How far will house prices fall [volume 5]
Discussion
TheFungle said:
I think my rather clumsy point was that if we committed to hard saving for a number of years AND subsequently upped our mortgage payments we would have nothing more than a more prestigious address .
I would much rather as we get older aim to reduce our mortgage payments or clear it off earlier in order that we can put money aside for the future or spunk it on rapidly depreciating cars
No, you would have a significantly higher value asset, that you could then sell and downsize if you wished to, or you could continue to live in a nicer area for no additional rent or mortgage payments. I would much rather as we get older aim to reduce our mortgage payments or clear it off earlier in order that we can put money aside for the future or spunk it on rapidly depreciating cars
You may decide you would rather spend the money now on other things and live in a "lesser" postcode, and that's absolutely fine, but the money you are paying on the house is not "gone" leaving you with nothing to show.
Your value judgement is that you would rather have a "lesser" house and spend the spare money on stuff to enjoy yourself with and I get that and good luck to you, we made the decision to have less spending money but a larger, more comfortable house, with much more space, and are very happy with our decision. Each to their own. You of course could sit in the current house, paying no mortgage and saving the money to put towards a larger house. We thought about this, but decided to do it now. Effectively the £1200-odd per month would be "ringfenced" if we were saving it to upscale, or would be being spent on a mortgage - so either way our available spending money would be the same or similar - so decided to have the bigger, nicer house now. Yes there is the risk of job security but there are risks in anything you do. If you are risk averse and your job is looking iffy, then you have probably made the right choice.
Edited by TriumphStag3.0V8 on Friday 24th July 10:55
Any idea if this proposal to tax capital gains on houses is a possibility?
https://uk.news.yahoo.com/house-price-rise-tax-smf...
God knows UKGov will need the money in the next few years.
I've never quite understood why capital gains on houses is not taxed - tax-free money for doing bugga all whilst less well off renters get nothing (and yes I, like many other boomers, have benefited hugely from this).
Doesn't it in effect just fuel house price inflation (= good if you're "on the ladder"?), almost a kind of Ponzi scheme where everyone on board thinks they are winning, and everyone locked out feels they are missing easy money.
IANAeconomist, anyone enlighten me how this came about?
https://uk.news.yahoo.com/house-price-rise-tax-smf...
God knows UKGov will need the money in the next few years.
I've never quite understood why capital gains on houses is not taxed - tax-free money for doing bugga all whilst less well off renters get nothing (and yes I, like many other boomers, have benefited hugely from this).
Doesn't it in effect just fuel house price inflation (= good if you're "on the ladder"?), almost a kind of Ponzi scheme where everyone on board thinks they are winning, and everyone locked out feels they are missing easy money.
IANAeconomist, anyone enlighten me how this came about?
Vizsla said:
Any idea if this proposal to tax capital gains on houses is a possibility?
https://uk.news.yahoo.com/house-price-rise-tax-smf...
God knows UKGov will need the money in the next few years.
I've never quite understood why capital gains on houses is not taxed - tax-free money for doing bugga all whilst less well off renters get nothing (and yes I, like many other boomers, have benefited hugely from this).
Doesn't it in effect just fuel house price inflation (= good if you're "on the ladder"?), almost a kind of Ponzi scheme where everyone on board thinks they are winning, and everyone locked out feels they are missing easy money.
IANAeconomist, anyone enlighten me how this came about?
My 2 pence worth;https://uk.news.yahoo.com/house-price-rise-tax-smf...
God knows UKGov will need the money in the next few years.
I've never quite understood why capital gains on houses is not taxed - tax-free money for doing bugga all whilst less well off renters get nothing (and yes I, like many other boomers, have benefited hugely from this).
Doesn't it in effect just fuel house price inflation (= good if you're "on the ladder"?), almost a kind of Ponzi scheme where everyone on board thinks they are winning, and everyone locked out feels they are missing easy money.
IANAeconomist, anyone enlighten me how this came about?
I agree with the part in bold but it would be a nightmare to unwind now and would discourage downsizing and people moving going forward.
We're currently looking at moving to a larger house in a different area which will cost maybe £100k more than our current house. We bought our current house for £275k in 2010 and will likely now sell it for approx. £500k (Albeit we did build a small extension), if we were to have to pay 20% or 28% of £225k (or maybe a little less if the extension costs were to be removed, these kind of details would have to be ironed out). then this would have a significant bearing on our thinking.
Personally I feel that the ship has long since sailed as things stand whilst there are still so many baby boomers around and any government implementing Capital Gains Tax on private residences would be putting themselves out of office. That said in 20 years time if many people have struggled to get on the property ladder and house prices have remained relatively stagnant then it may be a vote winner and still bring in some cash for the revenue.
