20% drop in house prices in next year

[WeeBitWobbly]

Did anyone read this in today's paper.

What do you think?

Don't think so smashingtime; FTBs can't get mortgages, housebuilders can't stop building or they go out of business and lastly certain people HAVE to sell.

I can never get my head round the fact people hate the thought of "losing money" when selling a house. If they've had a mortgage they've been losing money all the time by paying interest.

We're in the process of buying and have paid/will be paying 20% under the asking price.

But this will be our home for a long time.

People have been too greedy and from having looked round lots of houses in the past couple of years - there are a lot of older people in large family houses who have in their minds its worth a certain amount and want that amound to fund their down-sizing and lovely old age.

And they just won't budge on the price no matter how unreasonable it is.

However some houses are still going to sealed bids so very much depends on area as always.

'if house prices did fall 30% and your wage went up 10% and you were able to bororw 3x joint income with a 10% deposit would it allow you to buy the house you need for your family in your area?

Bawed on wage when i get back FT

Nope; would be about £90k short.

traceybath i think you're right about the downsizing issue - we are looking to buy a large family home - have just had an offer turned down on the house we want, they want 100k more than any other house on the street has EVER sold for even at the height of the market, and despite the fact that there are 2 other houses on the street at similar prices which have been unsold for more than a year. we've accepted an offer 5% under our asking price on ours, but they won't accept an offer 5% under the asking on theirs... really bizarre... but also i think some of the estate agents are fuelling it by continuing to try to push prices up...

I think it is highly likely and even 25%

The estate agents will not pass on bad news though, we looked at one which is a wreck it needs gutting from top to bottom, they paid £72k for it in 2001 and think that it's now a snip at £499k, nowhere near London and our local council has just cut 1100 jobs, with the LEA and NHS being the only employers.
I seriously think we need to move areas though because the retired folk and their offspring who inherit these lovely family homes can wait it out where as my children are growing daily.

FTBs can't get mortgages - plenty of them won't need mortgages, they've been saving their pennies for a long time

Been Beta: If house prices fell 30% and our wages increased 10%, we'd be able to afford a really nice house as big as we need/want on a mortgage multiple of 2.5x our combined salaries in this area.

beautyspot - all I know is that there are a huge number of families waiting in the wings renting in my village for prices to fall slightly. They will all be able to buy if prices fall by 10% as will many others. This will purely depend on area of course. Prices here are therefore at a stalemate - good schools, motorway links etc.

Friend of mine works for a house builder and says they have cut back on their staff and building plots so much that they are selling what they have like hot cakes and hardly having to pay any wages out.

Tis a sad thing but I think the vested interests have us all over a barrel!

now that we've finally got a buyer, we would love to sell our place and rent something, but there isn't a single house on the rental market that's even slightly appropriate where we're looking (in fact, there IS a single house, but they want 2800 pcm for it which is excessive, and oddly enough it's been empty for at least 6 months)... there must be a lot of people renting and waiting for prices to drop as you say, because we are just seeing the same old houses on rightmove every day that we've been looking at for 12 months and wondering when they will accept that the asking prices are waaaay too high

beenbeta I'm somewhat cautious about "all of this" but have just moved in to a 100% mortgage at just under 3x my salary alone. It's a 3-bed house with a garden. The estate agent wanted us to borrow so much more - but I figured along with the obvious increased costs of the mortgage there would also be increased bills! Of course I'd have liked a tennis court and an indoor pool - but a 3-bedder is perfectly adequate. I do not earn a fortune believe me!

I understand that I'm likely already in neg eq. but we fixed the rate for 7 years - and I said, I'm "risk adverse" so I'm just viewing this as a way to fix my rent until 2018 - and for where we are the mortgage is approximately 50% of the rental equivalent.

