By the beginning of 2007 it was obvious to me that UK property market was about to come crashing down. I’m no economics expert, nor some kind of property guru – quite the opposite. However common sense told me that a UK average property price of £200,000 combined with an average wage of £22,000 spelled disaster. The historical ratio of average property price to average wages was 3.5. So the 2006 average salary of £22,000 should have equated to an average house price of £77,000! No-one in the media, in politics or the property business picked up on this. The good times were never going to stop….
Just over 12 months ago I wrote the first post on this blog. It was a brief welcome and introduction about me. This is the post here:
(link opens in a new window)
In that post I briefly wrote about my old offline business and my decision to move to Turkey. You can read about that in more detail in the posts following that one. However, a major factor in taking the decision to move to Turkey was that I could see the UK housing bubble was going to burst, and I was determined to get out at the top.
In the summer of 2007 I called in several estate agents to value our house. All of them thought the housing boom would continue, at worst the market would be flat for 2 or 3 months, then the party would resume. So much for expert opinion! Anyway, when I got the valuations I was shocked.
We had bought our house back in 1998 – a nice enough house, 4 bedroom detached with a nice garden on a new build estate. Nice enough, but nothing special. I thought we had paid far too much money for it back in 1998 – by 2007 it was supposedly worth THREE TIMES what we had paid for it!
So we put it onto the market in September 2007. Within days we had lots of interest, and an offer – at our asking price! I’m not going to bore you with the details, but after the deal fell through a couple of times, we finally moved out at the end of June 2008. We were probably the last people in our area to get “full market value” for our property.
We got out just in time, the market had peaked about 6 months previously. If we had waited another 12 months (September 2008) to sell that house I doubt we would have got 75% of the 2007 price.
Apart from giving you a bit more background information about me there is a point to this story. I had predicted the end of the housing bubble at the end of 2006; this didn’t become reality until nearly 12 months later. I’m certainly no expert but I used common sense, as explained in the ratio between average earnings and average property prices. Unfortunately common sense seems to have disappeared across UK society.
My advice is if you apply common sense, most of the time you will be right. If I had ignored my own common sense warnings I would still be living in a house that was losing money every day, in a market with very few buyers, with the dream of emigration a long way away.
But anyway, there we were in July 2008 with a nice sum in the bank but essentially homeless! The next part was the actual physical move from the UK to Turkey. Tune in tomorrow for the rest of the story!