TriumphStag3.0V8 said:
My point on this, assuming Interest rates did not change dramatically was that in 20 years, the mortgage payments would be pretty much the same number, whilst the rent would probably have doubled (or more). And after 25 years, his mortgage payments would drop to zero. His rent wouldn't
That's the thing - you rent all your life, what then happens when you stop working? You have to live on your pension income (probably massively reduced from what you are used to), whilst still paying rent. If you have been paying a mortgage off all those years, then you don't have that cost any more and have an large asset you can use to free up funds for something fun if you decide to downsize.
Also, if you are able to save whilst paying rent, then you can save whilst paying a mortgage and then pay it off even quicker.
I'm afraid this is based on false assumptions.That's the thing - you rent all your life, what then happens when you stop working? You have to live on your pension income (probably massively reduced from what you are used to), whilst still paying rent. If you have been paying a mortgage off all those years, then you don't have that cost any more and have an large asset you can use to free up funds for something fun if you decide to downsize.
Also, if you are able to save whilst paying rent, then you can save whilst paying a mortgage and then pay it off even quicker.
In Germany, it's most likely that the rent will not increase at all - it depends on the original contract, and every one I've come across has been fixed like this.
Therefore after 20 years you'll be effectively paying far less due to inflation - easily topped up by a decent pension I would imagine, especially as rents are relatively cheap in the first place (outside of booming hotspots).
SunsetZed said:
My 2 pence worth;
I agree with the part in bold but it would be a nightmare to unwind now and would discourage downsizing and people moving going forward.
We're currently looking at moving to a larger house in a different area which will cost maybe £100k more than our current house. We bought our current house for £275k in 2010 and will likely now sell it for approx. £500k (Albeit we did build a small extension), if we were to have to pay 20% or 28% of £225k (or maybe a little less if the extension costs were to be removed, these kind of details would have to be ironed out). then this would have a significant bearing on our thinking.
Personally I feel that the ship has long since sailed as things stand whilst there are still so many baby boomers around and any government implementing Capital Gains Tax on private residences would be putting themselves out of office. That said in 20 years time if many people have struggled to get on the property ladder and house prices have remained relatively stagnant then it may be a vote winner and still bring in some cash for the revenue.
I agree, it's just not workable. I agree with the part in bold but it would be a nightmare to unwind now and would discourage downsizing and people moving going forward.
We're currently looking at moving to a larger house in a different area which will cost maybe £100k more than our current house. We bought our current house for £275k in 2010 and will likely now sell it for approx. £500k (Albeit we did build a small extension), if we were to have to pay 20% or 28% of £225k (or maybe a little less if the extension costs were to be removed, these kind of details would have to be ironed out). then this would have a significant bearing on our thinking.
Personally I feel that the ship has long since sailed as things stand whilst there are still so many baby boomers around and any government implementing Capital Gains Tax on private residences would be putting themselves out of office. That said in 20 years time if many people have struggled to get on the property ladder and house prices have remained relatively stagnant then it may be a vote winner and still bring in some cash for the revenue.
If they tried to tax retrospective gains it would be both unpopular and unfair. If your neighbour had done exactly the same as you, but sold before the tax came in, they'd take their full gain with them and you wouldn't.
If they tried to tax gains from, say, 1st January 2021 it would be impossible to administer because every home would have to be assigned a value on that date, and everyone would no doubt appeal. It would cost more to run than they'd gain.
It would have to crash house prices because housing is a Ponzi scheme that involves investing your profits from previous houses to move up the ladder, and increasingly investing BOMAD funds that are generated from house price growth.
Successive governments have thrown in everything they can to prop up house prices as they know that a significant crash on their 'watch' is likely to be one of the single biggest sources of lost votes. Perhaps this govenment thinks they can withstand that given really weak opposition, but I doubt they would.
It would certainly complete the ridiculous situation we have got ourselves into. The government pump up house prices using low interest rates, QE, HTB etc and then tax the profit in order to relieve debt amongst the young - debt that would be far less anyway if they hadn't let house prices get out of control...
dan98 said:
TriumphStag3.0V8 said:
My point on this, assuming Interest rates did not change dramatically was that in 20 years, the mortgage payments would be pretty much the same number, whilst the rent would probably have doubled (or more). And after 25 years, his mortgage payments would drop to zero. His rent wouldn't
That's the thing - you rent all your life, what then happens when you stop working? You have to live on your pension income (probably massively reduced from what you are used to), whilst still paying rent. If you have been paying a mortgage off all those years, then you don't have that cost any more and have an large asset you can use to free up funds for something fun if you decide to downsize.
