Housing market, interest rates - finger in the air time?
Discussion
OK guys, done before I know but what are your views on the housing market over the next 12 months or so?
For various reasons we're in rented at the moment, should be in a position to buy (in Bristol) within the next couple of months.
Having been there and done it for the housing market crash in the 90's I'm a) slightly wary of buying near the top of a market (again
) and b) wondering whether it's worth holding off for a couple more months to see what's likely to happen to prices/demand, our funds are quite tight so even a small softening in demand might help us.
Your thoughs please...
For various reasons we're in rented at the moment, should be in a position to buy (in Bristol) within the next couple of months.
Having been there and done it for the housing market crash in the 90's I'm a) slightly wary of buying near the top of a market (again
) and b) wondering whether it's worth holding off for a couple more months to see what's likely to happen to prices/demand, our funds are quite tight so even a small softening in demand might help us. Your thoughs please...
decade on decade, the housing market rises.
You need to think long term - I too, back in 2001 thought i'd wait for the crash to buy, as it was, 4 years later I had missed the huge rise, but I still bought, probably at the 'the top of the market' 2 years ago, expecting the worst.
As it is, the prices here have continued to rise (at a more realistic rate).
My advice is buy a home, not an investment and you can't go wrong - absolute worst case you have negative equity for a few years.
You need to think long term - I too, back in 2001 thought i'd wait for the crash to buy, as it was, 4 years later I had missed the huge rise, but I still bought, probably at the 'the top of the market' 2 years ago, expecting the worst.
As it is, the prices here have continued to rise (at a more realistic rate).
My advice is buy a home, not an investment and you can't go wrong - absolute worst case you have negative equity for a few years.
It depends where you're buying imo.
London is a market in and of itself becuase there is a lot of foreign money coming in and buying property (ie soaking up demand) without placing another property back on the market to pay for the new purchase (thus limiting supply). Plus we have quite a lot of people with bonuses (not just banking) that want an investment property to add to their overall investment portfolios.
So I'd say that there is going to be a levellling off in prices but no crash in the short term in London.
the rest of the uk is a different matter for the most part (unless we're talking about the super-rich areas like Poole).
Ithink you'll find that people will realise that the pricing in many towns is completely and utterly out of kilter with reality. I think there's going to be a correction. There's already weakening in prices in many areas. Some areas have house prices as punchy as London but without the employment opportunities - how can people sustain that/afford a mortgage?
My mum is looking in North Devon, Pembs and North Wales for a new home having just sold hers in Devon and we've definitely noticed a shift in pricing or certainly a stagnation over the last 6 months. People have been willing to consider offers well below their asking prices too recently which certainly wasn't the case back in August last year.
THis is all my own opinion however. Others will definetly think differently!
London is a market in and of itself becuase there is a lot of foreign money coming in and buying property (ie soaking up demand) without placing another property back on the market to pay for the new purchase (thus limiting supply). Plus we have quite a lot of people with bonuses (not just banking) that want an investment property to add to their overall investment portfolios.
So I'd say that there is going to be a levellling off in prices but no crash in the short term in London.
the rest of the uk is a different matter for the most part (unless we're talking about the super-rich areas like Poole).
Ithink you'll find that people will realise that the pricing in many towns is completely and utterly out of kilter with reality. I think there's going to be a correction. There's already weakening in prices in many areas. Some areas have house prices as punchy as London but without the employment opportunities - how can people sustain that/afford a mortgage?
My mum is looking in North Devon, Pembs and North Wales for a new home having just sold hers in Devon and we've definitely noticed a shift in pricing or certainly a stagnation over the last 6 months. People have been willing to consider offers well below their asking prices too recently which certainly wasn't the case back in August last year.
THis is all my own opinion however. Others will definetly think differently!
timmy33 said:
Oi_Oi_Savaloy said:
THis is all my own opinion however. Others will definetly think differently!
I for one agree with all of that. I earn good money, OK my OH is self employed and not earning very much at the moment but we can barely afford to buy a shoe box somewhere tacky so how do other people manage? The lenders will happily lend me close to £200k but given increasing interest rates paying just the interest on that will be problematic.
I really do fail to see how the market is where it is at the moment?
I'm also assuming that an increase in personal debt coupled with rising interest rises is likely to lead to a glut of bankruptcies (or will they be IVA's now?) which will put properties on the market?
Agreed. We live in Luton and it's pretty awful but cheap relative to anywhere nice in the immediate area. We want to move to Harpenden or St.Albans (about 2 miles down the road) but the prices there increase by almost 100% on Luton.
We could probably kill ourselves and do it but the prices are so high, it is difficult to believe that a correction is not imminent.
We could probably kill ourselves and do it but the prices are so high, it is difficult to believe that a correction is not imminent.
you could be right.
but look at the number of people in that position - the moment a house is repossed and put up for sale at a reasonable price it will be snatched up.
I'm not saying it wont stagnate, or even drop, but it'd need a hellva shift to crash, and the moment it does, there will be a flurry of buyers trying to get in at the bottom, which will push the prices back up.
but look at the number of people in that position - the moment a house is repossed and put up for sale at a reasonable price it will be snatched up.
I'm not saying it wont stagnate, or even drop, but it'd need a hellva shift to crash, and the moment it does, there will be a flurry of buyers trying to get in at the bottom, which will push the prices back up.
Piglet said:
I really do fail to see how the market is where it is at the moment?
I'm also assuming that an increase in personal debt coupled with rising interest rises is likely to lead to a glut of bankruptcies (or will they be IVA's now?) which will put properties on the market?
