Risky in what sense mate?

Negative Equity
http://en.wikipedia.org/wiki/Negative_equity

Its looking like it may happen again and its a horrible situation to be in.  The people whore most susceptible are people with >85% mortgages because as soon as house prices start dropping theyre instantly in more debt than the bank repossesing their house can cover.  When it happens you basically cant sell without finding thousands of pounds to pay off the difference in your mortgage, you cant just have your home repossesed and walk away because the house isnt worth enough to cover the debt, etc.

House prices took a big hit before christmas on the back of the sub prime mortgage problems and rising interest rates.  If they keep dropping here then a huge number of people here who bought with less than 10% deposits will be stuck unable to move without very expensive bridging loans or simply have their homes reposessed and still owe tens of thousands.  Its happening all over the US which is why theyre slashing interest rates.  The bank of england wants the housing market to cool so they wont be slashing interest rates here if the same happens.

Its happened here before and most of the banks and big companies are dumping property they use on the market and then renting it back from the buyers.  Thats a good sign that they think property is going to drop a lot.  Demand in the south east is high enough that it may survive but the big growth areas outside the capital are a risky option right now.

House prices wont fall anytime soon.
Theres to much demand from the influx coming in.

They may fluctuate a little, but I really cant see them dropping anymore than 2%-3%.

Price is driven by demand, so when they start to drop, people will start to buy.. people buying will then push the prices back up.

Anyway, £23k = mortgage of about £85k at a push.
Repayments on that would be around the £500-£600 mark.

Your pretty much looking at a Flat at best.

Quote from: EggtasticoHouse prices wont fall anytime soon.
Theres to much demand from the influx coming in.

They may fluctuate a little, but I really cant see them dropping anymore than 2%-3%.

Price is driven by demand, so when they start to drop, people will start to buy.. people buying will then push the prices back up.

Maybe in some areas, but where I live houses are being discounted like mad.  Talking to the estate agent the other day they are having issues shifting stuff as people are just refusing to pay.  When you think that the average price round me for a 3 bed terrace is 100k it seems strange to people from outside the area.  

QuoteAnyway, £23k = mortgage of about £85k at a push.
Repayments on that would be around the £500-£600 mark.

Your pretty much looking at a Flat at best.

Depends on location, 83k for me would mean a 2 bed turn of the century terrace.  

I bought a flat in August, £206k in London. Well outer London.

I think you need to look at where you want to buy and see how the market is.

London and other cities/towns should be able to survive the recent price drops ok as long as nothing else comes along to deepen the crisis. It depends entirely on where you want to live as to the degree of risk when buying right now.

For me, buying now would be off the agenda regardless of local market conditions.

To get my first place I took out a loan from the bank.

Use that cash to pay the depost, so that I had a lower repayment option,
then I had my mortage and load to repay, but now the load is repaid I am on a good deal.

But only consider this if you can afford both a loan & mortage - it will save you money on the morthage if you dont have any savings.

Quote from: EggtasticoHouse prices wont fall anytime soon.
Theres to much demand from the influx coming in.

They may fluctuate a little, but I really cant see them dropping anymore than 2%-3%.

Price is driven by demand, so when they start to drop, people will start to buy.. people buying will then push the prices back up.

Im not taking a view on this tbh.. as there are many factors that can affect the housing market but it is still perfectly feasible for house prices to drop significantly even with lots of demand for housing - if there are no buyers available at a particular price level then they pretty much have to drop else the market will become stagnant.

As far as Im concerned Im pretty happy renting, the rent I pay in my current place is cheaper than the interest alone would be on a mortgage so I am saving money by renting.

As for the OP Id say just make sure you shop around - check the price comparison sites, go to a broker and check what price youd get from your bank if youve got a graduate account with them (dont know if they are any good but HSBC keep trying to offer me a cheap mortgage that they apparently offer to grads.). Make sure you do your own research and bear in mind that any from of financial advisor/mortgage broker type you deal with is primarily a salesman and there are plenty of conflicts of interest that go with that.

Im not sure which way it would go but I think believeing were only looking at 2-3% correction is so naive its kind of astounding.  If the housing market is correcting (which is how it looked before xmas) then it could very easily correct in line with income.  Thatd be 10 times that amount.

Banks currently arent falling over themselves to give mortgages so even with high demand they cant pay the price.  The houses wouldnt stand empty but they could very easily drop in value 20% nationwide and still be at the extremes of what banks are willing to lend people.

Its not a lack of demand that could kill the prices - its 3 main things plus a ton of little ones:

* banks being cautious about any sub prime candidates for mortgages (i.e. 100% mortgages) - which they are as of the sub prime trouble
* if houses are too expensive compared to income (normally considered 3-4 times income) - which they are well in excess of
* economic problems globally meaning pension funds and investments wont mature to pay off existing mortgages - the US is on the verge of a major slump which could become a minor recession.

Until before xmas only the second was true and that meant they could just climb artifically high.  As of September all 3 are true and houses dropped in price big time.  The christmas holiday lul has been a blessing since it means noone knows if were in the middle of a crash or not.  Its not speculation, house prices were tumbling before xmas.  Hopefully itll be passing but if the US gets a recession or major slump...


