Housing Prices

[dinsdale]

First of all I admit I am stupid with money, and dont have a clue how interest and APR's work, But am I alone in thinking that the housing market MUST crash soon, as people are paying well over 3 times there salary just for a wardrobe size house??

[PatTheRat]

There was a prediction a few years ago that negative equity could occur again sometime around 2005. House prices are so high due to the excessive demand in the UK market. If more and more people rented for a few years before buying a new house (this sort of thing happens on the continient), prices wouldnt be so high.

[vicars]

The housing market does not have to crash - it is incredible that as something happened once it is therefore due to repeat itself based on prices going high again. Accept the fact that the chances are prices will not crash but may come down steadily by 10-20%. The problem is that there are not enough hoses to meet demand and as long as people are getting pay increases and not cuts then prices will have to rise over time. However watch out for mortgage regulation as self cert schemes are being steadily drawn back

[J3TUN]

Its basically a supply and demand thing. Lots of people on a small overpopulated Island and not enough new houses being built. Add to that many people have bought their council ot housing association accomodation which is not being replaced by a new one does not help. To compound the problem, our lack of trust in the penions industry has turned us into a nation of landlords and the first time mover is now holding onto his first time flat when he moves to the house with new family. The flat now stays with him and is rented out in the hope that it will help with pension planning and is quite frankly a better investment than anything else he can think of. So the flat which should have gone back into the housing "pot" stays off the market. The so called experts have been predicting a crash for the last 5 years.  My friend in the city has been talking doom and gloom for years citing the Japanese housing crisis where 0% rates could not stimulate house prices as a model for the UK....dream on! A natural slow down is already happening it will surely plateau while incomes catch up again and the cycle start all over again. Perhaps the next catalyst will be a breed of thirty or forty somethings who have newly inherited equity from this and previous booms.