al4x1

anyone who thinks there is going to be a sharp significant drop is going to be waiting a while. Property prices have stagnated they still went up 8% last year. With all the negative press on the economy people are generally holding off buying waiting to see if they are about to get a bargain. Interest rates don't look set to do anything nasty and while that remains its very unlikely to be more than a 5% drop.
My brother in law works for a relatively small estate agency and they have been selling 1 a day at the moment which is unheard of for them. Certainly seems like lots of interest. All these figures have been affected by HIPS coming in and a traditionally slow time of year for house buying and selling. But you never know the Daily mail and Pete may manage to talk the market down

GC8WRX

Its exactly that, paying the mortgage, that has been a problem for most young people!

Why should i fork out 750 a month (repayment) for a 1 bed flat on the ground floor, when realistically its worth about 400, 450 tops

First time buyers are all waiting for a significant price drop, and thus most i know are renting for another 12 months to see what happens! And its first time buyers that fuel the market as a whole!

Im sorry but no run of the mill 1 bed flat is worth 120k, and no 2 bed terrace in a part of town you wouldnt park a scoob is worth 150k(unless you pay even more stupid london prices)

And until they come down to about 80k and 100k repectively i aint buying shi1t, i dont care if i have to wait 15 years, the price drop will come!

My brother mortgage is 400 (repayment) a month for a 3 bed semi with a large garden and driveway, he bought in 92!

Henrik

iTrader: (5)

Up 8% since last year? Not according to Nationwide who say they're only up 2.7% (http://www.nationwide.co.uk/hpi/).

Interest rates aren't really that relevant at the moment, as banks wont lend most people the amounts they need to buy a house despite the interest rates (due to the "credit crunch").

Here's another nationwide PDF (from feb 29th), showing that the highest house prices were achieved in October 2007, and since then it's been downwards for four months in a row. http://www.nationwide.co.uk/hpi/historical/Feb_2008.pdf

Sounds like a great time to be buying property.

Paul3446

If you don't have a house now, you are basically screwed and may as well rent.

Henrik

iTrader: (5)

for now

davegtt

and forever

lozgti

This whole economy is being found out I'm afraid.

We are simply at the end of the cycle again and the housing market is going to have a bit of a battering for a bit.Say goodbye to your equity

Just seems labour and everyone involved in the housing market managed to string out the miracle for longer than expected.Should be interesting and very painful

davegtt

Problem with house prices dropping, if interest rates remain low which I cant see any major rise people will just snap up houses as soon as they become affordable again pushing the prices straight back up. Bit of a catch 22 IMO

lozgti

I think things would have been fine if the housing market hadn't been fuelled so much.....houses doubling in 5 years or whatever.

Maybe a steady increase rather than huge price rises wouldn't have made it so scary.It needs to drop a lot to be attractive to borrowers whose borrowing potential is being cut by all the banks.

If we can all only borrow abou 3x income and income hasn't gone up..what happens?

Gear Head

iTrader: (2)

A recession!

MikeCardiff

iTrader: (2)

One thing I can see happening is that as house prices fall, then mortgage rates will creep up ( they are already a couple of percent more than they were a couple of years back ) so the actual cost of the mortgage will end up being the same - good news if you are a cash buyer, but not for most people.

Petem95

It's just not that simple anymore is it - BoE cutting rates, and lenders at the same time increasing rates and tightening lending criteria - anyone who thinks house prices can remain insanely high with all this going on is either just ignoring the facts or living on cloud cucko!

Henrik

iTrader: (5)

Provided that you can make some overpayments, it's always better to have a smaller mortgage with higher rates, even if the "minimum amount payable" per month is the same.

MikeCardiff

iTrader: (2)

Agree, but there arent that many people taking out new mortgages ( which are the ones that will be most effected as there are generally much better deals available if you are remortgaging as all the lenders want to get customers from each other ) who are able to do this.

Even a 10 - 20% drop in house prices will still leave your average FTB place hugely overpriced, and FTB's will be stretching themselves to afford them.

Luminous

iTrader: (3)

Cloud cuckoo here for me. Just remortgaged, the difference was £2 per month. Feel the pain, not!

Mortgage companies want to make money. They may increase lending criteria a little, but they are not going to put themselves out of the market.

Graz

Unfortunately this was the view I was taking years ago when property prices started to sky rocket. I thought to myself that no way is this sustainable and there will be a drop soon. Oh how I wish I bought somewhere back then. I'd be sitting pretty now.

