How far will house prices fall [volume 5]

[Shnozz]

richardxjr said:

Eventual downsizing must be a big part of many peoples' retirement financing plans!

I was talking to a mate of mine about this last week.

My in-laws to a pleasant but more manageable small(ish) apartment. It struck me as the sort of place you could buy as a first home, or as a last. With transactional costs swallowing £10's or £100's of thousands over the years, with hindsight I thought not a bad little policy to do a full loop and return to your first place at the end of your years, renting it out from the point at which you move up the ladder and returning to it years later. Yes, wouldn't work for many and many caveats such as you might need equity from that place to move on initially, you might have different requirements property wise/location wise/transport wise/amenities etc. But just struck me as not a bad little concept.

[Sheepshanks]

richardxjr said:

Eventual downsizing must be a big part of many peoples' retirement financing plans!

Define "many"? Maybe in the SE the steps in pricing are big enough for it to make sense but outside of the SE I doubt it's very many at all.

[richardxjr]

Yes, obviously 'many' in areas of high house pricing. South (most of it), some Northern & Scottish cities...

[Captain Raymond Holt]

That’s poor plan (I’m a dirty northerner). Well, I say plan, I like for us to have the option.

[MX6]

richardxjr said:

Eventual downsizing must be a big part of many peoples' retirement financing plans!

I know someone, a family member, who is retired but still has the big house on the hill and a big interest only mortgage as well, no "repayment vehicle". It seems to be a game of kick the can down the road and postpone the day of reckoning when they have to sell up and downsize. Seems to be a bit of a game with the bank. I guess he likes being king of the castle, don't blame him really.

[NickCQ]

MX6 said:

I know someone, a family member, who is retired but still has the big house on the hill and a big interest only mortgage as well, no "repayment vehicle". It seems to be a game of kick the can down the road and postpone the day of reckoning when they have to sell up and downsize. Seems to be a bit of a game with the bank. I guess he likes being king of the castle, don't blame him really.

Depends what his pension arrangements are. If he is lucky enough to have an indexed-linked defined benefit pension with sufficient income to fund the mortgage then you can see why he's incentivised to keep rolling and ultimately downsize or do equity release when he is too old for a regular mortgage. As you say, it's a valuation game whether the LTV will be low enough to allow that when the time comes.

[Shnozz]

NickCQ said:

Depends what his pension arrangements are. If he is lucky enough to have an indexed-linked defined benefit pension with sufficient income to fund the mortgage then you can see why he's incentivised to keep rolling and ultimately downsize or do equity release when he is too old for a regular mortgage. As you say, it's a valuation game whether the LTV will be low enough to allow that when the time comes.

Once upon a time I played around trying to interlink my pension and my mortgage finishing post. With the tax advantages of a pension I thought I would (try to) be clever and make use of the tax free pension payments to pay excess in there and to use the 25% withdrawal to broadly align with what the balance would be on the mortgage. At times I had an IO mortgage with that being the plan.

Then the age at which I could claim the pension was interfered with and I realised I couldn't rely with any degree of precision the private pension as much I could the state one.

[NickCQ]

Shnozz said:

Once upon a time I played around trying to interlink my pension and my mortgage finishing post. With the tax advantages of a pension I thought I would (try to) be clever and make use of the tax free pension payments to pay excess in there and to use the 25% withdrawal to broadly align with what the balance would be on the mortgage. At times I had an IO mortgage with that being the plan.

Then the age at which I could claim the pension was interfered with and I realised I couldn't rely with any degree of precision the private pension as much I could the state one.

Yes, a fun exercise in Excel but there are risks outside the model in the real world!
I suppose the counter-argument is that the age you can borrow to should increase with the pension age...

[MX6]

NickCQ said:

MX6 said:

I know someone, a family member, who is retired but still has the big house on the hill and a big interest only mortgage as well, no "repayment vehicle". It seems to be a game of kick the can down the road and postpone the day of reckoning when they have to sell up and downsize. Seems to be a bit of a game with the bank. I guess he likes being king of the castle, don't blame him really.

Depends what his pension arrangements are. If he is lucky enough to have an indexed-linked defined benefit pension with sufficient income to fund the mortgage then you can see why he's incentivised to keep rolling and ultimately downsize or do equity release when he is too old for a regular mortgage. As you say, it's a valuation game whether the LTV will be low enough to allow that when the time comes.

Yes my understanding is that he can service the interest only mortgage okay but has no real means of paying off all of the outstanding balance. He was suprisingly candid after a few glasses of port last Xmas. I've no idea whether how widespread this kind of situation is, but I'd say that I try not to make any asumptions about people financial situations any more. Needless to say some are playing the look rich game by running more debt than you can shake a stick at, some are ultra conservative and live relatively humble lives, but sitting on a pile of cash. Maybe this always was the case, but perhaps these days the two ends of the spectrum are further apart than ever.

[Pit Pony]

NickCQ said:

MuscleSedan said:

Not all insurers ask about speed awareness courses and there are probably mortgage lenders who don't ask about payment holidays.

Which is part of the risk discussion - insurers have found that a SAC or even SP30 is just not that much of a risk factor in someone's driving so don't charge much for it.

I wonder what the actual statistics show. Are you more or less likely to be the cause of a crash, having been flashed once or twice ?
Because my feeling about my own driving having done the SAC and 4 weeks later (how fking stupid can you be) is that whilst I'm now closer to the speed limit, my attention is less on the road, and more on what speed I'm doing. And anecdotally I believe the balance is that I'm slightly less likely to crash, (so much marginally less that you couldn't measure it) but very much less likely to get 3 points.
The price of my insurance did not change.

