Back in the day, we all used to sit around banging on about how much our houses were worth, how much profit we've made and how clever we were.
House prices only ever go up, we told ourselves, and even at the start of the credit crunch we convinced ourselves that it was just a blip and prices would eventually resume their upward trend.
The unfortunate ones who really bought into the myth would remortgage their homes as regularly as celebrities change husbands, fueling another shopping spree on the latest home improvement, car or holiday.
So, here we are in 2011 and house prices in real terms are down nearly a third, even in London, the home of the rich and famous, prices are 20% off their peak in real terms.
That's before you factor in the cost of all those expensive home improvements carried out on the crest of the remortgage wave.
Now, before you start reaching for the drawer where you keep your sharp knives, there is still more bad news. The price of your house is still going to drop for the foreseeable future, at least in real terms, and if you bought at the top of the market then negative equity may be looming.
Why do I say this?
Here's why:
- Banks are still not lending, unless you have a big deposit
- Nobody's moving, housing transactions have slumped so low that estate agents are twiddling their thumbs all year, instead of just in December.
- Everybody's nervous about the future, whether it's job prospects or their mortgage payments inevitably going up
- And, of course, there's Greece! You don't need to understand the details but whatever happens is not going to make life any easier for anybody looking to borrow money.
- Oh, that's before the Government's austerity measures really kick in with large scale job cuts.
Ok, you can move to the knife draw now!
But wait! I've got a solution to all this doom and gloom with regard to the housing market.
Just stop thinking, reading and worrying about house prices. If you see an article which looks as if it's vaguely about house prices, then give it a wide berth. Don't engage in discussions about house prices, it's strictly a no-go area.
Here's why:
- If you already are buying your house then your mortgage payments are at their lowest ever.
- If you've also got a job then paying your mortgage will likely be a dream compared to 4 years ago
- If you fall into negative equity then you won't be able to move for a while, just get over it.
- If prices keep dropping then your next house will also be cheaper to buy, so where's the problem?
- If you are saving to buy a house then, happy days! It will be even cheaper next year.
- But most importantly there's nothing you can do about the housing market. Accept it.
The fact remains that if you can afford to keep paying your mortgage (and have hung on to your job) this economic downturn has been pretty painless.
Direct your energies into trying to boost what YOU are worth ie cut your spending, start saving, repay your mortgage, build your CV, network etc. These are the things you should be concentrating on, not the latest house price data.
