To think saying house prices could crash if we brexit will be a plus for many

[feellikeahugefailure]

The BoE and other banks say this as if it is universally bad news. If it stops the vast amount of foreign speculation on UK property then many will see it as a good thing.

Even if you own your own home, its paper gains unless you sell it. So even homeowners might want prices to fall as otherwise their children may never own a home.

I have to admit, I know little about London prices/effects, other than what I read here.

Here the 90s were devastating for many, 2007 caused a lowering in prices but not as big nor as extended. Houses here seem to be relatively stable, outside the most desirable areas. Even there they seem to have maintain their prices, where as in the 90s those same well placed for schools, des res's were repossessed wholesale.

My 2007 house won't sell for what we paid yet. Creeping closer, yes, but still below purchase price. Lost about 20% in the year after we bought.

Not read the ful thread, but I'd just like to point out that the OP has a history of posting threads wishing for a house price crash.

She lives in lala land, on a previous thread she talked of using pay day loans, sorry OP but if you've done that in the last 5 years you are not going to get a mortgage, so no amount of price crashes are going to benefit you.

Also, sound economic analysis of the impact of a house price crash, you know the one where house prices crashing effect the wider economy and the bank's willingness to lend, are met with a statement of "that's your view" with no opposing analysis to back it.

The OP is economically illiterate, as it seems are many others here.

House prices falling suit no one, steadying in the South East yes would be beneficial ( and I can't really see them going up at the same rate) but a price crash would be so detrimental to the wider economy that it quite honestly isn't worth thinking that it would work for anyone other than the cash rich, who will buy up all the assets.

Sorry about your negative equity but at least you have a house.....what about those of us stuck in generation 'rent'?

I think this^^ is an interesting point. As long as you pay your mortgage for 25 years you own your house at the end. Assuming you can stay in it personally I would prefer this on balance to lifelong renting. Of course if you have to move thats a big problem

Property going down can help with climbing the ladder as long as you have enough equity. We did really well moving in 2009 when the market was at rock bottom. OK we got 25k less for our house but bought the new one for 40k less than it would have been 18 months previously.

Nothing in relation to the economy is entirely good or bad for everyone. Probably on balance we need stability with house prices more than anything.

There isn't going to be a massive crash though purely because there aren't enough houses to go round whether we are in the EU or not.

In 2008/2009 the rise in house prices in London barely stuttered.

They certainly didn't return to anywhere near the values of the mid to late 90's.

A drop in house prices doesn't mean everyone is in negative equity, so that's a bit scaremongering.

Unless you levered up to the hilt if you have a 65% LTV prices can fall quite a way before you get into negative equity and become 'trapped'. So you loose a bit of your initial equity, but the house you want to trade up to will have lost more, so you don't end up in a worse position.

From mid 2008 - 2009, nobody sold in central London who didn't have to. The flats that did sell went for around 20% less that the exact spec was valued at in start Q3 2007 just prior to the run on Northern Rock. The statics on this are freely available and widely documented. Simultaneously, GBP declined versus some other western currencies by 20 - 30% so a foreign investor with a London home bought with cash would have been down a theoretical 40 - 50% if they had been forced to sell.

Dips happen, rarely everywhere, but prime London foreign investment zone is already getting hammered...and as tobysmum77 implies, nothing is bad for everyone.

I certainly don't agree that just because stability of a basic need has been grossly neglected, causing misery for the next generation, that it would be bad news if the situation were corrected (even if that meant redistribution of a little pain elsewhere in society).

The government should address this most gently by building many, many houses (and this should have been taken prioritized a decade ago!).

The problem is that house prices would have to really crash to be more widely affordable, and people who have high ltv mortgages will be people who have got into the housing market recently and taken out the maximum mortgage available.

You are right that people who don't owe much money on their mortgage won't be that bothered by negative equity. Equally people who are cash rich would be able to take advantage by buying at the bottom of the market.

However you have to be quite comfortable to take advantage of economic turbulence. the winners from a massive crash would be people who wouldn't struggle to buy a house now.

Negative equity will just stop houses being sold, and in any case will only happen in some parts of the country.

Leaving the EU would be bad for a host of reasons- economic, environmental, see worse working conditions for many, and any end to the EU arrest warrant would see a return to the Costa del Crime or an equivalent.

Negative equity will just stop houses being sold, and in any case will only happen in some parts of the country

For all the reasons given earlier, by myself and others, this is far too simplistic and simply not true.

Merry, winners from a massive crash would be people who wouldn't struggle to buy a house now. That wouldn't necessarily happen either. Interest rates tend to rise, lending becomes more restrictive, jobs get lost as businesses can't manage their loans, etc.

Those who cannot buy now are likely to find that they can't get a mortgage after a crash"

Those who cannot buy now are likely to find that they can't get a mortgage after a crash

Isn't that more or less what I said?

There will always be people who don't have to rely too much on finance, e.g. because they have inherited money or because they are asset rich.

However that won't include people who are struggling to buy a house now.

I agree that the likely response to a house price crash and an increase in bank's unsecured debt would be higher interest rates and more restricted lending.

Lets do some maths with this...

Ok so house prices come down 20% ( a fairly big fall) so but we need to be aware of what the repercussions of that will be. Banks will get even more restricted on lending (sorry to tell you that OP but you're not getting a mortgage having used pay day loans) and will require larger deposits with lower multiples of salaries.

So lets take a current FTB flat in London of about £300,000. Currently a couple earning the London median of £34, 000 each can afford this with a multiple of 4 times their salary and just over 10% deposit.

Now prices come down to £260, but the bank asks for 25% deposit and multiples of 2.5 salary. So even with the £65,000 needed to put down the deposit, they come down to needing a mortgage of £195,000 but are only able to get a mortgage for £170,000 which is not enough!