I sold, totally removed all UK property investment and Im renting again.

on a total side note... when I was in the USA about this time last year, house prices in Philadelphia had dropped 50% in a year

I was pretty shocked that I hadnt heard anything about it before that

Quote from: SteveFNegative Equity
http://en.wikipedia.org/wiki/Negative_equity

Its looking like it may happen again and its a horrible situation to be in.  The people whore most susceptible are people with >85% mortgages because as soon as house prices start dropping theyre instantly in more debt than the bank repossesing their house can cover.  When it happens you basically cant sell without finding thousands of pounds to pay off the difference in your mortgage, you cant just have your home repossesed and walk away because the house isnt worth enough to cover the debt, etc.

House prices took a big hit before christmas on the back of the sub prime mortgage problems and rising interest rates.  If they keep dropping here then a huge number of people here who bought with less than 10% deposits will be stuck unable to move without very expensive bridging loans or simply have their homes reposessed and still owe tens of thousands.  Its happening all over the US which is why theyre slashing interest rates.  The bank of england wants the housing market to cool so they wont be slashing interest rates here if the same happens.

Its happened here before and most of the banks and big companies are dumping property they use on the market and then renting it back from the buyers.  Thats a good sign that they think property is going to drop a lot.  Demand in the south east is high enough that it may survive but the big growth areas outside the capital are a risky option right now.

Which is why my estimate of the amount he might be able to borrow is so much smaller than yours. The BoE and US Treasury have pushed a huge wodge of money into the loans market to ease the pressure the banks have created, which is why we are finally seeing some movement from them. This is a pretty much unique situation with them bailing out the market rather than risk a disaster.

Prices are expected to be going down, a little on average. Hopefully it will not be as bad as expected. Some Estate agencies are telling people to consider offers, any reasonable offers.

Quote from: Beaker

Quote from: EggtasticoHouse prices wont fall anytime soon.
Theres to much demand from the influx coming in.

They may fluctuate a little, but I really cant see them dropping anymore than 2%-3%.

Price is driven by demand, so when they start to drop, people will start to buy.. people buying will then push the prices back up.

Maybe in some areas, but where I live houses are being discounted like mad.  Talking to the estate agent the other day they are having issues shifting stuff as people are just refusing to pay.  When you think that the average price round me for a 3 bed terrace is 100k it seems strange to people from outside the area.  

QuoteAnyway, £23k = mortgage of about £85k at a push.
Repayments on that would be around the £500-£600 mark.

Your pretty much looking at a Flat at best.

Depends on location, 83k for me would mean a 2 bed turn of the century terrace.  

Same deal where im looking.

There are some mid-terrace 2/3bed properties in Gloucester/Cheltenham which are going for 90k... some upto 120k (possible on a guarantor mortgage).

It isnt to buy a property around christmas, im not thinking about doing this until the summer, but I just wanted to see what Id need to get the ball rolling.

Id sit on it a while. We saw the greatest rises over here in Northern Ireland, and they are now starting to tail off and downturn. Loads of the me-too greedy investors and developers are starting to feel the pinch, and range rovers are going back to dealers showrooms left right and centre

You cant maintain a market with prices starting at £250,000 in a population where the average salary is about 23-25k.

Its ridiculous - I earn over 50k pa and I wouldnt be able to afford to mortgage a decent house on my own in the current climate.

It is amusing walking past the estate agents nowadays - theyre literally begging first time buyers to prop up their business. The same FTBs they were very quick to snub when all the greedy investors were buying up everything and keeping them in commission.

I still dont think theres going to be a collapse like people think.

If anything, property had always been cheap (when you think about it & compare it to prices on other things like cars, boats, holidays, etc) up until the current boom.

I do think prices have peaked (& prob over valued), but I dont see a crash where prices are likely to fall by as much as people think.

At the moment in lower valued areas, Investors arent interested because theres no/little return.

When you could buy a 2 bedroom+ house for £50k 5+ years ago, they was getting snapped up. Loads of people jumped on the bandwagon for a 2nd income.

Mortgage on £50k would be around £300 a month?
Rental = £80 a week minimum = £4200 a year approx. Mortgage = £3600
So theres £600 a year profit, which will get eaten up in maintainance anyway..

Now your looking at £85k
Thats a morgage of £550 a month £6600 a year
Your already down £3000 a year.

If they drop, then the buy to let market will open back up & push the prices up again. If they stay to high, then people just wont bother moving.

The problem isnt 85k houses  lol

The problem is for a lot of places houses at tha price point simply dont exist anymore.  There are actually car park spaces going for significantly more than 85k now lol.

Quote from: SteveFThe problem isnt 85k houses  lol

The problem is for a lot of places houses at tha price point simply dont exist anymore.  There are actually car park spaces going for significantly more than 85k now lol.

not everywhere in the UK & simple fact is, if you cant afford to live in the area.. MOVE.

I was just using the £85k as an example - along with £80 a week rent  - as that is what you can get by renting via the council.
Its the best market to aim for TBH as the every council has a housing list, so your guaranteed rental. 2nd best is prob student places, but they will have hire maintainance cos they are messy greasy f**kers.

Also, its worth pointing out that most couple now both work. Gone are the days of the old man going out to work & the women being housewifes.