Also, if you are able to save whilst paying rent, then you can save whilst paying a mortgage and then pay it off even quicker.
I'm afraid this is based on false assumptions.That's the thing - you rent all your life, what then happens when you stop working? You have to live on your pension income (probably massively reduced from what you are used to), whilst still paying rent. If you have been paying a mortgage off all those years, then you don't have that cost any more and have an large asset you can use to free up funds for something fun if you decide to downsize.
Also, if you are able to save whilst paying rent, then you can save whilst paying a mortgage and then pay it off even quicker.
In Germany, it's most likely that the rent will not increase at all - it depends on the original contract, and every one I've come across has been fixed like this.
Therefore after 20 years you'll be effectively paying far less due to inflation - easily topped up by a decent pension I would imagine, especially as rents are relatively cheap in the first place (outside of booming hotspots).
Also looks like Germany's basic state pension peaks at 30k euros which goes some way to helping pay for accommodation in retirement.
number2 said:
I could Google but I'll ask... is this state provided/subsidised? If not, why on earth would a private investor get involved?
Also looks like Germany's basic state pension peaks at 30k euros which goes some way to helping pay for accommodation in retirement.
I can only tell you from a renter's point of view (and I can't be bothered to Google it all either;)Also looks like Germany's basic state pension peaks at 30k euros which goes some way to helping pay for accommodation in retirement.
I don't believe they're subsidised - I know that most blocks of apartments are held by large companies who make steady modest profits over long periods of time.
It's certainly nothing like the get-rich-quick free-market scheme in the UK.
number2 said:
I could Google but I'll ask... is this state provided/subsidised? If not, why on earth would a private investor get involved?
Germany does not have the army of 'amateur landlords' that the UK has with 1-10 properties each.Instead, they have huge listed companies (think Vonovia, Deutsche Wohnen etc) that own swathes of old Soviet plattenbau flat in East Germany.
This brings huge efficiencies in property management and reduces the cost of capital and leverage.
They don't appear to be dipping all that much where I am.
https://www.rightmove.co.uk/property-for-sale/prop...
Take this for example. It's in arguably the second or third best road in the area. But it's completely f
ked. I went to take a look at it externally yesterday and it's worse than it looks in the pictures.
It's got a dormer extension but that must also be fooked as there ain't any pics of it.
Assuming the dormer doesn't need to be ripped out it needs an absolute minimum of 80k spending on it. Probably more. Call it 135k if you are going to do a modest kitchen diner extension.
If it were 575/600 I'd probably be tempted to go and take a look because it's definitely in the right road and could be really nice. The ceiling price for that house in that road, unextended, is about 750k give or take. So they are pricing it all in despite it being a total basket case and the new owner having to risk a divorce doing all the work.
https://www.rightmove.co.uk/property-for-sale/prop...
Take this for example. It's in arguably the second or third best road in the area. But it's completely f
ked. I went to take a look at it externally yesterday and it's worse than it looks in the pictures.It's got a dormer extension but that must also be fooked as there ain't any pics of it.
Assuming the dormer doesn't need to be ripped out it needs an absolute minimum of 80k spending on it. Probably more. Call it 135k if you are going to do a modest kitchen diner extension.
If it were 575/600 I'd probably be tempted to go and take a look because it's definitely in the right road and could be really nice. The ceiling price for that house in that road, unextended, is about 750k give or take. So they are pricing it all in despite it being a total basket case and the new owner having to risk a divorce doing all the work.
The Garden is not massive, but I kinda like this;
https://www.zoopla.co.uk/for-sale/details/55359170...
By the way, a few properties on E11 again gone like in 2 weeks, recently.
https://www.zoopla.co.uk/for-sale/details/55359170...
By the way, a few properties on E11 again gone like in 2 weeks, recently.
princeperch said:
They don't appear to be dipping all that much where I am.
https://www.rightmove.co.uk/property-for-sale/prop...
Take this for example. It's in arguably the second or third best road in the area. But it's completely fked. I went to take a look at it externally yesterday and it's worse than it looks in the pictures.
It's got a dormer extension but that must also be fooked as there ain't any pics of it.
Assuming the dormer doesn't need to be ripped out it needs an absolute minimum of 80k spending on it. Probably more. Call it 135k if you are going to do a modest kitchen diner extension.
If it were 575/600 I'd probably be tempted to go and take a look because it's definitely in the right road and could be really nice. The ceiling price for that house in that road, unextended, is about 750k give or take. So they are pricing it all in despite it being a total basket case and the new owner having to risk a divorce doing all the work.