Alpine Pony: DH and I are saving up a deposit to buy for very similar reasons to you. We don't really care about 'equity' or 'investment' but want to have a (long-term) fixed rate mortgage we can afford so as to avoid the insecurity that comes with private renting. We'd also like to be responsible for maintenance and decoration. we've had no gutters since before Christmas, the double glazing and boiler are woefully inefficient and the garden is a swamp. If it were up to us, we'd have done something about all of this, but we aren't allowed to.

We don't really care about 'equity' or 'investment'

You need to care about both those things otherwise you'll pay too much for what should be a basic need being met. And by too much I mean thousands, how long does it take you to earn three thousand pounds ?

So long as we can afford it, it doesn't matter if we pay more than we could have. We don't need to speculate or to 'get the best deal'. We need a house to live in.

Our plan is to buy with a repayment mortgage we can comfortably afford and steadily pay it off. Then we won't have to pay a mortgage any more and will have somewhere to live. I honestly couldn't care less if that means we pay more than we could have; all I care about is being able to afford it.

mamatomany - I do see your point. Right now, I'm paying ~400 a month (for the next 7 years) less than I would on a small rental 2-bed flat. So from my pov, until the value starts falling at more than 5k a year for the next 7 years I'm still relatively happy. To put this all in to perspective, the house cost 120k - so (and I hope this doesn't make me sound like too much of a cunt) - it's not that much money iykwim - it's not like we're on the hook for half a mill! I don't know where the interest rates will be in 7 years - and we may well be stuck in an SVR - but we've not over-extended and could happily pay double, if not triple what we're currently paying - although I'd hope that my wages would increase in line with any forthcoming inflation. Although my crystal ball is cracked.

DamselInDisguise - So you are happy to pay 5 times more than you neighbour for the same property just because you happened to be born 10 years later ?
You need to take your head out of the sand and look at the actual figures not just the monthly repayments.
This is the same mentality as somebody buying a sofa from brighthouse because they can afford the weekly payments, it madness and on a huge scale and it's what has kept house prices so high for so long.

Obviously it's your money but honestly don't you have better things to do with tens of thousands of pounds at least than give them to the bank ?

Of course. But I can't afford to rent anything bigger than a 1-bed flat and there's this thing called "life" which I just want to get on with. :)

I'm TTC my second. Don't fancy 2 kids in a small 1-bed flat!

Yes, mamatomany, I am happy to pay five time more than I would have if I had been born 10 years earlier (or 100 times more than if I'd been born a century earlier, so long as I can comfortably afford it.

The problem with brighthouse is that it encourages people to buy things they can't really afford. If DH and I can buy a house with a reasonable salary multiple mortgage and we can live comfortably while we pay it off, does it matter how much it costs in absolute terms? The mortgage payment would be similar to what we currently pay in rent anyway. The only real difference is that we won't have that monthly payment by the time we're 50.

I'd rather give me tens of thousands of pounds to the bank than to my landlord (who presumably gives much of it to their bank anyway).

We sold our house last year for 645k having paid 700k for it in 2007. But I was desperate to get out of there and hated where we were living.

We are now renting by the coast but we will buy again within the next 6mths simply for the long term security.

The long term security thing is also really important to us. We've been forced to move more than once because our landlords have been in financial difficulties and needed to (try to) sell. Our current landlord serves you with notice as soon as you move in, so that she can get tenants out immediately once their 6 months are up if she feels like it.

Damsel - at your landlady!

I didn't mind losing a bit of equity as we'd more than beaten the market in the previous house. The worse thing was thinking about the 30k stamp duty we'd paid for nothing.

I didn't mind losing a bit of equity as we'd more than beaten the market in the previous house. The worse thing was thinking about the 30k stamp duty we'd paid for nothing.

But that's completely different from being shafted from day one, they will never catch up because it's not just about paying too much it's about lost opportunity too.
Ask yourself how you'll feel in 2 years time when you've paid £120k and the people next door move in having paid £96k, what could you do with that £24,000 plus the interest you'll pay on it ?