Turning Bearish on property..

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Further to my previous thread, I've seen some pretty decent reductions in asking prices around my way and admit that I'm turning bearish regarding the property market and as to whether I should find another place after the deal I had going on fell through.

This makes interesting reading for starters... FT Article on Rentals

Definitely think I'm going to hang on a few more months to see what's happening, especially with the wobbly equities markets at the moment (plus I'm close to having 15% deposit) :)

Anyone else in the same boat? What are your thoughts?
 
well put it does feel a bit peasant like.

What's annoying is how starters who are earning a fair amount (like your GF) cannot afford to buy anything decent. For all people's hard work to get a good well paid job starters can afford ex-council properties that are holes.

I don't know what on earth to do really. Interest rates although didn't move from 5.75 will almost certainly rise soon - then who knows what will happen after.
 
Cant afford to buy the place we are renting atm, wouldnt want to as we are paying half of what the actual mortgage would be on the same property.

Its a nobrainer to rent atm, anyone telling you otherwise is most likely mortgaged to the hilt!

Roill on HPC.

Oh and IR will hit 6.5% this year, havent been wrong for 2 years so far. Inflation will rocket soon enough ;)
 
thelonecrouton said:
Mostly, that despite me and the g/f earning ~£60k a year between us, we can't afford to buy jack **** around Oxford... :mad:

We're just peasants I suppose. :p

I just had a quick seach and there are plenty of houses for sale in oxford for under £180 :confused:
 
Tenzen said:
Cant afford to buy the place we are renting atm, wouldnt want to as we are paying half of what the actual mortgage would be on the same property.

Its a nobrainer to rent atm, anyone telling you otherwise is most likely mortgaged to the hilt!

Roill on HPC.

Oh and IR will hit 6.5% this year, havent been wrong for 2 years so far. Inflation will rocket soon enough ;)


but how low do you think prices will drop?

If they drop 20% (which is highly highly unlikely) the prices will still be above £160k for a 1 bed in the WORSE areas of london in fact higher.
 
My rent currently costs me 100% less than a mortgage for an equivalent property would. No brainer for the time being.
 
Yeah but renting isnt the same, aside form the payments you cant do what you want to the house etc, i know mortgages property isnt really yours either its the banks but it feels totally different renting as opposed to buying. Getting a house is about doing it up like you want it, its where you spend a massive amount of time so imo its worth it. As for 60k between you not getting a house, thats pretty mad.

If i was in that situation i would seriously consider moving elsewhere, dont earn 60k between me and the gf as she has just changed jobs (self employed and lower wage to work back up) but usually its just under, the thought of pulling 60 between 2 not getting you a house is pretty mad even in this day and age.

Also you are almost gauranteed to make money on a house, so it may not shoot up but i really dont think its goign to go down massively. The south's prices just seems insane at the moment. We have just bought a 3 bed corner semi with detached garage (and 4 car drive) set aside from house with large garden around it for 166,950. Thats a 4 year old house, if i lived where i couldnt get a 1/2 bed flat for 150k then i can understand it must be a nightmare.
 
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picture the scenario

It's 2001 house prices have just rocketed people are thinking it won't last.
You are renting as rent is less then purchasing the now ridiculously priced house you're renting.

You carry on renting as in 2002, 2004, 2006 and 2007 there's an expected drop.

The house you could have bought would have risen astronomically if in london. The money you have spent renting has gotten you nothing to show in 2007. You missed out on buying in 2001.

Sometimes you just must bite the bullet.

I do agree however with interest rates on the up (unlike in 2001) it might be the time to hold fire, but not for too long.
 
rossyl said:
picture the scenario

It's 2001 house prices have just rocketed people are thinking it won't last.
You are renting as rent is less then purchasing the now ridiculously priced house you're renting.

You carry on renting as in 2002, 2004, 2006 and 2007 there's an expected drop.

The house you could have bought would have risen astronomically if in london. The money you have spent renting has gotten you nothing to show in 2007. You missed out on buying in 2001.

Sometimes you just must bite the bullet.

I do agree however with interest rates on the up (unlike in 2001) it might be the time to hold fire, but not for too long.