Blimey, I saw a Commodore 64 in one of the small rooms, next to Henry Bag! https://www.rightmove.co.uk/property-for-sale/prop...
Take this for example. It's in arguably the second or third best road in the area. But it's completely f
ked. I went to take a look at it externally yesterday and it's worse than it looks in the pictures.It's got a dormer extension but that must also be fooked as there ain't any pics of it.
Assuming the dormer doesn't need to be ripped out it needs an absolute minimum of 80k spending on it. Probably more. Call it 135k if you are going to do a modest kitchen diner extension.
If it were 575/600 I'd probably be tempted to go and take a look because it's definitely in the right road and could be really nice. The ceiling price for that house in that road, unextended, is about 750k give or take. So they are pricing it all in despite it being a total basket case and the new owner having to risk a divorce doing all the work.
princeperch said:
They don't appear to be dipping all that much where I am.
https://www.rightmove.co.uk/property-for-sale/prop...
Take this for example. It's in arguably the second or third best road in the area. But it's completely fked. I went to take a look at it externally yesterday and it's worse than it looks in the pictures.
It's got a dormer extension but that must also be fooked as there ain't any pics of it.
Assuming the dormer doesn't need to be ripped out it needs an absolute minimum of 80k spending on it. Probably more. Call it 135k if you are going to do a modest kitchen diner extension.
If it were 575/600 I'd probably be tempted to go and take a look because it's definitely in the right road and could be really nice. The ceiling price for that house in that road, unextended, is about 750k give or take. So they are pricing it all in despite it being a total basket case and the new owner having to risk a divorce doing all the work.
I’m in the process of getting my flat in lewisham on the market. The agent who came round told me that the prices fell a lot after the brexit vote and have now recovered to back where they were. With the stamp duty change, I suspect things will stay at this level, maybe a slight increase over the next 9 months in London. https://www.rightmove.co.uk/property-for-sale/prop...
Take this for example. It's in arguably the second or third best road in the area. But it's completely f
ked. I went to take a look at it externally yesterday and it's worse than it looks in the pictures.It's got a dormer extension but that must also be fooked as there ain't any pics of it.
Assuming the dormer doesn't need to be ripped out it needs an absolute minimum of 80k spending on it. Probably more. Call it 135k if you are going to do a modest kitchen diner extension.
If it were 575/600 I'd probably be tempted to go and take a look because it's definitely in the right road and could be really nice. The ceiling price for that house in that road, unextended, is about 750k give or take. So they are pricing it all in despite it being a total basket case and the new owner having to risk a divorce doing all the work.
I’m looking at 1 bed flats in Putney and Clapham around the £550k mark, so that big house for £650k seems like great value. Isn’t it amazing how skewed our perspectives are in London.
Jiebo said:
princeperch said:
They don't appear to be dipping all that much where I am.
https://www.rightmove.co.uk/property-for-sale/prop...
Take this for example. It's in arguably the second or third best road in the area. But it's completely fked. I went to take a look at it externally yesterday and it's worse than it looks in the pictures.
It's got a dormer extension but that must also be fooked as there ain't any pics of it.
Assuming the dormer doesn't need to be ripped out it needs an absolute minimum of 80k spending on it. Probably more. Call it 135k if you are going to do a modest kitchen diner extension.
If it were 575/600 I'd probably be tempted to go and take a look because it's definitely in the right road and could be really nice. The ceiling price for that house in that road, unextended, is about 750k give or take. So they are pricing it all in despite it being a total basket case and the new owner having to risk a divorce doing all the work.
I’m in the process of getting my flat in lewisham on the market. The agent who came round told me that the prices fell a lot after the brexit vote and have now recovered to back where they were. With the stamp duty change, I suspect things will stay at this level, maybe a slight increase over the next 9 months in London. https://www.rightmove.co.uk/property-for-sale/prop...
Take this for example. It's in arguably the second or third best road in the area. But it's completely f
ked. I went to take a look at it externally yesterday and it's worse than it looks in the pictures.It's got a dormer extension but that must also be fooked as there ain't any pics of it.
Assuming the dormer doesn't need to be ripped out it needs an absolute minimum of 80k spending on it. Probably more. Call it 135k if you are going to do a modest kitchen diner extension.
If it were 575/600 I'd probably be tempted to go and take a look because it's definitely in the right road and could be really nice. The ceiling price for that house in that road, unextended, is about 750k give or take. So they are pricing it all in despite it being a total basket case and the new owner having to risk a divorce doing all the work.
I’m looking at 1 bed flats in Putney and Clapham around the £550k mark, so that big house for £650k seems like great value. Isn’t it amazing how skewed our perspectives are in London.