[rm163603]

MX6 said:

NickCQ said:

MX6 said:

I know someone, a family member, who is retired but still has the big house on the hill and a big interest only mortgage as well, no "repayment vehicle". It seems to be a game of kick the can down the road and postpone the day of reckoning when they have to sell up and downsize. Seems to be a bit of a game with the bank. I guess he likes being king of the castle, don't blame him really.

Depends what his pension arrangements are. If he is lucky enough to have an indexed-linked defined benefit pension with sufficient income to fund the mortgage then you can see why he's incentivised to keep rolling and ultimately downsize or do equity release when he is too old for a regular mortgage. As you say, it's a valuation game whether the LTV will be low enough to allow that when the time comes.

Yes my understanding is that he can service the interest only mortgage okay but has no real means of paying off all of the outstanding balance. He was suprisingly candid after a few glasses of port last Xmas. I've no idea whether how widespread this kind of situation is, but I'd say that I try not to make any asumptions about people financial situations any more. Needless to say some are playing the look rich game by running more debt than you can shake a stick at, some are ultra conservative and live relatively humble lives, but sitting on a pile of cash. Maybe this always was the case, but perhaps these days the two ends of the spectrum are further apart than ever.

I just had a look at a few comparison sites, I know it's not going to be everything available but still.

All of the IO mortgages were 'remortgage only'.

I guess that means your family member is fine but anyone looking to buy his house from him wouldn't have that option.

There as so many moving parts to all of this that I defy anyone to predict what's going to happen.

Anecdotally it seems that people are piling cash into property more than ever (for completely valid reasons mentioned on here)

On the other hand at the entry level of the market things are tightening up lending wise.

Further to that there is a disparity in lending practice between new entrants and existing O/O or BTL, presumably to avoid any forced selling.

It occurred as to whether the current thread title isn't up to date...

To change it to 'increase' seems a bit premature though!

[foxbody-87]

What are your predictions for the house market then?
Me and the Mrs want to up-size and were going to wait until next year but started getting worried it would all go tits up with the economy so are trying to get the house shifted now.

[Mr Whippy]

Prices near me are mad.

A house that went for £260 in 16 is now up at £340.

One opposite that went for £380 in 17 was up at £435 (repaint only) recently and is sold STC.

The biggest ones on the estate (90s build, one of 30 ish units), one completed in June for £377, had been up at £395 and sold stc before lockdown.

So the small 3 bed is now up at £340. The mid level 3 bed with double garage at £435. And the 5 bed ones with big lounge etc, £377.

This feels a bit toppy to me.

I’m after a house in the area but these ones that have done 8%+ annual rises to get to today’s asking prices are just waiting for a bag holder imo.

It’s 2007 all over again.


I’m happy for everyone thinking they’re getting rich.
I’m easy either way as I’ve an interest in some prime property which will be going up way in excess of ‘missing out’ not being in the market now.
But if it goes down I’m ok too.

But I truly hope for younger people that there is a real crash.
High prices benefit no one except speculators.

[Thankyou4calling]

What’s happened to the mining man? I know he was a bit random but his posts were “Interesting “

[soxboy]

Thankyou4calling said:

What’s happened to the mining man? I know he was a bit random but his posts were “Interesting “

Maybe fallen down a hole?

[Captain Raymond Holt]

Captain Raymond Holt said:

That’s our plan (I’m a dirty northerner). Well, I say plan, I like for us to have the option.

[fido]

Mr Whippy said:

It’s 2007 all over again.

Except rates were around 6% then. Whereas now you can borrow 400k for £500 a month, and keep rolling it over (as long as you have 60% LTV ).

[ben5575]

foxbody-87 said:

What are your predictions for the house market then?
Me and the Mrs want to up-size and were going to wait until next year but started getting worried it would all go tits up with the economy so are trying to get the house shifted now.

People in the middle market in relatively safe jobs are driving the market at the moment and is where the action is.

First time buyers with much greater job insecurity and more challenging LTV's are going to struggle for the next few years.

Interesting, as about four months ago, we were seriously looking at downsizing the units in our developments to derisk, play safe and tap into the changes to Help to Buy from April next year. Now keeping product at 3 & 4 bed, mid market but with interesting liveable designs and the all important 'office' in them is proving very popular. We are selling very well at the moment.

In short if you buy a nice house that you can work from and has some outside space you'll be ok.

[Previous]

soxboy said:

Maybe fallen down a hole?

Probably got bored of the negative comments on here.

PH can be a great place when it welcomes different points of view.

[loafer123]

ben5575 said:

People in the middle market in relatively safe jobs are driving the market at the moment and is where the action is.

First time buyers with much greater job insecurity and more challenging LTV's are going to struggle for the next few years.

Interesting, as about four months ago, we were seriously looking at downsizing the units in our developments to derisk, play safe and tap into the changes to Help to Buy from April next year. Now keeping product at 3 & 4 bed, mid market but with interesting liveable designs and the all important 'office' in them is proving very popular. We are selling very well at the moment.

In short if you buy a nice house that you can work from and has some outside space you'll be ok.

Agreed. I am about to launch 30 really nice mid market units. We have done no marketing, just a sign on the front and have 300 people who have registered interest.