Terrible time to buy a house?

[turbobloke]

fido said:

Call it a crash, or dip, or a large drop - but I have no doubt in my mind that QE/ZIRP sorted us out for a few years at least.

Or a correction - and if another is a few years off, which seems unlikely but anything is possible - what's to say that somebody wanting to buy today, but holding on for a correction they believe is coming, won't discover (if it happens) that prices in their area don't get down to where they are now but remain higher...before rising again.

[Welshbeef]

turbobloke said:

Or a correction - and if another is a few years off, which seems unlikely but anything is possible - what's to say that somebody wanting to buy today, but holding on for a correction they believe is coming, won't discover (if it happens) that prices in their area don't get down to where they are now but remain higher...before rising again.

According to the link I provided the increase in my area means that our home went up by near on £100k - that's on top of double digit growth for years. So let's say prices went down 14% would that bother me? Not one bit infact I'd like them to drop a lot more so that I can buy a bigger pad up the chain sadly I'm fairly confident that will not happen or if it does then lots of people will be looking to do the same or the houses which come up for sale on the next step of the ladder will not be what we're looking for/the good ones will not go onto the market.


But £100k in a year is a huge amount of saving a person has to do just to keep parity with te market.

[jdw1234]

The only "demand" that matters is determined by the availability of credit.

[Welshbeef]

jdw1234 said:

The only "demand" that matters is determined by the availability of credit.

In that case BTL helps cover the Gap. But as not enough houses are for sale then it's an issue.


Also remember the last year nearly 70% of all purchases have been cash buys IE debt free.

[Ari]

jdw1234 said:

The only "demand" that matters is determined by the availability of credit.

The elephant in the room that all the 'they're not building any more land' believers that house prices will rise indefinitely for ever seem to miss.

So far the government seems to have kept the ever increasing credit stream going, mostly via lowering interest rates. Going to be interesting to see what levers are pulled next.

[Ari]

p1stonhead said:

Hell a few people I know with cash ready to go would simply dive in and get them as BTL's (although this is less attractive now).

Typically, when other investments (like shares) fall away in value, people sell rather than buy because they're cheaper so I'm not convinced that in a falling market BTL investors will rush in and save the day.

[Ari]

turbobloke said:

Ari said:

No one in my street (mostly ordinary people who bought with mortgages) could afford their houses at today's prices - including me!

Long since given up trying to make sense of it, although it will be interesting to see what levers the government create to try and keep prices at the current levels.

Can they really go any further than actually physically giving money to people to use as deposits?

https://www.gov.uk/government/uploads/system/uploa...

Sure they can - they (we) can pay all of a mortgage some of the time or some of a mortgage all of the time

Eh?

[Thankyou4calling]

Yggdrasil

Welshbeef said:

You have really overlooked the impact of

1. London house prices going very high pushing more people to look outside of London adding to the demand
2. The Berkshire/Reading proposed 1,000 houses to be built has been cancelled by the Govt there is nothing at all in the pipeline to deliver the housing required to need demand thus prices go up
3. cross Rail in now starting in Reading - massive improvement for infrastructure and means commuting to London and East London drastically quicker.
4. The £1billion Reading Station rebuild now nearly finished
5. Near zero unemployment in Reading
6. According to one of the local papers Readibg has the highest degree PHD and professional qualifications over any other town /city in the UK
7. Impact of T5 Heathrow
8. Impact of the next runway at Heathrow
9. rail link direct to Heathrow not via Paddington by 2020
10. Eurostar will commence from Reading.
11. massive Green belts in the areas
12. relative to its surrounding areas Reading is at the cheaper end. Of the scale
13. exceptionally low % of public sector jobs

So yep it's pricy and has a huge amount of reasons why things will not go adversely - heck it didn't during the 2007-2011 timescale (hardly any houses went into the market as I was looking constantly to add to the portfolio people sat tight didn't need to sell and en masse did that prevented a fall unlike some other areas.

Are you Head of Marketing for Reading council?

You make it sound like the promised land.

If you aren't you should consider applying.

[Sheepshanks]

Welshbeef said:

Take the home town I grew up in work frankly is working in shops hotels and bars - or you own a business are a teacher or policeman. The latter two are viewed as very high salaries..... Now oddly the prices for houses are £350-400k for 3 bed semis.... How?

Where is that? Not somewhere in Wales??

Welshbeef said:

Now do that again but say Reading let's say 3 bed semi £550k...

I'm sure you could find some examples at that level, but there's plenty for a lot less.

[Neil H]

fido said:

You didn't experience 2009 then. I bought and sold a property in 2009 - had to take 25% off the 2007 value to shift my property and there was only 1 buyer. This was a house just outside Zone 6 but a few minutes from a station. Yes it would be snapped up almost immediately today. Sold it chain-free but managed to find a property in Zone 4, which I then sold two years later for 20% more. Call it a crash, or dip, or a large drop - but I have no doubt in my mind that QE/ZIRP sorted us out for a few years at least.

