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How much do you need house prices to fall before you buy.

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I made the mistake of putting off buying in 2013 then Help to Buy 2 kicked in at the end of 2013 and early 2014 and prices went insane almost overnight.

One area i was looking prices are up circa 40% as in a 3 bed house that were advertised for £215k-£220k are now around the £300k mark.

I hummed and hawed and didnt buy for £220k (though if i was given another few months at that price i would have) as i thought it was over priced but it was time to bite the bullet.

But with interest rates looking as if they may go up this week and possibly fractionally more later on in the year to follow the FED, i think the stagnating prices will start to fall.

Im thinking if that 300k goes down to 240k it maybe time to bite the bullet, but the chances of 20% falls may be optimistic even at these insane bubble levels.

But what percent would you need to see prices fall to bite the bullet and buy into the bubble or do you intend riding it out.

Edited by Banned

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Bought in 2013 just before all that additional nonsense, more luck in finding a deal than anything else - as well the rental we had which was a good deal and suited us was likely to become unavailable.  One thing on the way down it is not just the pricing getting better but there are more opportunities to grab something decent within your price range rather than frantically outbidding every other buyer on the way up for anything, that is probably worth a £30K-£50K margin in that price range alone. 20% falls - prices can and do fall rapidly in the right/wrong circumstances when faced with little/no sales agent swill only list stuff they have a chance of getting bid so in a way they self select lower/better priced property and drag the averages down as it is pointless having kite flyers stuffing up their books.

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12 minutes ago, onlyme said:

Bought in 2013 just before all that additional nonsense, more luck in finding a deal than anything else - as well the rental we had which was a good deal and suited us was likely to become unavailable.  One thing on the way down it is not just the pricing getting better but there are more opportunities to grab something decent within your price range rather than frantically outbidding every other buyer on the way up for anything, that is probably worth a £30K-£50K margin in that price range alone. 20% falls - prices can and do fall rapidly in the right/wrong circumstances when faced with little/no sales agent swill only list stuff they have a chance of getting bid so in a way they self select lower/better priced property and drag the averages down as it is pointless having kite flyers stuffing up their books.

Sometimes the stars align and things go your way in life as you were seemingly nudged into it.  Sad state of affairs that if you'd waited another year you may well have been priced out.

You make good points about what may happen if falls occur, fortunately this time BTL lending is tightening so it is possible these fuckers wont be as much of a safety net as last time. Bringing in s24 for basic rate taxpayers in an upcoming budget would be like rocket fuel in sending prices down, maybe if May/landlord Hammond are gone by then it could happen

 

Edited by Banned

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In my current neck of the woods (Hampshire/Surrey) I would only buy if house prices dropped circa 40% and I can't see that happening any time soon. Im no expert but will a few 0.25% increases even have that much of an impact? I thought the majority of the obscene price increases have come from government props, particulary HTB. I envisage any interest rate rises will promptly be removed come spring next year if no deal is made.

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33 minutes ago, Admiral Pepe said:

In my current neck of the woods (Hampshire/Surrey) I would only buy if house prices dropped circa 40% and I can't see that happening any time soon. Im no expert but will a few 0.25% increases even have that much of an impact? I thought the majority of the obscene price increases have come from government props, particulary HTB. I envisage any interest rate rises will promptly be removed come spring next year if no deal is made.

I can see that happening at some point though, maybe not in the next couple of years but eventually theyll have to fall that far so wages can afford them.

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26 minutes ago, Noallegiance said:

As far as they can!

I tell people that three bed family homes at £350k should be more like £110k. 

The faces I get...

You should see the faces when I tell people that I want interests rate back up at 7% and I reckon we will see double digits in a few year xD

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12 minutes ago, Admiral Pepe said:

You should see the faces when I tell people that I want interests rate back up at 7% and I reckon we will see double digits in a few year xD

Ive had those looks for years, sadly they were right for looking at me as if i didnt know what i was talking about ... property prices only ever go up dont you know!

