jjones

so true

even if prices crashed 50% of current value then i would think most people who bought 5+ years ago would still have equity.

and people who purchased houses 20 years ago stretched themselves to buy, when the interest rates were silly (12%+) i remember my fathers monthly wage would only just cover the mortgage.

davyboy

You reckon ....

MikeCardiff

iTrader: (2)

#61 - good point - I reckon in most areas house prices have doubled in the last 5 years, so a 50% drop now would take them back where they started.

The people who are more likely to get in trouble are those that bought in the last 2 years, when houses were at their peak - a big chunk of negative equity coupled with a loss or reduction in income, or a hike in the interest rates and the lenders are going to get very twitchy.

Unless there is a sudden rise in interest rates, I dont think a crash like the last time would happen, more likely the market will either remain static, or drop slowly over time, as has already started to happen in the south in a lot of areas.

Mate of mine paid £215,000 for his house just over a year ago, his neighbour but one has theirs on the market ( essentially exactly the same house, standard of decor etc... only difference is they have a slightly bigger garden ) for £189,000 - and after a month they have had no viewings and are considering dropping the price to 185.

stilover

I have noticed recently that houose builders are giving away fantastic deals at the moment. Reason? Because house prices are so high. A new block of apartments are going up near me, at a starting price of £277k for a 2 bedroom. They even advatise FTB's ??? As a way of getting the properties sold they are paying stamp duty, partly furnishing it, cash back etc. If you buy to rent, they guarantee to give you £1,175 per month, even if no one's in it. They are starting to get desperate. Another 2 builders has build some apartments, and are really struggling to sell them. Only half have gone on one site, and less than half on the other (Built & finished last year).

Another local builder is offering to pay whatever your parents give you as a deposit, up to £7k.

At some point house prices will become too expensive for anyone to buy. That's when it will crash. Plus with the ever increaseing energy prices, everyone has less money to spend.

fitzscoob

thats not purely because they are not selling - what they are doing is giving you the illusion that they are giving you a deal by giving you 5% off etc (what most dont realise is that before they give you that deal they added more on to begin with)

Its all a sales ruse that has been going on for a while - its not a new thing.

MikeCardiff

iTrader: (2)

New house builders have done this for quite a while - years ago they were offering 'move in for £99' deals for FTB's - they 'paid' everything else for you. Handy for people with no money for a deposit, but they end up spending more in the long run because the builders would give big discounts for cash buyers.

Market is definitely getting stagnant in a lot of areas though, think people have just run out of money, that and a lot of people who want to move either cant sell, or cant get enough for their house to move into the new one, to keep things going.

stilover

Exactly. That house builder built the first & second blocks over the last 2/3 years. They were up for £153k (First Block) then £168 (Second block), and now £277k for the last block !!!!. They still cost the same to build, so why the increase??? If they had just held at £153k or even £168k I'm sure they would be selling more now. Why the £109k increase ??
They are just keeping up with the rest of the market. Then they have to offer incentives to sell them.

Just bring the price down to an affordable level, and watch them sell. Simple

fast bloke

But they will still get some people to buy at 277k, and they take a hit on 10-12k by offering incentives, so they make more money for the same amount of work.
If you had a car that you could afford to sell for 5k, but you thought you would get 14-16k for it, would you advertise it at 5k or at 16k, taking the first offer of 14k that you get, giving the buyer the impression that they have 'saved' 2k?

Ted Maul

what % of take home monthly pay should someone use for a mortgage then?

TopBanana

It's up to you.

davyboy

Mine is currently 18% and rising to 30% when we move.

MikeCardiff

iTrader: (2)

#69 - it depends - 30% of a £600 take home is a lot different than 30% of a £2000 take home. Its the amount of money left over after all your bills, credit cards, loans etc... go out that matters.

You need to sit down and work out exactly what you spend each month, find out what is left over, then go from there.

Danger of having too high a percentage is if you either a) lose your job and have to take a lower paid one just to get money coming in, or b) if you are buying with wife/girlfriend and one of you stops working.

davyboy

c) Mortgages rate go up.

OllyK

Mine's about 13% but you need to work out what you NEED to spend in a month and see what you have left. You then ought to allow yourself something towards holidays and little treats and then see what you have. Then decide what you think is going to happen to the motgage rate over the next few years if you plan to go variable and allow for that or get a fixed mortgage, pay a bit more and don't worry about it.

lozgti

Had a nose at a showhome the other day.Salesman was hugging my leg and saying 'you can have £10,000 off' only wanted a brochure.

Virtually every person who has looked at ours has said ' we have got another ten to look at yet'

When we viewed a couple of other properties ,each time the agent said ' we have people coming every 15 minutes to view.'

Finally,I have never seen so many for sale boards up.

I reckon the market is stuck

davyboy

Almost all of the boards around our way say sold on them - and they remain sold for ages, telling me the chain does not always go to plan!

Even the new build near us, most properties are sold even before a show house is available.

http://www.bryant.co.uk/index.asp?se...berBedrooms=-1

OllyK

House down the road from us went up for Sale 3 or 4 weeks ago, it's already sporting a Sold board. I suspect they priced it for a quick sale, it will be interesting to see what it did sell for when the figures get on the land registry in a couple of months.

ETA: Guess I was right. It's was priced at £95,950 for a 3 bed
http://media.rightmove.co.uk/13k/127...847_IMG_01.jpg
and a few doors down there's a 2 bed in the same style at £97,500
http://media.rightmove.co.uk/13k/127...854_IMG_01.jpg
that's been on the market a while.

lightning101

You must have some salary to only need 13% of it to pay a mortgage


I mean 10% of 5K is only £500 a month.

Unless you have done very well out of previous house sales.

OllyK

Did quite well out of previous house, sold a 2 bed terraced and moved in to a 3 bed detached that cost less. You can see from my post above, houses aren't expensive in (parts of) Derbyshire.

lightning101

I moved 5 times in seven years which seems mad, but it was purely to get the funds to put a 50% deposit down on a house in a nice area, but my mortgage is still nearly 40% of my monthly wage. At the end of the day its a good investment and I would just squander it on cars and women anyway.

Wait a minute

OllyK

We hardly needed a mortgage to buy the house, the bulk was for restoring the house - we've pretty much gutted it over the last 12 months.

lightning101

Thats an excellent position to be in, especially in this day and age of debt.

We have a lot of equity in our house and I still manage to run a couple of reasonable cars and have nice things without any other debt, so I'm reasonably content.

OllyK

Likewise.

the_boy

Ignore this, am talking rubbish..

MikeCardiff

iTrader: (2)

13% is low, but then a lot of people pay less than 20% - if they bought the house say 5 years ago when it cost half what it would cost now, and their wages have gone up / had a promotion etc... in the past couple of years it isnt that unusual.

The people who are paying very high percentages are mostly those who bought after the price rise, and as first time buyers - in these cases paying 40% + isnt that unusual. This just highlights how much more house prices have increased than wages since the boom started.

Jay m A

iTrader: (2)

40% is sustainable, unlike the 60% FTB were on average doing before the housing crash of the early 90's.

But wages to house prices ratio is only 1 consideration, back in the 90's mortgage payments were high due to interest rates being at least double todays rates, not to mention 15% at one stage.

davyboy

....so is the crash coming or not?

scoobynutta555

Nobody will know for certain if/when a crash occurs. With increased immigration I doubt there will be a crash soon though