Terrible time to buy a house?
Discussion
My thoughts:
Buy-to-Let less attractive
• Will be taxed gross with a 20% mortgage interest allowance by 2020. This will result in mortgaged portfolios being cashflow negative.
• 10% maintenance tax offset removed.
• Cannot move to Ltd structure due to CGT, dividend tax and stamp implications.
• Basel 3 likely to result in mortgage rates for BTL materially increasing.
• Change in overall sentiment
Owner Occupier Buyers
• MMR rules now enforced.
• No more interest only.
• Higher deposit requirements.
• Change in overall sentiment.
Foreign Buyers
• Sanctions
• China economy screwed.
• NY more attractive.
• ATED charges
• CGT/IHT for shell companies.
• Cannot use investment in property as way of obtaining visa.
• Non-Dom rules tightened.
• Foreign buyers have piled into off-plan new build who will try and flip pre-completion. Not as easy now banks will only lend against original valuation. Lots of secondary sales coming.
Supply/Demand
• You can view available inventory by type (e.g. 2 bedroom flat) month-on-month by postcode using RightMove.com
• Although there is a lag, you can see actual sales by postcode using land reg.
• You can see that in the vast majority of postcodes, inventory is increasing month on month whilst transaction volumes are comparatively low and well below historic averages.
• Using Zoopla or PropertyBee you can see that a significant proportion of inventory is having to be reduced.
• Massive oversupply of new build coming online e.g. Battersea.
London Always Goes Up!
• It didn’t between end of WW2 and c.1986 (source= Lucian Cook at Savilles research).
• It didn’t in the early 90s.
• You have to adjust for inflation for the 1970s.
Buy-to-Let less attractive
• Will be taxed gross with a 20% mortgage interest allowance by 2020. This will result in mortgaged portfolios being cashflow negative.
• 10% maintenance tax offset removed.
• Cannot move to Ltd structure due to CGT, dividend tax and stamp implications.
• Basel 3 likely to result in mortgage rates for BTL materially increasing.
• Change in overall sentiment
Owner Occupier Buyers
• MMR rules now enforced.
• No more interest only.
• Higher deposit requirements.
• Change in overall sentiment.
Foreign Buyers
• Sanctions
• China economy screwed.
• NY more attractive.
• ATED charges
• CGT/IHT for shell companies.
• Cannot use investment in property as way of obtaining visa.
• Non-Dom rules tightened.
• Foreign buyers have piled into off-plan new build who will try and flip pre-completion. Not as easy now banks will only lend against original valuation. Lots of secondary sales coming.
Supply/Demand
• You can view available inventory by type (e.g. 2 bedroom flat) month-on-month by postcode using RightMove.com
• Although there is a lag, you can see actual sales by postcode using land reg.
• You can see that in the vast majority of postcodes, inventory is increasing month on month whilst transaction volumes are comparatively low and well below historic averages.
• Using Zoopla or PropertyBee you can see that a significant proportion of inventory is having to be reduced.
• Massive oversupply of new build coming online e.g. Battersea.
London Always Goes Up!
• It didn’t between end of WW2 and c.1986 (source= Lucian Cook at Savilles research).
• It didn’t in the early 90s.
• You have to adjust for inflation for the 1970s.
DaveCWK said:
Everyone must be going balls-deep with the lenders.
Yes, I'm afraid so. Particular;y those who bought for the first time at the end of of the last boom and now need to move to a bigger property. There hasn't been the rampant capital growth that was such a feature of the early 2000s unless you bought at the bottom of the curve that's in londonOP, I'd pose the question from exactly the opposite perspective, is it a terrible time to sell a house?
Values are high it's true, and interest rates seem set to rise ( moderately ), yet wages are also set to rise and the economy seems to be recovering well. Yes China is a cloud on the horizon, mainly because of it's impact on Europe ( well Germany ) but we seem generally well set economically, Labour is busily imploding, and the island is overcrowded.
Against that backdrop to sell in the face of predictions I've read of 10% p.a. house price growth over the next 5 years could turn out to be a terrible decision. Especially when viewed against the very moderate price falls we saw, in what was at the time billed as the longest and deepest recession since the 1920's!!!
Values are high it's true, and interest rates seem set to rise ( moderately ), yet wages are also set to rise and the economy seems to be recovering well. Yes China is a cloud on the horizon, mainly because of it's impact on Europe ( well Germany ) but we seem generally well set economically, Labour is busily imploding, and the island is overcrowded.
Against that backdrop to sell in the face of predictions I've read of 10% p.a. house price growth over the next 5 years could turn out to be a terrible decision. Especially when viewed against the very moderate price falls we saw, in what was at the time billed as the longest and deepest recession since the 1920's!!!
With China bobbing slightly I see this as a signal for more Chinese wealth to be invested into the U.K. property market. Purely as an investment its tough to see where else could provide a safer haven with such good returns. This can result in only one way at the moment with the resulting ripple out.
