House prices: 50% falls before fair value

[Turion]

Turion,

Your posting history clearly illustrates that you have a deep and abiding loathing for anyone who actually owns property.

I own several properties, have no mortgages, and receive a modest income from them.

So what's your problem?

Are you some sort of socialist who would have my property confiscated for the good of the state?

Not true and if you read my posts you would know that I am a property owner myself.

The posts and articles represent a likely scenario that is about to unfold over the next few years.

In your case, it would seem you you have put all your eggs in one basket that's about to drop costing you half of your eggs. If you are relying on future capital values, and most landlords do intend to sell at some point, those will need to be re-written. No early retirement for you comrade.

[bogeyman]

Not true and if you read my posts you would know that I am a property owner myself.

The posts and articles represent a likely scenario that is about to unfold over the next few years.

In your case, it would seem you you have put all your eggs in one basket that's about to drop costing you half of your eggs. If you are relying on future capital values, and most landlords do intend to sell at some point, those will need to be re-written. No early retirement for you comrade.

You have no idea where my eggs are old boy. Don't pontificate.

BTW I am already retired for all practical purposes.

[BlasterBates]

If 50% falls are required for fair value and taking into account overshoot we're looking at 70% drops.

[Francko]

If 50% falls are required for fair value and taking into account overshoot we're looking at 70% drops.

mmm.... average house in UK at less than 60k.... can't wait... with the pound falling that would be less expensive than renting a b&b for a week. Cheaper to buy and sell afterwards. I see a new business opportunity... UK disposable houses... (oh ok here goes plan B)

[bobhope]

If 50% falls are required for fair value and taking into account overshoot we're looking at 70% drops.

unlikely to be 50% nominal falls, probably a combination of 30% nominal, 20% due to inflation. I'm aiming to start buying again in about 2011-ish

[bogeyman]

If 50% falls are required for fair value and taking into account overshoot we're looking at 70% drops.

Given that assessment I'm beginning to think your location tag is quite accurate,.

[51st State]

Not true and if you read my posts you would know that I am a property owner myself.

The posts and articles represent a likely scenario that is about to unfold over the next few years.

In your case, it would seem you you have put all your eggs in one basket that's about to drop costing you half of your eggs. If you are relying on future capital values, and most landlords do intend to sell at some point, those will need to be re-written. No early retirement for you comrade.

The only thing I understand from reading your posts is that you are a bitter twat of unfounded proportions. I do hope that your dreams of a 50% fall do come true, and that both of your (obviously unmarried) parents are caught out, along with the rest of your family, and anyone else who is stupid enough to call themselves your friend.

You'll still be here in 15 years time moaning about prices being too high and missing the boat yet again.

[BrilloPad]

unlikely to be 50% nominal falls, probably a combination of 30% nominal, 20% due to inflation. I'm aiming to start buying again in about 2011-ish

Dont specify a year. Wait for repossessions to "stop" - then for houses unsold to be sold. then start to buy.

[ferret]

The only thing I understand from reading your posts is that you are a bitter twat of unfounded proportions. I do hope that your dreams of a 50% fall do come true, and that both of your (obviously unmarried) parents are caught out, along with the rest of your family, and anyone else who is stupid enough to call themselves your friend.

You'll still be here in 15 years time moaning about prices being too high and missing the boat yet again.

Bit harsh! A lot of the talk at the minute seems to be of some big falls on the way. I have a vested interest in a crash as sold and am renting at the minute until we find somewhere we like.

I do think that the housing market is looking very shaky, not a lot selling, prices gone year-on-year negative last month according to the big reports, and 20% fall this year would not be surprising to me.

Banks don't want to lend, buyers do not want to buy so when and how will this be resolved?

I think we need to come back to realistic income to loan multipliers, 3.5 - 4 times salary is sensible and historically this is a good figure to look to when buying a house. When one bed flats are on the market for £150k then you would need to be on £37.5k per year to buy at 4 times. When the average wage is still in the low twenties then this smacks of a vastly over-inflated market. If you think a one bed flat should be affordable by someone on average wage (say £24k) then you should be looking at this kind of property (of course a person on average wage would expect more than a bottom-of-the-rung property) then this value would need to be more like £96k @ 4 X salary. So this is a 30% correction if nothing else.

50% falls will be good for a lot of people, those looking to upgrade, first time buyers etc. The only people who it will hurt are those who bought in the last few years, those who thought mortgage equity withdrawal was a cracking idea, and those that used high leverage or believed the BTL bull and bought in late without really understanding what they were doing.

bobhope - wages don't appear to be rising at 20% and inflation is eating into disposable income with food and fuel soaring so how will this add 20% onto property prices?

50% reductions would see the country in great trouble but it could happen - couldn't it?

Brillo - agree - you can't set a date on buying yet! Who can say how this will all pan out. I aim to buy when the cost of a mortgage is equivalent to the rent I am paying. In a really nice house at the moment where the rent is the same cost as £120k mortgage - this is for a house that was valued at over £400k last year. If we had bought the house last year we would be looking at a mortgage of twice as much as we are paying in rent.

Mortgage costs - "best buys" on MSN are fixed for 2 years @ 7% APR with arrangement fees at over a grand. I know this is not the point of the discussion but you would have to be brave to buy right now. This will greatly reduce the number of buyers though, and I feel prices will tumble simply due to this. A lot of houses I have been keeping an eye on have gone SSTC and then a week or so later come back on the market as the buyers realised how much the mortgage would cost or simply could not secure the funds they needed.

These are interesting times to say the least, and I don't think anyone can say with absolute certainty how this will play out. I think calling someone a bitter twat because they believe a 50% drop from peak may occur is uncalled for. It may happen!

[Bagpuss]

One wonders how common this situation will become:

http://forums.moneysavingexpert.com/...7#post10711237

We have just calculated all of our debts and we are about 40k in debt to unsecured debts.

We have a mortgage to which we owe £169,000, we have had no secure debt on the property but we do have a charging order on it for £2,100.

The mortgage repayments are interest only at £1070 a month plus a further £105 for arrears of £2000.

We have had the house valued at £199,950 but we are not going to get that for it in todays situation and we have been offered £184,000 for a quick sale from one of those avoid repossesion companies.

What shall we do? we are thinking about selling to this company and going into private rented because we just can't see a way forward. We can't afford to pay the mortgage, it's just too high!!

If we went bankrupt, do we have enough equity in the property for the OR to sell it from under us?