Please don't come back and say thats your opinion, it is pretty much what happened last time in terms of lending.

Even then the economic crash that would go with this would be devestating, firms wouldn't invest, consumers don't spend, jobs are cut.

So dearest OP, stop praying for a crash, it won't have the effect you want.

It was possible to get 5x salaries in 2009, at the height of the financial crisis. Yes banks will ask for higher deposits to safeguard themselves. The 2.5x salaries is entirely made up. Just like the idea that higher interest rates will result.

So 300k flat 25% deposit is a deposit of 80k ish. If you have that deposit then the flat is cheaper than before. If not then you can't buy it that's true. But not everyone is penniless but earning well, if you have inheritance for example but lower salaries it would help.

Tbh though for most ftbs it would be impossible either way.....

5 x Salaries were not common at the height of the financial crisis, many people were offered 2.5 - 3 at this point. I did know a lot of people attempting to purchase London flats at this point and thats what they got offered.

Whatever happens most people won't be better off, the cash rich, those who bought years ago and FTB with a fairly good inheritence is who it would suit.

Well dh got 5x his in 2009.

I didn't say they didn't happen but that they were uncommon, and no where near as common as they had been just a year or so before. Was he a ftb by the way?

Also, in 2009 prices did not come down 20% it was a bit less than that.

2009 was a wobble more than a crash in London and did not result in a drop in house prices that enabled many people to buy. House prices had still doubled in a decade while wages didn't really grow.

Interest rates were kept down because of the wider economic picture (and to protect home owners who had been given massive 5 x salary loans), but there is no guarantee that that situation would be duplicated.

Yes the house price market is different in different areas, but it's in London and the south east that there is a housing problem.

You'd have to go back to the 80's and 90's to see a real property crash in the south east.

One thing that you can be absolutely sure of is that banks act in their own interests, not those of first time buyers on low to average wages. (See causes of 2008 crash).

Yes that's true but remember this is all retrospective, at the time the expectations were worse. Plus the property market isn't just London, most people don't live in the SE.

Don't forget when you have kids you can't just sleep on a mattress and buy 'anywhere'.

Bollocks. I did exactly that at 20 years old with a 3 yo and 5 months pregnant. I'm 23 now. I was out on my arse and the council wouldn't help other than putting us up in a bed and breakfast. My salary was £19k at the time. I had £2500 rainy day savings. Not a hope in hell I was going into private rent, so I begged borrowed and stole a few hundred each from here and there to make a 5% deposit on a 75K 3 bedroomed top floor flat in absolutely the biggest shithole in town. The stair stunk of grass, the shared back garden was full of dirty nappies and old mattresses. No one worked, and getting woken up at 3am by loud music etc was a regular thing.

I lived on beans on toast and supernoodles while the house was closing to pay the soliciters. Walked to work to save £3 a day. I had two deckchairs in the living room but my mortgage was £400 and that was with overpayments. So literally every spare penny I had went on the house. I learned how to wallpaper, laid lino tiles, did carpets room by room, second hand furniture on gumtree etc.

And within a year I sold it for £100k, moved back to the nice area I'd grown up and bought a lovely 2 bed flat with our own garden and loft conversion using shared ownership.

Some people just love to make excuses. I actually do think the housing market should slow down, but as pp said I look at my friends in their early 20s and they do fuck all to help themselves, they want holidays and hugely expensive cars on finance. Now I'm settled I have holidays and have just bought my first car, but for me the priority was a secure place for my kids to live- and no matter how much my circumstances change I will do everything possible to never have to go into private rent!

You want to buy a house OP? Get a job, save your money and then move to where you can afford one and buy the worst looking place you see. If you want to be a homeowner and you have a job, its really not impossible you just have to realise its not going to be handed to you on a plate!!

Sorry merry I read wouldn't wrong

The housing market always moves in cycles. We had one in the Seventies, one at the end of the 80s and one towards the end of the noughties.

I have survived two of those.

It is a natural dynamic, painful for some but beneficial for others.

I will definitely be voting Leave.

I'll be voting to stay, not because of house prices but when the main leaders of the "out" crowd are Boris, Gove and IDS, along with the those outriders Farage and Galloway it gives your campaign a great lack of credibility.

Also because those backing the out campaign have no real economic strategy other than "renegotiating" deals with the EU which will not be as beneficial as current ones no matter what they say.

I do agree with your cycles of the housing market though Helfpful, the market at the minute in London is plateuing.

Oh to the person who said there is more to the housing market than London? I thought most places outside of London hadn't quite recovered from 2008 yet, and lets be honest if you live out of London and haven't managed to get on the housing ladder with Help to buy, low interest rates and prices being lower than 2008 in most places then its never going to happen is it.

I don't know about 'most' places. It has risen again here and is significantly higher than 2007.

In terms of Brexit I think in the short term it will have a negative impact. The longer term is pretty much impossible to predict. So I think I will vote stay also.....

I find the argument that it is better to vote stay because of 'uncertainty' a strange one.

If the EU provided any degree of certainty the credit crunch of 2007-2008 would never have happened surely.

Staying in gives us no more certainty than leaving.

Chap, what do you you mean by "If the EU provided any degree of certainty the credit crunch of 2007-2008 would never have happened surely"?

The main drivers of the recession internationally were easy credit, decline in the US housing market, increased levels of mortgage defaults, drops in the value of mortgage-backed securities and global asset prices dropping as investors became more risk averse. UK banks didn't regulate themselves, and used risky lending practices. I don't see what role you're attributing to the EU.

Ironically, post-recession the EU has implemented (and continues to) large-scale banking reforms to stop riskier lending - which Brexiters now describe as "meddling" .