angiescarr

Not about Spain but I know a lot of members on here have bought and sold houses either as landlords or for themselves.
I have friends in the UK who are desperate to move to a bigger house but their house is now worth 30,000 less than their mortgage. So if they sell it their savings of around a similar amount would be swallowed up leaving nothing for a deposit.
They're told to buy a second house they'd have to get the second one buy -to-let as the first one has no equity. Buy to let needs a large deposit which they haven't got.
What would you do?

jackytoo

They should stay where they are. Which area is it? We have just sold a house in the South East for a nice profit over 3 years. Chuffed actually

steviedeluxe

According to this article from the Wall Street Journal, UK Real Estate is overvalued by 30% (50% in London). A correction is overdue, but who knows, maybe the BoE QE programme will sort it all out painlessly?

( article makes for pretty grim reading - you have been warned)

http://blogs.wsj.com/source/2012/06/15/the-bank-of-englands-zombie-economy/

angiescarr

This is likely to be what they have to do. It's in the north and is a low value house. Nice to hear some positive news for a change though. Enjoy your profit

angiescarr

Yes. It's the grim truth. I always knew about the link between income and house prices was overstretched But when it's someone you know and care about. You kind of hope for a chink of light for them. The problem is. When their house is worth more. So will anything they want to up-scale to be.

Beaverstate

I remember back in early 2008 the housing market in my area of the US was still at it's peak, even though most of the country had already collapsed. Many believed local conditions and rules (growth planning) protected us. Wishful thinking, we caught up with reality.

Domino

living on the edge of the fens, a decent 3 bed semi, proper front and back gardens, would set you back no more than £125k.

one of the problems is that so many people are not saving for the deposit. back in the days our first property was £7,500 and we needed 10% deposit with an interest rate of 8%, all on a salary of £40wk. but we made it.

too often the papers are stuffed full of sad stories of a 24yo who has been to uni and cannot afford to buy a house. of course not, they havent been working long enough to save a deposit.
mind you, got the latest iPhone, 42" tv, all the other gizmo's, good holidays, etc etc. Their priorities are all wrong ! !

Yes it is back luck for people in the negative equity trap, I was exactly the same 20yrs ago. It will take time to resolve, you just have to have patience and prepare to jump the next time around.

rgds

Beaverstate

Exactly, prioritize. Buy a house you can afford, stay in it for 10 or 20 years, and you will be OK

teuchterpete

Still not easy when you graduate from uni with a loan of £40K outstanding, before you even start work.

Domino

well it was good enough for us,
in some cases it was good enough for our parents

but the kids of today have different priorities, they just want a card that will give them everything, no worries about paying it off, after all the government has the same attitude.

anonimouse

Hmmm I am sure if their house is worth less the new house should be worth less unless they are moving up market. They should wait and ride out the storm or sell less and buy less, it's all relative.

jackytoo

yes good point, didn't think of that

angiescarr

The point is they are moving up from a v small house to a family home....or wish they were!

angiescarr

You make some good points except that for us university education was fee.
As you say, The thing we're teaching them giving them loans that they can't pay off is very bad education!

agoreira

Why can't they pay them off? AFAIK, they only have to start repaying once they start earning a certain wage, £21k?? And then it's only a few pounds a week. If they don't earn, they don't have to pay.