The Housing Market

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  • The Housing Market
  • Premier Icon midlifecrashes
    Subscriber

    People who don’t have to sell their houses are unwilling to drop prices to get a sale, those who have to move will. Plenty of repos filtering through to the market in a steady stream now. Numbers of sales going through still low, prices low. Developers/landlords around in sufficient numbers snapping up bottom end bargains and repos. First time buyers nowhere to be seen due to lack of deposits.

    Premier Icon kimbers
    Subscriber

    girl in work just sold hers after much stress, but she accepted an offer way under what she wanted, wouldnt say how much tho

    i think shes just happy to have found a buyer, but worried they wont go through with it

    Premier Icon Capt. Kronos
    Subscriber

    Prices probably have a bit to go down yet – I suspect the last 3 months just reprisent the traditional Spring bounce. I bought a new place (moved in at the weekend) and expect it to lose value over the next 12 months. Not at the rate that we have seen over the last year or so, but probably in the 5 – 10% region at a guess. Then it will bump along the bottom a bit before slowly starting to see a raising market again.

    swoosh
    Member

    What are people’s opinions on the housing market? and its state at the moment? Is it improving or still getting worse?

    Recently Nationwide (IIRC) said that house prices were up on the month previous for the third month on the trot. Surely this just means that people are paying more for the houses this month than last year and not that more sales are going through, more mortgages are completed etc.

    Who in the housing industry knows which direction the market is going?

    There are plenty of people putting their houses on the market in my area but what i dont know is if sales are on the up or are still tailing off.

    What are peoples opinions?

    Premier Icon Teetosugars
    Subscriber

    All the RICS lot at work reckon its as low as it will go..

    If you have a deposit, and want to buy, this is yer time..

    Like already said, there is a shortage of 1st time buyers due to no deposits.

    Having said that, there are now a lot more 95% mortgages,and, if you look hard enough you can get 100% if you need/want to..

    Premier Icon epicyclo
    Subscriber

    Sales are reported some time after they have occurred. Be wary.

    daves mum
    Member

    I’d be very careful. I think what we are seeing at the moment with talk of green shoots is a classic bull trap – see the graph in the following link for a good visual explanation..

    http://www.housepricecrash.co.uk/graphs-bubble-lifecycle.php

    I’ve been doing a fair bit of reading about this over the past year or so as a potential first time buyer, and if you look back to previous house price corrections, actual house prices always under/overswing the long term average. As a result, the house prices may now be close to the projected average, but there is a big undershoot coming… again a good visual aid is here

    http://www.housepricecrash.co.uk/graphs-average-house-price.php

    The previous crash lasted 5 years before sustained house price increases, it makes no sense that after possibly the most dramatic period of house price inflation in history, and with our economy in tatters, that house prices are due to rise any time soon.

    Currently because of low interest rates those who may otherwise be struggling with their mortgage are coping because of the low rates. Interest rates can only go up from here, and these will be the killer, causing further drops. I’m anticipating a further 20%+ fall from where we are now.

    This is of course all in my opinion, it is up to you to decide if you agree with my theories.

    happysnapper
    Member

    Prices have come down a fair bit and prices seem to be stabilising. daves mum makes some good points, particularly the impact of lower interest rates keeping payments down although I think the additional 20% drop is probably a bit steep. But this price drop is different to others, demand is being constrained by the lenders. They’ve made some pretty stiff promises about lending next year. It’s a tough call how it will turn out. If there is mass unemployment around the corner that will be the cause a serious blip.

    However, if you’ve found a house you like and are going to live in for a few years (it is the main purpose of a house after all), then you’ll probably be ok.

    jonb
    Member

    Most of what you read you need to be aware of the bias. People talking the market down who want to buy or upsize. People talking the market up who want to sell or have an interest in sales (Estate agents etc.)

    The other thing to consider is the “market” it is different for different areas and different houses. Footballers houses in Surrey may well be doing one thing when terraced houses in Newcastle may well be doing something completely different.

    It’s hard to tell, we’re certainly in an upward trend for the last few months but there is potential for it to turn downwards again if/when interest rates rise. Generally the economy is still in a bad way. People are losing jobs so it’s unlikely the housing market will boom again until there is a wider recovery.

    daves mum
    Member

    There is also talk by the FSA of restricting lending to a income multiple of your salary… to a much lower level than the 5x+ that we have seen over recent years, the figure I read was 3 – 3.5x salary (plus maybe a minimum % deposit too) This would have a devastating effect on house prices, would cause a lot of pain for some people by putting them into negative equity, but I think in the long run it would be a great thing for our society, as high house prices benefit nobody except those wishing to downsize.

