House prices

[dazzerd]

The government will intervene to stop house prices falling drastically because so many people have loans taken out against their homes. There'd be chaos.

The government will intervene to stop house prices rising drastically because so many first time buyers are already priced out of the market.

So there's no reason to wait, get your house and enjoy it.

The government cannot intervene if the BOE rise interest rate. It is a decision made by the BOA independently. The BOE will need to raise rates soon as inflation is out of control; meaning we all become slowly poorer as things get more expensive.

It's a catch 22 situation for the powers that be to be honest. Do nothing on interest rates which keeps mortgage repayments down but at the same time screws savers and also means the value of your pound is is less.

Raise interest rates is going to screw mortgage holders (at least those who are already on the edge). A small increase in rates can mean a couple of hundred pounds a month. Many people would say this is the fairest option as many people who took out mortgages at the top of the market when loans were easy to come buy were in reality not in a position to afford the payments in the first place. This is harsh but probably true.

First time buyers are completely screwed anyway unless they are cash rich.

In all honesty I cannot remember a time where the economic outlook for this country is so bleak whilst the level of inequality so vast; if I had the choice I would be off as soon possible.

 

[Heliospherez]

In all honesty I cannot remember a time where the economic outlook for this country is so bleak.

Agreed. I can't see how any economist could magic this country back from where we are - and where we are heading.

The next 12-24 months are going to be tight for a lot of the population & unless there are monumental changes in the mortgage market and lending in general - Things aren't going to improve for a long, long time.

 

[dal]

I would say the last 5 years have probably been the worst timing in living memory (probably ever) to buy a house in England.

No the worst time I can remember is in 1989, I remember my mate bought a flat for £40k which seemed like a lot of money then and within a year it was worth about £12 k
Mind you at that time interest rates soared to 15% and people were being reposessed left right and center.

 

[Perywinkle]

Some people were saying the same when I bought my house 13 months ago.
It's been valued recently at almost 20% more than we paid for it.

 

[cheets64]

Some people were saying the same when I bought my house 13 months ago.
It's been valued recently at almost 20% more than we paid for it.

Have you done anything to it?

 

[v0n]

I am yet to see any true price drop in my preferred areas at all. It might be there on paper, but in reality what I couldn't afford in 2005, I still cannot afford in 2011. Market is stagnated, mostly because people can't get mortgages more than anything else. But no 20-30% bargains that press would suggest.

 

[Scam]

To the OP, your 10k you might lose is real money not some fictitious house valuation. Never forget that.

It may be 'real money' but he's not losing it. He's simply choosing to pay the price for that house at that particularly given time. If you want something, you pay the price that's asked for it.

Given some plonker has just put up a 2-bed flat on my street for 400k (I rent..) I'd absolutely love the market to crash. Who gives a crap if some people have negative equity, they'll still have a bloody house to live in. It seems most people seem to forget that when whinging about it.

Realistically I can't foresee prices dropping. We're heading down a two-tier society of older homeowners renting them out to all the plebs currently under 30. We'll pay extortionate rent until.. well.. 'something' happens to fix it. Who knows what that'll be. This house price bubble is splitting the country in two and it's only a matter of time when those currently under 30 will have to do something about it. Afterall, it's not like we'll get a pension is it?

 

[Perywinkle]

Have you done anything to it?

Nope, not a sausage.
A small development down the road (sheltered housing granny cottages) might mean we get a shop and the station upgraded though, which will make it a proper comuter stop. as opposed to only a pub and a station where 10 trains per day stop (and none after 8pm or at the weekends)

 

[Raumarik]

You sure ?

This for Northern Ireland as a whole.

Peak Q3 2007 227970 + 1.1%
+1 Q4 2007 224816 - 1.4%
+2 Q1 2008 196892 - 12.4%
+3 Q2 2008 183476 - 6.8%
+4 Q3 2008 159970 - 12.8%
+5 Q4 2008 147833 - 7.6%
+6 Q1 2009 138,537 - 6.2%
+7 Q2 2009 135,862 -1.9%
+8 Q3 2009 147,204 +8.3%
+9 Q4 2009 137,949 - 6.3%
+10 Q1 2010 134,435 - 2.5%


Total fall from peak to Q1 2010 - for the average Northern Ireland house - £93,535 or 41%

And it's even worse now - Possibly around 45% up until Dec 2010. I know of loads of people who paid around £230,000 - £240,000 for houses - only for them be valued recently at £100,00 - £110,000

Most poeple here have agreed the peak will be around 50% - and I can;t se why not.


