Your property predictions for 2008

Property prices are far too high. The only people who really benefit from this are people with a vested interest in property, such as estate agents, the government and buy to let investors. When the price of property falls, the only casualties who will deserve sympathy will be people who have bought a 'home' (not an investment) in the past three to four years. However, if it is a 'home' that they bought, in a few years they will be able to sit out their negative equity. The house pricecrash will be positive for first time buyers and anyone wanting to trade up the ladder. Property prices that are now nine times the average wage are unsustainable. Property prices are just a part of an economic picture which is unhealthy. Manufacturing has been dwindling for years. The economy is built on three key parts, a housing bubble, a financial sector and an inflated public sector. All three of these parts are now becoming seriously unstuck. The credit crisis has seriously damaged the finacial sector. Hence mortgages of multiples of over 3.5 with no deposit are becoming a thing of the past. The goverment has built up one of the highest budget deficits within the developed nations and taxes are at an all time high. We have enjoyed a world wide boom fueled by irresponsible lending and cheap imports from China. Inflation from China is now being imported, food and fuel is also rising. All spelling the recipe for DISASTER.

if house prices stay the same and peoples wages stay the same then everyones got a problem havent they.

if house prices drop then thats great for first time buyers but absolute doom for anyone who has invested short term in the property market like many people out there have in the last couple of years.
there would be millions of people with negative equity
what happens then ?
is there an easy solution ?
i think maybe not

bad times ahead

Housing is an asset like any other and not simply a place to live. The idea that a house is just bricks and mortar is too simple and doesnt reflect the new global flows of capital and investment. it is no different from a piece of paper of stock ownership with a dividend or a piece of gold held in a vault. All assets come and go in fashion and those trends last for decades and reflect trends in perception. The credit fallout will of course lead to tighter lending standards but it is also leading to dreadful stock market conditions, powerful monetary stimulus and rampant inflation in "real" assets. Have you lost 20 - 40 % on your house ? No - but your stock portfolio may well have done, some big name uk companies will go bust in the coming years for a 100% equity loss. So where you going to put your money. Housing remains a solid investment and although tight credit will impact at the margin of the new breed of hot money "developers" it will most likely simply provide excellent investment level. As for too expensive relative to earnings - well supply / demand deals with that in the uk, there simply arent enough houses and unlike the US, that cant change. Prices will always look "too" high. remember the investment mantra - the trend is your friend. id suggest buy this dip.

I'm sorry but I sometimes find it hard to sympathise with those who bemoan a future price crash. For goodness sake, houses are for living in, not profiting from! I bought my first home in 1990 when mortgage rates were 15.4% and the major difference between then and recently is NOT the mortgage rate per se, but the laxness of lenders and how monetary discipline has been thrown out the window and replaced by short term greed! Would you believe that I had to pay a penalty fee in 1990 because my deposit was "only" 22% of the asking price (lender required 25% deposits then!)? Prices HAVE to come down as it is totally unrealistic for us to keep expecting bricks and mortar to be a future nest egg when all it was intended for was a comfortable roof over our heads. One more thing, although greedy lenders should shoulder the majority of the blame for the uncontrolled and over heated credit market of the past 10 years, we all also have a responsibility to say NO to lending multipliers of 4,5,6 and 7 etc as we KNOW that we can't afford them should rates change even minimally. I cleared my mortgage in 16 years due to keeping my payments in double figure interest rate levels and thus took advantage of "then" falling rates to eat into the capital debt. I'm sorry dear "reader" but it's as much our responsibility to take control of our finances as it is the lender's to take control of theirs AND that comes to you from a man who has earned less than half the national average wage all his life!

I have a few properties that I rented out. My rental income just cover BTL mortgage, maintenance and insurances. Considering buying and selling properties cost money, I am actually subsidising housing for my tenants from my own pocket. I am not too much worried about market downturn as long as I am in for long term and keep having tenants. The problem is when my fixed rate becomes expire and the cost becomes unafforable. I hope the credit crunch will be over soon on way or the other. Otherwise both landlord and my tenants would loose.

Want to see the truth, look at www.housepricecrash.co.uk

Let's just think about this for a short while before wading in with tales of woes and misfortune. Property is a hedge again inflation it is as simple as that. If, however, you bought a property having lied about your earnings or if your earnings are subject to year on year change or you lose your job you will find this price realignment financially penal if you have variable rate or your 4.5% mortgage comes to an end and you can't afford the repayments...but if you were sensible, bought because you could afford it and can make the repayments and have a job and will remain in employment why would you have reason to panic? As for property prices, the overpriced 'tat' that was on the market through less-than-reputable agents will come down in price much more than good property in good locations. THIS IS NOT A CRASH, this is related to the sub-prime in America and the knock on effect called the credit crunch (which is how all this started). Oh, while we're at it can we stop talking about '90, 79', 1066, it's just not relevant in 2007.

House prices are going to rise and rise right from an early age of say 21years old riight up to your retirement at 70years.

You will make a furtune. Yes!

Thats greed in action.

Remember you can not pay bills with bricks and mortar otherswise builders would not need to sell their houses.

You will never see how people struggle to pay their mortgage.

Never forget that all our economic systems are set up to get you spend your money and when you've spent it no one will want you.

The way things are going the rich are leaving the ordinary folks well behind in the wealth stakes.

Most of the rich like politicians are getting their bricks and mortar paid for by hard working folks paying taxes.

The poor are getting their house and rent subsidies
paid for by the tax payers just like the politicians.

Hard working people will get no help and be taxed all their lives.

So while you are struggling with your mortgage rember you are also buying politicians homes and the people that are signed on the benifits systems.

House prices can fall for many reasons and all those rich in bricks and mortar now will look sad.

Don't worry the tax payer will support you.