Looks like the housing market is off again…

Well, at least around here it appears so…

The house two doors down has just gone on the market for £110k more than we paid for ours in 2010. Same floor plan except they’ve converted the garage which we’re doing later this year, taking upgrades into account that’s around a 30% lift in four years 😯

I’d be sceptical if it wasn’t for a friends experience, they live just down the road and sold their three bed last week. Went on the market at £475k, had over eleven viewings and sold ten days later for £480k. Here we go again…

Where have you been for the last 3 years?

Whoah 30%, I’d best go and arrange an unaffordable mortgage for the next 30 years.

Sub prime lending encouraged by those who don’t believe it’ll happen again 🙄

The real problems will occur when we start regarding the health of our economy by the housing market. Oh 😯

There was an interesting article on the bbc news website comparing our economy to others. I think it said unlike other countries 50pc of people’s wealth is from property whereas it’s 15pc or something elsewhere.

We just moved and between accepting an offer and moving our house went from being valued at £345k to £370k in 3 months and there was no shortage of buyers. We needed to move quickly to get the house we wanted but the new buyers I reckon are nearly £40k up from day one (not bitter 😉 )

It’s a two tier society brewing as heaven knows how some people can ever afford these houses when leaving school etc.

It’s almost as though Osborne’s economic recovery, in anbsence of any meaningful long term reform, is based around a housing boom Required to last long enough to see them through to the next election before the shit hits again
All achieved by keeping interest rates uber low, a huge taxpayer underwritten lending plan (the 20% value already eclipsed by the bubble it helped create) and a huge effort to maintain wealthy foreign investors of questionable integrity to keep pumping up the London housing bubble/crisis

You’ve got to hand it to George. He’s clearly put a lot of thought into this economic ‘recovery’.

He’s looked at the last global financial meltdown, studied the conditions that led to it, then asked ‘how could we perfectly recreate it, yet somehow make it worse this time? Is there a way? It wasn’t quite the perfect storm last time around.

By jingo, I’ve got it!!! We’ll lower interest rates to the lowest ever level, then we’ll inject billions and billions and billions of pounds of taxpayers money into the resulting credit-fuelled bubble! Its genius! So when it inevitably goes tits up this time, the taxpayer is on the hook directly for the sqillions of pounds of losses as the entire market implodes! Which will be approximately 2.3 milliseconds after the next election, when the Bank of England whacks the interest rates up, and everyone who’s paid absolutely stupendous amounts for their massively overvalued properties defaults on their mortgages! And due to the inherent weakness of the real economy, which we’ve studiously ignored for 5 years, theres no money left for any bailouts this time, so we really are utterly and completely ****ed!!!

It’d actually be laughable, if the forthcoming financial armageddon, which is most definitely already in the post, wasn’t going to be so utterly catastrophic for all of us! Oh…. except for George and his rich chums of course. Who somehow always come out of the apocalypse their monumental stupidity and limitless greed cause, smelling of roses

I despair!

The whole help to buy thing is designed to stoke a housing bubble which should peak just before the next general election.

Our friends offered £485000 on a £495000 property it went for £550000.

Yep, it is madness around here too. Houses selling for over the asking price within days of going on the market

What a mess. We aren’t entirely alone in having a housing bubble – Canada (thanks to Mark Carney) and Australia also have theirs.

The politicos are certainly behind it all, but we’d expect no less of them. The major problem is central banks, which conspire with the politicians to engineer asset bubbles.

As said above it cannot end well.

Listening to tthe news this morning .

Folks are up in arms about the more stringent and invasive checks for mortgage affordability …..”

Personally its not before time…..

Part of the problem at least is how the Labour government’s handled the global credit crunch. In the recession of the nineties, when there was a Tory government, home repossession went through the roof, so to speak, and the construction industry experienced the greatest turnaround from profit to loss in British history.

In contrast during the last recession, despite it being far more severe, more severe than anything for over 70 years in fact, there were significantly less repossessions due the policies of the last Labour government. See the graph below.

People are less nervous about repossession and negative equity due to how Labour cushioned the effects of the global credit crunch.

