Why do some first time buyers pay ludicrous prices for property, when prices are expected to crash?
June 30th, 2010 by
According to the IMF, Ernst and Young, and the Office for National Statistics, house prices are still considerably overvalued. Given that prices rose from £57k in 1997 to £198k in 2007, and have only fallen to £161k despite rising unemployment and tightening lending criteria, why are FTB’s even considering paying such absurd amounts for property when the average salary is only £23k?
Related posts:
- Are UK house prices going to crash? i really want to buy my first property. but, is tghis the right time? do u think prices will continue to rise and that i should get on the...
- will property prices in the uk crash? i have 4 houses and im looking to buy a 5th but im unsure now ...
- What is your opinion on house prices in London? There has been lots of specualtion as to what is going to happen to property prices in London. Will they crash or rise slightly in the next few years?...
- Thinking of buying a property in Florida (UK resident) any advice? I hear there has been a crash in the market I saw an article in a newspaper that property in the states has fallen by 40%, and with the dollar weak and the pound strong I was thinking it...
- Where will the property market be in 3 years time ? I have seen two property corrections in my lifetime, 1972 and 1989. Everything is cyclical and I feel we are due for another bumpy ride. This government has encouraged...
Sometimes because they make the terms so easy for first time buyers to get them sucked into buying.
Maybe because despite the statistics you quote, house prices have started rising again – albeit slowly – in parts of the country.
because the prices arent expected to crash. they crashed last year, but the crash was counterbalanced by house shortages that made the crash shallower and briefer than expected. so long as there’s too few houses for too many people, property will be overvalued.
Those wouldn’t be the same “experts” who 2 or 3 years ago told us that house prices couldn’t go down, would they?
Hint: It’s ALWAYS a good time to buy and it’s NEVER a good time to buy. Take your pick.
Because they buy into the lie perpetrated by all Governments.
Inexperience and they think that mommy and daddy are always going to be there to bail them out.
The IMF said that house prices in the UK were overpriced by around 30%. I think they are wrong – they are overpriced by more than 100%.
Realistically a terraced house in a northern town like this one should compare in price with a second hand caravan, and definitely not be over £100,000.
Part
For the same reason others buy gold.
Like gold, land is finite, not least land in a reasonably benign part of the world such as the UK. There is only one Earth to support a human population that demands three. So anyone with land is sitting on an appreciating asset for as long as the world’s human population keeps exploding.
When the value and meaning of many major currencies is brought into doubt – because of bubbles, deregulated creative accounting and precious little industry to support that currency – then anyone with any money at all or cheap access to it (remember the base rate is 0.5% and will remain so for a while) will buy either into gold or into land. You can’t live in a house made of gold bars, unless you are very wealthy indeed!
If there is a hyperinflation when interest rates become a burden, then even 6-figure debts will vanish into dust. Imagine if they were in Zimbabwe dollars a year or two ago…
Everybody is allowed at least one mistake in life.
Desperation to get on the property ladder, and don’ forget if it all goes pear shaped it is now much easier to declare themselves bankrupt and let everybody else pay for their mistakes.
Sometimes I think there may be a bit of a scam involved.