All depends where u are

What's happened in Northern Ireland is hardly applicable to the rest of the UK.

 

[Raumarik]

Some people were saying the same when I bought my house 13 months ago.
It's been valued recently at almost 20% more than we paid for it.

We're the same, 8 months ago we bought it at market value, same people have valued it 15% up on what we paid. Not that we intent to sell anytime soon anyway, it's a home not a money making scheme for us.

 

[Third Opinion]

Waiting 6 months cant hurt if you are worried. Prices are falling but I am not sure about 20-30%. One things for sure we are very unlikely to have another boom with the economy the way it is. So all this you must buy now or don't hesitate or you will miss the boat is getting a bit tired now.

My parents bought their house 5 years ago for 250k. They wanted to sell it last year but it was only valued at 210k and the agent suggested putting it on for 190k for a quick sale.

Prices can fall and have been despite record low interest rates. If they do take a tumble there is jack all the Government can do to stop it.

 

[Fuzz]

What difference does it make if house prices drop 10% after you bought in.
The next house you might be looking to upgrade to will also be 10% less.
The only time you'll lose out is if you take the cash and do something else with it.
Stop treating the house as some sort of stock exchange commodity and just live in it like you are supposed to.

 

[The Halk]

Different properties are affected differently. There's a chain from 1st time buyer small flat to 4 bedroom detached. The entry to the chain is significantly more difficult than it was before which is having an effect on demand - it also has an effect on supply as people depend on chain sales. The resuilt is a slower market.

Interest rates are set to rise this year - my opinion is by about 1% - that will have a minor effect on things.

I expect prices to be stable to -10% at worst this year. I'm not ruling out a total catastrophe though. House price "corrections" happen because of a domino effect, through hysteria. If that happens then the 30% drop is possible. It just isn't likely at all.

If you have a look at pricing then you can see what I mean. 80% LTV pricing is only a percent or so better than 60%. 90% is where the big premiums are being charged, because it's only really those properties that present any danger of a loss under default.

 

[Heliospherez]

What's happened in Northern Ireland is hardly applicable to the rest of the UK.

I never said it was.

My post was directed at the post saying house prices wouldn't drop 30%

As I said - here in Northern Ireland (part of the UK) - house prices have dropped as much as 50% in a lot of areas. So to people here who bought at the height of the market - the prediction was more correct. It's all relative.

 

[DBT85]

I would say the last 5 years have probably been the worst timing in living memory (probably ever) to buy a house in England.

Unfortunately through we can't just go back 10 years and get our parents to buy another house for us. On that basis you can only go by what you have available at the time. There are thousands of people who are renting who are paying just as much on rent and often more than they would be on a mortgage for the same property but because they don't have a deposit have no choice.

The wife and I had three options. Stay at home with the parents, rent, or buy.

Since we had 30k to drop on a deposit, we were starting out our married life together and both despise the idea of paying off someone else's mortgage instead of our own the decision was simple.

If anything the worst time to buy anything was 2006-2007 when the market was at its peak. Since then its actually been great to buy somewhere if you can get a good deal.

People selling houses will not accept much less than they paid for the house or what they perceive to be the value of the house. We saw it first hand when buying our place. Some people just would not accept anything in line with the market trend because in their eyes the house was worth x amount. Nothing would budge them an eventually they would sell it for the price they wanted

Those selling a property that has been inherited may be less like this since they didn't pay for it and in the end just want it over and done with which is what happened with our place.

For us it only matters where things are in 4 years time when our fixed deal ends. Our house would have needed to drop nearly 25-30% from the March 2009 price for us to be in negative equity. Bearing in mind according to the Nationwide site houses in greater London are today worth 16% more now than they were then I'm not really that concerned. That's just using "greater london" as a blanket area. I'd love to see what an estate agent values our place at now. We spent about 20k on doing it up but only 10k was on stuff that would stay in the house including getting the wiring out of the 1960s. The house looks utterly different now because of it.

Ultimately house prices falling does matter to anyone with a mortgage because it'll affect any new deal you can get. Ours runs olut in 4 years. at the moment if house prices are flat for the next 4 years we'll owe 66% of the value. That will get us a much better interest rate on a new fixed deal than if the house prices drop 10%.

 

[The Halk]

The height of the market was greed and avarice in abandon. People were paying up to 10% over the surveyed price of a house because they believed it'd be worth that in 6-12 months and after that it'd be profit. There was an incredible amount of speculation going on, and lots of people buying flats etc. I'm very happy about them losing lots of money, and I have no sympathy when they face reposession etc.