Yes I blame the last Labour government for not allowing the market’s revenge….that would’ve learnt them!

Thing is ernie – it will come ….. They are just delaying it .

Im just working hard just now to try and prevent it being my gaff they reposess

So you’re working hard ? That’s what the last Labour government did – pumped money into the public sector to keep people working, in both the private and public sector, so that they could carry on paying their mortgages.

Gotta have somewhe to live man , when i say working hard i mean working hard to make overpayments to get it down.

We’ve either got a capitalist system, or we haven’t. The half-way house we have at the moment is insanity. The worst of all possible worlds.

The sub-prime madness is being reproduced, but this time the ludicrous risk-taking for personal gain at the top, is now being done by people and organisations who are safe and secure in the knowledge that they are being effectively underwritten by the taxpayer. There have been no consequences for their previous actions at all. Nothing! In a truly capitalist system, the repercussions of their behaviour would have been personally catastrophic! As they were to large chunks of the population. But like Ernie said, they were effectively insulated from the fallout by the rest of us, who enjoyed no such luxury

I’m just waiting for the phrase ‘too big to fail’ to start being bandied around again. It will be, once again, after the financial meltdown, not before. When the utter folly of leaving the economy (and especially the banks) unreformed, all comes home to roost

Its like Groundhog day. Depressing 😥

It was just a soft landing until the daft Help to Buy scheme, which has really put a rocket under the whole thing again. Completely daft policy, unless you have an election coming up and need to win at all costs.

God help whoever wins though!

If its not in London/Greater London then let the idiots overstretch themselves.

Que News interviews with people who then blame ‘the banks’ rather than them using their common sense.

I can afford a 4k road bike on credit. Guess what I’m only buying a 1k one. Same with the house market, why do people want ‘the best that they can get’?

This whole thing smacks of ’Dead Cat Bounce’

Prices are not rising everywhere, only the affluent areas, and the huge price rises in London skew the national % statistics hugely.

Still there is a shortage of homes, easy (sub prime) lending is back in the form of the governments guarantee scheme and interest rates are still at a record all time low. The media are also jumping on the band wagon again to irresponsibly fuel the fire.

The real problem round our way is the lack of 2-3 bed family starter homes. Builders are either building flats – designed to be snapped up by BTL investers, or it’s 4 bedroom plus luxury homes with more bathrooms than bedrooms, for people with a lot of money (or the ability to borrow a lot of money). Nothing at all in the middle ground which kind of says something about how massively distorted the market is at the moment.

Hora , i know folk who have just done that – same earnings as me and the mrs , sold their old house bought at the same time as us for a 10k profit and were chuffed with that ( just about paid for moving fees that will have – not inc all the fees from first time round) and have bought a new build for just under 400k. About 3 times what their first house was worth.

I worked out the mortgage monthly to be more than my take home basic.

Their reasoning – well prices are only going to go up so if we cant afford it we will sell

I didnt even argue , theres no arguing with that reasoning. MENTALISTS

The real problem round our way is the lack of 2-3 bed family starter homes. Builders are either building flats – designed to be snapped up by BTL investers

In Manchester there are huge amounts of flats still being built.

In 10-20yrs time many will be empty/desolate and/or being knocked down.

By jingo, I’ve got it!!! We’ll lower interest rates to the lowest ever level

Wait – George did that? I thought it was the BoE?

By jingo, I’ve got it!!! We’ll lower interest rates to the lowest ever level
Wait – George did that? I thought it was the BoE?

Molls – the idea that the B of E is an independent organisation, rather than a tool of the treasury, has always been pretty laughable. But the appointment of Mark Carney really did put paid to any pretence at all to that.

Interest rates need to rise to try and put the brakes on this runaway bubble. Do you think they will? Before the next election? Not a chance!!! Yet a truly independent central bank, freed from political interference, would be doing exactly that! In fact, they’d have done it long ago!

As someone trying to buy a (first) house just now these topics are depressing reading…

Though I’m hoping the stringent mortgage rules come in fast, I want more people struggling to borrow, as I’m not planning on stretching myself so a bit less competition would be nice.

