Housing market

[lambda]

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!

What you failed to consider, when taking this advise on board, was who the advice was coming from, and the era that these advice givers lived in.

The baby-boomer generation experienced a huge post-war boom that was sustainable and real, until the 1980s. Have a look at the UKs budget deficit from then onwards. We have been living beyond our means since the 80s. We have been expecting too much for too little.

The reality is that the property game is over. The baby boomers know nothing else, as they have precided over the boom, and because its been inflated artifically for so long, most 40+ believe that its actually real and never ending.

Every generation is different, and our generation will be paying for the baby-boomers extravagance, and lack of self control.

People like you have got caught up in the transition, and will get burnt.

 

[Grissle]

What you failed to consider, when taking this advise on board, was who the advice was coming from, and the era that these advice givers lived in.

The baby-boomer generation experienced a huge post-war boom that was sustainable and real, until the 1980s. Have a look at the UKs budget deficit from then onwards. We have been living beyond our means since the 80s. We have been expecting too much for too little.

The reality is that the property game is over. The baby boomers know nothing else, as they have precided over the boom, and because its been inflated artifically for so long, most 40+ believe that its actually real and never ending.

Every generation is different, and our generation will be paying for the baby-boomers extravagance, and lack of self control.

People like you have got caught up in the transition, and will get burnt.

So I guess this will be the post I'll quote in 50 years time when my flat is worth more than 100k

 

[Admiral Huddy]

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.

I understand what you are saying but as I said in this post, you have to redeem your mortgage to gain a new one. If the sale price falls below the mortgage value, then you are caught with negative equity which needs to be realised otherwise the bank will be lending more than 100% on the new mortgage. During the 90s, banks allowed this as an "unsecured" loan which had a higher rate to get the market moving again.

so let's take that £100k mortgage on a flat that now worth only £88k. You sell it for the £88k but owe the bank £12k. You buy a house worth 200k but the the £12k deficit from the flat needs to be added.. meaning you have a Mortgage value is 212k. the £12k is unsecured.

 

[latchy9]

LOL

You're not Eric from HPC are you?

Sadly, I don't even know who Eric is and who HPC are.
(I hear cries of newb!)

The quote about 'who told you it was a good idea' is spot on too. People always want you to conform to their ideals.

Single people never tell you to get married and those without houses never tell you to buy one!

 

[SKILL]

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.

Just out of curiousity, what are these advisors saying now, after you've lost £12k on your 'investment' and are effectively stuck in a 1-bed flat until the housing market recovers (whenever that may be) or taking a financial hit on your investment.

And that's not accounting for any potential loses still to come depending how the property market goes,

Or how much you've wasted on paying interest on the loan,

Or any consequences of you going onto SVR and being unable to remortgage when interest rates return to >4%


Just for comparison's sake you've lost on average £333 per month (not counting interest again), I share with a mate in a 3-bed house with garage in a nice area and pay £300 for rent.

Which of us has thrown the most into a black hole?

 

[Grissle]

Just out of curiousity, what are these advisors saying now, after you've lost £12k on your 'investment' and are effectively stuck in a 1-bed flat until the housing market recovers (whenever that may be) or taking a financial hit on your investment.

And that's not accounting for any potential loses still to come depending how the property market goes,

Or how much you've wasted on paying interest on the loan,

Or any consequences of you going onto SVR and being unable to remortgage when interest rates return to >4%


Just for comparison's sake you've lost on average £333 per month (not counting interest again), I share with a mate in a 3-bed house with garage in a nice area and pay £300 for rent.

Which of us has thrown the most into a black hole?

What? I'm on a fixed rate. And they're saying the same, that it will pick up, because it will.

You've thrown the most into a black hole, that's pretty obvious . In 10 years I'll have paid off a lot more of my mortgage (it's a repayment not interest only), the house price will have come back up and I'll have either invested the money I've put into my mortgage or potentially made a profit on it. You'll never see those £300 a months again. Sure, I pay interest, but what I don't pay in interest is paying off equity, which will rise again. If you think my flat is going to be at 88k or below 88k in 10 years you're a tool.

 

[Hank_Marvin]

In 6months time me and my gf will have 15% of £130k with a rough £600 monthly repayment (current interest rates), do we buy then, will a big crash then happen? what to do, its a tricky time, specially if rates go up. I suppose we will have to jump in, fixed rate incase 15% isnt enough soon.

Any advice for me anyone?

 

[footman]

My grasp of economics is probably infantile but here goes anyway:

Apart from people hoping to realise large capital gains on their property when they sold them, what about those who increased their personal debt
by having their houses re-valued and then taking out 2nd (or even 3rd) mortgages to fund consumer items like big new motors or exotic holidays.

These new debts were then broken down and parcelled up as traded derivatives and soon became "sub-prime" when house values plummeted.

What a merry-go-round!

 

[dowie]

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.

perhaps those people weren't so wise after all

it certainly isn't always optimum to buy - personally I'm going to be a bit conservative about it and carry on renting, I could buy at the moment (just) but I'd be over-leveraging myself. so long as my rent is less than say the interest portion of a mortgage over the next few years (I do happen to have a very low rent) then I'd most likely be throwing money away by buying now as opposed to renting. From a personal perspective I hope house prices fall even further, though the market itself may well simply stagnate for a while as people will be reluctant to sell too low.

 

[nero120]

What? I'm on a fixed rate. And they're saying the same, that it will pick up, because it will.

You've thrown the most into a black hole, that's pretty obvious . In 10 years I'll have paid off a lot more of my mortgage (it's a repayment not interest only), the house price will have come back up and I'll have either invested the money I've put into my mortgage or potentially made a profit on it. You'll never see those £300 a months again. Sure, I pay interest, but what I don't pay in interest is paying off equity, which will rise again. If you think my flat is going to be at 88k or below 88k in 10 years you're a tool.

