Economy - house buying again
Discussion
didnt want to hijack the other thread, but are we likely to see a major down turn in economy in the next few years. Contracts at work are coming in thick and fast.
But i am concerned about buying a property in the SE as i do not want to get into the negative equity trap. From the few articals i am erading it is looking like we have weather the major part of the storm well compared to Germany and the US, but with all of this stuff kicking off in Iran. and the extra costs of the terrorist bill and security measures i do not think that we are far from a Tax increase.
With so many buyers at the moment pushed to there financial limits, is it worth renting until the economy settles. I have a house in cumbria which is being let out with no mortgage for £450 per month so my rental down south is being subsidised a little. If i was to buy the house up norht would be sold and then i would have a large mortgage to deal with (Circa £1k) per month.
My job is a secure as any job can get but its the risk of a housing market crash that is concerning me..
Thanks
Steve
But i am concerned about buying a property in the SE as i do not want to get into the negative equity trap. From the few articals i am erading it is looking like we have weather the major part of the storm well compared to Germany and the US, but with all of this stuff kicking off in Iran. and the extra costs of the terrorist bill and security measures i do not think that we are far from a Tax increase.
With so many buyers at the moment pushed to there financial limits, is it worth renting until the economy settles. I have a house in cumbria which is being let out with no mortgage for £450 per month so my rental down south is being subsidised a little. If i was to buy the house up norht would be sold and then i would have a large mortgage to deal with (Circa £1k) per month.
My job is a secure as any job can get but its the risk of a housing market crash that is concerning me..
Thanks
Steve
I'm of the opinion that prices will only go down from here, or at the very least be steady for the next 10 years. What are interest rates going to do over the next 10 years?
These crazy house prices are merely a result of ultra low interest rates which has resulted in increased 'affordability' and therefore increased demand thus higher prices. Now even with these low interest rates people can't afford to buy a house.
If young families can't afford to buy somewhere then our future is doomed
What else? People always banging on about historically low interest rates. Ok, but they only need to go up 0.5% to have the same effect as a 3% rise in 1990.
Home ownership in the UK is largely delusional I believe. I'd rather rent from a landlord than rent the money from a bank. Although I own a house I choose to rent 300K flat for less than........£500 per month! That's the crappiest yield ever!
I'll rant some more when I get my breath back
These crazy house prices are merely a result of ultra low interest rates which has resulted in increased 'affordability' and therefore increased demand thus higher prices. Now even with these low interest rates people can't afford to buy a house.
If young families can't afford to buy somewhere then our future is doomed
What else? People always banging on about historically low interest rates. Ok, but they only need to go up 0.5% to have the same effect as a 3% rise in 1990.
Home ownership in the UK is largely delusional I believe. I'd rather rent from a landlord than rent the money from a bank. Although I own a house I choose to rent 300K flat for less than........£500 per month! That's the crappiest yield ever!
I'll rant some more when I get my breath back
At the end of the day I guess you've got to do what you feel comfotable with. I don't believe in the 'must get on the band wagon' rubbish. I'll buy a house when I want and if in 10 years time they are soo expensive that nobody can affort them then there's going to be a lot of people leaving the country!
People have very short memories. All this, 'ah but it's different this time' has been said and proved wrong a million times over.
Either houses will crash or inflation will take off (which will result in higher IR's anyway) so that won't be allowed to happen.
www.aceparts.com/youarehere2006.gif
>> Edited by aceparts_com on Tuesday 14th February 18:10
People have very short memories. All this, 'ah but it's different this time' has been said and proved wrong a million times over.
Either houses will crash or inflation will take off (which will result in higher IR's anyway) so that won't be allowed to happen.
www.aceparts.com/youarehere2006.gif
>> Edited by aceparts_com on Tuesday 14th February 18:10
Figures form most large mortgage lenders would indicate that the housing market should stay fairly stable for 3-5 years. The key to inflation was cheap borrowing, the key to slow down was unaffordability for first time buyers.
Wage inflation is currently increasing more rapidly than house prices. At the current rate it, steady house prices create an equilibrium situation in between 3-5 years. This would then allow first-time buyers to again fuel the market. I also believe that these people will buy regardless of interest rates. These are of more concern to existing owners (even though stats shiow that almost 80% of people could save money on a remortgage!!!!).