The reason for the high house prices in the 00s was simply because they were in short demand, so people who didn't need them bought as many as they could to profit from people who needed a house. Speculating on all sorts of things is generally not a massively good thing - there are benefits - but when you're speculating on houses it's bad in my opinion.

Sadly people buying their own houses were caught up in that and they've ended up paying more than they needed to... but at least they still have the house. They've not lost out greatly.

 

[Kmodo]

Waiting 6 months cant hurt if you are worried. Prices are falling but I am not sure about 20-30%. One things for sure we are very unlikely to have another boom with the economy the way it is. So all this you must buy now or don't hesitate or you will miss the boat is getting a bit tired now.

My parents bought their house 5 years ago for 250k. They wanted to sell it last year but it was only valued at 210k and the agent suggested putting it on for 190k for a quick sale.

Prices can fall and have been despite record low interest rates. If they do take a tumble there is jack all the Government can do to stop it.

Surely that is the exception to the rule? If houses that were 250k are now on for 200k everyone would have noticed it. A year after I finished uni I was looking at houses around Bath (I gave up as it would have stretched me too far) , now two years later it seems like they have went up :S

 

[Richie]

I can't see house prices crashing 20-30% myself. Who is going to sell their house at a massive lost unless they have no choice. Sure, there will be some but the vast majority of people will just stay put until their own house recovers slightly. This will result in less supply on the market as a whole.

 

[Windle]

I can't see house prices crashing 20-30% myself. Who is going to sell their house at a massive lost unless they have no choice. Sure, there will be some but the vast majority of people will just stay put until their own house recovers slightly. This will result in less supply on the market as a whole.

Exactly what I said in my post and as i mentioned it's what the majority of places like the Royal Insitute of Chartered Surveyors are predicting. The current downward trend is not expected to exceed 5% and should then be buoyed by the fact that a lot of sellers will sit on their properties until the market improves unless they absolutely have to sell. This lack of supply will match the lack of buyers and the market will stay relatively flat into 2012.

 

[Slam62]

Unfortunately through we can't just go back 10 years and get our parents to buy another house for us. On that basis you can only go by what you have available at the time. There are thousands of people who are renting who are paying just as much on rent and often more than they would be on a mortgage for the same property but because they don't have a deposit have no choice.

The wife and I had three options. Stay at home with the parents, rent, or buy.

Since we had 30k to drop on a deposit, we were starting out our married life together and both despise the idea of paying off someone else's mortgage instead of our own the decision was simple.

If anything the worst time to buy anything was 2006-2007 when the market was at its peak. Since then its actually been great to buy somewhere if you can get a good deal.

People selling houses will not accept much less than they paid for the house or what they perceive to be the value of the house. We saw it first hand when buying our place. Some people just would not accept anything in line with the market trend because in their eyes the house was worth x amount. Nothing would budge them an eventually they would sell it for the price they wanted

Those selling a property that has been inherited may be less like this since they didn't pay for it and in the end just want it over and done with which is what happened with our place.

For us it only matters where things are in 4 years time when our fixed deal ends. Our house would have needed to drop nearly 25-30% from the March 2009 price for us to be in negative equity. Bearing in mind according to the Nationwide site houses in greater London are today worth 16% more now than they were then I'm not really that concerned. That's just using "greater london" as a blanket area. I'd love to see what an estate agent values our place at now. We spent about 20k on doing it up but only 10k was on stuff that would stay in the house including getting the wiring out of the 1960s. The house looks utterly different now because of it.

Ultimately house prices falling does matter to anyone with a mortgage because it'll affect any new deal you can get. Ours runs olut in 4 years. at the moment if house prices are flat for the next 4 years we'll owe 66% of the value. That will get us a much better interest rate on a new fixed deal than if the house prices drop 10%.

You seem very honest and sensible and I can totally understand your position, I hope it turns out ok for you.

Surely that is the exception to the rule? If houses that were 250k are now on for 200k everyone would have noticed it. A year after I finished uni I was looking at houses around Bath (I gave up as it would have stretched me too far) , now two years later it seems like they have went up :S

The expensive ones won't sell, in this type of market the correctly priced ones come and go very quickly.

I can't see house prices crashing 20-30% myself. Who is going to sell their house at a massive lost unless they have no choice. Sure, there will be some but the vast majority of people will just stay put until their own house recovers slightly. This will result in less supply on the market as a whole.

There are a lot of distressed mortgages at the moment and it can only get worse.
I will be surprised if we don't get 40 to 50% drops in the end.
The economy will take 5 to 10 years to rebalance and when it does we will all have to be a lot worse of.