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50% for me.  I would like to move back to the SE where I grew up.  I moved away years ago and can't afford to move back.  At 50% I might be able to get something modest.   Looks like I may have to wait awhile yet although where I am now half way along the M4 is levelling off whereas the area in the SE I want is falling.............

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I doubt I will. If interest rates get back up to 5% (which they will need to to create a crash) then I think there will be some very interesting renting opportunities and better things to do with cash than tie it up in property.

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I bought in 2010, then sold and bought another one in 2016.

I don't think it'll be long now before interest rates start rocketing. I wouldn't be surprised to see double digits. I'm about to put my money where my mouth is and get a 10 year fix on my mortgage.

 

 

 

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Put my house on the market in mid 1992 for 90K. Eventually after a lot of stress and failed SSTC and knob-head buyers I was lucky to sell it for 55K in late 1993. Sold another because divorce in 2014 and looking for similar level of drop before I buy again. Someone else can have the pain this time.

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2 minutes ago, Funn3r said:

Put my house on the market in mid 1992 for 90K. Eventually after a lot of stress and failed SSTC and knob-head buyers I was lucky to sell it for 55K in late 1993. Sold another because divorce in 2014 and looking for similar level of drop before I buy again. Someone else can have the pain this time.

And do you see it as likely, as in to similar degrees you saw in the 90s?

I remember my parents asking price halved in the space of a year or 2 at that time, but they still sold for 30% more than they bought for in 1988. 

Difference between 92/93 and now is we had something that resembled capitalism back then.

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Where I am, I'd want a drop of 50% at least for old stock and considerably more for new build, both of which are unlikely, I suspect. So, I doubt I will ever own, which doesn't worry me.

Where I am located, nice old detached properties currently valued at ~ £800k will command a rent of about £14k pa and a 6 bed Taylor Wimpey new build (2 beds in the attic) will cost about £600k. I could buy a very small property for cash, but I'd sooner rent a very small expensive house cheaply and have disposable income.

Hopefully, I will always be able to afford to rent. I've been in my present rental 23 years. It won't suit me when I'm infirm, which is a pity, but I'll cross that bridge when I come to it and, if it proves a problem or I run out of cash, I suspect there will still be flights to Switzerland.

Edited by Hopeful

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20 minutes ago, Hopeful said:

Where I am located, nice old detached properties currently valued at ~ £800k will command a rent of about £14k pa and a 6 bed Taylor Wimpey new build (2 beds in the attic) will cost about £600k. I could buy a very small property for cash, but I'd sooner rent a very small expensive house cheaply and have disposable income.

Those numbers add up a better for renting,  where i was looking a 3 bed terrace could rent for 11-12k but be bought for circa 280k, for such a place id be willing to pay 200k and feel ripped off.

Both numbers need to come down considerably imho, if the economy is to function properly

 

Edited by Banned

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1 hour ago, Banned said:

Those numbers add up a better for renting,  where i was looking a 3 bed terrace could rent for 11-12k but be bought for circa 280k, for such a place id be willing to pay 200k and feel ripped off.

Both numbers need to come down considerably imho, if the economy is to function properly

 

I think it will be very interesting, and the market will be both confused and localised.

Now the kids have (nearly) gone, I will be fishing in the £0.6m market.

Rent on that should be about £1,500 per month. £650 over LHA rates so a limited pool of renters. But within my budget.

Now let's guess that there are many recent purchasers who bought at £600k with a £500k mortgage. At say 2%. They will have capital repayments of £1,800 per month and interest of £800 per month.

But now input a rise in base rate to 3% which i would think would lead to a drop in prices of about 20%. The house is now worth £480k so they are in negative equity. They can't sell, because after costs they will have a £40k deficit. Which is a small amount on a mortgage but a bloody large lump to come up with from earnings. Their mortgage will increase to somewhere nearer 6% or even more, £20k extra per annum in interest, so an increase in monthly outgoings of £1800.