    I could go on about this for hours, and of course I have a vested interest in house prices going down, but I truly believe 20%+ falls from the current point are going to happen

    daves mum
    Member

    Jonb – you make a fair point about those with vested interests (me included)

    I try to look at the facts and previous trends, and the only logical thing is for further falls. I’m a young guy with a sizeable deposit, earn above the average wage, no debts etc, and can’t afford a modest house to live in. God only knows how other young people expect to get on the ladder. This is surely not a sustainable situation, and something has to give.

    djglover
    Member

    Depends on area, very localised markets. Round here is booming this summer W13 London, – but I can’t speak for neighbouring areas, our friend is a local agent and all the local stock has sold over spring for near or asking price. I’ve seen all the boards turn to sold too. Apparently people round here think they have called the bottom of the market and taken the plunge having put off a move for 2 years or so. However, according to my brother Leeds is still very tentative.

    Premier Icon kimbers
    Subscriber

    2 estate agents on chiswick hi street have closed down in the past couple of months

    happysnapper
    Member

    kimbers – Member
    2 estate agents on chiswick hi street have closed down in the past couple of months

    There’s always two sides to the recession coin 😉

    Premier Icon ourmaninthenorth
    Subscriber

    There is also talk by the FSA of restricting lending to a income multiple of your salary… to a much lower level than the 5x+ that we have seen over recent years, the figure I read was 3 – 3.5x salary (plus maybe a minimum % deposit too)

    You mean like it used to be? Presumably, your research has told you that. 😉

    God only knows how other young people expect to get on the ladder.

    Two telling words there: expect and ladder.

    The reversion to lending practices last seen before the Big Bang means that attitudes will need to shift back to what they once were. There’s a reason why mortgages tend to be for 25 years: it was expected that it would be paid off by the time you retired. Of course, retirement age was 65 then (none of this baby boomer retiring at 55 nonsense) and life expectancy averaged 70. In other words, people weren’t that young when – if..! – they bought a house.

    TandemJeremy
    Member

    Myself I don’t see houses prices falling any more around here ( Edinburgh)

    The market is very quiet but hoses are still selling. I think in hotspots there could be further drops but 20% – personally I doubt it very much.

    uplink
    Member

    TBH – the housing market is far too complex for anyone to predict what’ll happen in the medium or long term
    Anything could happen that could change things relatively quickly

    you really just need to take a shot at it when you’re ready

    owenfackrell
    Member

    We have just sold ours for just under the asking price and at what we wanted. Down her in the south sales seem to be going through just fine. When we were getting out morgauge we were told that the rates are about to go up and they are also recomending that people fix there rate for the next 5 years if they can. The rates also masivly change if you go over 75% of the purchase price but as said above you can get 95% if you need to and can afford it.

    daves mum – you have posted 2 graphs which contradict eachover, where is the “false dawn” on the 2nd chart??

    I agree with uplink, just get in there. I hope you have a large deposit. I meet so many people who think the perfect conditons, low prices, easy cheap mortgages ect are just around the corner, but they never all come at once. They never get on the ladder, procrastinate, and waste thousands renting.

    csb
    Member

    No-one who has been renting a house since mid-2007 has been wasting their money. On the contrary, those who have been paying a mortgage in that period have lost thousands.

    uplink
    Member

    On the contrary, those who have been paying a mortgage in that period have lost thousands.

    They’d only lose if they wanted to realise the asset now & they paid more for it than they could get now

    I don’t have a mortgage any more but I guess my house is worth less now than it was 2 years ago but I haven’t lost anything

    RichPenny
    Member

    No-one who has been renting a house since mid-2007 has been wasting their money. On the contrary, those who have been paying a mortgage in that period have lost thousands.

    That’s not true for everyone though is it. Some have lost loads, some haven’t as they’ve not had to sell.

    breatheeasy
    Member

    No-one who has been renting a house since mid-2007 has been wasting their money. On the contrary, those who have been paying a mortgage in that period have lost thousands.