I have a gut feeling the current housing bubble will pop in the next few years.
Me and the missus were recently looking at moving to a better area, with a house which had potential for extending and to keep as the family home for years to come.
Most of the houses that we liked were around £250k-£260k, this is for a 3 bed semi in south Bristol. We both felt that would be unobtainable...
Disheartened by this we still got an estate agent round to value our house. It seemed they were overly keen to market ours and commented that houses in our area are usually going for more than the asking price! (We are in an area that's generally not desirable but we are on the border of a better area) So currently we're sat on a hefty amount of equity.
We looked at one of these quarter of a million pound houses and both agreed the market is ridiculous, it had smaller bedrooms and a smaller garden than ours and it needed work doing on it internally. Sod that we're staying put until the market drops, ours won't take as big a hit as the higher valued properties and with our mortgage payments being so low we can save a lot of money for when it does drop.
The problem is the interest rates can only go one way, people (my friends included) have mortgaged to the hilt on crazy low interest rates on 2 year fixed rates. Sadly broke all over again (Google it)
All my personal opinion obviously
Me and the missus were recently looking at moving to a better area, with a house which had potential for extending and to keep as the family home for years to come.
Most of the houses that we liked were around £250k-£260k, this is for a 3 bed semi in south Bristol. We both felt that would be unobtainable...
Disheartened by this we still got an estate agent round to value our house. It seemed they were overly keen to market ours and commented that houses in our area are usually going for more than the asking price! (We are in an area that's generally not desirable but we are on the border of a better area) So currently we're sat on a hefty amount of equity.
We looked at one of these quarter of a million pound houses and both agreed the market is ridiculous, it had smaller bedrooms and a smaller garden than ours and it needed work doing on it internally. Sod that we're staying put until the market drops, ours won't take as big a hit as the higher valued properties and with our mortgage payments being so low we can save a lot of money for when it does drop.
The problem is the interest rates can only go one way, people (my friends included) have mortgaged to the hilt on crazy low interest rates on 2 year fixed rates. Sadly broke all over again (Google it)
All my personal opinion obviously
I
anarki said:
I have a gut feeling the current housing bubble will pop in the next few years.
Me and the missus were recently looking at moving to a better area, with a house which had potential for extending and to keep as the family home for years to come.
Most of the houses that we liked were around £250k-£260k, this is for a 3 bed semi in south Bristol. We both felt that would be unobtainable...
Disheartened by this we still got an estate agent round to value our house. It seemed they were overly keen to market ours and commented that houses in our area are usually going for more than the asking price! (We are in an area that's generally not desirable but we are on the border of a better area) So currently we're sat on a hefty amount of equity.
We looked at one of these quarter of a million pound houses and both agreed the market is ridiculous, it had smaller bedrooms and a smaller garden than ours and it needed work doing on it internally. Sod that we're staying put until the market drops, ours won't take as big a hit as the higher valued properties and with our mortgage payments being so low we can save a lot of money for when it does drop.
The problem is the interest rates can only go one way, people (my friends included) have mortgaged to the hilt on crazy low interest rates on 2 year fixed rates. Sadly broke all over again (Google it)
All my personal opinion obviously
So what did the agent value your house at and what type of house is it? As Timmy says, 250k for a 3 bed semi in a decent area as a house to move up to sounds, on the surface, decent value.Me and the missus were recently looking at moving to a better area, with a house which had potential for extending and to keep as the family home for years to come.
Most of the houses that we liked were around £250k-£260k, this is for a 3 bed semi in south Bristol. We both felt that would be unobtainable...
Disheartened by this we still got an estate agent round to value our house. It seemed they were overly keen to market ours and commented that houses in our area are usually going for more than the asking price! (We are in an area that's generally not desirable but we are on the border of a better area) So currently we're sat on a hefty amount of equity.
We looked at one of these quarter of a million pound houses and both agreed the market is ridiculous, it had smaller bedrooms and a smaller garden than ours and it needed work doing on it internally. Sod that we're staying put until the market drops, ours won't take as big a hit as the higher valued properties and with our mortgage payments being so low we can save a lot of money for when it does drop.
The problem is the interest rates can only go one way, people (my friends included) have mortgaged to the hilt on crazy low interest rates on 2 year fixed rates. Sadly broke all over again (Google it)
All my personal opinion obviously
anarki said:
We looked at one of these quarter of a million pound houses and both agreed the market is ridiculous, it had smaller bedrooms and a smaller garden than ours and it needed work doing on it internally. Sod that we're staying put until the market drops, ours won't take as big a hit as the higher valued properties and with our mortgage payments being so low we can save a lot of money for when it does drop.
