Property values?
Discussion
martin hunt said:
magic torch - I believe in the 7 year cycle rule for life, therefore if you r mate said it 5 years ago the 7 years are up in 2 so my timing maybe right :-) (ever fancied using my waterblaster.eu on your hoon?)
My point was that people were having this conversation five years ago, had my friend sold at the time, he'd have lost out. Just an observation...
End of the day we are speculating here, I'm long on property so the odd 'blip' won't make a massive difference.
Will have a look at the waterblaster.
What causes a major correction in the housing market of the order of 20 - 30%, a huge downturn in the economy with massive unemployment in the order of 3 Million, interest rates rising to 15%.
With interest rates at the level they are currently, even with expected rises to 5.5 or 5.75%, affordability in terms of the proportion of of earned income to pay for a mortgage is broadly in line with earning. It's in nobodys interest (bar a few property speculators) for house prices to drop substainatially - certainly not the Bank of England or the Government's.
The housing market will inevitably slow down as the Bank of Interest restrains inflation.
So increase in 2007, 2%
With interest rates at the level they are currently, even with expected rises to 5.5 or 5.75%, affordability in terms of the proportion of of earned income to pay for a mortgage is broadly in line with earning. It's in nobodys interest (bar a few property speculators) for house prices to drop substainatially - certainly not the Bank of England or the Government's.
The housing market will inevitably slow down as the Bank of Interest restrains inflation.
So increase in 2007, 2%
griffgrog said:
What causes a major correction in the housing market of the order of 20 - 30%, a huge downturn in the economy with massive unemployment in the order of 3 Million, interest rates rising to 15%.
With interest rates at the level they are currently, even with expected rises to 5.5 or 5.75%, affordability in terms of the proportion of of earned income to pay for a mortgage is broadly in line with earning. It's in nobodys interest (bar a few property speculators) for house prices to drop substainatially - certainly not the Bank of England or the Government's.
The housing market will inevitably slow down as the Bank of Interest restrains inflation.
So increase in 2007, 2%
With interest rates at the level they are currently, even with expected rises to 5.5 or 5.75%, affordability in terms of the proportion of of earned income to pay for a mortgage is broadly in line with earning. It's in nobodys interest (bar a few property speculators) for house prices to drop substainatially - certainly not the Bank of England or the Government's.
The housing market will inevitably slow down as the Bank of Interest restrains inflation.
So increase in 2007, 2%
It's in the future generations interest that they can afford somewhere to live. Anyway, the bubble will pop naturally - look at the US and Australia now. We won't be far behind.
Supply and demand...
In London, there is nothing for sale..why- to move to the next house I am facing 4% stamp duty and a massive chunk of money to move from a reasonable area to a fashionable area. Like me, many are improving and extending to avoid this hefty charge. They can be easy do as there is so much equity in the properties. The improvements increase the value even more. They then go and buy a 2 bed appartment as a rental with the rest of the increase in equity. Now there are lots of new people moving into London. Smart people working in the City and Industry. They are usually high flighers and have to live in the "right" places. There are no places for sale and those that come up are snapped up unseen. Then there is all the "funny money" and all the cheap Polish labour. This is mopping up any development opportunities and selling the finished products to the high flighers at massive prices.
Unitl supply eases up nothing will change. It only takes a tiny amount more people looking to buy then houses for sale to push up the prices and as we have seen interest rates are not having the desired effect.
In London, there is nothing for sale..why- to move to the next house I am facing 4% stamp duty and a massive chunk of money to move from a reasonable area to a fashionable area. Like me, many are improving and extending to avoid this hefty charge. They can be easy do as there is so much equity in the properties. The improvements increase the value even more. They then go and buy a 2 bed appartment as a rental with the rest of the increase in equity. Now there are lots of new people moving into London. Smart people working in the City and Industry. They are usually high flighers and have to live in the "right" places. There are no places for sale and those that come up are snapped up unseen. Then there is all the "funny money" and all the cheap Polish labour. This is mopping up any development opportunities and selling the finished products to the high flighers at massive prices.
