MegaSack DRAW - This year's winner is user - rgwb
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Listening to the Radio 4 piece this morning about how Londoners feel about high house prices, and that even people who own think it's a bad thing.
City AM quoted a survey this morning saying 62% of Londoners think there's a bubble. Whether they're right or wrong this is likely to lead to buyers putting their plans on hold till the longer term picture becomes clearer (who wants to buy at the top of the market?_
Given an interest rate rise is likely to slow up the housing market, how long will it take for the proposed rise to work through so we can see what effect it has on the market?
One scenario is the hike will be so small that it has no effect
Another scenario is it makes mortgages more expensive and therefore leads to prices going flat again
Another scenario is people with interest-free mortgages and BTL can't afford their properties any longer and the market gets flooded with supply.
No idea which scenario is most likely, but wondering how long after any rise in interest rates, the impact tends to become clear? One month, three months, six months?
IMO the prices will still keep rising until theres another crash. Only a marked-increase in interest rates would slow the market. This isn't going to happen- they'll keep stepping it which will also allow the market to keep rising. The tipping point will be too late.
A few posters on here said they were offering over asking prices which I thought was crackers. Guaranteed future negative equity. Why would you do this 'just to get that property'. Its what happened last time.
The good thing is this time a crash will be JUST property not the whole economy/banks/job market because of the global recession so people overpaying the odds now will be the losers.
The good thing is this time a crash will be JUST property not the whole economy/banks/job market because of the global recession so people overpaying the odds now will be the losers.
You can't crash just one part of an economy. If the housing market stalls then all those people in the wider house industry (bathrooms, kitchens, small builders, kitchen fitters etc) will see a marked drop in trade. They then spend less in shops, so you see a dip in retail etc etc....
At risk of being flamed- those domestic/housing small traders etc- do they actually declare their tax/VAT correctly?
The 2008 recession was 360degrees, a housing bubble burst wouldn't affect anywhere near the levels of 2008 IMO.
What annoys me is people being greedy/overpaying will cause me to pay more on my mortgage even though I'm not the one offering over asking prices etc.
That is annoying.
at most, interest rates will rise to what? 3 or 4 percent?
at most.
and even that low number will ruin millions of people, and bring the glorious economic recovery to a crashing halt.
if that's a problem for you, then you DID over-reach yourself financially.
in my humble opinion; interest rates would need to rise above 6% to stop the wealthy simply buying houses as investments.
the 'trickle-down' of wealth is really more of 'torrent-upwards'. Rich people want to invest their money, and while property is offering 10%*, and cash-in-the-bank only 1 or 2%, the rich will buy houses.
and so ad infinitum (being a landlord is a much better way to become rich than being a tenant).
(*and that's without considering rental income)