pimmo2000

iTrader: (6)

On the Wirral ! Quite a nice area really. Nothing posh but good enough for a 1st home.

philc

- got a sense of deja vu when I read this topic ....

Kiwi housing is 'riskiest in the world' - New Zealand's source for business, stock market & currency news on Stuff.co.nz

- so, you think you've got problems !

GrahamG

Well i'm up the shoot... just in the process of buying a place now. We got about 9k of the asking price, if that helps.

Petem95

Have people not noticed how worries about credit and debt have been causing massive losses on the stock market, and major buy-outs have been unable to go ahead due to nobody willing to take on the debt?....

IMO prices will take a big dip - however I also believe it will be no cheaper to buy a house as a result, as higher interest rates, tighter credit controls and less disposible income due to rapidly inflating prices (petrol, food, bills) will mean you'll be spending the same % of your remaining take-home on the mortgage, despite the amount borrowed being a fair bit less!

The "ive made a killing on my house" "greed is good" lot need to wake up and smell the coffee regarding prices however!

lozgti

The whole property market excitement thing seems to have died a death.

Having just moved house I obviously hope values continue to rise.Can't see it though.Think we are at the levelling off stage if anything with houses going for a reasonable amount less than the asking prices.

Sure someone will have a nice graph to prove me wrong

ChefDude

on the up side, for people with some spending money and no mortgage, the increases in bank lending rates to combat the debt market are strengthening the pound against the usd.

and this helps me buy cheap lenses for my camera from the states

anyone looked at arb'ing GBP -> USD -> NZD ?

Dracoro

Why?
It just means it gets more expensive to get into the next property in the ladder. i.e. when you need to leave a 2 bed flat for a 3 bed house it costs that much more. If prices fall then it becomes more affordable to trade up.

People, stupidly, like the idea of their property rising in value, however it's only of use if they wish to sell and cash in (which is generally only for people with other poperties as investments, not single property owners).

For example

3 bed House costs £300k
4 bed house costs £400k
To trade up you need to find/finance £100k.

Prices then, for example, double everywhere.

Great! your 3 bed house is now worth £600k
However the 4 bed house that you need to buy (say you have kids growing up and need more roon) are now costing £800k.
Therefore you now need to find/finance £200k instead of £100k.

lozgti

My equity increases?

Appreciate what you are saying but this move will probably be the last for the next good few years anyway.Moved to a nice area in readiness for kids going to school.Have a nice property,garden,double garage (joy )

As it is last move for a bit I suppose it doesn't really matter,however it is nice to think you have a bit of a'cushion' as it were.

As I said though,I think things are levelling out.It is time for wages to play catch up as I don't think (probably wrong ) there has ever been such a large gulf between what people earn and what they need to borrow to buy.

Reality is...it is overvalued

philc

in the past 5 days the NZD has gone from US 81cents to US 76 cents - so someone is doing very nicely ...

jonc

This isn't necessarily always the case, if you buy wisely, it is possible to add substancial value to the property at the time of sale to ease the next step up the property ladder. For example, a property with out of date fixtures fittings and in a poor decorative state. Doing it up, modernise it and or extend it will add value to the property over the rise of the average property. This is one of the factors that has driven up the property prices over the decade.

Gordo

Dracoro is spot on (Jonc is also right but his is a different point). The media and New Labia have promoted the concept of being wealthier because your house has gone up in value. Assuming it's your only/main residence this is nonsense. Put it this way - someone's house goes up £100k so they borrow £50k for a new car / to go on holiday etc. this is silly - they're never going to crystallize the £100k uplift so it's not real money (unless they default on the loan and have to to pay it off!) - the point is they now have £50k of debt. Would they have borrowed the £50k if the house hadn't gone up in value? Course they wouldn't as that would be madness.

My gut feel is there will be a correction - I know several large buy to let investors who are in the process of or have already liquidated their assets. the consumer debt it going to come home to roost as interest rates continue to creep up and the impact of the previous rate rises comes through.

The supply / demand argument is right and it's complicated (people see renting as 'dead money' and would rather hose it away on interest, buy-to-letters driving up demand, immigration, low interest rates, general feel good fator etc). I don't buy it, though - I was told this morning (by a developer) that 30% of city centre flats in Leeds are vacant. That tells me the market's overheated.

I for one would welcome a correction - jonc's logic is right in that you should always be able to add to the underlying value of a property that would benefit from work done to it - the issue is you may still lose money in the process if the market's dipping, especially given the high costs associated with moving (stamp duty in particular).

Not like me to be bearish!

Gordo

john banks

For the first full quarter that I was renting after selling my previous house, the land registry data showed a drop in house prices of 2.2% in my region, one of the hotspots apparently. The second quarter land registry data isn't out yet for Scotland, but HBOS data showed a 0.6% gain. So in six months house priced have dropped and my savings/investments have increased by about 3% after tax. I pay the same to rent my present property that a 100% interest only mortgage would cost on the old one which was a third of the size. Only the crazy would extend themselves on credit to buy at this point in my area IMHO. The gains were last year. The only way it makes sense to buy is if you're convinced that prices are going to continue to rocket upwards. Otherwise renting is FAR more attractive. Even returning to sensible levels of borrowing and honest comparisons with renting would result in an almighty crash, and it will take years for incomes to catch up. I'm more convinced than ever of a crash now.

