Advice/Opinions for a first time buyer.

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  • Advice/Opinions for a first time buyer.
  • Premier Icon feenster
    Subscriber

    Edinburgh will continue to be relatively prosperous due to all the tourist money.

    @TJ, but how many people actually work in tourism compared to public sector and financial services in ediburgh? And of those that do, aren't most of them low paid, casual and trasnient workers, and not involved in the housing market? I can't quite see how Edinburgh's tourism status has a bearing on house prices in Edinburgh for average punters – what am I not getting?

    Feenster – simply that it brings a lot of money into the city. A lot.

    This supports businesses from hospitality / tourism to retail. So while the directly employed people are lowish earners in the main it has the effect of pushing up the floor on both wages and housing. If you want a job in Edinburgh there is always one available. Due to the high rate of employment and relatively high wages the rental sector is flourishing. £500 pcm for a studio flat worth £120 000 is the norm. A large number of students also are in the city.

    So while tourist money has no direct bearing on the housing market – by increasing the affluence of the area it has an indirect effect thru a general increasing of profits and a upwards pressure on the bottom of the market.

    mastiles_fanylion, the stock market has rallied but is still well below its early 2007 high.

    Ohh I agree – still some 1600 points off (IIRC without checking) but the point is that it is moving *very* quickly in a positive direction.

    badnewz
    Member

    To advocate the devil (or estate agent), reasons I've heard cited for house price growth include: the global economy is recovering, population growth in the UK (to be 70 million in 2030), social economic changes (more divorcing couples = need for 2 rather than 1 property), devalued sterling will bring a UK manufacturing boom, Gordon Brown will get re-elected (unlikely) and will then start another credit binge.
    Aliens could also prove to be bullish UK property speculators.

    tinsy
    Member

    Feenster
    mmmm, Edinburgh must be loads different to London then, as I would have said you have already missed the lowest point of the trough and things are now going up. According to the papers, other areas do follow the London house pricing trends, though so maybe its only a matter of time.

    Contrary to you view on lending, things are getting better and better in that department on a weekly basis.

    TJ is right on every count as far as I can see… (wow that really hurt)

    Premier Icon feenster
    Subscriber

    Ok, I can see what you are saying, but what I still don't get is this:

    upwards pressure on the bottom of the market

    The bottom of the market, and the financial resources needed to get there don't match at the moment. They haven't for a long time, but previously people just borrowed more, because they could, so prices went up. Now they can't do that, so I reckon the source of that upwards pressure has gone.

    From my point of view there is a huge correction needed in edinburgh more than most to get prices more realistic again.

    Feenster – if you have a buoyant rental sector due to high employment and large numbers of students then this increases the desirability and saleability of cheap property and thus prices. This then has "knock on" effects throughout the market. The rental sector takes properties out of the owner occupier market thus decreasing availability thus you get a scarcity premium.

    As there has been no significant increase in most of Edinburgh in property prices for the last few years there is little correction needed.

    I really don't see any significant move in house prices in Edinburgh in any direction over the next few years. Slowly upward if anything

    Truth is I don't think anyone can predict exactly what the housing market is going to do other than, in the long term, it will probably rise. Yes we have seen prices rising recently but that could also be accounted for by the fact trhat we are almost in equilibrium between buyers and sellers. The quantity of housing being sold and bought is still, from what I understand, considerably down on "normal" levels. With the economic uncertainty (I don't believe we are coming out of the downturn yet) and the potential for more job cuts particularly in the public sector over the next year or two it is more than likely that the house prices will dip, drop or crash. You can never really predict what extra costs you will need when you buy a house either as sometimes things just happen. You have to know your budget, what you need to pay for, decide whether you want those luxuries you may have had up until now (Sky for example) and what else may change in the future (eg babies). Interest rates will rise at some point but quite possibly not for a couple of years but it is something that needs to be factored in to your budgeting. We have been on a fixed mortgage of one sort or another for our entire mortgage history. Yes, it has not been the cheapest option for us at a number of points but I did have security in knowing exactly what the biggest mnonthly outgoing was. That's how I manage. Others do differently and find it works for them. When looking at your costs I would also remember to factor in montly saving for other bills that crop up such as car servicing, boiler servicing, water rates etc.

    Premier Icon feenster
    Subscriber

    @TJ

    So what you seem to be saying is that the high number of students and low paid workers in tourism and hospitality businesses are fuelling the demand for rental property at the bottom of the market, thus taking them out of the market and making them scarcer and therefore pricier for people like me who want to buy one.

    And (I'm running with it here), the higher the bottom of the market gets, the more people are excluded from it, so the more people have to rent which increases demand for rental property, which makes property to buy even more scarce, which keeps it priced high……

    Depressing.

    So what we [edit: I] need are students and tourists out of Edinburgh

    More or less. It has an effect right thru the market. Demand for rental properties is not just at the bottom end of the market tho – 4 / 5 bed flats are also in the rental market for students. The high rental activity keeps a floor under the price per room so even proerties worth £300 000 can make worthwhile rentals if you rent to 5 students.

    Certainly prperty is basically unnaffordable and you are right that a correction is needed. I see it happening thru price rises below wage rises for the next ten years rather than by a crash in values in a short time scale

    A Leith 1 bed flat at £160 000 is unaffordable for the average worker.

    some good advice in this thread.

    imho what the market will do depends hugely on where you are.

    in cornwall lower end properties, up to 200k, are selling like mad to cash buyers because even at minimal rental they offer a far greater return than the cash in the bank.

    250'ish middle market is sticking, the family houses that tend to be mortgage dependent (i sold a house 18months ago for 250 and i reckon that today i would severely struggle to get 200 for it).

    300 and up, which tend to be more affluent buyers, is not bad PROVIDED it is priced correctly. there are still a lot of 'have a go' prices around.

    but, from what i can gather there are a huge number of deals falling through and a lot of large legal cos laying off conveyancing staff. read into that about teh state of the market what you will!

    my gut feeling, and i am happy to be corrected, that the market will slump again in the new year. i don't forsee a catyclismic crash but the re-introduction of stamp duty, vat likely going up and an inevitable rise in interest rates should do it.

    my advice would be that if you can find a good deal, most preferably a house that you can add significant value to, and you want a home/long term investment, then buy because cash in the bank is worth nothing.

    and for sure do not be afraid to make silly silly offers.

    mastilles_fanylion – 18quid/month water, i wish! you can tell that you don't live in cornwall!! : )

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