The discgrace that is the UK Property Market
Discussion
jonny70 said:
also posted on the other housing thread;
Start mortgage tempts borrowers with cheap interest-only fix, but sting in the tail sees bills rocket 180% after three years
[i]Clydesdale and Yorkshire Banks have launched a Low Start mortgage that tempts homeowners in with a three-year interest-only fix that comes with a sting in the tail - monthly payments that would rocket by 180 per cent when it ends.
The National Australia Bank-owned institutions have unveiled four fixed rate mortgages that start on an interest-only basis and move to a repayment product after three years. Mortgage lenders have lots of tricks to attract your money such as freebies or cashback, but the most important one to be wary of is the introductory rate like this.
While it may seem like a cheap way to climb on the property ladder, or clamber further up it, borrowers will see monthly costs soar by more than 180 per cent once the interest-only period ends.[/i]
Read more: http://www.dailymail.co.uk/money/mortgageshome/art...
this is exactly like the teaser rate loans in the USA before the credit crunch to encourage borrowing and then they shot up after 2 years.
This stinks of a bubble , cheap cheap money to fund really cheap mortgages to create a housing boom, thing is money wont be cheap forever.
It seems we have pre-the credit crisis all over again!
(Yet im sure there will be someone along in the minute to tell us its supply and demand innit , (cause they take pride in their average middle England home being worth nearly 7 figures or that they think they are a property investment guru cause they rode the last boom and their btl went up in value and obviously dont want them to decline in value)
Ok, I know never respond to a post with a link to the Daily Fail, but I'll take the bait.Start mortgage tempts borrowers with cheap interest-only fix, but sting in the tail sees bills rocket 180% after three years
[i]Clydesdale and Yorkshire Banks have launched a Low Start mortgage that tempts homeowners in with a three-year interest-only fix that comes with a sting in the tail - monthly payments that would rocket by 180 per cent when it ends.
The National Australia Bank-owned institutions have unveiled four fixed rate mortgages that start on an interest-only basis and move to a repayment product after three years. Mortgage lenders have lots of tricks to attract your money such as freebies or cashback, but the most important one to be wary of is the introductory rate like this.
While it may seem like a cheap way to climb on the property ladder, or clamber further up it, borrowers will see monthly costs soar by more than 180 per cent once the interest-only period ends.[/i]
Read more: http://www.dailymail.co.uk/money/mortgageshome/art...
this is exactly like the teaser rate loans in the USA before the credit crunch to encourage borrowing and then they shot up after 2 years.
This stinks of a bubble , cheap cheap money to fund really cheap mortgages to create a housing boom, thing is money wont be cheap forever.
It seems we have pre-the credit crisis all over again!
(Yet im sure there will be someone along in the minute to tell us its supply and demand innit , (cause they take pride in their average middle England home being worth nearly 7 figures or that they think they are a property investment guru cause they rode the last boom and their btl went up in value and obviously dont want them to decline in value)
No one is holding a gun to a potential homebuyer's head. Not now, not then.
The problem in 2005/6/7 not the bank increasing mortgage payments by 180%. The problem was the idiots that believed that a mortgage was a one-way bet on wealth, not appreciating that it is a loan that needs to be repaid. The cost is £x pcm and they are getting a discount for a couple of years and then they have to repay at £x pcm. Many focussed on the initial rate in the mistaken belief that the house would have doubled in value so everything would be all right.
Even before discounts, mortgage rates are still at historic lows. 10% plus was normal through the 1980s.
sideways sid said:
Ok, I know never respond to a post with a link to the Daily Fail, but I'll take the bait.
No one is holding a gun to a potential homebuyer's head. Not now, not then.
The problem in 2005/6/7 not the bank increasing mortgage payments by 180%. The problem was the idiots that believed that a mortgage was a one-way bet on wealth, not appreciating that it is a loan that needs to be repaid. The cost is £x pcm and they are getting a discount for a couple of years and then they have to repay at £x pcm. Many focussed on the initial rate in the mistaken belief that the house would have doubled in value so everything would be all right.
Even before discounts, mortgage rates are still at historic lows. 10% plus was normal through the 1980s.
i never normally post dailymail articles but was a reliable source for this type of introductory interest only mortgage No one is holding a gun to a potential homebuyer's head. Not now, not then.
The problem in 2005/6/7 not the bank increasing mortgage payments by 180%. The problem was the idiots that believed that a mortgage was a one-way bet on wealth, not appreciating that it is a loan that needs to be repaid. The cost is £x pcm and they are getting a discount for a couple of years and then they have to repay at £x pcm. Many focussed on the initial rate in the mistaken belief that the house would have doubled in value so everything would be all right.