Having to reduce the price of your house in order to sell it doesn’t signify a crash, that could be any number of things. I take your point though, but even in an overall rising market there will be peaks and troughs. Property should be seen as a long-term investment - if you had kept and sold that property now would you have lost out?

Ari said:

jdw1234 said:

The only "demand" that matters is determined by the availability of credit.

The elephant in the room that all the 'they're not building any more land' believers that house prices will rise indefinitely for ever seem to miss.

So far the government seems to have kept the ever increasing credit stream going, mostly via lowering interest rates. Going to be interesting to see what levers are pulled next.

Are you suggesting mortgage providers will stop lending?

When interest rates do rise, they will not suddenly jump 5% overnight and there would be no reason for them to.

[turbobloke]

Ari said:

turbobloke said:

Ari said:

No one in my street (mostly ordinary people who bought with mortgages) could afford their houses at today's prices - including me!

Long since given up trying to make sense of it, although it will be interesting to see what levers the government create to try and keep prices at the current levels.

Can they really go any further than actually physically giving money to people to use as deposits?

https://www.gov.uk/government/uploads/system/uploa...

Sure they can - they (we) can pay all of a mortgage some of the time or some of a mortgage all of the time

Eh?

I'm confused about your "Eh?"

Your question was (in theory) can they really go further than actually giving money to people to use as deposits?

The answer, also in theory, is clearly yes.

In addition to helping with deposits, the government could quite easily adopt a scheme whereby mortgage payments are fully met by the government (us) for the first year up to a set limit, or a different scheme that involves the government (us) paying 5% of mortgage payments for the life of the mortgage.

Clearly the government could, if it wanted, go further than paying for part of house purchase deposits, by paying part of the mortgage as well.

As a sort-of example, back in the 70s the MIRAS scheme totalled £5 billion per year. The equivalent cost to the Treasury today would be £45bn.

[Thankyou4calling]

Sheepshanks said:

I'm sure you could find some examples at that level, but there's plenty for a lot less.

Put 3 bed semi in Reading into Rightmove and it comes up with 64. None of them above 500k and the majority less than 350k so Welshbeef isn't looking very closely.as you say plenty for less.

[Ari]

turbobloke said:

Ari said:

turbobloke said:

Ari said:

No one in my street (mostly ordinary people who bought with mortgages) could afford their houses at today's prices - including me!

Long since given up trying to make sense of it, although it will be interesting to see what levers the government create to try and keep prices at the current levels.

Can they really go any further than actually physically giving money to people to use as deposits?

https://www.gov.uk/government/uploads/system/uploa...

Sure they can - they (we) can pay all of a mortgage some of the time or some of a mortgage all of the time

Eh?

I'm confused about your "Eh?"

Your question was (in theory) can they really go further than actually giving money to people to use as deposits?

The answer, also in theory, is clearly yes.

In addition to helping with deposits, the government could quite easily adopt a scheme whereby mortgage payments are fully met by the government (us) for the first year up to a set limit, or a different scheme that involves the government (us) paying 5% of mortgage payments for the life of the mortgage.

Clearly the government could, if it wanted, go further than paying for part of house purchase deposits, by paying part of the mortgage as well.

As a sort-of example, back in the 70s the MIRAS scheme totalled £5 billion per year. The equivalent cost to the Treasury today would be £45bn.

Oh, I see, I think. I thought your initial 'they can' referred to the people I was talking about, ie the people in my street who couldn't afford the houses they currently live in if they were starting again from the same place but on current level of wages and house prices.

I'm not convinced that the government (us - as you rightly say) will actually start to meet peoples mortgage payments for them but who knows? I never expected them to start gifting part of peoples deposits for them.

It does feel a bit 'built on sand' doesn't it?

[turbobloke]

Ari said:

turbobloke said:

Ari said:

turbobloke said:

Ari said:

No one in my street (mostly ordinary people who bought with mortgages) could afford their houses at today's prices - including me!

Long since given up trying to make sense of it, although it will be interesting to see what levers the government create to try and keep prices at the current levels.

Can they really go any further than actually physically giving money to people to use as deposits?

https://www.gov.uk/government/uploads/system/uploa...

Sure they can - they (we) can pay all of a mortgage some of the time or some of a mortgage all of the time

Eh?

I'm confused about your "Eh?"

Your question was (in theory) can they really go further than actually giving money to people to use as deposits?

The answer, also in theory, is clearly yes.

In addition to helping with deposits, the government could quite easily adopt a scheme whereby mortgage payments are fully met by the government (us) for the first year up to a set limit, or a different scheme that involves the government (us) paying 5% of mortgage payments for the life of the mortgage.

Clearly the government could, if it wanted, go further than paying for part of house purchase deposits, by paying part of the mortgage as well.