    Yeah, right. Assume say, £1000 per month rent – you’ve just wasted £24k in two years on nothing. Me? I’ve paid £24k off my mortgage (less interest). Potentially my house “may” be worth £24k less, but if nothing else I’m a couple of years closer to no mortgage, whilst renters will be paying rent even after they retire. I realise that’s maybe an over simplification but to say houseowners have wasted money is not true.

    Premier Icon aracer
    Subscriber

    In the context that they’d have more money in their pocket had they rented for a couple of years and bought now, then yes they have lost money.

    Premier Icon aracer
    Subscriber

    I’ve paid £24k off my mortgage (less interest).

    So how much have you actually wasted in interest whilst your house has devalued?

    breatheeasy
    Member

    So how much have you actually wasted in interest whilst your house has devalued?

    Well, as interest rates are current 0.5%, not a huge amount. And thats assuming my mortgage compared to an similar rented house are the same, I would expect the rent to be more.

    uplink
    Member

    Doesn’t matter if a house devalues – start thinking of it as a home rather than an investment

    daves mum
    Member

    General Fatigue – the scaling on the lifecycle of a bubble chart is exaggerated, I guess to more clearly illustrate the different phases. If you look at other chart of house prices against time, in the times of rising and falling house prices, the gradient of the line is never straight, there are ‘ripples’. What we are seeing at the moment is a levelling off of house prices, which is leading people to think we have reached the bottom (a bull trap), whereas the reality is house prices will continue to fall.

    If you look at other factors which are away from the housing market, such as rising unemployment, falling incomes etc, I don’t see there being any fundamentals for house price increases, or even stabilisation in the near future.

    All in my opinion, of course!

    breatheeasy
    Member

    In the context that they’d have more money in their pocket had they rented for a couple of years and bought now, then yes they have lost money.

    Well, if you rented for free then technically, yes you have more money. The fact you probably rented probably meant you spent you money on rent rather than mortgage.

    Isn’t that what people are complaining about now? Having to pay rent, they can’t afford to save up for the deposit….

    Premier Icon kimbers
    Subscriber

    we were able to renegotiate our rent down when our contract was up a few months ago our landlord was so desperate to keep us as quite a few of his tennants had moved out

    Premier Icon aracer
    Subscriber

    Well, as interest rates are current 0.5%, not a huge amount.

    Where can I get a mortgage for that rate? What rate were you paying 2 years ago?

    Doesn’t matter if a house devalues – start thinking of it as a home rather than an investment

    Well it does if you could buy it for less now than you bought it for 2 years ago – and haven’t in the meantime paid off much of the mortgage.

    mudshark
    Member

    The average person really is rather clueless about money – a statement such as rent is wasted money is just wrong; it’s a waste only in the sense that paying interest is a waste, which some people do appreciate. However less people appreciate that there’s an opportunity cost associated with owning a house; instead of owning the house the money could be invested elsewhere and give a return. If someone who has the cash to buy a house decides to rent then they could well cover their rent with the income from their capital – of course the income depends on the risk level taken. So anyone who has been renting since the time that house prices started to fall has not lost money in the way a home owner has but if that person has rented for a lot longer then they may have not made the returns that they would have made if they’d owned a house – but, if you understand what I am saying, you will see that they may have – unlikely though.

    So if your house is worth less now than it was at some point in the past then yes you have lost money as your overall wealth has depreciated. But that isn’t necessarily a concern as if you’re not going to sell then no problem. Of course the renter may be able to afford a relatively more expensive house now than before. Be aware though that not owning a house is more of a gamble than owning one assuming that house ownership or rental costs are a significant part of you overall costs. Once you buy a house your total assets value moves up and down with the market but if you don’t then you may find house prices go out of reach – of course if you get it right then you beat the market and can later buy a house better than you could have afforded earlier.

    So to conclude(!) my opinion is that house ownership is the least risky approach so buy when you find something that suits you and you’re happy with and don’t worry about how it’s value might change over time – if you buy something as you think it might be a good investment but don’t really like it you may regret it if prices fall.

    As for me? I bought in ’96 and have moved twice and am now in the house I hope I’ll be happy with for decades to come with no mortgage.

    Premier Icon aracer
    Subscriber

    instead of owning the house the money could be invested elsewhere and give a return.

    Too right, you could have put it in the stock market and made loads of money instead…

    mudshark
    Member

    Or into gold….

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