Not much for sale round my way, but a 2000 sq ft bungalow on my road just came onto the market for ‘offers over £800k’ and sold within 2 weeks.
I was very surprised as the bedrooms all have sloping ceilings and restricted space as they’re in the attic space.
I’ll be interested to see what It actually sold for
Next door bought their place for £850k, knocked it down and have just spent over £2m on a new build
Next door but one bought their house for £800k and are spending a similar amount on the build of a new house.
So, at least temporarily, the market seems to be very good.
Based in Chiltern Hills
I was very surprised as the bedrooms all have sloping ceilings and restricted space as they’re in the attic space.
I’ll be interested to see what It actually sold for
Next door bought their place for £850k, knocked it down and have just spent over £2m on a new build
Next door but one bought their house for £800k and are spending a similar amount on the build of a new house.
So, at least temporarily, the market seems to be very good.
Based in Chiltern Hills
Certainly a mini-boom in swansea area - 18 properties listed today alone and its averaging 4-5+ a day. My neighbour's house just sold as soon as viewings were allowed and prices are strong. My sale is going along slowly, no issues with valuations (desktop on the one I'm buying, visit on mine). Seems positive (assuming you don't want prices to drop).
princeperch said:
They don't appear to be dipping all that much where I am.
https://www.rightmove.co.uk/property-for-sale/prop...
Take this for example. It's in arguably the second or third best road in the area. But it's completely fked. I went to take a look at it externally yesterday and it's worse than it looks in the pictures.
It's got a dormer extension but that must also be fooked as there ain't any pics of it.
Assuming the dormer doesn't need to be ripped out it needs an absolute minimum of 80k spending on it. Probably more. Call it 135k if you are going to do a modest kitchen diner extension.
If it were 575/600 I'd probably be tempted to go and take a look because it's definitely in the right road and could be really nice. The ceiling price for that house in that road, unextended, is about 750k give or take. So they are pricing it all in despite it being a total basket case and the new owner having to risk a divorce doing all the work.
I would’ve thought if you were keen at 575/600 there may well be a deal to be done.https://www.rightmove.co.uk/property-for-sale/prop...
Take this for example. It's in arguably the second or third best road in the area. But it's completely f
ked. I went to take a look at it externally yesterday and it's worse than it looks in the pictures.It's got a dormer extension but that must also be fooked as there ain't any pics of it.
Assuming the dormer doesn't need to be ripped out it needs an absolute minimum of 80k spending on it. Probably more. Call it 135k if you are going to do a modest kitchen diner extension.
If it were 575/600 I'd probably be tempted to go and take a look because it's definitely in the right road and could be really nice. The ceiling price for that house in that road, unextended, is about 750k give or take. So they are pricing it all in despite it being a total basket case and the new owner having to risk a divorce doing all the work.
Certainly worth pursuing.
This place was on the market for a few years with every estate agent in the area at different times and different prices,last agent who it was up with at end of last year had it on for 'offers over £340k (i think) managed to get a sale (sold Jan 2020 £344k)
https://www.onthemarket.com/details/8982733/
As you can see it is now back on the market after 6 months and looks like all they have done is removed the trees from the grounds to allow more light into the garden & house!
https://www.martinco.com/property/for-sale/327726
https://www.onthemarket.com/details/8982733/
As you can see it is now back on the market after 6 months and looks like all they have done is removed the trees from the grounds to allow more light into the garden & house!
https://www.martinco.com/property/for-sale/327726
princeperch said:
Just out of interest what are your expectations as to what will happen with any 1 bed flat you buy for 550? I'm not saying it's not market value ATM in those areas but are you comfortable that the value might fall in the next few years or are you of the view the capital value will increase ? Or aren't you bothered either way?
Here is my, probably twisted, logic.The monthly costs of renting vs buying is the same in this situation. I'm in my early 30's and single, so would want to live in a part of London which is fun, otherwise what's the point.
I would assume zero capital appreciation during ownership. This is where the stamp duty holiday helps, as I'm not trying to recover £15k+ when I sell.
The mortgage would be about £1750 a month, i earn about £5.5k after tax, so easily affordable. During that time I will be repaying about £15k per year back, so that's effectively money back in my pocket when I sell.
Worst case scenario, prices fall over the next 3-5 years. In which case I would ride it out until they recover. Putney/Clapham are massively popular, so could rent it out in a second if needed. I'm saving(investing) £2k a month from my salary, so in 3-5 years, I would have saved enough to buy something else if needed.
Edited by Jiebo on Saturday 25th July 19:30
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