ozzieeagle

It really does come down to how many people "have to sell" though.

Toxic debt in America was out of control, especially against housing. I dont think it's a problem to the same degree in the UK. They also have a decent social welfare system in the UK and here in Aus, which may mean even if people lose jobs, they still may manage to hold on to houses, albeit at the cost of extending their mortgages.

It's a whole lot more complicated than even the best financial expert can get their head around.

In my case even if I had a mortgage for 300k and I lost my job, my wife could start to double shift as a nurse, not exactly the best scenario for our family, but it shows how flexible people are. I would imagine most people would be able to find their way through a 3 year downturn, except for people with brand new mortgages that hit really bad times. The UK and Aus, both have far better social security buffers than most countries. All of this must be a major factor.

I personally think after a bit of a drop, where the "have to sells" dictate the market, then the market will stagnate, with inflation eroding house values, until the whole world picks up again.

Three Legs

We're dooooooooooooooooooooooooooooooooooooooomed.

Weird Fish

Of course if people have to sell they will at whatever cost. I assumed you read what I said. I am no fool. In fact I have paid off my mortgage and my property will never fall to the level I bought it for. It was a home, not an investment so I actually have nothing to loose. But I am not an idiot and will not sell my home in the current climate because I don't have to, although I would like to sell my house. House prices will go up again, it is just a waiting game.

I never said that lending money to people that can't afford repayments was a solution. The financial crisis in the UK has been created both by greedy banks and a greedy public that simply don't want to save for anything.

bigAPE

You mean current market conditions. In a few years the market will eventually recover and things will continue the way they have before. I don't think it's being optimistic, it's merely the reality of housing. If all you want to do is dump your assets then sure you could sell a property which is reasonably worth £200k for £100k, but then who's the fool then.

Actually I disagree, the comments were pretty smug. I can only assume that this individual has not been trying to sell their property recently in which case they are in a unique position in so much as not having to practice what they preach.

We have not made a loss on the house. Even if we sold at a very low value right now we would be more than doubling the price we paid. Not because we picked the property for it's future value but because we were lucky.

I disagree, in the case of people with high value, high premium, mortgages on properties purchased at the peak of the growth cycle they should have figured that they would never be able to maintain those repayments. A lot of people just got greedy and the press was waving their arms with shock headlines saying the bubble was going to burst for almost 6 years before it actually did. This doesn't mean they are prophetic, it just means they said it so many times that eventually it would be right.

I agree in part, it's also a condition of the credit culture what we live in. My motto in life has always been, with the exception of maybe a car or a house, don't buy anything on credit that you couldn't buy outright today. So far it has worked well for me. Debt free, mortgage free and comfortable. I would like to sell my property to allow me to jump on the low prices in Australia which are coming into view, but I am not stupid enough to dump my primary asset knowing that I would be doing so on the low end of a downward cycle. Which is the reason we are now renting.

There are far too many armchair financial advisers out there and it's very easy to tell people they are being foolish without knowing their circumstances or their intent.

northernlights

The 55% drop is based on calculations that the average house price should be just £96,000, based on UK average earnings and the old lending limit of three times salary plus a 25 % deposit. The average house is now £160,000 – that’s where you get the 55% figure.

As for the East End and North of London, the prices of these homes were ramped up on the announcement that London would be hosting the Olympics and as a result have fallen heavier than other parts of London.

The Olympics is another financial blow to the UK in a time of a world reccession. Visitors and spending are not going to be a big as hoped unless the world economy has a turn around between now and 2012.

ABCDiamond

Following the peaks in that graph...

1980 £ 66,000
1990 £106,000
2008 £188,000

The next peak should be £242,000, but I am not sure when

aasmith1957

i admit it i want to sell for as much as possible in aust then return to uk and pick up a bargain cash.we dont have a big morgage and what we hoped to get for our property has reduced in the last year.but we built our home not with the intention of selling and cashing in in maybe 2 years at a huge profit.we will still make a profit but things wont be as cushie as we planned.things change ,aspirations change.we moved here almost 18 years ago 1992 when recession was in full swing,we had to drop our price by 20% to get here or spend more time hanging around.both of us in full time employment etc.i have never looked at our house as an investment (hubby does) it is always my home.think 55%drop is total crap especially where we have family.just not extortionet prices to start with.(south yorkshire and scottish highlands).it seems to be the more we have the more we want,humans are inherintly greedy.:

Burbage

The only thing I borrow money for is a house. Because a house is the only thing that has a chance (and I say a chance, it is a long term investment and if you have to sell quickly and prices go down then you're in big trouble) of appreciating in value. But even if it doesn't you'd have to pay rent anyway.

The sensible thing to do is to mortgage on the basis that the interest you pay is the same as the average monthly rent or the rent you would otherwise be paying. That way you lose nothing (ie you'd either be renting or paying interest). My interest payment over the lifetime of the loan is 660 a month, and I've moved out of a rental that was costing me 1000 a month. I consider myself ahead of the game, but the rates will rise eventually. on the other hand if I pay off the loan early I'll pay less interest overall.

You just have to get the calculator out. A lot of people didn't, and simply accepted the bad advice they were given.

Those people who bought at the peak on 100% mortgages and have just seen themselves moving into negative equity don't need anyone to tell them they were foolish. They'll be ok if they can hang onto their houses for 10-15 years, otherwise they're in trouble. Anyone could see that average house prices were outstripping average salaries. House prices had to hit a ceiling. And the credit crisis was ready to follow.

LAM

Home owner don't want to sell in fear of losing money and won't accept house prices dropping.

Developers don't want to build because nobody wants to buy at the price they want, so they are sitting tight.

Banks won't lend money unless you have a fair size deposit and have an annual household income which is a greater percent(than previously) of the loan amount.

Buyers won't buy because they think the market hasn't bottomed or can't afford it or can't get credit

Banks are printing money for fun.

Does all this mean house prices are going to stay pretty much the same(dollar/pound amount) and everything else inflates?

Burbage

There are always sellers who must sell.

ozzieeagle

Although the following applies to Melbourne, it shows that there are people out there that have to buy.

http://www.news.com.au/heraldsun/sto...2-2862,00.html

http://www.brisbanetimes.com.au/news...447347880.html

We have two strong opposing forces here, which one will give.

Its still difficult to find a rental in Melbourne.

ABCDiamond

It comes down to whichever group can hold out the longest, and of course, if the finance is available.

ozzieeagle

Thats one major factor as to why Aus is actually different to the UK and the US. You can still easily get money from banks for housing.

Burbage

I disagree. Nobody has to buy. They can rent.

spilko

I have left my house in the Uk and let it as I refused to sell it for a much reduced value. Things will recover, they always do. Currently the rental income is 4x the interest only mortgage payment so it is also bringing me some money in. I had lived in the house for 19 years.

Out of all this mess I hope people are more wary about considering a house an investment and but think of it as somewhere as a home that they can live in for many years. People moving around every 2 years, trying to get a slightly bigger, better, newer house drives the house prices up and mortgages people to the hilt. Then in a a downturn they are shafted.

I find it difficult to have sympathy for those who have moved in the last few years, for little reason, and who now might find themselves with negative equity.