Question about house prices

[MatteH Oxford]

Precisely. The only concern for any home owner should be whether or not they can service their mortgage to end of term.

Which will always be a big concern if they bought at a high debt/low interest rate rather than a small debt/highish rate ( around 8% ) like I was fortunate enough to be able to do back in the late 90s.

I'd much rather have a £100k mortgage @ 15% than a £300k @ 5%, the reasons are self explanatory. For one, an over payment of £10k would bring the principal sum to 90K rather than a whopping £290k. 5% to 15% would mean the interest charges would treble, at 15% the rate would have to go to 45% and that wouldn't be very likely in comparison. I've only ever seen my mortgage rate come down during the time of the loan, which is another advantage of buying when rates are higher.

I don't know how recent buyers sleep at night with the size of the debts they have taken on

 

[Skillmister]

I don't know how recent buyers sleep at night with the size of the debts they have taken on

But they've made it on to the property ladder so all is well! Except they'll be stuck on that bottom rung of the ladder for a couple of decades...

Thankfully I live in an area where my first property isn't going to cost an arm and a leg and I'll have the added benefit of not paying any legal fees when I do buy.

There are 210 properties for sale in my postcode for under £200k. 127 for under £150k.

 

[HangTime]

Your mum could do what some others have done:

-Rent out London pad so that she keeps a foothold in the London market and can benefit from any capital appreciation
-Use the rental income to rent a decent property elsewhere

I'm not entirely convinced by this strategy but basically the idea is that some people who got on the ladder in London years ago but now want to move out to the country for a better lifestyle can do so without having to abandon boom town. They get to live in the area they want but their assets remain in London if that is where they think there is the most money to be had in terms of price fluctuations. This may turn out more effective than selling up and buying elsewhere if the London market outperforms the market in the other location.

As for the general question, the way I see it going is that the commuter belt will forge ahead with Liz Line locations potentially performing as well as or better than London over the next 5 years. Certainly you look at Berkshire and some of the places on the line while not necessarily the most desirable historically will appeal to people working in London given the relatively low prices compared to the new travel time and direct route to Liverpool St and Canary Wharf.

Now some will suggest that this has already been accounted for with Slough/Maidenhead/Reading etc already having experienced 15-20% annual growth but I can see it continuing for a while when you consider the prices relative to other commuter areas south of there in Surrey and North Hants. It depends a bit on gentrification projects etc with some areas perhaps remaining run down but the natural 'sprawl' of professional buyers will help to pick these up in the same way as it has in some of the London boroughs over the past 15-20 years.

One of the reasons I think the commuter belt will prosper is simply because family homes in London have become unaffordable even for people with 'good' jobs. I work in London and our household income is into six figures but I can't see us ever being able to afford to live there in a nice house in a nice area.

 

[icehot]

Depends on your view of a crash. If 10% compound over 10 years and then in year 11 it crashes by 20% is that what you consider to be a crash? It would need to crash by 60% to break even. If house prices crash by 60% overnight we have a lot more to worry about. Plus the equivalent cheaper property would have crashed as well.

This.

 

[HangTime]

Let me try again: what would the effect of a terrorist attack have on the London housing market

Not a lot IMO unless the attack was of a magnitude/longevity we haven't seen before. Certainly not on typical homes I think; possibly it might indirectly impact on the high end market due to impact on the stock markets meaning less cash floating around and potentially overseas investors being slightly more cautious.

As a point of comparison, taking 7/7 as an example you can see basically nothing happened: http://www.home.co.uk/guides/house_...th=01&startyear=2005&endmonth=01&endyear=2007

 

[StriderX]

For London to stop being desirable, Westminster would have to be leveled to the ground... MI5/6 and co would have to have failed on purpose for that.

 

[Scam]

A lot of people do dispose of their asset at retirement.

Many people are approaching retirement right now. It might be the asset that supports them going forward.

This is an interesting point I never thought about. All the baby boomers are approaching retirement. With the recent attacks on BTL perhaps we will see more of them offload their properties and downsize, rather than becoming amateur landlords? One can hope, anyway.

 

[Rifte]

This is an interesting point I never thought about. All the baby boomers are approaching retirement. With the recent attacks on BTL perhaps we will see more of them offload their properties and downsize, rather than becoming amateur landlords? One can hope, anyway.

If I was a pensioner looking to retire in the next couple of years from my employment, the last thing I would do would be to offload any property that I could BTL out.

The BTL assault really only impacts those people that have a HUGE portfolio or are still employed.

A pensioner would still get his or her income tax allowance, and that would suck up most of the profit made on a BTL property. Especially if the property was owned by a couple. It would take a lot for a retired couple to make 22k of profit on a BTL property.

I suppose the only thing that could potentially push them over would be their pensions, if they pull on it. But then they would only really hit the basic rate.