How far will house prices fall [volume 4]
Discussion
crankedup said:
House price falls? Not any time soon with the Pacific Basin major areas in investment difficulties, Europe likewise it leaves rock solid London property attracting money from these areas as relatively safe investments. This confidence in the property market from overseas will sure as heck prop up the market as those City prices continue to ripple out.
lol. overseas investors are long gone. the market has already crashed.
That would actually be £75k here in many parts of Leeds where I am, and I wouldn't want it either!
It's just absolutely mental.
To all those that bang on about affordability and how "kids these days want it all" you are looking through the other end of the telescope. If you are looking to buy now with interest rates as low as ever; massive oversupply of cash in the world; and the relationship between interests rates and house prices.... It's all very well buying a Stratford crack den for 750k when you can afford it, what about when it's worth half the price and your mortgage payments have doubled.
That's where I am at the moment. I can afford the payments on a 450k mortgage on a 500k house (north beds) but why the f
k would I want to? In 3yrs I could be forced into an increased flexible rate against something that's worth 400k and I've spunked 50k savings, can't afford the mortgage at another (say) 1k a month without a serious change in life and am stuck owing the bank 50k if I want to do anything that involves moving.
It hellish and those that do it have bigger bks than me.
To all those that bang on about affordability and how "kids these days want it all" you are looking through the other end of the telescope. If you are looking to buy now with interest rates as low as ever; massive oversupply of cash in the world; and the relationship between interests rates and house prices.... It's all very well buying a Stratford crack den for 750k when you can afford it, what about when it's worth half the price and your mortgage payments have doubled.
That's where I am at the moment. I can afford the payments on a 450k mortgage on a 500k house (north beds) but why the f
k would I want to? In 3yrs I could be forced into an increased flexible rate against something that's worth 400k and I've spunked 50k savings, can't afford the mortgage at another (say) 1k a month without a serious change in life and am stuck owing the bank 50k if I want to do anything that involves moving.It hellish and those that do it have bigger b
ks than me.Edited by Bedford Rascal on Wednesday 10th February 18:18
z4RRSchris said:
crankedup said:
House price falls? Not any time soon with the Pacific Basin major areas in investment difficulties, Europe likewise it leaves rock solid London property attracting money from these areas as relatively safe investments. This confidence in the property market from overseas will sure as heck prop up the market as those City prices continue to ripple out.
lol. overseas investors are long gone. the market has already crashed.
I ask because it isn't chiming with what I was hearing just a few weeks ago. You are sure it's the city market that has collasped!, I f so then a lot of speculators and developers are going to get their fingers burnt.
The developments of high rise along the Thames is rampant. Some people have sunk multi millions or billions into these projects which are under construction and late stage planing.
I agree that turnover of property has dropped significantly and the lower end property of upto two million may be struggling due to the stamp duties changes 2014 but I don't see the mega wealhy affected by this and I am with the side that is with the City being a safe haven for property investment. Perhaps we have a pause for breath. I am genuinely interested in your take on the top end of the city market.
Edited by crankedup on Wednesday 10th February 19:38
RYH64E said:
crankedup said:
House price falls? Not any time soon with the Pacific Basin major areas in investment difficulties, Europe likewise it leaves rock solid London property attracting money from these areas as relatively safe investments. This confidence in the property market from overseas will sure as heck prop up the market as those City prices continue to ripple out.
What do you consider to be 'rock solid London property'? How about this fantastic opportunity in Stratford? A veritable bargain at just £750k I'm sure, overseas investors must be queuing up.Redrow boss says Stamp Duty is killing London property:
http://www.standard.co.uk/business/redrow-chairman...
http://www.standard.co.uk/business/redrow-chairman...
Bedford Rascal said:
It's just absolutely mental.
To all those that bang on about affordability and how "kids these days want it all" you are looking through the other end of the telescope. If you are looking to buy now with interest rates as low as ever; massive oversupply of cash in the world; and the relationship between interests rates and house prices.... It's all very well buying a Stratford crack den for 750k when you can afford it, what about when it's worth half the price and your mortgage payments have doubled.
That's where I am at the moment. I can afford the payments on a 450k mortgage on a 500k house (north beds) but why the fk would I want to? In 3yrs I could be forced into an increased flexible rate against something that's worth 400k and I've spunked 50k savings, can't afford the mortgage at another (say) 1k a month without a serious change in life and am stuck owing the bank 50k if I want to do anything that involves moving.
It hellish and those that do it have bigger bks than me.