Terminator X

iTrader: (7)

I'm older than that, it was O Level

TX.

Terminator X

iTrader: (7)

Of course they are! Big demand & low supply = high prices. Low demand & high supply = the opposite. Housebulders can't build em quick enough, simple as that.

TX.

Terminator X

iTrader: (7)

Ah, the wise words of someone who no doubt rents!

TX.

Terminator X

iTrader: (7)

I'll bet a £1 that you've been saying this since 2001 when you joined the Forum!

TX.

fast bloke

There seems to be an awful lot of bollox talked on here by 'experts' from both sides. The doomsayers have been doomsaying since the average house price was 23p. The people at the other end have been forecasting eleventy sqillon percent growth since the same time. The renters can always throw up a few statistics to show that they are technically better off, and the buyers can quote <insert appropriate lender name here> to say that their house has gone up by 100k this week. At the end of the day, if you can negotiate around what you would like to happen and the stories you tell yourself to convince yourself that you are correct, you will find that no-one really has the slightest notion what will happen next. If anyone could predict with any certainty what would happen, they would now be so rich that they would have several slaves to post on the internet while they go off and make an extra few million predicting the future.

p.s. - I would prefer 0% interest rates and inflation at 100%. It would be perfect for my circumstances, but just because I would like it, you will wait a long long time before you find me trying to convince others that I know it will happen

Petem95

I think its more like big demand, low supply slack lending and low rates = high prices

You could have 50 buyers for every house, but if nobody was able to borrow enough to buy it then it would have to drop in price to a level where people could. Have you noticed how rates are on the up, and lending looks set tighten?

Anyway the supply/demand arguement is the only thing the lenders and EA's have left to talk up the market, and IMO its nowhere near as bad as made out (Clearly some will lap up all they say, eh Tx ).

Do you really think we couldnt see a crash? Look at places like Japan and Hong Kong - GENUINE supply/demand issues as very little land to build on, yet still MASSIVE house price crashes with prices down over 80% in a lot of areas. Or do you prefer to ignore these examples?

PeteBrant

It doesn't quite work like that.


You aren;t factoring in that the demand is limited by the ability to raise the capital. It's not like you are buying oranges.

Demand in Maidstone, will probably be just as high, if not higher, because by default there will be a wider selection of people able to buy the properties at the given price.

THe higher the price, the less people can afford it, therefore demand isn't as high - For example, demand for £3,000,000 houses is not the same as it is for £200,000 houses. Yet the £3,000,000 house is still going up 10% a year.


I am not saying supply/demand isn't an issue, but it is not nearly as simplistic as you are making it out to be.

PeteBrant

Bit late for that, manufacturing is already dead int he uk - When you look at it from a viewpoint of a couple of decades ago.
The Government might not get a choice, For starters they don't control interest rates, the BoE do - And that is primarily governed by the rate of inflation - Which of course to a certain extent is controlled by the government.

And a government that wants to control inflation shouldn't really be lowering the base rate of tax to 20%......

More people, especially FTB's will be able to afford a £100K home, then will a £275K home - The relative niceness of the area becomes irrrlevant - I would prefer to live in Kensington than where I do now, but I don't have the option.

The reaons the prices aren't the same is not purely down to supply and demand - There are several other factors at play, not least of which is the "niceness" of the area as you mentioned.

Schools, catchment area, hospitals, transport links, crime statistics, historical value, lay lines, flood plains, weather, population demographic - All of these factors affect the value of a given property. Supply/Demand is just one of those factors, and not necessarily the primary one.

PeteBrant

Not necessarily. Demand is only present if you have the budget available.

Were demand the driving factor, then you would find only the nice areas going up in value, and the run down, less affluent areas would remain static. As it is, there is pretty much a uniform rise across all property prices.

Matteeboy

Does it really matter so much?
We have been brainwashed into thinking it's our God given right as UK citizens to own a home and if we can't afford one, then we have failed.

Owning a house has been the best thing ever for about ten years, it's now not quite as appealing to get on the "ladder" - so it kind of levels out.

People forget to look at the entire life cost of a mortgage (which is often taken out at low rates, then goes up over 25 years), people forget that they have to sell their house to realise any cash, people forget that everything else goes up at the same rate.

We have rented two different apartments in the past three years - both almost identical value, both lovely places on the river - One (rented first) was double the rent of the other.

If you're clever (or more likely lucky) with renting, you can pick up a bargain and pocket the rest. You're very very unlikely to pick up a house purchase at a bargain though.
Unless it's in mid Wales.

PeteBrant

BBC NEWS | In Depth | UK House Prices | Maidstone

Many of the lower prices areas in the Maidstone area have risen more than Tunbridge Wells - For example, the lowest average , Medway, has gone up 9.4% in the last year, versus 3,2 for Tunbridge.

Of course specific local anecdotal examples may be different, but on the whole, there is a uniform rise, if anything, more of a rise in less expensive areas - Supply/Demand is not the only criteria.

bugsti

Just one thing - after 25 years (assuming you dont move) when you have finished paying your mortgage you live rent free. If you rent then you pay for it as long as you live.

Matteeboy

Ahhh yes Bug but how much interest have you paid over that 25 years?
A mortgage is a big loan after all.

Not saying it's wrong to buy (quite the opposite), just lots treat house price rises like winning the lottery.