Joined: 28 Oct 2004 Posts: 1924 Location: Warwickshire
Posted: Thu Aug 04, 05 8:47 am Post subject:
All the best with that, I doubt you�ll ever regret it.
"I bet the official figures from the Land Reg will say house prices have not gone down at all, just people expect then to go up all the time. From a personal point of view I'd love them to go down as I'm still climbing the ladder."
One of the reasons that people now see property as such a good investment is that prices rarely drop. During the lean times vendors can struggle to reach their asking prices, and most decide to wait until the market begins to start warming up to sell. There are some that really need to sell their homes, due to job relocation or any other number of reasons, and these are the ones who can decide to take a hit on price. That�s when it looks like prices are dropping, but really they are not.
I'm presuming then that you weren't involved in the property market around 1990?
Property prices can and do drop, in the same way they can and do go up.
Property plummeted early 1990's and almost one million people in this country were made homeless because of it.
At the moment as you say people are holding out for the market to "warm up". What is going to cause this warm-up I wonder?
The recent cut in IR's has possibly had the opposite effect in boosting house prices. A .25% cut means that someone with a 100k mortgage will save around �15 per month. It hardly covers a 10k rise in the price of any one particular property. Buyers are wary, very wary of borrowing.
In the 1990's earnings v borrowing ratio was 3 x income. Today it stands at around 5.5x. This means that people simply cannot afford to borrow anymore. It also means that for many they will not be able to pay their mortgages back. They were sold over inflated properties at a level which realistically meant repayment was a tenuous chance.
If prices fall, many will be in negative equity again. But at least as the fall kicks down the ladder people will be able to afford homes.
Many waited for the "warm up" last time. It never came. You either lower your price and sell early, hoping to buy from someone who has done the same thing. Or you sit it out till the slump is over and prices have maintained stability with inflation taking you out of the NE situation.
Try and sell in the middle and you will lose a lot more than a piddling couple of thousand.
Last time round my friend bought at the height of the boom. The value of her property was in NE for 10 years when she was finally able to sell. 1988-1998
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