Unitl supply eases up nothing will change. It only takes a tiny amount more people looking to buy then houses for sale to push up the prices and as we have seen interest rates are not having the desired effect.
pooh said:
I see a crash coming too, the whole buy to let thing has been propping up the market. Rising interest rates are pushing repayments higher than rents and if people with buy to lets start to bail out in significant numbers, it could bring the whole thing down.
I find it hard to belive that rents are not at least "loosly coupled" to interest rates. They will eventually go up too, as part of the cost base for landlords which needs to be recovered. Can't help thinking of the couple of Math teachers that were in the papers the other week, with 700+ buy to lets and expanding on with their sights set on 1,000 properties. Their view was that as prices have always doubled every 7 years and demand will outstrip supply by a considerable margin for the forseeable future, it would be daft not to buy property.
And don't forget, with Climate Change in a few years the UK will be one of the few remaining habitable places in the western world. That's got to be a filip for property ownership!
victormeldrew said:
Can't help thinking of the couple of Math teachers that were in the papers the other week, with 700+ buy to lets and expanding on with their sights set on 1,000 properties. Their view was that as prices have always doubled every 7 years and demand will outstrip supply by a considerable margin for the forseeable future, it would be daft not to buy property.
Maybe they're talking the market up before dumping 700 properties on it? Dot.com all over again i say.
[quote=aceparts_com
It's in the future generations interest that they can afford somewhere to live. Anyway, the bubble will pop naturally - look at the US and Australia now. We won't be far behind.[/quote]
What about Australia? Have you seen property prices in Perth? Used to be immense value for money there. Unfortunately, due to huge increase in mineral prices (nickel etc), mining is booming. The Perth property market is now the 3rd most expensive in the world (as a function of income) and the average house is 7.8x average income!! Basically, loads of mining companies and finance companinies employing loads of people on mega wages. They are buying property in Perth and there is limited supply.
Re: UK property, I think the market is very dependent on location. I wouldn't want to be a property speculator in Scarborough, or Morecambe or any otehr dead seaside town. BUT, property prices in the right part of Leeds, Harrogate, York etc are very strong and growing. I expect the same can be said in London and parts of the SE.
It's in the future generations interest that they can afford somewhere to live. Anyway, the bubble will pop naturally - look at the US and Australia now. We won't be far behind.[/quote]
What about Australia? Have you seen property prices in Perth? Used to be immense value for money there. Unfortunately, due to huge increase in mineral prices (nickel etc), mining is booming. The Perth property market is now the 3rd most expensive in the world (as a function of income) and the average house is 7.8x average income!! Basically, loads of mining companies and finance companinies employing loads of people on mega wages. They are buying property in Perth and there is limited supply.
Re: UK property, I think the market is very dependent on location. I wouldn't want to be a property speculator in Scarborough, or Morecambe or any otehr dead seaside town. BUT, property prices in the right part of Leeds, Harrogate, York etc are very strong and growing. I expect the same can be said in London and parts of the SE.
I suspect there could well be a correction. In my opinion (worth almost nothing in this field admittedly) the trigger will be the combination of rising interest rates and flattening house prices, which will make the hordes of amateur buy-to-let landlords sell up. What's the point if you;re not getting any capital growth, and you are having trouble covering the mortgage payments?
So I see a flood of BTL properties hitting the market in the not too distant future. Hopefully this would make it possible for first time buyers to get on the ladder, but I'm not sure what impact a correction in the BTL sector would have on, say, a £750K family home in Farnham where City money is still easy to find >-(
So I see a flood of BTL properties hitting the market in the not too distant future. Hopefully this would make it possible for first time buyers to get on the ladder, but I'm not sure what impact a correction in the BTL sector would have on, say, a £750K family home in Farnham where City money is still easy to find >-(
I just don't get the notion that the housing market is rising above peoples ability to buy. My first house in S.London cost me 57K in 1994. At that time I earned £11K and my girlfriend something similair. Between us we came home with about £1000 and our mortgage was about £500. i.e 50% of our income went on paying the mortgage.