As a sort-of example, back in the 70s the MIRAS scheme totalled £5 billion per year. The equivalent cost to the Treasury today would be £45bn.

Oh, I see, I think. I thought your initial 'they can' referred to the people I was talking about, ie the people in my street who couldn't afford the houses they currently live in if they were starting again from the same place but on current level of wages and house prices.

I'm not convinced that the government (us - as you rightly say) will actually start to meet peoples mortgage payments for them but who knows? I never expected them to start gifting part of peoples deposits for them.

It does feel a bit 'built on sand' doesn't it?

We must keep in mind that we're talking about politicians!

[Axionknight]

Bedford Rascal said:

fido said:

You didn't experience 2009 then. I bought and sold a property in 2009 - had to take 25% off the 2007 value to shift my property and there was only 1 buyer. This was a house just outside Zone 6 but a few minutes from a station. Yes it would be snapped up almost immediately today. Sold it chain-free but managed to find a property in Zone 4, which I then sold two years later for 20% more. Call it a crash, or dip, or a large drop - but I have no doubt in my mind that QE/ZIRP sorted us out for a few years at least.

Edited by fido on Tuesday 28th July 20:26

Scary graph that.

Not for me it isn't - my mortgage is flying down.

[fido]

Neil H said:

Are you suggesting mortgage providers will stop lending?

They basically did that in 2009 - hence I got the house I was buying about 20% off the peak price! [Cash buyer]. There was a bit of luck in finding a buyer for my place - I don't think he realised how desperate I was for a sale. Okay I took a hit, but it was a bit of a binary option so as to speak.

Think everyone is missing the point. I was merely responding to the suggestion that nothing happened between 2007 and now. And if record low rates and half a trillion of QE is nothing, then nothing happened ..

turbobloke said:

Or a correction - and if another is a few years off, which seems unlikely but anything is possible - what's to say that somebody wanting to buy today, but holding on for a correction they believe is coming, won't discover (if it happens) that prices in their area don't get down to where they are now but remain higher...before rising again.

That's always the risk - not having a home (or ability to buy one, if you're a multiple-directorship PH'er with gold bullion in storage) is effectively being short 1 home!

Edited by fido on Wednesday 29th July 10:49

[spreadsheet monkey]

Thankyou4calling said:

Yggdrasil

Welshbeef said:

You have really overlooked the impact of

1. London house prices going very high pushing more people to look outside of London adding to the demand
2. The Berkshire/Reading proposed 1,000 houses to be built has been cancelled by the Govt there is nothing at all in the pipeline to deliver the housing required to need demand thus prices go up
3. cross Rail in now starting in Reading - massive improvement for infrastructure and means commuting to London and East London drastically quicker.
4. The £1billion Reading Station rebuild now nearly finished
5. Near zero unemployment in Reading
6. According to one of the local papers Readibg has the highest degree PHD and professional qualifications over any other town /city in the UK
7. Impact of T5 Heathrow
8. Impact of the next runway at Heathrow
9. rail link direct to Heathrow not via Paddington by 2020
10. Eurostar will commence from Reading.
11. massive Green belts in the areas
12. relative to its surrounding areas Reading is at the cheaper end. Of the scale
13. exceptionally low % of public sector jobs

So yep it's pricy and has a huge amount of reasons why things will not go adversely - heck it didn't during the 2007-2011 timescale (hardly any houses went into the market as I was looking constantly to add to the portfolio people sat tight didn't need to sell and en masse did that prevented a fall unlike some other areas.

Are you Head of Marketing for Reading council?

You make it sound like the promised land.

If you aren't you should consider applying.

I thought the same.

Crossrail or no Crossrail, Reading is still a dreary provincial sthole.

[Welshbeef]

spreadsheet monkey said:

I thought the same.

Crossrail or no Crossrail, Reading is still a dreary provincial sthole.

You've not been to
Hull
Stockport
Coventry
Derby
Blackpool
Southampton
Slough
Basildon
Thorpe Lea
East Grinstead

A list of places I've been to within the last few weeks - I'm sure they must have nice areas ... but what I saw was utter dives.

[jdw1234]

Welshbeef said:

jdw1234 said:

The only "demand" that matters is determined by the availability of credit.

In that case BTL helps cover the Gap. But as not enough houses are for sale then it's an issue.


Also remember the last year nearly 70% of all purchases have been cash buys IE debt free.

BTL at current values doesn't work anymore due to tax change and so will support the market at lower prices to take into account the new cost base.

I havent seen the number to support 70%, but I assume you are right. However, transaction volumes are at historic lows and values are determined at the margin (I.e. when someone needs to sell). The majority of sales are made to people who need mortgages.

[Welshbeef]

Do we have official stats or graph for house sale volumes?

What I read fairly recently in the press is that mortgage approvals are increasing following a slight lull due to the uncertainties of would labour get in and would Scotland leave.