to think thank god the London property bubble is looking like bursting

[lexiepix]

www.property-time.co.uk/news/Featured-News-227/articles/Latest-Index-Shows-London-Housing-Bubble-Has-Burst-111171.aspx

Its been long overdue and the lr figures for the last few months show that pretty much all of inner London is falling. I know some will have pain from this, but its been waiting to happen for ages and the longer it inflates the worse the pop will be.

For what it's worth I don't live in London, but I think when they do pop the whole country will be better off. When I was working in London most of my older workmates were on about the UK average pay (22-30), but living in property worth between 500-800k, and calling a 300k one bed flat "cheap"

It means different things to different people. I don't want property prices to fall as that will mean less equity in my house and I wouldn't get such a good rate on a remortgage, on the other hand, my dsd will be an adult soon. If the prices fall she may have a chance of buying a house in the next ten years.

It's not round here, but wait until April when pensioners can pull the money out their pensions.

We need to ween ourselves off the idea that above CPI inflation in the housing market is a good thing. It isn't. Who cheers at the cost of a loaf of bread going up? Food and shelter are essentials. The government should be trying to create a market in which both are as cheap as possible.

So what if you have a high mortgage and your house reduces in value? what have you lost? Nothing. You owe no more on your mortgage. Property crashes tend to harm those who speculate on the property market, and those who have borrowed too much as a percentage of value. They (crashes) benefit the majority of those who can't hope at the moment to every own their own home.

High property prices are killing the country. It means the vast majority of the country's wealth is stuck in it rather than being invested in industry and actually doing something productive. You can't go on year after year sadling the younger generation with ever increasing debt. Zone one is dead, look at the lr figures and volumes. They have thrown everything to try to keep them high - qe and zirp just so they remain looking good up till the election. They go up, they go down. That's markets.

More and more jobs will disappear if the UK living costs stay so high.

House prices are increasing my £42 a day, who gets a £42 a day pay rise?!?!
I rent and am desperate to buy, but just can't get a large deposit and the 3x wages leaves us about £200,000 short. (Yet we can afford more than the repayment would be, as that's our rent).

BUT I also know a crash would be catastrophic, the banks would stop lending. There would be huge job losses and repossessions. People wouldn't be able to renew mortgages as they'd be in negative equity. It would be awful.

A crash would be awful for all those who would suffer repossessions but it would also represent a huge transfer of wealth. Have a think about who the losers would be and who the winners would be.

The losers
Anyone who's had to buy a house at these inflated prices with a stretched mortgage and interest payments that eat most of their income - in other words middle income, hard working people that would like to avoid using the welfare system as much as possible. Not likely to earn enough to bother avoiding taxes either.

Lots of these types of people will have their homes and stored wealth repossessed

The winners
Anyone who has so much capital and income that negative equity and interest payments are meaningless. They will have plenty of capital to snap up all these firesale houses (bargains) and wait for the market to recover and get even more rich than they already are.

It would be another attack on the often cited "hard working lower to upper middle classes" - possibly a core demographic of MN?

That's a massive simplification, to suggest that hard working people will be negatively affected by falling prices is just not true.

Anyway i think anyone that uses hard working should be guillotined

What people fail to realise that people who live in large expensive houses that they haven't stretched to buy will have plenty of spare cash to pick up cheap properties in a major crash. They won't care about the price of their own home as they weren't going to sell anyway. And now they have lots of dirt cheap flats/houses they can snap up as BTLs (formidable competition for first time buyers indeed). And so the rich get richer etc etc.

As I understand it that is not usually the case MN do you have anything to support that.

Those with a lot of stored equit usually wouldn't be the ones loosing their houses (unless there was something else of course) I ale think you'll find that actual numbers would be reasonable small (perhaps even outweighed by those who would finally get to buy)

of course there are other solutions but the gov refuses to use them.......

I still haven't heard any good reason why for example rental income shouldn't be taxed gross just like any other income for all us PAYE people.

Though how much peoples properties are actually being passed on and not having to be sold to pay for elderly care. Then those properties get snapped up by buy to letter's and the available property market shrinks that little bit more?

lexiepix - I am a hard working person and I would be negatively affected if the prices fell because I bought my house last year after much scrimping and saving and would prefer it if its value didn't go down.

Why will they have more spare cash than they do now?
If they are mortgage free the value of one of their major assets is falling, why would they want to take on more falling major assets.

One thing is that of course owning falling assets becomes relatively unattractive if you are not getting the benefit of shelter from them

Sure Duchess but we can't run the entire country to suit just you now can we?
I am a very hardworking person and I would very much like it if property prices would fall and then we could maybe get a home, and maybe even my children could aspire to own one too!

sorry gotta go but clearly I don't wish to see anyone loose out by falling house prices however as said upthread, you won't if you can sit tight long enough it doesn't matter if you can afford not to sell (and if you can't .......) however i don't think it is fair that the non property owning masses continually loose out to those that already own property.

Because the market will bottom out. And you can bet your bottom dollar that savvy investors will swoop in. Nobody wants a falling asset, but they damn well want it when it's rising again...which it inevitably will.

If you don't need a mortgage for a btl, rental yeild may be sufficient for you to hold out during the lows and wait for prices to rise again. It's never a one way road. My mother made a truckload investing in property (not in the UK but a much more unpredictable market actually!)

I bought my 1st home not long ago so probably at peak price but wouldn't mind if it drops in value as long as it eventually recovers and appreciates in value over the next 20-30 years.

Oh it will recover angelos I have no doubt that the overall trend is up. We are heading for a trough though, during which there are plenty of people waiting on the sidelines for their turn. If the demand disappears so will the price.

Does anyone actually think demand for property in London will ever completely disappear?

Clarinet9 - I agree with your stance on gross taxing rent, but I really don't think there was any need for the "we cant run the country to suit you" comment. I'm extremely normal - lots of people are in the same position as me. Why on earth should they all go into negative equity to suit people like you who seem to think they shouldn't move house for 20 years, no matter what happens because "sitting tight" is perfectly acceptable.

For goodness sake. What is it with all the London bashing!?

I work so bloody hard here. I work 18 hour days some times in a city job and I can STILL only afford a house in SE London, which most people consider to be the poor man's London. And yet I have to come up against ignorant non-Londoners who seem to be just waiting for the market to bottom out so that they can laugh at us all for having wanted to get a foot on the ladder before we decide to leave the city.

Fingers and toes crossed

But you will have to pay more each month as your loan to value ratio will be higher.

This is a concern with commercial mortgages, but seldom occurs with residential.
Because people are prepared to pay silly prices, the market goes up too fast. The faster it rises the harder it lands. It's happened plenty of times before. Those paying silly prices ensure that many of average incomes cannot afford to buy.

Wait, SE is poor man's london? How very dare you madam?!

I lived in south east London, new cross, while doing a stressful city job. Got depressing coming back to a dark studio here when someone with the same job 20 years ago could of afforded something nice west.