Even before discounts, mortgage rates are still at historic lows. 10% plus was normal through the 1980s.
Yes but how long will historic lows last?My point is people are borrowing on cheap money and have got used to it , a 25 year mortgage of 150k on 3 % is £717 a month when rates rise which inevitably they will do it will cost almost £1100 a month at 7% (assuming base rate of 4-5% and then 2% bank margin)
Most folk will buy a house obviously on the most they can borrow but what it really comes down is how much their payments are a month , how much is coming out of their monthly paycheque on the mortgage? When i/r go back to average levels mortgage debt servicing is going to be much more expensive than it is now.
jonny70 said:
Yes but how long will historic lows last?My point is people are borrowing on cheap money and have got used to it , a 25 year mortgage of 150k on 3 % is £717 a month when rates rise which inevitably they will do it will cost almost £1100 a month at 7% (assuming base rate of 4-5% and then 2% bank margin)
Most folk will buy a house obviously on the most they can borrow but what it really comes down is how much their payments are a month , how much is coming out of their monthly paycheque on the mortgage? When i/r go back to average levels mortgage debt servicing is going to be much more expensive than it is now.
This is a very good point and a reason why a big part the UK property is one of the most risky in the world IMO (of course it has been one of the most resilient so far, especially London). High prices and the limited upside, the correction that didn't quite happen unlike in other countries and the rates - and these cannot be fixed for the life of the mortgage (unlike in the US).Most folk will buy a house obviously on the most they can borrow but what it really comes down is how much their payments are a month , how much is coming out of their monthly paycheque on the mortgage? When i/r go back to average levels mortgage debt servicing is going to be much more expensive than it is now.
Again people seem to be ignoring the simple laws of supply and demand, their are simply more people wanting to buy then their are houses in most of the UK and especially in London and without a massive change in this dynamic (and I don't really see how that can happen), house prices are only going one way.
I've sold a house which by all standards shouldn't have been that easy to sell without too much hassle at all. I have also been looking for a house to buy for the better part of a year in London now so I think I have gotten to know the market pretty well. Houses are literally flying out the door and if you're not quick, they will be snapped up from under you by one of the next 10 eager buyers. I've also had to increase my budget several times during that time period just to keep pace with the price increases for the exact same type of house that I started looking at a year ago. Was it galling? You bet but that's just the way it is.
Even the house which I eventually bought went up in value during the 2-3 months between the offer being accepted and a sale being completed, I know this as I can no longer find anything comparable for the money on Rightmove now without increasing the budget by at least another £20k. If it is a bubble it's been the longest lasting bubble I've ever seen, 40 years and counting!
I've sold a house which by all standards shouldn't have been that easy to sell without too much hassle at all. I have also been looking for a house to buy for the better part of a year in London now so I think I have gotten to know the market pretty well. Houses are literally flying out the door and if you're not quick, they will be snapped up from under you by one of the next 10 eager buyers. I've also had to increase my budget several times during that time period just to keep pace with the price increases for the exact same type of house that I started looking at a year ago. Was it galling? You bet but that's just the way it is.
Even the house which I eventually bought went up in value during the 2-3 months between the offer being accepted and a sale being completed, I know this as I can no longer find anything comparable for the money on Rightmove now without increasing the budget by at least another £20k. If it is a bubble it's been the longest lasting bubble I've ever seen, 40 years and counting!
Guvernator said:
When my parents bought their house 40 years ago they have often told me how much of a struggle it was, they were very hard pressed for a few years. They struggled to pay the mortgage and have ANY kind of life with what they had left. Fast forward many years and I bought my first house in London in my mid twenties, sure it was a struggle to pay the mortgage but as long as I was sensible, I was still able to enjoy all the mod cons of modern life, broadband, sky, latest phone and the occasional night out so my parents had a much harder time of it then I did.
I am just about to complete on another house now which I hope will be my family home for a long time, do I wish that house prices where lower? Sure because it would have meant that I could have paid a lot less for it or got a bigger house. Is it likely to happen though? I really don't think so. As mentioned already prices have risen for 40 years, England is a small country and most of the prime real estate has already gone especially in London and it's getting more and more crowded every, therefore the simple laws of supply and demand mean any land which does come up for sale is also expensive. This means it's not in a developers interest to build cheap housing when they could just as easily build "luxury flats" instead and get a much better return on their investment which is why you are seeing these luxury flats spring up all over the place, even in places which were normally deemed as being ropey so where is the supply for this "cheap housing" going to come from? The government certainly can't afford to build more council houses, they are broke!
