House Prices - Where does it end?

Samtheman1k said:
But you're not making payments on the house as you have an interest only mortgage. Interest is effectively as dead money as rent is.
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It's not "dead" money as such - in ten years time he will have paid the interest on his mortgage, stopping his mortgage from growing, but hopefully his house will have increase in value. So in 30 years he will still owe the value of his mortgage, but he will own the house. So at the start his mortgage might have been 100k and his house worth 100k. At the end, his mortgage will still be 100k (but will be less in real terms) but his house might be worth 200k.
 
Samtheman1k said:
Given that EURO interest rates are lower than BOE interest rates, I think that it will make house prices rise even further!!
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That was my point though, what's right for one economy in one particular place isn't necessarily right for a different place with a totally different economy. We'd see recessions in some areas whilst booms in others or you'd end up with a rate that doesn't really please anyone.
 
ci_newman said:
Negative equity is bad, mm-kay! A collapse would probably bankrupt a considerable number of middle-class families, or rather destroy any hope of a reasonable retirement wage.
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indeed didn't think about it that way...
 
daz said:
That was my point though, what's right for one economy in one particular place isn't necessarily right for a different place with a totally different economy. We'd see recessions in some areas whilst booms in others or you'd end up with a rate that doesn't really please anyone.
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But surely it works for the US and the rest of Europe...or does it?
 
there are whole areas of country with affordable housing.

Why doesn't the government entice firms north?

Huge tax breaks etc for setting up in deprived areas for instance. The housing market is really only astronomical in the south east, probably due to that being the terminus for all international flights and train journies.
 
rossyl said:
but what sort of repayment are you looking at on that?

Surely the percentage of your monthly salary that goes on a repayment will be very large.
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30 year mortgages etc.

Parents remortgaging their house to help their kids get a foot in.
 
jas72 said:
Why doesn't the government entice firms north?
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Because they would prefer people to have to commute 100's of miles per day in their car and on the train, if everybody lived just around the corner from where they worked they'd lose £££

HEADRAT
 
House prices are terrifying. My brother and his girlfriend have been looking at getting a house since christmas and by our reckoning the average house in Belfast has risen by £30k since then. A bog standard 3 bedroom house in a ok area costs around £220k now when 2 years ago it would only have been around £90k meaning that it's virtually impossible for someone to buy a house on their own even in a top paid job over here.

I think the biggest problem is greed and panic buying. There should be a law that you put your house on the market at its market value and the first person that offers that sum of money gets it. There's far too many people coming in and bidding on houses which is just pushing the prices up and up as sellers get more and more greedy holding out for months to get a price £30-40k over their asking price triggering people to panic buy beacuse they know property is getting too expensive for them to afford.
 
brid said:
.... As the government proved 15 odd years ago when it had to put interest rates up to 15%..... this aint the case
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Interest rates only went up to 15% for a few hours, and only then because the government had signed up to a mechanism that kept the pound artificially high. Its also worth noting that the Black Wednesday episode smashed the Conservative party's reputation for running the economy - something they're still paying for today. Any government worth its salt isn't going to let interest rates get out of control again.
 
matthew_o50 said:
There should be a law that you put your house on the market at its market value and the first person that offers that sum of money gets it.
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What if the buyers are ****** and look likely to cause your next door neighbours hell? (and you don't want to stitch up the neighbours because you've known them years and have a good friendship...) :D
 
Also as I've said many times before those that think we've go low interest rates are in a "fools paradise", we've never paid so much interest.

Would you rather pay interest at 12% on a house worth £90K of 6% on a house worth £250K!!

I know which I'd prefer!

The banks should only be allowed to lend 3.5x income with no exception IMHO.

HEADRAT
 
jas72 said:
there are whole areas of country with affordable housing.

Why doesn't the government entice firms north?
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They are - the BBC is moving some of its departments to Manchester, much to the chagrin of staff. Thats the basic problem, snobbery amongst southerners :p
 
I'm not sure where people get the idea from that things will go up and up in value. The business model our society is based on cycles.
Perhaps people get caught up on strong words such as recession?
It is possible that economic decline can be sparked by one-off events, housing crashes, oil cost etc, but overall, it will happen either way.

Oh, and to the person who asked why interest rates are certain to rise. They were artificially low to begin with to provoke people to spend in order to prop up Gordon Brown's ideals. Allowing them to raise would be the only way to control inflation.
 
Can't they just tax buy-to-let'ers massively so it isn't so finiancially viable for them to buy up all the cheap housing and rent it out to the people that should be buying them in the first place?
 
jim5000 said:
Can't they just tax buy-to-let'ers massively so it isn't so finiancially viable for them to buy up all the cheap housing and rent it out to the people that should be buying them in the first place?
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It hasn't been financially viable for buy-to-letters for a long time.
 
Housing doesn't just crash in isolation, to most people it doesn't matter what there house is worth as they are living in it! What does matter is employment, if you lose your job then it's not too long before must people would lose their house if they weren't able to find another job.

To a certain extent even if the interest rates shoot up people will always hang onto their house, it would be the last thing to go, if you lose your job you have no room for negotiation with the bank/bs and you're out on your ear!

We had friends and family in the 1980's who were in the building trade and it was a terrible time :(

HEADRAT
 
jim5000 said:
Can't they just tax buy-to-let'ers massively so it isn't so finiancially viable for them to buy up all the cheap housing and rent it out to the people that should be buying them in the first place?
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But there is very little council housing and most of these people wouldn't be able to get a mortgage, the buy-to-let'ers serve a purpose that the goverment have no answer for.

HEADRAT
 
daz said:
It's not "dead" money as such - in ten years time he will have paid the interest on his mortgage, stopping his mortgage from growing, but hopefully his house will have increase in value. So in 30 years he will still owe the value of his mortgage, but he will own the house. So at the start his mortgage might have been 100k and his house worth 100k. At the end, his mortgage will still be 100k (but will be less in real terms) but his house might be worth 200k.
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He still has to find 100K though to pay back the mortgage doesn't he? What happens then? In the past people relied on Endowments, but no-one uses them any more.

How do people on Interest Only mortgages repay the capital?
 
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