Finally thanks mostly to the fact I'm no longer single we got a place of our own last year. Managed to stump up 25% deposit with the proceeds of the sale on her place and my savings.

I can see no reason why there will be any sort of big drop over the next few years. The economy is doing well enough, inflation is low, interest rates are low (relatively speaking). Yes the credit crunch has happened but this has only really effected those who really shouldn't be buying anyway. It's just back to the days before 100%+ mortgages were readily available and it was not okay to borrow 6x salary to buy a house. Save up first, it's what my parents had to do when they were young, no flash cars, going out on the **** every weekend, etc.

The other thing there is no getting away from is that we live on an island, there are only so many places to build houses and they are rapidly being used up. For sure we have a lot of open countryside but we don't really want to see it getting built on otherwise the UK will cease to become a pleasant place to live (though some may argue that it isn't anyway ). Whilst the population isn't expanding rapidly we do have a lot of migrant workers coming into the country including professional types as well as unskilled workers. They need somewhere to live. So demand will nearly always outstrip the supply. So long as it remains within the realms of affordability, which it is probably towards the top end of now, the the prices will remain the same.....


...but we'll see, may be eating my words in a few years, but really I don't care, I'm in it for the longer term, I want somewhere nice to live, not some crappy rented place that I can't do anything with to make it my own. An English man's home is and always will be his castle

john banks

Demand is driven by credit. Credit is tightening. There is no shortage of housing - plenty for sale (and rising), plenty to rent.

The economy is a basket case. CPI inflation is low but rising and will do so dramatically in the next few months. RPI is persistently over 4%. House price inflation is about to turn to year on year negative. A recession is creeping up on the UK whilst Darling says all is well.

Gold and other currencies are telling you that the £ is going to hell with all the debt, poor banking practices and rampant inflation excluded from the official figures.

I'll keep my crappy rented houses thanks (having cashed in on the bubble rather than bleated about it too early).

Leslie

How do you think that will affect the value of Northern Rock who handed out all those mortgages? What are the chances of the taxpayers getting those billions back?

Les

Gear Head

iTrader: (2)

Fine if you were in a position to do that!
Go and be smug somewhere else!

john banks

I'm aware that selling your house and renting has so far made me look a bit of a nutter, and now starting to look just slightly wise. The smugness was enjoyed by the over-leveraged whilst property was in a bull run, but I realise it will be even more irritating to be smug when it is crashing, so I think I'll shut up before I get lynched.

I'll pose as a first time buyer when everything is f***ed and keep my views to myself

Petem95

Not everyone has thought that!

IMO you're going to make a killing as things are going pop in a much bigger way than a lot of people expected (me included), and as the asset bubble's grew stupidly big (including houses) - so if you sold your place fairly near the top then I think the difference between the top and the bottom is going to be pretty massive.

The bad news regarding the financial state of affairs in the US and other big economies just keeps on coming - things are going to get much worse before they get better.

Many firms are cutting jobs, borrowing money has gone from one extreme to the other in the space of 7-8 months (ie everyone being able to borrow huge amounts with ease, to it being extremely difficult to borrow even for those with good credit histories)

Back on topic the UK housing market seems to be following exactly the same path down as the US and Ireland for example - prices started off only slowing slightly with sales volumes falling hugely (because sellers still think the house is worth loads, so hold out for buyers who dont come), but after 12 months or so the real drops start appearing in the figures and then falls just snowball.

A lot of UK BTL sellers will be waiting until after April (and changes to CGT) to sell, so expect a massive increase in properties then, and even more downwards pressure on prices.

I just feel sorry for the FTB's who stretched themselves and bought in the last couple of years - some are set to get seriously screwed

lozgti

The worst part is the 'Chemical Ali' denials still going on

"There is no problem with anything.Stock markets aren't falling.hedge funds aren't going bust,banks aren't in deep doo doo.Everything is mighty fine and the good times will keep on coming"

stilover

Couldn't agree more.

StickyMicky

must admit that last month i felt like jumping on and buying a place, then priced up what the current empty neighbouring properties were wanting for rent, and the current average rent costs per week have went up £50 for pads in the same street, also got hit with a big *** tax bill so my nicely saved deposit went flying out the window LOL

time to start again

nobody seams to be buying around here and prices have dropped, but the stuff to rent has went up?

i had a few words with my accountant, and he basically said, just get on, when you can, as holding out for a drop is a bit pointless, you could hang on for years waiting for a drop, and have the cost of living rocket up anyway.