Though probably less of a tool than those who thought this bubble could last forever, and look how that turned out.

If I were you, I wouldn't be so certain of things getting so much better. We are in an unprecedented time right now, and no one knows what things will be like when we emerge from the other side.

Just keep your head down and get through it as best you can.

 

[Grissle]

Though probably less of a tool than those who thought this bubble could last forever, and look how that turned out.

If I were you, I wouldn't be so certain of things getting so much better. We are in an unprecedented time right now, and no one knows what things will be like when we emerge from the other side.

Just keep your head down and get through it as best you can.

I've never said I spoke to anyone who said it could last forever, I merely stated that housing prices rise in the long run. And they do, they've been pushed back to roughly what the market was like in 2002, just like the market was pushed back in the 80s, only the impact has been bigger because the market is bigger. No one knows what's going to happen, if they did they wouldn't be sat on OCUK posting about it they'd be rolling in billions of pounds.

But the facts are that the UK doesn't have an endless supply of land and the population is ever increasing, as are our salaries. You do the math.

 

[Andrew_McP]

But the facts are that the UK doesn't have an endless supply of land and the population is ever increasing, as are our salaries. You do the math.

Demand for housing is nearly always infinite. I'd have a house in Cornwall and The Lakes if they were £1000 each. I'd have 2 ATI 5*** cards tomorrow afternoon if they're £50.

Pricing is everything. And the cost of housing depends upon the cost of borrowing. And by that I mean the real, long term cost, not the short term speculative cost which fooled so many people in recent years.

Andrew McP

 

[SKILL]

What? I'm on a fixed rate. And they're saying the same, that it will pick up, because it will.

Just out of curiosity how much longer is the fix?

You've thrown the most into a black hole, that's pretty obvious . In 10 years I'll have paid off a lot more of my mortgage (it's a repayment not interest only), the house price will have come back up and I'll have either invested the money I've put into my mortgage or potentially made a profit on it. You'll never see those £300 a months again. Sure, I pay interest, but what I don't pay in interest is paying off equity, which will rise again. If you think my flat is going to be at 88k or below 88k in 10 years you're a tool.

Who's to say that I won't buy a house, for about £100k in about 2-3 years (where I believe the trough of this crash is going to be), then in 10 years from now who's in a better position? assuming of course that house prices do rise in the next 10 years, highly likely yes but just look at Japan to see that a decade of stagnation is perfectly possible...

Looking at the hard facts, eg recent history to the present day, you've spent £100k on a small home, you've lost £12k of that over 3 years, and you've paid what, 2-3k interest?

In that time I've spent £10,800 on rent...

Houses work as an investment, but only when you consider either long term (like you say, 10 years, although whether that'll be enough this time who knows) or buying in a trough, buying after over 10 years of continual house price growth is, imo, a bad investment.

 

[Morba]

How long do you guys think it'll take before those hit hardest break even again on the housing market?

I bought a flat about 3 years ago for 100k, currently it's worth about 88k. I'm feeling the burn, I wasn't intending on spending such a large proportion of my adulthood in a 1 bed flat but it's increasingly becoming apparent. I was hoping it would take another 3 years to fix, but is that wishful thinking?

Whats the problem?
you have lost 12%, other properties you will be looking to buy will have lost around the same.

 

[The Mad Rapper]

all recent evidence suggests otherwise, may flatten but there is no sign of further declines

Unless significant liquidity returns to the market, the housing market is going to do nothing except stay flat.

 

[Hades]

My friend was gazumped yesterday. Make of that what you will.

 

[The Mad Rapper]

My friend was gazumped yesterday. Make of that what you will.

Come back and let us know when the sale completes.

We were selling a flat in London since early June, the buyers pulled out last week

 

[Grissle]

Just out of curiosity how much longer is the fix?



Who's to say that I won't buy a house, for about £100k in about 2-3 years (where I believe the trough of this crash is going to be), then in 10 years from now who's in a better position? assuming of course that house prices do rise in the next 10 years, highly likely yes but just look at Japan to see that a decade of stagnation is perfectly possible...

Looking at the hard facts, eg recent history to the present day, you've spent £100k on a small home, you've lost £12k of that over 3 years, and you've paid what, 2-3k interest?

In that time I've spent £10,800 on rent...

Houses work as an investment, but only when you consider either long term (like you say, 10 years, although whether that'll be enough this time who knows) or buying in a trough, buying after over 10 years of continual house price growth is, imo, a bad investment.

We're not talking about you vs me in your life decisions. This thread was about my future. The crash happened, the ifs, coulds and should haves are irrelevant. I don't care if you can make a better informed decision because the market has crashed, I'm sure you could, good for you. So could I have if I knew, or was in a position right now where I hadn't bought the place. Fact is at the time of purchase I didn't know it was going to happen. Obviously I'm not going to spend my life in a 1 bed flat so I'm assessing my options as and when I want to move. The likelihood is I'll just rent it out and keep the place indefinitely. Which means in 3-4 years I'll probably be paying next to nothing on it. There are plenty of variables, and unfortunately that's where your math becomes pretty irrelevant. Not to mention it's based entirely on your predictions.

 

[Stretch]

House prices really depend on where you live. The market in Cambridge bottomed out at the begging of the year, and it's only going up in the medium term. They didn't drop that much over the last couple of years anyway, dispite the credit crunch. Luckily we've just bought at a reasonable price.

 

[blade007]

I think once people start buying up properties as an investment again (i.e to sell them on for profit) prices will start to rise again. That's not as easy right now because banks are making it difficult to get mortgages and significant capital is needed. If that's relaxed a bit I think we'll see a slight upward turn.