Wage inflation is currently increasing more rapidly than house prices. At the current rate it, steady house prices create an equilibrium situation in between 3-5 years. This would then allow first-time buyers to again fuel the market. I also believe that these people will buy regardless of interest rates. These are of more concern to existing owners (even though stats shiow that almost 80% of people could save money on a remortgage!!!!).
If you think there will be a housing crash / slowdown soon then sell the house up north straight away.
The housing market, like the stock market has its ups and downs but if you invest for the long term (10 years plus) then you will almost certainly ride out any crashes and be making more than inflation.
3 years ago I thought house prices reached their peak but they still keep going up. I would not buy now unless I planned to stay in the property for a minimum 5 years.
The housing market, like the stock market has its ups and downs but if you invest for the long term (10 years plus) then you will almost certainly ride out any crashes and be making more than inflation.
3 years ago I thought house prices reached their peak but they still keep going up. I would not buy now unless I planned to stay in the property for a minimum 5 years.
It's interesting that the rags and the agents are still trying to talk the market up. Front page of today's metro saying house prices on the up, not enough supply etc. etc.
That's not what I'm seeing! There appear to be a lot of sellers putting properties up at "hopeful" prices, I'll keep an eye on them and see what happens to the asking price. I can't see most of them selling at the advertised price.
That's not what I'm seeing! There appear to be a lot of sellers putting properties up at "hopeful" prices, I'll keep an eye on them and see what happens to the asking price. I can't see most of them selling at the advertised price.
Piglet said:
It's interesting that the rags and the agents are still trying to talk the market up. Front page of today's metro saying house prices on the up, not enough supply etc. etc.
That's not what I'm seeing! There appear to be a lot of sellers putting properties up at "hopeful" prices, I'll keep an eye on them and see what happens to the asking price. I can't see most of them selling at the advertised price.
Pretty spot on.
I've already picked up 2 good "bargains" this year already
People have overpriced their properties and this is across the country as awhole!
Wheel n deal out there folks
Plus, it's fun
SO, off at a tangent. Where you are in the property cycle when you BUY has a direct influence on your wealth when you sell up. Buy low, sell high.
Property has not risen at 7% for the last 50 years, it's gone up, it's stayed the same, it's dropped, inflation has risen, etc.
Now prices are at an all time high with inflation (cpi) at an all time low along with interest rates. Don't take a genius to figure out where things are going next.
My favourite quote. House prices can stay irrational longer than developers can remain solvent!
Property has not risen at 7% for the last 50 years, it's gone up, it's stayed the same, it's dropped, inflation has risen, etc.
Now prices are at an all time high with inflation (cpi) at an all time low along with interest rates. Don't take a genius to figure out where things are going next.
My favourite quote. House prices can stay irrational longer than developers can remain solvent!
I did hear what I thought was a sensible comment on one of the house related TV programs (might have been Kirsty Allsopp?) saying that, if it's for owner occupation it's always less risky to be in the house market that out of it.
She made the point that even if house prices do fall, they generally all fall together - so even if you lose money on your house, your new one is cheaper.
The danger of being out of the market is that if prices do move up, you can be left high and dry.
She made the point that even if house prices do fall, they generally all fall together - so even if you lose money on your house, your new one is cheaper.
The danger of being out of the market is that if prices do move up, you can be left high and dry.
Well said aceparts.
The chances of anything intelligent coming out of Kirsty Allsop's gob are slim ... however for once she may have had a point. Undoubtedly there is a benefit from home ownership if your objective is to own a home at some point in the future. Owning an asset now is obviously a pretty good hedge for owning a similar asset in the future. But this only works if owning a house now doesn't put you at financial risk. Owning a property is not much of a hedge if you lose your job next year, can't afford the mortgage and get carried out on a stretcher.
Affordability (which is primarily interest rates versus income) drive the UK housing market at the moment. The market is highly inefficient and it can take ages to correct when it gets out of kilter even when the eventual outcome is pretty clear.
Drawing comparisons between housing and the stock market is dangerous. Over the long term the stock market goes up because the economy is growing. The increase in the prices of the companies rise because they are generating greater profits. The price increase is underpinned by a fundamental growth in value. There is no equivalent fundamental mechanism increasing the value of houses. Instead over the last few decades there has been a string of unrelated factors that have pushed prices up, and it seems to me there is no reason to assume that more of these factors will magically keep popping up in order to inflate house prices forever. In the UK we have had deregulation of the mortgage market, a demographic change that has increased the demand for housing and at the same time we have had very rigid planning laws that have restrained the supply of new houses. This coupled with a huge fall in interest rates has jacked house prices up. Who is to say that in 10 years time house supply will still dramatically under-shoot demand? Might we not relax planning laws substantially or relocated a lot of economic activity out of the South-East into the rest of the UK? Who is to say in 10 years time that interest rates will still be so low?