I don't have any BTL's so I have no vested interest in house prices going up but even I can see that people who think they will go down to a more affordable level are dreaming, they are only going to go one way. Also lets look at that term affordable, I was able to afford to buy my first house with a decent deposit with very little help from my parents on a slightly above average salary however I had to make some pretty major sacrifices but young people these days seem to want it all, the nice house in zone 1/2, all the mods cons and trips out every other night. Of course you won't be able to save money if your spending £1500 a month on rent so move somewhere cheaper for a few years, stop going out so much and save like mad.
It has NEVER been easy to get on the property ladder but I'd say for those who are willing there are as many if not more opportunities to do it now, you just have to WANT to do it but I guess it's just easier to have a good moan and then go to the pub instead.
I am just about to complete on another house now which I hope will be my family home for a long time, do I wish that house prices where lower? Sure because it would have meant that I could have paid a lot less for it or got a bigger house. Is it likely to happen though? I really don't think so. As mentioned already prices have risen for 40 years, England is a small country and most of the prime real estate has already gone especially in London and it's getting more and more crowded every, therefore the simple laws of supply and demand mean any land which does come up for sale is also expensive. This means it's not in a developers interest to build cheap housing when they could just as easily build "luxury flats" instead and get a much better return on their investment which is why you are seeing these luxury flats spring up all over the place, even in places which were normally deemed as being ropey so where is the supply for this "cheap housing" going to come from? The government certainly can't afford to build more council houses, they are broke!
I don't have any BTL's so I have no vested interest in house prices going up but even I can see that people who think they will go down to a more affordable level are dreaming, they are only going to go one way. Also lets look at that term affordable, I was able to afford to buy my first house with a decent deposit with very little help from my parents on a slightly above average salary however I had to make some pretty major sacrifices but young people these days seem to want it all, the nice house in zone 1/2, all the mods cons and trips out every other night. Of course you won't be able to save money if your spending £1500 a month on rent so move somewhere cheaper for a few years, stop going out so much and save like mad.
It has NEVER been easy to get on the property ladder but I'd say for those who are willing there are as many if not more opportunities to do it now, you just have to WANT to do it but I guess it's just easier to have a good moan and then go to the pub instead.
Guvernator said:
mentioned already prices have risen for 40 years
They've gone up broadly in line with earnings over the last 50 years.Guvernator said:
therefore the simple laws of supply and demand mean any land which does come up for sale is also expensive
Land prices are correlated to house pricesGuvernator said:
they are only going to go one way
The Government have a lot to answer for when people believe thisGuvernator said:
Again people seem to be ignoring the simple laws of supply and demand, their are simply more people wanting to buy then their are houses in most of the UK and especially in London and without a massive change in this dynamic (and I don't really see how that can happen), house prices are only going one way.
I've sold a house which by all standards shouldn't have been that easy to sell without too much hassle at all. I have also been looking for a house to buy for the better part of a year in London now so I think I have gotten to know the market pretty well. Houses are literally flying out the door and if you're not quick, they will be snapped up from under you by one of the next 10 eager buyers. I've also had to increase my budget several times during that time period just to keep pace with the price increases for the exact same type of house that I started looking at a year ago. Was it galling? You bet but that's just the way it is.
Even the house which I eventually bought went up in value during the 2-3 months between the offer being accepted and a sale being completed, I know this as I can no longer find anything comparable for the money on Rightmove now without increasing the budget by at least another £20k. If it is a bubble it's been the longest lasting bubble I've ever seen, 40 years and counting!
I've sold a house which by all standards shouldn't have been that easy to sell without too much hassle at all. I have also been looking for a house to buy for the better part of a year in London now so I think I have gotten to know the market pretty well. Houses are literally flying out the door and if you're not quick, they will be snapped up from under you by one of the next 10 eager buyers. I've also had to increase my budget several times during that time period just to keep pace with the price increases for the exact same type of house that I started looking at a year ago. Was it galling? You bet but that's just the way it is.
Even the house which I eventually bought went up in value during the 2-3 months between the offer being accepted and a sale being completed, I know this as I can no longer find anything comparable for the money on Rightmove now without increasing the budget by at least another £20k. If it is a bubble it's been the longest lasting bubble I've ever seen, 40 years and counting!
Guvernator said:
Again people seem to be ignoring the simple laws of supply and demand, their are simply more people wanting to buy then their are houses in most of the UK and especially in London and without a massive change in this dynamic (and I don't really see how that can happen), house prices are only going one way.
Of course people pile in when prices are rising. This won't last forever.Guvernator said:
If it is a bubble it's been the longest lasting bubble I've ever seen, 40 years and counting
House prices were around 2.5 times earnings as recently as 1995 - where does 40 years come from?Russ T Bolt said:
oldnbold said:
Have things really changed that much?