The same house is now up for sale for £175K. A person of similair average occupation would be earning now about 25 - 30K and coming home with say £1500 after tax. If it's a couple say £2500. The morgage for that propoerty would be c£1250 i.e. 50% of net income.
Result, no change in proportion to income.
or to look at it another way:- low interest rates have pushed house prices to the extent of affordability (50% of net income) and house prices will always be inversely proportional to interest rates at that time.
The same house is now up for sale for £175K. A person of similair average occupation would be earning now about 25 - 30K and coming home with say £1500 after tax. If it's a couple say £2500. The morgage for that propoerty would be c£1250 i.e. 50% of net income.
Result, no change in proportion to income.
or to look at it another way:- low interest rates have pushed house prices to the extent of affordability (50% of net income) and house prices will always be inversely proportional to interest rates at that time.
griffgrog said:
or to look at it another way:- low interest rates have pushed house prices to the extent of affordability (50% of net income) and house prices will always be inversely proportional to interest rates at that time.
Bang on! But it's the interest rates in the time AFTER purchase that one needs to worry.... Looking back 15 years they've been as high as 15% and as low as 3.5%... Who knows going forwards?
The UK's interest rates will be broadly in line with those in the Eurozone and the US. Whilst interest rates have risen to counteract the inflation that global economy has been experiencing, I can't see anythink like what happened when Norman Lamont was Chancellor.
But if George Nuke's Iran, well that could have an impact on the global outlook.
But if George Nuke's Iran, well that could have an impact on the global outlook.
griffgrog said:
I just don't get the notion that the housing market is rising above peoples ability to buy. My first house in S.London cost me 57K in 1994. At that time I earned £11K and my girlfriend something similair. Between us we came home with about £1000 and our mortgage was about £500. i.e 50% of our income went on paying the mortgage.
The same house is now up for sale for £175K. A person of similair average occupation would be earning now about 25 - 30K and coming home with say £1500 after tax. If it's a couple say £2500. The morgage for that propoerty would be c£1250 i.e. 50% of net income.
Result, no change in proportion to income.
or to look at it another way:- low interest rates have pushed house prices to the extent of affordability (50% of net income) and house prices will always be inversely proportional to interest rates at that time.
Same with me; first house £18.5k in 1983, my income £7.8k, about £450 take home, mortgage was £215, 48% of income. 14% mortgage rate back then! The same house is now up for sale for £175K. A person of similair average occupation would be earning now about 25 - 30K and coming home with say £1500 after tax. If it's a couple say £2500. The morgage for that propoerty would be c£1250 i.e. 50% of net income.
Result, no change in proportion to income.
or to look at it another way:- low interest rates have pushed house prices to the extent of affordability (50% of net income) and house prices will always be inversely proportional to interest rates at that time.
aceparts_com said:
victormeldrew said:
Can't help thinking of the couple of Math teachers that were in the papers the other week, with 700+ buy to lets and expanding on with their sights set on 1,000 properties. Their view was that as prices have always doubled every 7 years and demand will outstrip supply by a considerable margin for the forseeable future, it would be daft not to buy property.
aceparts_com said:
nothing to do with supply and demand as outside London there is plenty of supply otheriwse people would be living on the streets
Just today on the Rugby local news the local council were being taken to task for the homeless lists being at an all time high. You're just not talking from an informed viewpoint IHMO (and I'm being charitable there). Rugby Advertiser said:
Storm brewing over homeless shelter plan
A STORM is brewing over proposals to convert a disused church into a homeless shelter.
As the Advertiser reported last week, plans are being launched to convert St. Philip's Church, in Wood Street, into a shelter for young homeless people.
A STORM is brewing over proposals to convert a disused church into a homeless shelter.
As the Advertiser reported last week, plans are being launched to convert St. Philip's Church, in Wood Street, into a shelter for young homeless people.
You should tell them; they seem to think people are living in the streets!
Edited by victormeldrew on Monday 29th January 21:55
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