The thing that is most amusing is when we get the oft repeated comment that those "kids" would be able to afford it if they give up the gym memberships and expensive mobile phones.To all those that bang on about affordability and how "kids these days want it all" you are looking through the other end of the telescope. If you are looking to buy now with interest rates as low as ever; massive oversupply of cash in the world; and the relationship between interests rates and house prices.... It's all very well buying a Stratford crack den for 750k when you can afford it, what about when it's worth half the price and your mortgage payments have doubled.
That's where I am at the moment. I can afford the payments on a 450k mortgage on a 500k house (north beds) but why the f
k would I want to? In 3yrs I could be forced into an increased flexible rate against something that's worth 400k and I've spunked 50k savings, can't afford the mortgage at another (say) 1k a month without a serious change in life and am stuck owing the bank 50k if I want to do anything that involves moving.It hellish and those that do it have bigger b
ks than me.Yes with massive sacrifice you might be able to afford a starter home in a crap area, whoopy do. That doesn't mean that the market is working as it should when professionals in their thirties are struggling to buy houses built for factory workers.
JagLover said:
Yes with massive sacrifice you might be able to afford a starter home in a crap area, whoopy do. That doesn't mean that the market is working as it should when professionals in their thirties are struggling to buy houses built for factory workers.
I could not agree with this more.What I don't understand is what mechanisms or catalysts are available to push prices the other way.
walm said:
JagLover said:
Yes with massive sacrifice you might be able to afford a starter home in a crap area, whoopy do. That doesn't mean that the market is working as it should when professionals in their thirties are struggling to buy houses built for factory workers.
I could not agree with this more.What I don't understand is what mechanisms or catalysts are available to push prices the other way.
The cost of technology has gone down a lot, the cost of cars has gone down a lot such that around 80% of the population has one or has access to one - and the cost of housing has gone up a lot.
Do what you can, accept the rest, carry on. What's the alternative? Relying on politicians isn't an alternative!
Bedford Rascal said:
It's just absolutely mental.
To all those that bang on about affordability and how "kids these days want it all" you are looking through the other end of the telescope. If you are looking to buy now with interest rates as low as ever; massive oversupply of cash in the world; and the relationship between interests rates and house prices.... It's all very well buying a Stratford crack den for 750k when you can afford it, what about when it's worth half the price and your mortgage payments have doubled.
That's where I am at the moment. I can afford the payments on a 450k mortgage on a 500k house (north beds) but why the fk would I want to? In 3yrs I could be forced into an increased flexible rate against something that's worth 400k and I've spunked 50k savings, can't afford the mortgage at another (say) 1k a month without a serious change in life and am stuck owing the bank 50k if I want to do anything that involves moving.
It hellish and those that do it have bigger bks than me.
In your position I'd be looking to buy a 400k or so property in a nice London suburb/just outside M25 near a commuter station (even somewhere as unfashionable as Slough is affordable and gives good rental returns - it's always in demand for rental properties due to proximity to Heathrow and fast commuter railway link), where you are about as property-crash-protected as it's possible to be. Then, let it out. Rent will cover the mortgage and a little bit more. Obviously you want to live in North Beds, so rent your own home there. Meanwhile, you still have your foot on the property ladder long term and will benefit from the appreciating asset. It should be a cost neutral way of doing it. And you won't have to live in Slough ;-) Worth investigating for feasibility, anyway.To all those that bang on about affordability and how "kids these days want it all" you are looking through the other end of the telescope. If you are looking to buy now with interest rates as low as ever; massive oversupply of cash in the world; and the relationship between interests rates and house prices.... It's all very well buying a Stratford crack den for 750k when you can afford it, what about when it's worth half the price and your mortgage payments have doubled.
That's where I am at the moment. I can afford the payments on a 450k mortgage on a 500k house (north beds) but why the f
k would I want to? In 3yrs I could be forced into an increased flexible rate against something that's worth 400k and I've spunked 50k savings, can't afford the mortgage at another (say) 1k a month without a serious change in life and am stuck owing the bank 50k if I want to do anything that involves moving.It hellish and those that do it have bigger b
ks than me.Edited by Bedford Rascal on Wednesday 10th February 18:18
walm said:
JagLover said:
Yes with massive sacrifice you might be able to afford a starter home in a crap area, whoopy do. That doesn't mean that the market is working as it should when professionals in their thirties are struggling to buy houses built for factory workers.
I could not agree with this more.What I don't understand is what mechanisms or catalysts are available to push prices the other way.