The chances of anything intelligent coming out of Kirsty Allsop's gob are slim ... however for once she may have had a point. Undoubtedly there is a benefit from home ownership if your objective is to own a home at some point in the future. Owning an asset now is obviously a pretty good hedge for owning a similar asset in the future. But this only works if owning a house now doesn't put you at financial risk. Owning a property is not much of a hedge if you lose your job next year, can't afford the mortgage and get carried out on a stretcher.
Affordability (which is primarily interest rates versus income) drive the UK housing market at the moment. The market is highly inefficient and it can take ages to correct when it gets out of kilter even when the eventual outcome is pretty clear.
Drawing comparisons between housing and the stock market is dangerous. Over the long term the stock market goes up because the economy is growing. The increase in the prices of the companies rise because they are generating greater profits. The price increase is underpinned by a fundamental growth in value. There is no equivalent fundamental mechanism increasing the value of houses. Instead over the last few decades there has been a string of unrelated factors that have pushed prices up, and it seems to me there is no reason to assume that more of these factors will magically keep popping up in order to inflate house prices forever. In the UK we have had deregulation of the mortgage market, a demographic change that has increased the demand for housing and at the same time we have had very rigid planning laws that have restrained the supply of new houses. This coupled with a huge fall in interest rates has jacked house prices up. Who is to say that in 10 years time house supply will still dramatically under-shoot demand? Might we not relax planning laws substantially or relocated a lot of economic activity out of the South-East into the rest of the UK? Who is to say in 10 years time that interest rates will still be so low?
I think blind faith is the term I would use for people and there houses. Home ownership is delusional. People renting from the bank (mainly) being impressed with how much their investment (roof over head) has gone up in value (how much the next fool will pay, or, as is often the case, how much one can borrow against it)!.
I'm not sure but I think it's mainly an english obsession.
I'm lucky enough to rent a truly magnificent apartment (value around 300+K) for just £125 per month! I know it's a fluke etc. but I still get people asking me why I don't want to buy.
I'm not sure but I think it's mainly an english obsession.
I'm lucky enough to rent a truly magnificent apartment (value around 300+K) for just £125 per month! I know it's a fluke etc. but I still get people asking me why I don't want to buy.
aceparts_com said:Eh? Pff? Gnrr? Blackmail? Sexual favours?
(value around 300+K) for just £125 per month!
Having said which, some friends of mine are renting a house in Sussex of similar value for around £500 a month which is still a bloody good deal, giving the landlord a paltry 2% gross income.
One of the clues that made me wonder if the aforementioned Allsop might be a little hard of thinking came in a magnificently silly intro to her show which went something like this: "Jack and Jill currently rent this nice country house for £650 a month. They want to buy their own house, but are put off because £650 a month will only buy them a hovel with no garden or sanitation. We convinced them to buy anyway." Well thanks for spelling it out Kirsty!
>> Edited by ATG on Monday 20th February 18:27
ATG said:
Who is to say that in 10 years time house supply will still dramatically under-shoot demand?
Nothing is *certain* but it's pretty unlikely there will be a dramatic change - the demand for housing is ever increasing. What concerns me as a parent wondering if my kids will ever leave home) is that there are suggestions that we (parents in general) might have to guarantee our kids mortgages, or that they'll need to take out Japanese style 50 or even 100 year mortgages. In my view any such schemes simply re-inforces house prices an should be banned.
I do wonder if the buy-to-let market will implode - it doesn't seem possible to buy property now and make any kind of yield. Thank God the Government abandoned plans to allow residential property to be bought tax-free in a pension fund. I think that would have caused a huge disruption in the market, and prices may well have shot up to absorb the 40% 'discount' available by way of tax rebate.
It's all very well decrying buying your own house, but 20yrs ago I paid £30K for my reasonable 3 bed house. Its value now is immaterial as I don't intend to sell it. I do pay £125/mth to a bank so I am renting off them, if you want to look at it like that. But in 5 more years it becomes free.
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