House prices..

Morba said:
http://news.bbc.co.uk/1/hi/business/7430815.stm

Another drop in approved mortgages, lowest figures since reports started in '93.
Doesn't look good for all those estate agents!
Click to expand...

I say this slightly tongue-in-cheek (as mortgage approvals are at least an indicator), but if we we take a step back and consider what this means, is it really so bad? New mortgage approvals and lent money are down. This means, that less people are borrowing money for the purposes of buying a house. Take this out of context, and is it really so bad? One could argue that it's actually a good thing, because it means that people aren't needing to borrow so much money or building up high levels of debt. In fact if you think about it, isn't it quite logical that if house prices are falling, the amount being lent should fall also? Maybe not so much for the total number of mortgages, as while it's a nice idea, I suspect there aren't many people with such a large deposit built up that a fall in prices negates their need for a mortgage.

Haircut said:
unsustainable in the long term.
If wages grow at 3.5% p.a. and houses increase at 8% p.a. then after 20 years house prices will have outpaced wage increases by over 200%.
That is not something that can continue indefinitely, but yet is something that people seem to see as normal these days.
Click to expand...

It can't continue indefinitely, but certainly if you look at the medium term, the ratio of average house prices to average income is certainly on the rise: http://www.housepricecrash.co.uk/graphs-ftb-average-house-price-to-earnings-ratio.php

This only looks at FTB, but as you can see, the ratio has increased from 2.1(!!) in the mid90s, to 5.3 towards the end of last year. Even a 30% correction in prices should still see the ratio up fairly high, barring a huge hike in wages. The fact is, people who bought a house around then or slightly before may well have paid off their mortgage by now, because it was so low in relation to their income. With a 2.1x mortgage you could probably pay it off in 12 years fairly comfortably, even allowing for the higher interest rates around 97-98.

In essence I agree with what you are saying, but equally I think the medium term outlook is just as important for some people as the long term.
 
Last edited:
scorza said:
The reports I've read in the Sunday papers etc have recommended arranging mortgages 6 months in advance - and act fast! So yes, now's the time to start looking. There's little to no chance of interest rates going down in the next 6 months imo anyway so you probably won't lose out by agreeing something now.



Probably not, but if you'd have missed a payment then you could be in serious trouble. When you arrange your next mortgage you'll have to go through all the credit check process again blah blah.
Click to expand...
Interesting as my mortgage paper work came through today and said that the funds are only reserved for 3 months....
 
aardvark said:
lol - i like the way the bbc/hbos is lying when it says the yoy fall is 3.8% - look at the original document and its actually down 6.2% (they use a 3 month average to distort the figures).
Click to expand...

Not really surprised they got it wrong the figures have been rushed out to try and influence the interest rate decision.
 
Looks like theres a news 'black out' on this one today. BBC and SKY felt it was more important to mention Emu eggs hatching accidentally, and that alcohol is good for athritus ..... than it was to mention the MELTDOWN in the housing market.

2.4% down in a month is WORRYINGLY fast. Even 1% a month would be considered 'crash' speed.
 
On sky news they have just questioned the building industry claims there is a shortage of housing. Apparently as it stands today there is a million unsold empty homes.

So much for supply and demand.
 
Third Opinion said:
On sky news they have just questioned the building industry claims there is a shortage of housing. Apparently as it stands today there is a million unsold empty homes.

So much for supply and demand.
Click to expand...

It is supply and demand, but supply and demand of credit rather than numbers of houses.
 
nucastle said:
Looks like theres a news 'black out' on this one today. BBC and SKY felt it was more important to mention Emu eggs hatching accidentally, and that alcohol is good for athritus ..... than it was to mention the MELTDOWN in the housing market.

2.4% down in a month is WORRYINGLY fast. Even 1% a month would be considered 'crash' speed.
Click to expand...

real meltdown isnt it
 
Third Opinion said:
On sky news they have just questioned the building industry claims there is a shortage of housing. Apparently as it stands today there is a million unsold empty homes.

So much for supply and demand.
Click to expand...

My dad works for a major housebuilding firm, and he reckons they sold only two houses nationwide in April.
 
Ant84 said:
My dad works for a major housebuilding firm, and he reckons they sold only two houses nationwide in April.
Click to expand...

there are a lot of developments that are holding off finishing the developments untill the houses that are already up are sold. otherwise they end up with so many empty
 
You must log in or register to reply here.
Back
Top Bottom