I was also born in the early 60's, and my wife and I purchased our first house in '83 at the age of 22. Took the max mortgage we could get (2.5 x joint salary) to buy in Aylesbury. After we had paid the mortgage we didn't have a pot to pi55 in. No nights out, no holidays, 15 year old car, always skint before the end of the month etc etc.
My job moved us to the East Midlands 2 years later and we sold up for double what we paid.
Both my daughters have purchased in the last three years with there partners, both when aged 24, one of them within the M25. They both have holidays each year, weekends away, nights out, latest i phones, sky tv etc etc. Neither of them, or partners earn more than £35k a year. Yes they are also skint at the end of each month, but the life style they expect and enjoy is far better than the one my wife and I had 30 odd years ago when we started out.
Pretty much describes my experience tooI was also born in the early 60's, and my wife and I purchased our first house in '83 at the age of 22. Took the max mortgage we could get (2.5 x joint salary) to buy in Aylesbury. After we had paid the mortgage we didn't have a pot to pi55 in. No nights out, no holidays, 15 year old car, always skint before the end of the month etc etc.
My job moved us to the East Midlands 2 years later and we sold up for double what we paid.
Both my daughters have purchased in the last three years with there partners, both when aged 24, one of them within the M25. They both have holidays each year, weekends away, nights out, latest i phones, sky tv etc etc. Neither of them, or partners earn more than £35k a year. Yes they are also skint at the end of each month, but the life style they expect and enjoy is far better than the one my wife and I had 30 odd years ago when we started out.
z4chris99 said:
I think 3/4 years till the big crash, and I'm a resi developer so that's us f
ked
The population has grown by 419,000 in a year mainly thanks to immigration and the fact immigrants give birth to 26% of babies born in this country. With the new rights for Romanians and Bulgarians the figure will probably be even higher next year.ked We already had a housing shortage and we don't have a hope of building new homes at a rate that will keep up with the ever growing demand. When demand is growing faster than supply, prices are unlikely to fall.
Steve126 said:
We already had a housing shortage and we don't have a hope of building new homes at a rate that will keep up with the ever growing demand. When demand is growing faster than supply, prices are unlikely to fall.
The real question would be to what degree that housing shortage is genuine excess demand and to what extent it is an apparent shortage caused by price inelasticity (driven by various factors)?Plenty of housing stock on the market in towns oop north but more often than not, pricing is anywhere between aspirational and good old fashioned stupid, financing is hard to come by for many, the labour market is fragile etc.
Steve126 said:
z4chris99 said:
I think 3/4 years till the big crash, and I'm a resi developer so that's us fked
The population has grown by 419,000 in a year mainly thanks to immigration and the fact immigrants give birth to 26% of babies born in this country. With the new rights for Romanians and Bulgarians the figure will probably be even higher next year.ked We already had a housing shortage and we don't have a hope of building new homes at a rate that will keep up with the ever growing demand. When demand is growing faster than supply, prices are unlikely to fall.
Steve126 said:
The population has grown by 419,000 in a year mainly thanks to immigration and the fact immigrants give birth to 26% of babies born in this country. With the new rights for Romanians and Bulgarians the figure will probably be even higher next year.
We already had a housing shortage and we don't have a hope of building new homes at a rate that will keep up with the ever growing demand. When demand is growing faster than supply, prices are unlikely to fall.
It doesn't quite work like this.We already had a housing shortage and we don't have a hope of building new homes at a rate that will keep up with the ever growing demand. When demand is growing faster than supply, prices are unlikely to fall.
Those countries you mentioned have also experienced property booms in spite of the population outflows.
There are so many other factors and the currently stretched markets are not a safe place to be IMO.
http://www.rightmove.co.uk/property-for-sale/prope...
how long before you get change from a bobby moore?
how long before you get change from a bobby moore?
RealSquirrels said:
jdw1234 said:
How many Bulgarians and Romanians are buying houses?
how many landlords are buying houses to rent to them?Is the value of a rental property not dictated by the rent it can command? Surley a rational landlord won't invest if yields get too low?
How are these immigrants commanding increasing wages?
Maybe you mean stuffing more of them into a single house or each immigrant spending a higher proportion their income on rent, but we can't be too far from the limit.
As a young person trying to get on the housing ladder it does seem a bit of a laugh at the moment. Houses seem to be going up in value all around, but my wages have been frozen and so it becomes ever more difficult. At least if wages were rising as well you could realistically save for something.
As a young person trying to get on the housing ladder it does seem a bit of a laugh at the moment. Houses seem to be going up in value all around, but my wages have been frozen and so it becomes ever more difficult. At least if wages were rising as well you could realistically save for something.
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