices can stay as high as they are. So it's an outright no to flats, ex council etc, because they will drop first.

Waheeey I leave you guys for two hours and Redshield has you onto lizard folks, knights templars and god knows what else. Anyone would think you were deliberately trying to derail this thread red?

Yello that may have been me - I had no idea

whoknewthat Wed 18-Apr-12 13:17:03
But that's why house prices aren't falling - houses are just not selling. The people selling don't HAVE to move

Did you not see my £400k example? People feel like they don't have to move so they can hang on for a high price. The reality is that all the time they wait and house prices are not rising above inflation or saving rates, they are losing purchasing power. £400k in 2013 buys a lot less food, energy, fuel etc than it would in 2007.

This is the crux about house prices. HPI is a result of credit expansion which results in inflation. However people look at profits from housing in nominal terms. If your house price doubles you gain nothing if you have paid interest on a mortgage and the net gain when downsizing is in devalued pounds. Bankers get your mortgage pounds every month for 25 years while they are still worth more.

What makes me laugh is people with money in the bank for a house purchase who say they are buying because inflation is eroding their money! Nothing could be further from the truth. Only HPI can erode the purchasing power of money to be used to buy a house. The cost of fuel, ernergy, food is irrelevant to it. Higher living costs just mean other people have less money to save for a deposit or cash purchase. If house prices are flat or falling then any interest rate on money in the bank makes a house more affordable. Remember each £1 not borrowed on a mortgage is £2 saved after interest.

YellowWellies

Who mentioned lizards and knights templars ?

You can carry on talking about the house price crash, im not here because i have got a vested interest in high house prices. The house price crash has only just gotten started and the falls are going to be big.

Actually redshield's posts have made me anxious about how bad things could get and do a bit of reading . Scary stuff.

There is a reason they burn the books.

Hahaha I thought some of the more out there stuff would detract from the main discussion. But clearly not! The Money Masters is a cracking video but yes, as Red suggests not everyone is ready to be 'unplugged from the Matrix'

I dont understand why redshield is rothchild is English is an issue Eleanor?

And now people are talking about the rothschilds.

Thats why i chose the name.

Calm down, you do yourself so damage there

Redsheild said ages ago about rothschild being an interest if you read the thread

So where is the problem?

Do you think they are conjuring the dead spirit of the brothers or sumat?

Ooh, that post about the rothschilds was post number 666. Coincidence, i think not.

This thread is getting seriously derailed! Which is a shame because it was interesting.

The reason this thread exists is because of fractional reserve banking.

Fruitshoot

If your house price doubles you gain nothing if you have paid interest on a mortgage and the net gain when downsizing is in devalued pounds.

But this is the bit that sends my tiny mind into meltdown. I just don't geddit.

In my OP, I gave the example of someone who bought the house next door to ours for £Xk, and 10 years later, sold it for £Xk+120k. In my head, that's £120k real money in the bank, yes? Interest discounted for the moment.

That actual £120k, plus whatever my neighbour's DP made on his place is a sizeable cash chunk against a house priced £250k, right? So unless house prices drop so low that the value of the bigger property falls to £45k, that's an actual profit isn't it?

Oh, and the scary thing is, that the original property is a 2-bed which more than tripled in 'value'.

'If your house price doubles you gain nothing if you have paid interest on a mortgage and the net gain when downsizing is in devalued pounds.'

That's like saying there's no point to eating because it all ends up in the toilet anyway.

Tardy but most people still need a house to live in... Which has also increased in price.

Only downsizers and btl landlords benefit.

Yes but in this case they're paying a relatively small mortgage on a larger property than those of us stuck with big mortgages on smaller houses. And of course they're in a better position to be paying the capital off.

i think i am wasting my time, but the short supply of housing to the UK market guarantees both higher rents in the future and higher prices.

everyone still needs somewhere to live, and someone is going to own that place. encouraging people into rented increases rents (and also purchase price as landlords buy up housing for that purpose) ..encouraging buying increases purchase price (and subsequently rental values as landlords cover their purchase expenses and decreased supply of housing for rental)

the problem is supply shortage. people are only willing to go to higher prices and take out credit for that purpose because of that supply shortage.

the kind of collapse talked about on this thread, wouldn't put me off buying a house, more having a few years worth of tinned food in the basement of it and installing steel shutters and doors...proper OFRS stuff.

Edless, that's true. But as people have said before, it is the supply and demand for credit that's important, not houses.

Yes, everybody wants to live in their own house but not everybody can afford to, or get a mortgage.

Hence when the supply of 100% mortgages at 7 times salary increased, so did house prices. The rise wasn't caused by a sudden influx of people wanting a place to live.

Yes, all houses need an owner, and rentals can provide a good return on investment. But BTL mortgages increased that massively, as so little capital was required. That's not the case anymore so there is not the desperate demand caused by amateur landlords plumping their pension, hence house prices aren't going up.

And the people who want houses to live in can't afford them. They are not overstretching themselves because they can't even if they wanted to. So they are sharing, living with their parents, remaining in flats after they have had children, extending rather than trading up.

I'm not saying prices will crash but the 'everyone wants a house so prices will always rise' just isn't the case.