Housing market

Rotty said:
all recent evidence suggests otherwise, may flatten but there is no sign of further declines
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There's every sign of further declines as the cost of borrowing can only go one way. We are in an artificially stimulated market at the moment due to low interest rates.

Due to the UK trade deficit and the need to finance the nation's borrowing interest rates HAVE to rise. We can't keep interest rates low like Japan was able to as we don't has Japanese style exports.
 
My first post to Overclockers ever. (Hi everyone!)

The housing market in the UK faces several challenges over the near future.
First of these is the artificially low interest rate. This is unsustainable in the longer term as the value of sterling will continue to slide against other major currencies, this will push up the price of imported goods and raw materials and this will in turn, push up inflation. The *only* way to reverse this trend is to substantially (ie not 0.5%) increase interest rates. This then has the effect of making mortgage repayments more difficult which in turn increases the number of houses being repossesed. This in turn leads to an increase in the number of houses for sale (and the number of desperate sellers) and this in turn leads to a reduction in house prices.
Add the continuing increases in the rates of unemployment (despite the 'official' view that the worst is over) and you have a recipe for major pain for people with mortgages as their repayments increase and their property value decreases.
I won't even start with banks not lending and 40% deposits required for buyers.

Alternatively, the government could let inflation run away, but then you end up like Zimbabwe...
In short, the housing bubble is going to burst big time next year. We're only just starting to see the pain now. Rates must increase soon and then....ouch!
 
latchy9 said:
In short, the housing bubble is going to burst big time next year. We're only just starting to see the pain now. Rates must increase soon and then....ouch!
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Instinctively I agree with you, but the last year has proved just how far governments will go to paper over the economic crevasse we've allowed ourselves to borrow into over the last decade. Rates may well stagnate if inflation (as measured by Bent & Bodger CPI Guessimates Ltd.) is relatively low, in order to protect the 'recovery'.

Here in the eye of the financial storm, with temporary calm restored thanks to many, many billions of future tax pounds -- but with none of those taxes properly planned yet -- I have given up predicting what will happen next. I just wish everyone luck, no matter what their position at the moment. I hope the optimists are right. I fear they will be very wrong.

Negative equity is not a life sentence for the OP though. Rather than dwelling on it just dwell *in* it. ;-) Focus on ensuring you can keep up the payments even if interest rates rise by a few %. I had plenty of mates in this situation in the 90's, and they all survived. At the end of the day it's only a house and scary lump of debt; there are worse problems to have.

Not many though, admittedly. :-)

Andrew McP
 
As has been mentioned I can see house prices dipping/falling again in the next 6-12 months, I doubt they'll recover to 2007 levels for a long time, 10+ years.

Yes we've had rises in all measures over the past 6 months or so, but the figures are still historically low (thinking mortgage lending, approvals and house sales particularly) and the house price Vs earnings ratio is still high. And this is at a time when interest rates are 0.5%, and the BoE have printed ~£130 Billion, with a further ~£45 Billion to go.

Taxes are gonna go up, Interest Rates are going to go up, 'Quantitive easing' is going to be stopped, and even unwound eventually, Unemployment will continue to go up, Mortgage lending is going to stay at it's 'restricted' levels (read not stupid 2007 levels). I can't see how that's going to help house prices stay at the current levels?
 
Government should really abolish the 3% stamp duty which is really stopping a lot of people moving. If the upper end of the market doesn't move, then nothing does.

We looked at moving recently put the stamped duty was too much.. We would have put £10k in Mr. Brown's pocket before any other expenses... yet a similar house only 40 miles in Ipswich was £100k less and fell into the lower 1% bracket. Ipswich is to far for me to commute so we' decided to extend instead, which I believe a lot of people are doing.. Staying put.
 
Admiral Huddy said:
Government should really abolish the 3% stamp duty which is really stopping a lot of people moving. If the upper end of the market doesn't move, then nothing does.

We looked at moving recently put the stamped duty was too much.. We would have put £10k in Mr. Brown's pocket before any other expenses... yet a similar house only 40 miles in Ipswich was £100k less and fell into the lower 1% bracket. Ipswich is to far for me to commute so we' decided to extend instead, which I believe a lot of people are doing.. Staying put.
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lol the stamp duty isnt whats stopping people from moving but the high prices, whats better a nice 30 % drop or abolish 3% stamp duty. a 30% drop means cheaper homes and less stamp duty.
 
From an owners perspective, to abolish the 3% tax because for existing home owners it makes little difference in a 30% drop or a 20% drop. The difference will always be the same because both properties suffer the same devaluation. The only good thing is that property which was once out of reach then becomes affordable, but then they slap a 3% stamp duty charge on it depending on the house your buying of course.

So I have to disagree speaking from personal experience. It stopped us from moving and i know plenty other who have the same opinion. Try getting a general builder to build an extension in our area. Most of them are booked out now to Jan. As I said, if the middle market isn't moving them what chance is there of a chain developing.
 
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lambda said:
People that bought expect capital gains, just like those that bought before them. Its a classic ponzi scheme model.
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This is exactly what ***** me off about todays homeowner. You shouldn't expect capital gains! It's a bloody home, NOT an investment! It's exactly where the market went wrong IMHO.