I agree 100% with this, renting for some is viable, depending on job situation etc. Buying i understand is a lot more involved but at the end of the day you can still sell it if you need to and if its been done out properly they fly out the door. We sold our 2 bed flat with garage (upper flat) within 2 hours of going on the market, ok we made an 18k profit in 3 years which for some areas is a pitance but we only spent 2k on it. There is still a hunger for nice property and it sells quick if its right and done out nice. Renting is cheaper but i would rather have my own place to do what i want to.
 
Professional opinion...

I'm a Bank Manager as you may or may not be aware. Prices are not going to drop at the moment and massive drops are out of the question. Why? COuple of reasons.

1) Change in the demografic of modern households. My house is a BIG 3 bed semi in a very nice part of town, 15 mins walk from the beach /countryside and will be extended to 5/6 bed in the next 5 years. House cost £143,500 (cack decorting) last year and is only affordable because me and the wife both work. 10 years ago, it would have cost maybe £60k and is already worth £165k. Extension will take that way beyond £200k. If the traditional roll of the woman being the house-wifey had continued then prices couldn't have escalated like they have. Now that women are eqaul if not superior bread-winners then big mortgages are now easily affordable. Thus, 1st time couples can afford more and will spend it, allowing 2nd/3rd time buyers to increase their property sale price and so on.

2) The economy is now built on secured debt. The so many people have released tens, or hundreds of thousands of equity to buy nice sparkly cars , go on big holidays, buy a smashing new kitchen/conservatory. Take away the value of the property and they are in negative equity plus that would reduce consumer spending, slow down the economy, bankrupt many small firms thus increasing unemployment and sending us into recession, casuing a further drop in the housing market and so on. We aren't just talking early 90's style recession either - BIG BIG BIG problems.

The bank of England are much more aware of the economy than the treasury ever were and they won't force interest rates beyond what is needed and certainly will not be responsible for plunging the country into economic decline. Rates will peak at 6 - 6.25% mid 2008 and the effect will start to bite. Many people are in fixed rates (me) for now and are paying under-base (me 5.49%) for their borrowing therefore the effects of increasing base has not hit everyone yet.

Waiting for property prices to drop? Good luck, enjoy the wait but stock up - you're in for the long haul!
 
Tenzen said:
Cant afford to buy the place we are renting atm, wouldnt want to as we are paying half of what the actual mortgage would be on the same property.

Its a nobrainer to rent atm, anyone telling you otherwise is most likely mortgaged to the hilt!

Roill on HPC.

Oh and IR will hit 6.5% this year, havent been wrong for 2 years so far. Inflation will rocket soon enough ;)

Err, interest rates will hit 6% next time the monetary policy committee meets but they ain't gonna put them up 3 times in 5 meetings - it would kill Christmas and see the above consequenses. Interest rates are raised to reduce consumer spending & consumer confidence to lower inflation - you aren't living in the UK if you think monster inflation AND 6.5% interest rates are round the corner - the country couldn't afford it!
 
markyp23 said:
100% LESS would obviously be HALF of the mortgage.

No, HALF the mortgage would be 50% LESS.

Example:

Mortgage payment: £1,000

100% of £1,000 is £1,000
50% of £1,000 is £500

The concept of percentages as fractions is covered in the 11+

;)
 
markyp23 said:
Shhhhhh!!!!!!!!!

I got my "100% more" and "less" mixed up!

As in £100 -> £500 = 400% increase! Oops

Heh, sorry, personal gripe/pet-hate/annoyance of mine (along with apostrophe abuse).

:)

When interviewing someone, one of the phrases the guy kept using was "I'll give you 110%". He was confused when I asked him where he'd get the extra 10% from.

:)
 
Back on topic.

Yes it's bad, no it's not a problem...at least for house prices and interest rates.

The problem in the UK is supply/demand. Until a HUGE number of new houses are built (100s of 1000s) demand will simply outstrip supply. This is the reverse of the problem in the US, where supply is now far outstripping demand...this couple with interest rate hikes means that the first market to dry up is the housing market, meaning falling prices, meaning negative equity, meaning sub-prime lenders going t*tsup.com

It'll never happen here (in the same way) because there's just not the same amount of land available to developers.
 
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