Though i do then wonder if buying before a crash is a good idea… (though round here – brizzle – prices didn’t seem to actually dip, just sales slowed down. Prices currently at or above the previous highs…)

OTOH, at a 5 year fix of say 3% (or a little over), if prices for a 3 bed round here drop from say 250 to 200 in a crash but then interest rates climb to 6%… over 5 years the extra interest paid on 6% would make that not a huge difference in real terms.

However, that’s just all made up numbers plucked out the air if you go into “what ifs” so a bit pointless…I’ll be sticking with my strategy of buying something I can afford, that I can still afford if rates jump to say 10%.

Of course I could not buy, and keep on renting, but then in 5 years I fritter away another 50k+ on renting…so I’m “loosing” that anyway…

Thoughts on if I’m mad or not to be looking to buy welcomed…

I can’t see rates going up much, they should go up now to slow the bubble, but that’s political suicide, so instead they’ll let the bubble burst of it’s own accord and then we’ll need low rates again to encourage growth…..

why do people want ‘the best that they can get’

Because if you are going to be in debt for a large portion of your life you may as well push a bit harder – yes it might be tougher in the first 5 or so years but after that the difference will equalise more and you will end up with more equity for when you want to downsize and pay for your retirement I guess. And making a small move means similar sunk costs for relatively little in the way of improvement in living environment.

It’s the obsession with housing in the UK that gets me. Partly it’s the media to blame for this with endless trash TV convincing everyone they can make money through property.

Very strange considering we have in the UK some of the lowest quality, badly designed and old fashioned housing in Europe. Yet people in the UK seem to value tiny windows, fake wooden beams and chintzy period features over natural light, open plan living space and sustainability?

Beggars belief!

It’s no wonder everyone’s skint and up to their eyes in debt.

I remember when I was a kid, a top notch mortgage was 3.5 times your salary. Assuming an average current-day salary of £25k, which is a figure I’ve pulled out of my arse but doesn’t sound wildly unreasonable, that gives us a figure of £87.5k.

Around where I live, I can get something that’s one of a) an nice house, b) a reasonable size, or c) in a decent area, for around the 150 mark. So for somewhere I’d actually want to live I’d have to spend that 87k twice over.

And you lot are talking about 400k properties. That’s well over ten times my salary.

So, aged 42, I’m stuck in a shitty East Lancashire terrace in an area full of people I’ve little in common with. It’s fully paid for, but needs a considerable amount of work doing to it, and is worth something like £50k. I can’t even begin to comprehend how I’m going to ever live somewhere nice.

How do you do it? How do people afford to live in these places? Did you all just have the foresight to buy property in the 80s when they were giving houses away with Green Shield stamps?

How is this sustainable?

It strikes me, like so many other people that the London and SE market is going through another period of madness whereby house price hysteria hits and people buy at almost any price. However it’s supply and demand. There are undoubtedly people with money to buy (borrow large amounts) in this area and still huge numbers of foreign investors. However the numbers of new houses being built is absolutely minimal. When was the last time you saw anything other than the odd “fill in” development in London and the SE. Now I have friends and family in the SE, who bought houses they could never now afford and are massively asset rich compared the majority of the UK.0

Last week I was in the NE of England. The village where I was staying you could buy a reasonable terraced house for £45k and there were big new developments going up and more seemed to be planned. The housing price “boom” was non existent in the NE.

This was a striking example of the different markets for housing in the UK. However there doesn’t seem to be any possibility of any change.

Right, but they’ll _lend_ you 3.5 times your salary, you’d have a deposit on top of that.

I’m looking to buy my first house in my 30s…I’ve been saving a while…

Because if you are going to be in debt for a large portion of your life you may as well push a bit harder – yes it might be tougher in the first 5 or so years but after that the difference will equalise more and you will end up with more equity for when you want to downsize and pay for your retirement I guess

That was our attitude. Could’ve got something smaller/cheaper, but **** it, we can afford the repayments and maintain a comfortable standard of living. If the interest rates skyrocket it’ll be a pinch, but it’s doable.