All I can say it that all asset classes are at historic highs right now, stocks, bonds, land, houses, and a host of commodities. I'm also assuming that an increase in personal debt coupled with rising interest rises is likely to lead to a glut of bankruptcies (or will they be IVA's now?) which will put properties on the market?
Why? Liquidity....too much money sloshing around trying to find a home. However....interest rates are now rising around the globe...but there's always a lag, it takes a while for folks to realise/react that's all.
What will cause the markets to stagnate? Simply that the banks will tighten lending criteria, they won't want to lend 7 times income to some pikey chav on a 'Lie to Buy' basis if they can't package up the mortgages and sell them on.
To explain
UK chappie takes out mortgage at AB Bank.
AB Bank gathers together 10,000 similar mortgages, and packages them as a bond.
AB Bank sells the Bond on in the international markets for a nice profit to some man in Russia.
The 10,000 mortgages are now no longer on AB Banks books.....so it can go and do another 10,000.
UK chappie is now in effect paying his mortagage to some rich Russian, he just doesn't know it.
AB Bank will keep doing this rather profitable turn until no one wants to buy anymore MBS ( Mortgage Backed Securities ).
And yes you're own Government has been stitching up the UK population not intervening. But we all know why that is.
Edited by timmy33 on Thursday 24th May 10:35
Legend83 said:
But would a crash be geographical? Referring to my example, I reckon a crash in Harpenden/St.Albans would be all good and well if the value of my house in Luton stayed the same, but what if my house shed it's value too - we would be fooked, that's what.
To be honest, going on the 'repossesion' argument, that most people sign up to when predicting a crash.Well, its going to effect 2 groups:
1. Low income that cant afford a huge rise in their mortgage.
2. Middle classes that mortgage themselves to the hilt for a big house.
- 1 are likely to have their houses repossesed, and are more likely to be in 'cheaper' areas.
- 2 are more likely to pull the purse strings tight, and worst case, downgrade.
Fidgits said:
, but it'd need a hellva shift to crash, and the moment it does, there will be a flurry of buyers trying to get in at the bottom, which will push the prices back up.
That's a good point, there are probably more buyers priced out of the market now than there have been before, so there will be a feeding frenzy at the bottom perhaps? Dunno - too complicated - I'd just like to find a house that I can afford and isn't in the middle of pikey-land!
Piglet said:
Fidgits said:
, but it'd need a hellva shift to crash, and the moment it does, there will be a flurry of buyers trying to get in at the bottom, which will push the prices back up.
That's a good point, there are probably more buyers priced out of the market now than there have been before, so there will be a feeding frenzy at the bottom perhaps? Dunno - too complicated - I'd just like to find a house that I can afford and isn't in the middle of pikey-land!
Fidgits said:
yeah, i mean, this is all my opinion - but considering the number of people who are struggling to get on the housing market, the moment they see an opportunity, they're going to jump on it.
I guess this is why I am fairly confident my house would sell at the price I want. Problem is getting the price I want for any subsequent purchase.Fidgits said:
Piglet said:
Fidgits said:
, but it'd need a hellva shift to crash, and the moment it does, there will be a flurry of buyers trying to get in at the bottom, which will push the prices back up.
That's a good point, there are probably more buyers priced out of the market now than there have been before, so there will be a feeding frenzy at the bottom perhaps? Dunno - too complicated - I'd just like to find a house that I can afford and isn't in the middle of pikey-land!
I've just accepted an offer of around £5k less than I was looking for - I don't regard it as a bad price but there didn't seem to be a feeding frenzy of buyers who feel the "need" to buy something. Perhaps because even though it's cheap, it's probably still our of reach for the majority of single purchasers in the area and potentially a lot of lower income couples?
IMO, and of course it is just that. You guys are missing the point. The reason most people don't buy at the bottom is that by then we are in a recession and the banks are so busy coping with existing bad debts that they basically refuse to lend. It's their choice.
So yes, people will want to get into the market, but no, they won't be able to because the banks will refuse to lend to any but the most credit worthy.
Why? Because no one will want to buy sterling denominated subprime debt.
So yes, people will want to get into the market, but no, they won't be able to because the banks will refuse to lend to any but the most credit worthy.
Why? Because no one will want to buy sterling denominated subprime debt.
The problem with your argument Timmy is that its biased by someone obviously desperate for a crash...
as for the poster who couldnt sell their flat, it obviously wasnt *that* cheap because there wasnt a feeding frenzy...
Location, condition, all effects the value of a house, noone can really know the threshold, but if a local paper announced a crash and houses selling at rock bottom prices, you could bet your bottom dollar the estate agents would be swamped, and houses would sell at prices not far off original asking just because people think they are getting a bargin
as for the poster who couldnt sell their flat, it obviously wasnt *that* cheap because there wasnt a feeding frenzy...
Location, condition, all effects the value of a house, noone can really know the threshold, but if a local paper announced a crash and houses selling at rock bottom prices, you could bet your bottom dollar the estate agents would be swamped, and houses would sell at prices not far off original asking just because people think they are getting a bargin
Fidgits said:
The problem with your argument Timmy is that its biased by someone obviously desperate for a crash...
Eh?Erm no, it is baised by someone who works in the industry.
Why the hell would I want a crash, anymore than I want a recession? But the fact is that both are on the cards for all asset classes IMO.
Did you actually bother reading what I'd posted, or just decide that you knew what I was saying and give a knee jerk response?
By the way, I do have the mental capacity to think outside of my own situation. Thanks.
Edited by timmy33 on Thursday 24th May 11:24
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