Well, I don't know, but you can't go far rong looking at the statistics here: http://www.housepricecrash.co.uk/ I suspect there probably will, and considering I am one of those who can't get on the ladder, I really hope it happens soon. Unlike many poeple that buy because of some twisted logic that if they don't they may not be able to afford it later (even though they actually can't really afford it when they buy), I beleive in paying for something based on what you think it's worth (you know, cost of materials, labour, and then add or subtract a bit for location). Anyone ever heard of buying a car based on what you earn? Nope, well people do it all the time with a house. Any views welcome (P.S. if you work for an estate agent, own up, they always say everything is going to be fine!)
I'm currently looking at buying my first house (I'm 22) I guess I'm lucky enough to have moved in to a comparitively cheap area. A 2 bedroomed terrace here in Wombwell costs about £60,000. However the scary thing is, If I had bought a house here 4 or 5 years ago, I would have only paid £22,000 for the same spec....
Can't even by anything in Bristol (unless your looking at living in drug areas), for less than £140,000 (thats a 1 bed flat, or mid-terrace box).
1) look at the website address - how can it possibly have an unbiased opinion? It's like having a website called Michaelmoore.com and having "unbiased facts" information about dubya on it. 2) Houses are the only things that will always go up in price in the long term, that's fact. In the short term they can fall and rise, but over a 20+ year period buying a house is always an investment. 3) inflation, area, market trends etc depicts how much it is worth, not you. You could argue that you think EVERYTHING is only worth 50p. Unfortunately market trends and supply/demand dominante house prices with people wanting to move into "nice" areas over ****-holes. 4) House prices falling isnt inevitable, look at places like Germany (so ive been told) - 50/80/100 year mortages and can even be passed onto children ive heard.
I do not disagree with what you are saying about the web site name, but the statistics cannot be disputed. First time buyers rate is at an all time low, house prices in relation to wages are higher than the 1989 crash, and in many sectors people have not had pay rises for many years (me and some of my friends included). When stress is forced onto incomes, something has to give at some point. That with the high levels of debt, cannot be good for the short term future.
Im not sure if there will be a house prices crash like in 1989. We arent suffering from "Lawson boom and bust" of the Torys - the, now independent, bank of england will shift interest rates and stuff to prevent such a crash but it will probably happen in some form. I agree that house prices are boardering insane in some parts though - but it's supply and demand. If detached, 4 bedroom houses in nice neighbourhoods were the price of a 3/4 bedroom, average semi in the suburbs then demand would be through the roof and prices would rise like they have done. Imo, it's because there's a lack of non-generic housing. Often people view new houses built today as inferor or too generic, or they are built to sell quickly not to improve the area. They are packed in to create the maximum houses on the smallest plot possible. Generally, new housing developments in cardiff are totally snapped up before any brick is laid - that says to me we have a major housing shortage, which is also causing price rises.
I little dutch history I feel Read this from this web site I found (http://www.shema.com/modules.php?name=News&file=article&sid=56), that describes how the dutch lost common sense over the tulip bulb: Investors are human beings and tend to move in herds (All we like sheep have gone astray). This herd mentality can add instability: Every so often market economies will go into a mania, a period of excessive excitement or "irrational exuberance," where people lose common sense and invest in companies or goods, driving them up to stratospheric levels. When the financial bubble bursts, the excessive valuations come back down to the starting level or below. One of the classic manias was the 17th century Dutch Tulip Bulb Mania. "Tulips were first imported into Europe from Turkey in the mid 1500's. The flowers soon gained in popularity, and a demand sprang up for different varieties of the bulbs. The supply (and increasing popularity) of rare varieties of tulip bulbs couldn't keep up with the demand, and prices soon began to rise sharply. Prices rose to such heights that by 1610 one rare bulb was considered an acceptable dowry for a bride! As prices soared, ordinary citizens soon began to view tulip bulb speculation as a sure fire way to get rich. Holland, the largest producer of the bulbs, became the epicenter of the mania. People mortgaged their homes and businesses to buy the bulbs. The prices for many rare bulb types reached several hundred dollars each. One bulb of a very rare variety even changed hands at over $20,000! By 1637 people began to see that prices had reached an outlandish level. The smart money began selling and a crash soon followed. Many Dutch families lost the homes and businesses they had mortgaged to take part in this 'sure thing' investment" (From "A Brief History of the 17th Century Dutch Tulip Bulb Mania" which can be found at www.tulipsandbears.com/tulip.htm). Some economists think that in the past several years, the valuations of many of US stocks, especially some of the highflying NASDAQ stocks, with their astronomical P/E (Price-To-Earning) ratios, and parts of our housing market, have been in a mania. If so, the end of the mania will add financial instability. Now, we may be talking bulbs, but the principle is the same, everyone is now un easy about the housing market at best, and have you noticed how many houses are now up for sale in certain areas? Just in one street of 10 houses near where I live, 4 of them are up for sale. I have seen the same house up for sale, bought and then up for sale 3 times in just over 2 years. People buy houses now as an investment, and not somewhere to live (which pushes prices up faster), but like all investments you need an end buyer, and once that end of chain buyer can no longer afford the prices, hello 1989.
