Recession Expected And House Prices Expected To Fall
Most commentators seem to be of the opinion that recession is around the corner and ready to pounce at any time and nearly all commentators now seem to accept that house prices are going to fall over the next twelve months. The figures suggested vary quite a lot but few dispute that they may fall around 5% or so over the year. What does that mean for the house market and what does it mean for individual house owners and buyers?
If they are right this would mean that anybody buying a house today for £200,000 would lose £10,000 by 2009. This equates to about £192 per week which is about the same amount it would cost to rent the same house and leave any money you have in the bank earning some interest.
Buying a house is not usually done as an investment alone. We all have to live somewhere and we like the idea of owning our own property but when it is costing so much you have to wonder if there is any point in doing so. If the downturn in house prices were to only last for 12 months and then turn around and prices start to rise again then the losses may soon be recouped but we have no idea if this might be the case or not.
Confidence in the future seems to be fairly low at the moment. The credit crunch and the US mortgage problems continue, banks are reporting ridiculous amounts lost in poor lending deals and people are starting to tighten their belts. Everything suggests that the times of spending and borrowing excess are over. Things could get difficult for many of us over the coming months and it could even be for some years so it is now more urgent than ever that people reduce their spending, reduce their debts and batten down the hatches for the coming financial storm ahead.
Related posts:
- House Prices Begin To Fall
- House Prices To Drop In 2008?
- House Prices Are Unlikely To Rise For Some Time Yet
- One Percent House Price Drop In June
- The Value Of A House Must Find Its Own Level
Filed under: Investments • Property Prices
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The question isn’t just how much will a declining housing market cost us but also how many more or fewer people will be able to afford to get their own home. For the past 40 years house prices in the UK have risen astronomically. In the 1960s a lender would only lend 3 times one borrower’s income. Now we have the ridiculous situation where two borrowers can’t get on the housing ladder even if they both borrow 5 times their income. It’s completely untenable.
I agree Tim and I think that is one of the reasons we have crazy houseprices now. It clearly is not sustainable