Is this the right or wrong time to buy a house?

[Miss_60 10]

A HOUSE PRICE CRASH IS COMING.

 

A number of newspapers are reporting that house prices are starting to fall! Here are the links to some examples:

 

http://www.timesonline.co.uk/article/0,,2-1150538,00.html

 

http://property.timesonline.co.uk/article/0,,14029-1154159,00.html

 

In these articles are quotes from people who do not think that there will be a crash. However, as this next article points out, THESE PEOPLE HAVE A VESTED INTEREST IN A CRASH NOT HAPPENING. THEY WERE SAYING THE SAME THINGS BEFORE THE LAST HOUSE PRICE CRASH. SEE HERE:

 

http://property.telegraph.co.uk/property/main.jhtml?xml=/property/2003/09/17/prosy17.xml&sSheet=/property/2003/09/17/ixpmain01.html

 

INDEPENDENT EXPERTS ARE PREDICTING BIG PRICE FALLS. SEE THESE LINKS:

 

http://www.thisislondon.co.uk/news/business/articles/timid79314?source

 

http://observer.guardian.co.uk/focus/story/0,6903,1243305,00.html

 

Mervyn King, the Governor of the Bank of England has given the most obvious warning that he is allowed to, that the crash is coming – and he has now said it TWICE!

 

http://news.bbc.co.uk/1/hi/business/3806961.stm

 

http://news.bbc.co.uk/1/hi/business/3836021.stm

 

The Governor of the Bank of England can’t just come out and say that a crash is coming, because this would start one. He would not be making these warnings for the fun of it.

 

King’s warnings seem to be filtering through to househunters. More and more now expect house prices to fall. In January, only 1 in 10 househunters thought house prices would fall in the next 12 months, now it is more than 1 in 3.

 

http://www.thisislondon.co.uk/news/business/articles/timid80270?source=

[1Man&hisBMW 10]

Originally posted by Tony

OK then.. lets lok at it another way.

 

If prices are 'too high' (which they aren't in Sheffield) do you suppose that people who are selling in the future will accept less than they have paid? Of course not.

 

Not just about that though is it Tony? It also depends how stretched people are paying their mortgages now, if rates rise, and things become less affordable, those without a buffer will suffer the problems of repayment.

 

I dont think there will be a 'crash' as such, but definately a decline or readjustment as its called. Sheffield has just come up to whats its housing stock is worth, but those people paying well over asking etc may find differently later on.

 

You will find as in the property crash of the 80's/90's people don't have to sell, because their houses actually get reposessed when payments are not met.

 

Never think that you might not have to sell for less than you bought.... bit like currency exchange, the people oiling the cogs of the market know when it needs to be done.

 

Buy, yes... but buy cautiously and sensibly.

[Tony 10]

Originally posted by 1Man&hisBMW

I dont think there will be a 'crash' as such, but definately a decline or readjustment as its called. Sheffield has just come up to whats its housing stock is worth, but those people paying well over asking etc may find differently later on.

 

That's exactly the point. Having bought a house at the height of the market in 1991 and sold in the depths of 1994 I had that experience. That particular experience was that we paid £42k for a house in a direct deal, and sold it for £56k 2 1/2 years later. We bought sensibly and sold sensibly. It took 4 months to sell ours and there were people around us who had paid £57k for the same property.

 

In those circumstances people just stay put. Demand falls. Price averages stabilise and the whole thing generally calms down. The prices for those same properties now are selling for £130k. Property is as long term investment. It outperforms EVERY other investment sector over the long term. It will always do so.

 

Additionally, I still maintain that Sheffield is almost immune to major fluctuations, even at the moment.

[1Man&hisBMW 10]

Originally posted by Tony

That's exactly the point. Having bought a house at the height of the market in 1991 and sold in the depths of 1994 I had that experience. That particular experience was that we paid £42k for a house in a direct deal, and sold it for £56k 2 1/2 years later. We bought sensibly and sold sensibly. It took 4 months to sell ours and there were people around us who had paid £57k for the same property.

 

In those circumstances people just stay put. Demand falls. Price averages stabilise and the whole thing generally calms down. The prices for those same properties now are selling for £130k. Property is as long term investment. It outperforms EVERY other investment sector over the long term. It will always do so.

 

Additionally, I still maintain that Sheffield is almost immune to major fluctuations, even at the moment.

 

 

Tony

 

I see where you are coming from, but its still the 'buying sensibly' which most people are not doing. This x-amount over asking etc is going beyond funny, and it just means that the tax you pay, the mortgage, etc all increases.

 

I just hope people keep theirs senses about them when buying..

[Tony 10]

You are right of course. That's the reason why the BoE and the Government have led the lazy media by the nose to create a little dampener - and you can see the results.

 

There is no benefit to anyone of price falling, and interest rates are still puny in all honesty. However, people need a little jolt every now and again to remind them not to be silly.

 

There is a NATIONAL housing shortage, not an oversupply (that's part of the reason why apartments will continue to thrive). Lending is cheap. People are pricing themselves out of the market, that's all that needs adjusting, and it's happening.

[zorba 10]

I think a lot of these points are valid, especially about property being a long term investment. However although it is a long term investment it usually only benefits people after you die.

 

Because usually to realise the equity in your investment you either have to downsize (move to a tent in this current housing boom) or leave this existence.

 

There is also the buy to let factor. I think that a lot of people have rushed to the buy to let market.

 

With this in mind if interest rates do go up and people cannot fill properties with tenants (due to varying reasons competition, new housing stock & high rents), then they may become stretched and therefore have to release this property back into the general market.

 

This may lead to an adjustment in the current housing price boom!!

[Tony 10]

Originally posted by zorba

There is also the buy to let factor. I think that a lot of people have rushed to the buy to let market.

 

With this in mind if interest rates do go up and people cannot fill properties with tenants (due to varying reasons competition, new housing stock & high rents), then they may become stretched and therefore have to release this property back into the general market.

That's another very valid point. However, you must bare in mind that many, many people have worked out that it's more profitable to buy a property, pay the mortgage and get the capital growth than to give £500 a month to a pension company - even if they have no tenant! It's not so much 'buy to let' as buying your pension.

 

A few people might stuggle if they don't have tenants and they don't have other income to cover a mortgage, but as pretty much everything in Sheffield is let that's some time off.

[John 11]

Don't forgot a big slice is consumed by CGT when you sell your buy to let property or 2nd home. Take that into account it is no where near as profitable as stepping up the ladder at the right time using your own home.

[zorba 10]

Just came across this article may prove a bit of interesting reading.

 

http://www.iii.co.uk/insider/index.epl?type=editorial&editorial_type=&id=31812&archive=!1&section_id=30520

[Tony 10]

This is the point. There is a shortage of housing!!!

[sham71 10]

however, an acute shortage of land and housing in Japan and Hong Kong didn't stop property prices falling 50% and more when the bubble burst.

[neilaw 10]

I lived in Hong Kong and that had nothing to do with over inflated prices, it was all to do with fears about the china handback. Companies left HK, people left HK cos their jobs went and the property became less desirable. Not an overinflated price issue.