As Atomic has said I doubt very much that they'll be a massive crash, the goverment \ Bank of England just can't afford the impact that it would have on the economy at large. Price increases have slowed over the past 6-12 months due to the interest rate rises. In some areas there have been small drops in prices, at the very least places have been taking longer to sell. I can't see there being any change in this trend either as inflation has risen slightly and it's looking like the BoE may increase interest rates again. People are still buying though, I know 5\6 people (couples) that've bought in the last 6 months, they're just being more realistic about what they can afford and being helped out more by parents, etc... Out of interest there are a couple of mortgage lenders that have sprung up that specifically cater for groups of friends clubbing together and buying houses between them..
Haven't seen much of a slow down here. I have seen a flat increase from £120,000 to £170,000 in 2 years.
I'm talking over the past 6 months or so since the interest rate rises started. I think in that time new mortgage applications have dropped to there lowest for sometime. I know what you mean though, the house I bought just over a year ago went up by £70k in the 8 prior to when I bought!
One thing that indicates the possibility of at least a slump (not necessarily a crash) is the fact that the buy-to-let market seems to be cooling. BTL investors have, if some sources are to be believed, been both propping up the lower end of the market and crowding out less affluent first time buyers. On the upside it might give first time buyers better access to the market, but it's not going to make the housing market grow in the way it has been. I agree with some of the previous posters though, the BofE will do everything it can to prevent a crash.
There will not be a major slump because there simply is not the supply for the demand. Its basic economics. If there isnt enough of something people will pay more for it. There arnt enough houses therefore people will pay more. There might be a reajustment of values at some point but not a major crash. Also you state the "earnings to house value" ratio. There are two ways this can change: 1) House prices change (as you are surgesting) 2) Wages go up (more likely) But critically you must have enough houses to staisfy demand for house prices to go down and that simply is not the case. TBH I think I can trump anyone in a raw increase in value. Our house has gone from £750k to £1.5M
Anyway I'm actually writing a paper on this atm. I'd have to agree with Bindi here, house prices aren't going to crash. The market is cooling atm which is understandable (after xmas people normally avoid large purchases) The url Henchman:crg posted is utter BS. Trying looking at some real statistics from a credible website. Generally with the lack of free hold land that's available and the rate at which the population is increasing house prices can only increase in the long term. As Bindibadgi mentioned we are now long in Lawson boom and bust periods. It maybe so that the house prices in relation to wages are higher than the 1989 crash, this is not necessarily mean that demand is going to fall. I'd say demand is now much more stronger than 1989. The Bank of England is now independent from the goverment and they will do everything in their power to prevent a housing market crash.
-H-, are you saying that the figures at that URL are inaccurate? I agree the web site address in very bias, but does that mean the information on the site is wrong? Also, www.upyourstreet.com used to show graphs of house sales (but for some reason they have stopped, even though that was one of the best features). Maybe some kind of sensorship is going on here? Just a thought.
It may not be wrong but it is biased. As -H- said in many areas demand is increasing and outstripping the availablity of stock and new land on which further housing can be built. I think any slump may be more pronounced in city centres where there's been lots of building and many new dwellings sit empty deflating the market through over capacity.
the annoying thing is atm people are all putting houses on the market thinking that they will make lots of profit over the original price, due to the recent hike. So its lots harder to sell a house as the market is flooded. Meaning to sell you have to lower the asking price, which sucks.
Its the same down in bournemouth, average wage of people living and working here is about 20k, average house price for a 3 bedroom semi is around 200k (unless you want to live in scummer canyon). My brothers doing 30k a year and can get a mortgage on a one bedroom flat but a 2 bedroom is out of his price range
yeah but you could probably buy the whole of knowle west for a tenner my sister just got a three bed house in st andrews just off gloucester road for £250k ish, which isnt really that bad when you see what people pay for 2 bed boxes in London. I'm actually in rather a lucky situation, in that ive just come into some money from relatives who passed away and have what amounts to a sizeable deposit ready. So im just bidding my time waiting for a crash right now If there is a crash tho, just have a little thought for all the people caught in negative equity
