(Daily Doom) UK on a knife edge

[Gonzo]

I remember the last housing crash. I was young, but my dad ran his own business and we were very well-to-do, so we had alot to lose and I was very conscious of things at the time.

Basically, the house market didn't 'crash' as such in the early 1990's. Everyone had to sell at the same time and no one had any money to buy your house, so everyone who had to sell was in trouble. There was no sentiment that houses were massively 'overvalued', it was just that everyone was in financial trouble. The only winners were the few people who had money to buy.

For example our family house was valued in 1993 at 500-700K. It sold for 360K. Now it would be worth over £2m.

Large numbers of people found themselves out of work and could no longer afford to keep up their mortgage payments. The result was large numbers of properties being put up for sale by their owners, and large numbers of repossession sales.

Whether the value of your house is going up or down does not make a large amount of difference unless you need to sell it.

At the moment, large numbers of people are not losing their jobs so that is not causing forced sellers.

It remains to be seen if people that have stretched themselves to the maximum, in addition to owing fortunes on their credit cards, would find the repayments too much when their fixed price mortgages end over the next year or so and have to sell (or be repossessed). But with the last interest rate cut it looks like we might get away with that.

But, the thing about economic shocks is that they are not expected. So expect something that has not been expected to suddenly cause disaster. My personal feeling is that we are near the end of the "good times".

[Francko]

My personal feeling is that we are near the end of the "good times".

Translated in pure english means:

WE ARE DOOOOOOOMED, DOOOOOOOOOOOOOOOMED!!!

[swamp]

Most people in Britain now work in the public sector and by definition can't ever lose their jobs. So there can never be another recession

This is all down to the genius of Gordon Brown

[BlasterBates]

Translated in pure english means:

WE ARE DOOOOOOOMED, DOOOOOOOOOOOOOOOMED!!!

not necessarily

[interested]

Does anybody here seriously believe we are not?

280k for 1 bed flat in zone 2/3, for f00ks sake. Come on, every brain cell in your head must scream that something about it doesnt add up? When people earn around 30k on average-ish in that there london.

Prices have been driven to daft levels with LTVs of 110%, cheap money/silly low interest rates and massive salary multiples / "self cert" mortgages.

What do you think will happen now that mortgages are returning to 4x income, 80-90% LTV and BTLers have headed for the hills?

I've just bought a nice 1 bed in Zone 2 for £295K but it's about 90% LTV and it's not stretching me too much....but I'm still a bit nervous about the market generally, although I haven't bought with an expectation that I'm going to make a ton of money, I've bought because I need somewhere to live.

However I'm a bit less nervous than I was because I met this bloke in a pub the other day who bought a 2 bed place 18 months ago on 100% mortgage of about £360K - and he a) has to rent the other room to afford the mortgage and b) is counting on capital appreciation and c) is seriously over-stretched on that mortgage and d) will be even more so when his fixed rate deal expires

I guess it's people like him that need to worry most...

[PAH]

I haven't bought with an expectation that I'm going to make a ton of money, I've bought because I need somewhere to live.

Why not rent for 6 months or a year to see what calamity the government and the banks can rustle up for us?

I'm currently renting for less than I could get an interest only mortgage, though I know it's pointless doing so for a long time, just waiting to see if prices become more reasonable and have actually peaked.

If not, I might buy abroad as a potential retirement home for when I finally get tired or unable to contract anymore. At the moment I like the freedom to go wherever the work is.

[Ardesco]

I've just bought a nice 1 bed in Zone 2 for £295K but it's about 90% LTV and it's not stretching me too much....but I'm still a bit nervous about the market generally, although I haven't bought with an expectation that I'm going to make a ton of money, I've bought because I need somewhere to live.

You could buy a 4 bed detached outside London for that and have enough change to buy your train ticket in for the next 5 years!!

[ferret]

I don't see many 4 beds for £295k in my region. Not in areas you would want to live in anyway...

[Bagpuss]

I've just bought a nice 1 bed in Zone 2 for £295K but it's about 90% LTV and it's not stretching me too much....but I'm still a bit nervous about the market generally, although I haven't bought with an expectation that I'm going to make a ton of money, I've bought because I need somewhere to live.

...

Why didn't you rent? Most rents are subsidised by BTL landlords these days, so often you can live in a nicer gaff than a interest only mortgage would buy.
1/3 of a millions pounds for a bedsit sounds ridiculous.

[Francko]

not necessarily

Then

WE ARE BOOOOOOOOOOMED, BOOOOOOOOOOOMED!!!!