All those retarded property development shows didn't help either, it just made any **** with access to a 100% mortgage think that they were a 'developer' :mad:
 
Surely though, lets say your flat was still worth £100k, but you wanted to move to a house worth 200K, you'd need to come up with 100K after selling the house be it in more mortgage or whatever else.

So your flat has dropped to 88k in value, but the 200k house has also dropped, to 180k, so you still need 100k more to move to a better house. Infact, if the house dropped by the same percentage, you'd actually be ahead. If the 200k house dropped by 12% also, it would now only be 178k, so you only now need 90k in extra funds rather than 100k?

People get too hung up on what they paid and what its worth now, its all relative, moving to a bigger place you could be in a better position than you were, likewise if the market had gone up 10% instead and your flat was now worth £110k, the house would be worth £220k, so you'd need 110K.

The only trouble is where people buy something, expect several years later to be able to sell for more than you bought it for and buy something that hasn't gone up in price.

Ok, things change based on what kind of mortgage you can get now to any other time, but it doesn't work out all that massively different.

Your flat went down in value, but so have the places you'd likely move to next.

The thing to do really is buy a run down pile of poo, live there for 3-4 years as you do it up slowly, sell it for more than its worth due to your work, then buy somewhere worth more but also run down, rinse repeat throughout life till you find somewhere you're happy to stay.
 
The Mad Rapper said:
This is exactly what ***** me off about todays homeowner. You shouldn't expect capital gains! It's a bloody home, NOT an investment! It's exactly where the market went wrong IMHO.

All those retarded property development shows didn't help either, it just made any **** with access to a 100% mortgage think that they were a 'developer' :mad:
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Why? Homes are homes and are investments, why can't they be both? If history has shown us one steady fact it's that population and thus house prices will always rise in the long run. It's the age old saying, land is the one thing they're not making any more of.

I don't see why people like myself should not buy into the market to make money. I bought a flat rather than renting one so that I knew I wouldn't be throwing my money into black hole. I took the initiative as an 18 year old to listen to all the experienced people in my life that told me if they could go back and talk to themselves as an 18 year old they'd tell themselves to buy property.

It's true though that you can't really do anything in this country without ****ing someone off. Perhaps I should have got a girl up the duff and lived on benefit instead, or become a student and thrown my loan into alcohol and meaningless degrees. Or maybe I should have just rented and lined the pockets of some property develope... oh wait you don't like them either!
 
Grissle said:
Why? Homes are homes and are investments, why can't they be both?
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In the sense that it is something to leave to loved ones when you die, then fair enough. But the greed that characterised the last boom was insane.

People seeking to profit from property simply price decent people out of home ownership. That's what my problem is with it.

P.S. If you are happy with your reasons behind your purchase then why are you on here moaning that you lost £12K? Investments go up as well as down :p
 
The Mad Rapper said:
This is exactly what ***** me off about todays homeowner. You shouldn't expect capital gains! It's a bloody home, NOT an investment! It's exactly where the market went wrong IMHO.

All those retarded property development shows didn't help either, it just made any **** with access to a 100% mortgage think that they were a 'developer' :mad:
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The Mad Rapper hits the nail on the head perfectly.
If you like your house, then the paper value is meaningless. If you bought your property primarily as a method of making money, then you are getting what you deserve.

BTW, a special note should go to all the mortgage brokers and borrowers who took out liar loans (sorry - self cert mortgages) and then skewed the market by buying properties they clearly could never afford on the hope of making a quick buck. I'd like to know why not one mortgage broker was ever prosecuted for obtaining money by deception, when clearly they colluded in the biggest con in history. (a con for which all the taxpayers and homeowners are now footing the bill).
The BBC did an expose on this years ago (I remember it because it was in Ealing - near me) and found that 7 out of 8 times, borrowers were 'encouraged' to lie about their income on mortgage applications.
Nothing happened then and nothing happens now. Vested interest anyone?
 
drunkenmaster said:
Surely though, lets say your flat was still worth £100k, but you wanted to move to a house worth 200K, you'd need to come up with 100K after selling the house be it in more mortgage or whatever else.

So your flat has dropped to 88k in value, but the 200k house has also dropped, to 180k, so you still need 100k more to move to a better house. Infact, if the house dropped by the same percentage, you'd actually be ahead. If the 200k house dropped by 12% also, it would now only be 178k, so you only now need 90k in extra funds rather than 100k?

People get too hung up on what they paid and what its worth now, its all relative, moving to a bigger place you could be in a better position than you were, likewise if the market had gone up 10% instead and your flat was now worth £110k, the house would be worth £220k, so you'd need 110K.

The only trouble is where people buy something, expect several years later to be able to sell for more than you bought it for and buy something that hasn't gone up in price.

Ok, things change based on what kind of mortgage you can get now to any other time, but it doesn't work out all that massively different.

Your flat went down in value, but so have the places you'd likely move to next.

The thing to do really is buy a run down pile of poo, live there for 3-4 years as you do it up slowly, sell it for more than its worth due to your work, then buy somewhere worth more but also run down, rinse repeat throughout life till you find somewhere you're happy to stay.
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then add in the interest to 90k( if home dropped by 10%) you be looking at 135K and 110k( if house price rise by 10%) 165K, but people dont really take into account the amount they pay in interest, a 30k in savings, just from a price drop of 10K to a price rise of 10K.
 
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