The problem is the interest rates can only go one way, people (my friends included) have mortgaged to the hilt on crazy low interest rates on 2 year fixed rates. Sadly broke all over again (Google it)
All my personal opinion obviously
People have been saying interest rates will sky rocket for many years now, and it still hasn’t happened. When they do rise, it will be by small amounts.The problem is the interest rates can only go one way, people (my friends included) have mortgaged to the hilt on crazy low interest rates on 2 year fixed rates. Sadly broke all over again (Google it)
All my personal opinion obviously
The rise in prices is driven by a lack of supply, so I genuinely don’t envisage a ‘drop’ as you put it – the market isn’t driven by optimism or speculation, so I wouldn’t really consider it to be a bubble. The best you can hope for will be a levelling off. You’d kick yourself if that 250k house was 300k in a few years. Perfectly possible.
Neil H said:
anarki said:
We looked at one of these quarter of a million pound houses and both agreed the market is ridiculous, it had smaller bedrooms and a smaller garden than ours and it needed work doing on it internally. Sod that we're staying put until the market drops, ours won't take as big a hit as the higher valued properties and with our mortgage payments being so low we can save a lot of money for when it does drop.
The problem is the interest rates can only go one way, people (my friends included) have mortgaged to the hilt on crazy low interest rates on 2 year fixed rates. Sadly broke all over again (Google it)
All my personal opinion obviously
People have been saying interest rates will sky rocket for many years now, and it still hasn’t happened. When they do rise, it will be by small amounts.The problem is the interest rates can only go one way, people (my friends included) have mortgaged to the hilt on crazy low interest rates on 2 year fixed rates. Sadly broke all over again (Google it)
All my personal opinion obviously
The rise in prices is driven by a lack of supply, so I genuinely don’t envisage a ‘drop’ as you put it – the market isn’t driven by optimism or speculation, so I wouldn’t really consider it to be a bubble. The best you can hope for will be a levelling off. You’d kick yourself if that 250k house was 300k in a few years. Perfectly possible.
Timmy40 said:
It's entirely possible, IMO the best thing to do is get on with life, buy the house you want for the stage in life you are at, take any equity coming your way as a nice bonus, but don't for goodness sake put your life on hold waiting for the market to suffer some huge correction so that you can buy a bargain.
Good advice for life in general. Having said that, I would be wary of gearing up too much with rates at rock bottom, and the current global economic situation. This does feel a bit like 2006.I think the best thing to do, if you are desperate to get on the housing ladder, with limited cash is buy a run down property, (not too run down), and spend three or four years doing it up yourself.
If you are not too good at d-I-y LEARN....there's plenty of info on You tube etc.
If you want a nice shiny house to move into, you are going to have to pay for it one way or another.
A bonus will be you will feel a great sense of satisfaction when it is finally finished, but you may have to "rough" it for a year or so.
If you are not too good at d-I-y LEARN....there's plenty of info on You tube etc.
If you want a nice shiny house to move into, you are going to have to pay for it one way or another.
A bonus will be you will feel a great sense of satisfaction when it is finally finished, but you may have to "rough" it for a year or so.
It's never a good time to buy a house. There is always a "factor" that clouds the decision.
Anyhow, I moved two years ago to our forever, read final, house. In my area houses are expensive, always have been, so to get the house we wanted, it was all or nothing. Obviously did my sums and made sure it all fit. Now I'm glad did as I now would not be able to afford our house. Current estimates claim an 85k rise in two years. If we had postponed it for whatever reason, we would be in our old house as it simply would not have been worth it to move.
Anyhow, I moved two years ago to our forever, read final, house. In my area houses are expensive, always have been, so to get the house we wanted, it was all or nothing. Obviously did my sums and made sure it all fit. Now I'm glad did as I now would not be able to afford our house. Current estimates claim an 85k rise in two years. If we had postponed it for whatever reason, we would be in our old house as it simply would not have been worth it to move.
fido said:
Good advice for life in general. Having said that, I would be wary of gearing up too much with rates at rock bottom, and the current global economic situation. This does feel a bit like 2006.
Agreed, but that would be sensible advice even in a good market. Anyone genuinely worried about interest rates can lock in for 5 years anyway.So much negativity on here, as there has been for years, with people convinced the housing market will meltdown. This isn't 1992, and we don't have 10% inflation. If you are buying it to live in stop procrastinating and get it done, the best time to buy a property in this country was yesterday.
Neil H said:
fido said:
Good advice for life in general. Having said that, I would be wary of gearing up too much with rates at rock bottom, and the current global economic situation. This does feel a bit like 2006.
Agreed, but that would be sensible advice even in a good market. Anyone genuinely worried about interest rates can lock in for 5 years anyway.So much negativity on here, as there has been for years, with people convinced the housing market will meltdown. This isn't 1992, and we don't have 10% inflation. If you are buying it to live in stop procrastinating and get it done, the best time to buy a property in this country was yesterday.
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