The House Price Crash Thread

[snowychap]

...do I continue to pay rent on this flat which is effectively "lost" money?

It is not 'lost' money, though.

If you are talking about a home for the duration of your life (whether that be the exact same one or one that changes according to your needs), then what relevance does its market value (at any time) have?

Think you have the wrong end of the stick there snowy. I currently (privately) rent which eats up a helluva lot of my wages. So from my personal point of view, paying rent on a property that I have no ownership is exactly that, lost money. Whereas, paying money out on a property that I will have some ownership on at least means I'm getting something for my money.

Might be the wrong point of view to have but that's where it stands.

No, I understand where you are coming from.

What I would argue, though, is that we have been 'educated' to believe that, in terms of homes, money paid out for a service is dead money. That unless it buys you something concrete (not referring to the substance of which the building is made :winkold:) then it is wasteful expenditure.

Paying money out in rent, one does receive something for the money, i.e. a roof over one's head.

Do you see any other thing on which you spend money in terms of it being valued at more in the future (e.g. clothes, car, white goods, TV, &c.)?

I understand your mindset and I'm not having a go at you for it - I am just pointing out that the view of property as primarily a commodity is, in my view, not good and the kind of thing which helps to bring about the sorts of worries now being experienced by a large number of people - across the world.*

*Just to be clear.

[Gringo]

So Gringo, would you say that banks are now acting more responsibly in terms of lending or acting more vindictively against those that don't have money?

The answer would have to be neither and both - in that availability is more a reflection of wholesale banking conditions than retail policy, whilst pricing is driven by risk aversion.

Some of the specialist lenders that serviced the sub-prime market can't get any funds to lend due to the credit freeze - this isn't a change in risk approach of the primary lender but because in terms of the eventually traded products, ie the CDOs, the market has gone into freefall, meaning these companies can't re-finance existing debt never mind seek new business.

Similarly some of the more traditionally FTB friendly suppliers have been hit with financing problems a la norther wreck, and have had to reduce their available products. As one pulls from the market, the rest get swamped and so the knock on effect is that the money available for those products gets taken quicker and those markets dissappear.

The risk aversion aspect is that banks don't like repossessing houses, so in a falling market they are reducing their exposure by pricing themselves out of some of the riskier and low-deposit product ranges.

HSBC obviously have a load of spare capital (profits from their asian markets) and see this as an opportunity to grab some market share, though one assumes they will only accept the low-risk portion of those re-mortgaging.

[trekka]

...do I continue to pay rent on this flat which is effectively "lost" money?

It is not 'lost' money, though.

If you are talking about a home for the duration of your life (whether that be the exact same one or one that changes according to your needs), then what relevance does its market value (at any time) have?

Think you have the wrong end of the stick there snowy. I currently (privately) rent which eats up a helluva lot of my wages. So from my personal point of view, paying rent on a property that I have no ownership is exactly that, lost money. Whereas, paying money out on a property that I will have some ownership on at least means I'm getting something for my money.

Might be the wrong point of view to have but that's where it stands.

No, I understand where you are coming from.

What I would argue, though, is that we have been 'educated' to believe that, in terms of homes, money paid out for a service is dead money. That unless it buys you something concrete (not referring to the substance of which the building is made :winkold:) then it is wasteful expenditure.

Paying money out in rent, one does receive something for the money, i.e. a roof over one's head.

Do you see any other thing on which you spend money in terms of it being valued at more in the future (e.g. clothes, car, white goods, TV, &c.)?

I understand your mindset and I'm not having a go at you for it - I am just pointing out that the view of property as primarily a commodity is, in my view, not good and the kind of thing which helps to bring about the sorts of worries now being experienced by a large number of people - across the world.*

*Just to be clear.

I guess that's the world we live in though. In 20 years time and I've been paying rent at the same value of what a mortgage would have been then I would say that's not good neither. If I'm going to be paying £100 more a month to have a mortgage and my own property then from my own personal perspective it's entirely worth it but then I was always the one who landed on Mayfair in Monopoly and my sniggering sister would ask for £2000. If only I had bought Mayfair in the first instance when I landed on it before

[snowychap]

I guess that's the world we live in though. In 20 years time and I've been paying rent at the same value of what a mortgage would have been then I would say that's not good neither. If I'm going to be paying £100 more a month to have a mortgage and my own property then from my own personal perspective it's entirely worth it but then I was always the one who landed on Mayfair in Monopoly and my sniggering sister would ask for £2000. If only I had bought Mayfair in the first instance when I landed on it before

Sniggering siblings have a lot to answer for. :winkold:

[ianrobo1]

here is a question if you have enough savings to pay off your credit would you ?

[Digsby]

...do I continue to pay rent on this flat which is effectively "lost" money?

It is not 'lost' money, though.

If you are talking about a home for the duration of your life (whether that be the exact same one or one that changes according to your needs), then what relevance does its market value (at any time) have?

Think you have the wrong end of the stick there snowy. I currently (privately) rent which eats up a helluva lot of my wages. So from my personal point of view, paying rent on a property that I have no ownership is exactly that, lost money. Whereas, paying money out on a property that I will have some ownership on at least means I'm getting something for my money.

Might be the wrong point of view to have but that's where it stands.

No, I understand where you are coming from.

What I would argue, though, is that we have been 'educated' to believe that, in terms of homes, money paid out for a service is dead money. That unless it buys you something concrete (not referring to the substance of which the building is made :winkold:) then it is wasteful expenditure.

Paying money out in rent, one does receive something for the money, i.e. a roof over one's head.

Do you see any other thing on which you spend money in terms of it being valued at more in the future (e.g. clothes, car, white goods, TV, &c.)?

