Could be worse, you could be my neighbours…

Bought house for 380K, last house identical to theirs sold for 133K.

I bought mine earlier and it’s a better configuration but I’ve lost about 80-100k if I could sell. Luckily I’m not in negative equity and I’m looking at it as a home to live in (although 10k a year rent isn’t too bad a way of looking at it either).

“Bought house for 380K, last house identical to theirs sold for 133K.”

was it a new build ?

rents where we are at are more than mortgages on similar properties – unless your happy to live in areas where your likely to find your doors and windows stolen in the night.

The supply of houses affecting prices is a misnomer, it’s the availability of cheap credit that controls house prices. There will always be an under supply of desireable housing which people will pay as much as they can get their hands on for , regardless of their ability to repay. The current reduction in values reflects the clamp down on and cost of credit.

What you can afford is always down to a multiple of your income, what you can borrow. In the good old days it was around 3.5 times your income, so the houses associated with your cost that. When the bankswere lending 6 or7times your income you’d still end up in the same of property, just pay alot morefor it. The banks won, every else lost. Then bubble burst and the banks won again as we bailed them out rather than let them go under as we should have done. The cycle will therefore repeat in a few years.

FWIW we were verylucky (and it was mainly luck), we bought in 2001 off plan in an unpopular location for £97k, house is now worth around £180. Prices didn’t overheat in quite the same way as we don’t have a fantastically desireable postcode. We also limited our borrowing to 3.5 times my salary at the time even though we could have borrowed much more.

It’s all a bit pot based on when you need to move, just don’t expect the banks or politicians to give a stuff about making the market work for society in the long run as that would require a lot of short term pain. Average houseprices are still well above 3.5 times average income.

There is no asset that “always goes up in value”, so why should housing be any different? The price of housing is affected by many variables and like anything else price can deviate from value for considerable periods of time. It doesn’t really follow to argue that the market isn’t working therefore markets are the wrong way to allocate housing. Much better IMO to remove the obstacles to markets FROM working and failing to equate price with value correctly. Unfortunately, once again we have a government that thinks it knows better and has decided to prevent this from happening.

Since 1983, average house prices in the UK have been 4x average earnings with considerable variations across regions. At their peak, they reached 5.9x and their low just over 3x. They are currently 4.5x. Despite very low interest rates, mortgage costs v income (affordability) is still well of its lows albeit a long way from its highs and more in favour that price/earnings. So it’s like the horses…the key is not only to pick the right horse/house but to do so when the odds/price is in your favour. With earnings likely to remain depressed for some time, it seems unlikely IMO that price to earnings ratios will expand to make you money from a house purchase and hard to see rates going much lower. So we are still not (IMO) at the point where the odds are stacked in favour of the owner making money. That is unless you live in certain lucky pockets and an an oligarch knocks on your door with a suitcase of cash.

Usually when people start telling you how much money they have made on their houses that’s a good indicator that prices are just about to fall.

And the answer was? Should you overpay or not?

Personally I’m in for the long run til the kids finish school at least (18yrs) so not worrying about price fluctuations. In the current market then, does one just say “sod iit, lets go and by a 60” telly instead?

Is there a UK housing bubble? yes and no

Property values should not been seen as something that will always go up in price as this will/has create(d) an aura that is a good speculative investment this creates a bubble.

On the other hand there has been a cronic undersupply of housing over the last 30 years in recent times there have only been 1 year(2005) in which we have built enough houses for our population demands. This undersupply against high demand has also put an inflationary pressure on housing prices.

So housing prices over the last couple of decades have been part supply and demand and part speculation (bubble).

If people didn’t see them as speculative investments and we built enough house for population demands then, no prices should not increase that much.

“sod iit, lets go and by a 60” telly instead?

Worked for me

If I’d rented my last house instead of buying it I’d have been far better off, and I wouldn’t have had to spens so long dealing with estate agents and solicitors. House buying is not always a win situation.

Lots of intresting view

Equity does not mean you have made any money, unless you sell up or you are a developer. For the average home owner it just means they have a better chance of trading up (from

But if you have the equity then trading up is cheapest if market prices fall.

Since 1983, average house prices in the UK have been 4x average earnings with considerable variations across regions. At their peak, they reached 5.9x and their low just over 3x. They are currently 4.5x. Despite very low interest rates, mortgage costs v income (affordability) is still well of its lows albeit a long way from its highs and more in favour that price/earnings.

The trouble is that young have been hit hardest buy the current crash. So that must be affecting first time buyers. It feels to me like prices have to come down further

ampthill – Member
It feels to me like prices have to come down further

And if interest rates were allowed to return to their normalised levels, prices would come down further. Instead we have more smoke and mirrors and traps for the unwary.

Well having just spent another week in Detroit where you can buy a house for $1 – although whether you would want to live there is another matter – house prices are never guaranteed to go up.

However in the UK taking the long term view (20-30yrs), just with normal (wage) inflation and the number of households increasing and plus little new house building, then house prices almost certainly will go up. The issue is that there are plenty of fluctuations in the short term and we may have a correction if interest rates go up and the government stops trying to manipulate the housing market.

BTW I remember my father 30yrs ago complaining how unaffordable houses were and then having them suffer with 12% inflation. Houses have never been that affordable in many areas.

Prices rises all depend on where you are and the local supply / demand. Buy somewhere with high demand and it’s almost a one way bet e.g. I paid £91k for mine in ’97, today it would sell for £450k without any problem. Although it’s all rather academic as you still need somewhere to live.

Note the popular area may change, crystal balls may be required 🙂

And if interest rates were allowed to return to their normalised levels, prices would come down further. Instead we have more smoke and mirrors and traps for the unwary.

Which is why I’m hoping to

A) hope the low rates stay for another 18 months so I can fix again ate low rate
B) pay shit loads off so if / when I do re negotiate and the prices are high I have less capital to generate interest.

Kryton – I think he was referring to overpaying price wise when buying the house.

Prices are based on ability to pay which in the UK is based on ability to borrow. A long period of monetary easing should lead to reflation, inflation and rising interest rates which will cut ability to borrow leading to prices falling relative to the rest of the economy. Sometimes low interest rates and printing money don’t reflate an economy though (see Japan over the last 25 years) prices will then remain high despite slow economic conditions.

Like any other volatile market (if the market in your area is volatile), wait for a price fall then buy when the price rises above the long term moving average. You’ll have missed market bottom but are unlikely to have bought on a blip in a long-term down trend.

I’ve lived in rented accommodation when I felt prices were likely to fall, been proved right and

Bought a place in 1995 for £45k, and under-sold it last year for £150k.

Bought something last year for £156k which was £1k more than the previous owner paid for it seven years ago.

I’m hoping it’ll only go up in value when I come to sell it in a few years time.

But as long as it keeps the rain off, I don’t really care.