- Extravagant SDLT rates
- Affordability relative to salaries and expectation
- Falling compensation in the City
- Bank balance sheets getting hit again meaning lending will be more difficult to come by
- Falling commodity prices stifling the growth of some economies where the citizens have wanted overseas assets
- Falls in faux-prime causing overseas investors to question the "London Prime is as good as gold" orthodoxy
Or maybe not.
The "nothing safer than bricks and mortar" mantra of the British is very ingrained. The majority of our wealth and our parents' wealth has been made from property (albeit in a higher inflation period than today). Pension changes mean that there are many 50-60 yo with a nest egg and their first (and last) instinct is to pour it into UK property. Every investment thread on here ends up with the conclusion being "put it in property" (and that has by and large been the right advice over the last 50 years).
AstonZagato said:
The catalysts aren't obvious - but that doesn't mean they don't exist. If they were obvious then the prices would have moved already (as faux-prime already has). There are some straws on the camel's back already:
Or maybe not.
The "nothing safer than bricks and mortar" mantra of the British is very ingrained. The majority of our wealth and our parents' wealth has been made from property (albeit in a higher inflation period than today). Pension changes mean that there are many 50-60 yo with a nest egg and their first (and last) instinct is to pour it into UK property. Every investment thread on here ends up with the conclusion being "put it in property" (and that has by and large been the right advice over the last 50 years).
Allot of is mentality you are right.- Extravagant SDLT rates
- Affordability relative to salaries and expectation
- Falling compensation in the City
- Bank balance sheets getting hit again meaning lending will be more difficult to come by
- Falling commodity prices stifling the growth of some economies where the citizens have wanted overseas assets
- Falls in faux-prime causing overseas investors to question the "London Prime is as good as gold" orthodoxy
Or maybe not.
The "nothing safer than bricks and mortar" mantra of the British is very ingrained. The majority of our wealth and our parents' wealth has been made from property (albeit in a higher inflation period than today). Pension changes mean that there are many 50-60 yo with a nest egg and their first (and last) instinct is to pour it into UK property. Every investment thread on here ends up with the conclusion being "put it in property" (and that has by and large been the right advice over the last 50 years).
Historically, since the lows seen in the mid 1970s, property has been a very good investment and so there is an expectation this will continue even when it seems more and more like a Ponzi scheme. There is an expectation that prices will continue the same upward trajectory hence the desperation to get “on the ladder”. Ironically the post above yours is advising BR to spend £400k on a house he won’t actually live in all to get “on the ladder”. If BR is a higher rate tax payer, given the change in interest tax relief, he might well end up paying for the privilege of his stake “on the ladder”
You are talking about various short term factors that may prick the bubble one major short term factor acting the other way of course is that extremely low interest rates, by historical standards, have become the new norm to keep the show on the road.
Looking further back to longer term trends. Ever since government, both local and central, became involved in the planning for housing the non-build element of the cost of a new home has been on a steep upward trajectory.
We responded to the depression of the 1930s with a house building boom. We responded to the depression caused by the financial crash by desperately re-inflating the bubble and “growth” returned once this was done.
A house is a place to live and the higher the proportion of income devoted to this the lower the standard of living.
Government got us in to this mess so only a change of course can fundamentally change the situation.
turbobloke said:
...and the cost of housing has gone up a lot.
Could (and should, imo) go down a lot as well. I won't be holding my breath waiting for the correction, partly because I've been expecting it to happen for about 20 years and been comprehensively wrong, but I just don't see how current London prices are sustainable. Looking at the prices one would would assume that London is exclusively populated by powerfully built PH Director types, but it isn't, and even those of us who might be considered to be very comfortably off would struggle to buy anything more than a hovel in parts of London that were little more than slums when I was a lad.JagLover said:
That doesn't mean that the market is working as it should when professionals in their thirties are struggling to buy houses built for factory workers.
JL, sorry to burst your bubble but now that almost all young people go to university then end up in an open plan office, "professionals in their 30's" are the factory workers of today. As for affordability. Houses aren't cheap to build. A 4 bed house will cost about £200k to put up in the SE. The building plot it goes on will cost about the same, add in a small profit and you get the price around £450-500k.
In more central areas the price of the plot just goes up.
Ok, if you abolish planning permission maybe plot prices would fall, but that's not going to happen.
Nationally are houses really that over priced? As I say it costs between £150-300k to build them, depedning on size then you have to add on the cost of the plot.
If blocks were still 10p each rather than 60p maybe prices would be lower, but I don't see the cost of materials and labour returning to levels of 20 years ago anymore than I expect to be able to get a can of coke for 10p because that's what it cost when I was at school.
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