I understand your mindset and I'm not having a go at you for it - I am just pointing out that the view of property as primarily a commodity is, in my view, not good and the kind of thing which helps to bring about the sorts of worries now being experienced by a large number of people - across the world.*

*Just to be clear.

I have been educated to believe that you should aspire to own your own home so as to not have to worry about forking out rent for the rest of your life.

25 Years of paying a mortgage and the property is yours to live in, no one can take it away.

25 years of renting, and you face another, lets say, 25 years of rent, with nothing to show for it, and always having the risk of someone being able to take it off you.

I know which one I prefer, and it isn't because I see my House as a commodity, it is because I see a roof above my head as the best thing I can possibly buy myself.

[ianrobo1]

yes thats the argument for it and but I brought mine when I could afford it

but I listened to some women on R5 who had a 115% mortgage on a propety in cov worth £189k

Now she claimed there was nowhere else affordable but that is total bollocks so she has risked a lot for prestige more than anything

and it is those mortgages which should never be offerred again

for me all mortgages should be based on 90% LTV and either 3x single income or 4x joint income

this will bring prices down but that is good, you can not have houses at average £200k with average wage at around £27k

[snowychap]

here is a question if you have enough savings to pay off your credit would you ?

Depends on the terms of both, Ian.

Personally, I never have any savings - so I can only answer in the hypothetical.

[ianrobo1]

thats true but you get less in interest onn savings than what you pay on credit but how about the 'rainy day' ?

[snowychap]

I have been educated to believe that you should aspire to own your own home so as to not have to worry about forking out rent for the rest of your life.

25 Years of paying a mortgage and the property is yours to live in, no one can take it away.

25 years of renting, and you face another, lets say, 25 years of rent, with nothing to show for it, and always having the risk of someone being able to take it off you.

I know which one I prefer, and it isn't because I see my House as a commodity, it is because I see a roof above my head as the best thing I can possibly buy myself.

And that is a perfectly admirable viewpoint.

I am not decrying the ownership of a house. My problem is that a lot DO see it as a commodity to be traded.

Your plan is fine as long as there isn't a point within that 25 years when the property is repossessed. As long as everything goes swimmingly (and for most it will - even in uncertain times) then it is a perfectly sensible option.

It shouldn't however be the absolute necessity that it has become where sense seems to have gone out of the window and people are borrowing amounts that they can only afford to repay when the circumstances are very favourable.

The aspiration to get oneself in to a situation where one doesn't have to worry is a perfectly sensible one and I'm sorry if my post was offensive to you in your situation as it wasn't meant that way.

[ianrobo1]

snowy would you allow mortgages to rent ?

I guess not, because I would not

Do you support my idea of allowing councils more freedom to build rented housing AND stopping the selling of exisiting homes ?

[snowychap]

thats true but you get less in interest onn savings than what you pay on credit but how about the 'rainy day' ?

I'd recommend a watch of the Martin Lewis programme on C5, Ian, or a trip to his website moneysavingexpert.com.

The rainy day idea is a very bad reason NOT to pay off debts.

The only reason not to pay off debts is if doing so is cheaper than paying them off, e.g. student loans - which generally shouldn't be paid off quicker than the minimum (explanation from Martin Lewis' website).

Oh and if you can't pay them, obviously.

[trekka]

MoneySavingExpert is a fantastic site. Read it weekly, if not daily at times. In fact, it was one of the reasons how I've managed to half my credit card debt by doing interest-free balance transfers from reading that site.

A good bookmark for anyone I reckon. Useful in a rainy day

[ianrobo1]

thanks guys !!

what it is for me is that currently I am on a 0% charging card but that runs out in decemeber by then I would imagine the offers will be limited if zero

[snowychap]

snowy would you allow mortgages to rent ?

I guess not, because I would not

Do you support my idea of allowing councils more freedom to build rented housing AND stopping the selling of exisiting homes ?

I'm not really in favour of trying to legislate behaviour, Ian.

The allowing mortgages to rent is difficult because although I can see where you are coming from, I can say that would be a) impractical and restrictive.

In order for people who rent to have somewhere to rent there need to be landlords.

I would be very uncomfortable about the idea of legislating out of the rental market place that group of individual, small-time 'investors' who have become landlords in increasing numbers over the past 20 years. What we would otherwise be left with is only those who can afford the ownership of those properties either with ready cash or in the way of companies.

Unless, that is, your proposal would be to take the rental market completely out of the private sector?

I would agree with the idea of allowing councils more freedom about spending on social housing - though that would be in connection with respending the money they have made from the sale of existing housing and not by the use of money that is specifically for spending on public services in the area.

I am not, I'm afraid, too au fait with the ins and outs of tenants' rights to buy so all I could do is say that, hypothetically, I would like to see the stock of social housing grown rather than decreased but I think that whole area has become a bit of a minefield with housing associations and the like.

[ianrobo1]

I would not privatise exisiting private landlords nor future ones but only a few years ago buy to let was ot allowed and that has fueled the prices especially in the south

programmes like property ladder have not helped as discussed earlier, however no Sarah Beeney !!!

it is complicated but at the moment the prices are unsubstanable in many parts and not surprised to see the WM suffer first

[snowychap]

programmes like property ladder have not helped as discussed earlier, however no Sarah Beeney !!!

I could think of a few programmes the Beeney could do. :winkold: :winkold:

[ianrobo1]

totally pointless pics of Sarah but worth it did you know she runs dating websites !!

[snowychap]

Red crosses, Ian, red crosses!!!!!!

Correct, please.

EDIT: Top one's ok, now. And I've just had a look at the second one and I wouldn't worry yourself over that.

[ianrobo1]

I see the second pic !!