There aren't many people that can afford that kind of increase. 

So what are their options? Go bankrupt? Most people won't because of the stigma? Hand the house back and come to an arrangement with the bank? Again most won't because they will think it is a blip and property values will increase again soon. Or rent it out for whatever they can get and themselves rent somewhere much smaller? 

At this point, most that are in a position to buy will do so, leaving very few self funded, income rich renters. I look forward to paying 3% of value to rent a house which someone is renting off the bank for 5%. Karma.

I also like the so called 'accidentally rented' properties. They are designed from the start to be homes, not investments, and tend to be much nicer places to live.

Of course the government could choose to go for another bailout negating the above, but it is nice to dream.

 

 

 

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19 minutes ago, Cunning Plan said:

Of course the government could choose to go for another bailout negating the above, but it is nice to dream.

QE is going to be coming at some point in the future but the BoE cant print when the FED are QTing it'll destroy the pound. And anymore HTB esq schemes would be political suicide. 

Maybe the dream is getting nearer.

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Need to drop 120k for me just to meet my maximum wage X borrowing..

i have 100k deposit

An ok ish house 450k in outer london

 So at the moment need a 350k mortgage.. 

max I can get is about 230k and with 3 kids a 1 bed flat does not really help.. unless I become a landlord to offset my rent I pay.. getting someone else into debt poverty paying my mortgage..

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9 minutes ago, macca said:

Need to drop 120k for me just to meet my maximum wage X borrowing..

i have 100k deposit

An ok ish house 450k in outer london

 So at the moment need a 350k mortgage.. 

max I can get is about 230k and with 3 kids a 1 bed flat does not really help.. unless I become a landlord to offset my rent I pay.. getting someone else into debt poverty paying my mortgage..

So back to pre HTB levels, which is similar to myself. Aren't Gidiot and Carney a pair of cunts coming up with that one.

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Another slight problem I foresee is that, since property prices have been maintained for so long, people now know the price of everything and the value of nothing*, and this may slow realistic offers and so slow the collapse for old-timers who know what something is worth in earned cash.

 

* this actually applies to all goods due to a loss of understanding of the value of money IMO, due to:

1) credit

2) few people are self-employed. Most are given their money for attendance rather than pure productivity.

 

Edited by Hopeful

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I need them to come down to £80-90k. Never going to happen.

I would prefer a freehold 2 bedroomed house or bungalow (have lived in enough flats over the years). They are around £160-200k in my city so it will have to be one hell of a price drop!!

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14 minutes ago, UmBongo said:

I need them to come down to £80-90k. Never going to happen.

I would prefer a freehold 2 bedroomed house or bungalow (have lived in enough flats over the years). They are around £160-200k in my city so it will have to be one hell of a price drop!!

Yes that is some drop even 20% is optimistic imho .. in time they will go back to being relative to wages of that i'm sure its just the time scale i'm dreadful at predicting. 

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7 minutes ago, Banned said:

 in time they will go back to being relative to wages of that i'm sure its just the time scale i'm dreadful at predicting. 

I'll probably be too old to apply for a mortgage by then. 9_9 Not that I want a mortgage anyway.

Oh well, at least I'm not paying much rent.

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Probably 40 to 50% in the SE which is where I currently am. I doubt that will happen. My exit game is having enough cash to buy outright in a cheaper part of the country when I choose to pack in the rat race. Probably could do it now if I moved to somewhere like Middlesborough but I still need some work for the time being! The itch to buy isn't what it was but I'd rather not be in private rental as a pensioner. 

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1 hour ago, SillyBilly said:

Probably 40 to 50% in the SE which is where I currently am. I doubt that will happen. My exit game is having enough cash to buy outright in a cheaper part of the country when I choose to pack in the rat race. Probably could do it now if I moved to somewhere like Middlesborough but I still need some work for the time being! The itch to buy isn't what it was but I'd rather not be in private rental as a pensioner. 

I am the same except that I don't anticipate ever being a pensioner.

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