The thing we found (as first time buyers with a 5% deposit) was that there was no meaningful change in the rates until you hit 10% deposit, so actually the repayments on a £200k house (vs a £250k as we ended up with) were very similar, factor in wanting to move sooner because we’d outgrown the house or whatever (coupled with the fact money’s for spending and we wanted a nice house in a nice place) and it made no real difference. We weren’t going to get something for £130k, and if we’d waited to save an extra £10k the market would’ve moved on so much anyway that we’d still be priced out.

How is this sustainable?

That’s what I was thinking 6-7 years ago, that’s what I still think, but somehow, despite the biggest recession in living memory, it would appear to be otherwise?

75% of our MPs are btl mortgage holders – they invented a whole new class of fraud by flipping houses to screw over the taxpayer

These muppets will never break the cycle

I kind of think that Gideon didn’t plan to go for the bubble recovery
but when after a couple of years it became apparent that Tory dogma of slash public spending and tax breaks for the wealthy didn’t actually do shit to help the economy it was back to the same old- et voila here comes help to buy

so what happens to those of us who ~10 years ago got reasonable mortgages (that we could afford) if the market goes pop?

I assume I’m sorted for a roof over my head but I’m ****ed if I want to move to bigger house/nicer area. Even with the equity in my house pretty sure I’d need to sign up to a hefty new mortgage – something I’m obviously reticent to do.

so what happens to those of us who ~10 years ago got reasonable mortgages (that we could afford) if the market goes pop?

Depends how badly it pops. Given that you’re 14 years in, I guess you’re unlikely to end up in negative equity so if your house’s value drops, the ‘bigger house/nice area’ prices should drop too and the absolute difference (assuming that the % difference in value will remain roughly the same) in price will be less. So that’s sort of good news… though maybe less good if you’re relying on the value of your house as part of your retirement income (eg downsizing).

2 years ago we tried to sell our place (3 bed victorian terrace in a nice small town, commuter distance from London). Despite dropping the price a couple of times no bugger wanted it.

Fast forward 2 years and we tried again. Had an open weekend with 25+ viewing. Then had 7 offers above asking price on Monday morning. Come Tuesday all of those offers were increased.

We’ve accepted an offer 35k above asking price – and 100k above the price we dropped to 2 years ago.

Bloody ludicrous.

Interest rates need to rise to try and put the brakes on this runaway bubble.

If that happened, how many people would default on their mortgages?

Cougar – im talking about a 400 k house but i dont think its a good idea. Its over double my houses value(its double the bedrooms but only 20sqm bigger in size)

How ever its 5% deposit + help to buy to get a deposit together.

I already followed ngees idea of stetching to buying a decent sized house on a decent size plot to save me moving for a long time. 400k would make me so mortgage poor it would be silly.

At 42 and with 10 years of savings and help from my parents and well above average salary and I can’t afford to buy in London except in undesireable areas and even then it’s something small – unless, of course, I borrow to uncomfortable levels.

Every serious commentator says London/SE is in a bubble. Only the naive first time buyers, sellers and estate agents are quiet on this…

It’s so clearly cynical electioneering… and the Tories are supposed to be the party who are strong on managing the economy. It suggests things are in a far more delicate state than we’re being led to believe… they wouldn’t need to do it otherwise…

When you compare salaries to prices I can’t see from where the first time buyers are getting their money which means the demand has to dry up at some point.

The housing market is not a functioning market, it’s herd behaviour and sentiment – which can go down as fast as it goes up. The economy is not is as good a state as the headlines suggest – our national debt has increased again.

I’m tired of estate agents playing games, telling outright lies and pretty much refusing to show me properties of any quality so for now, I’ve decided to keep saving until after the election when Gideon will hopefully stop playing games (I wish) and interest rates rise. Hopefully more and more first time buyers are coming to this conclusion, which will put a brake on the hysteria.

Hopefully then I’ll not be in such a weak position as buyers currently are and will have a fair chance of buying something decent at an affordable price.

The greed on show from sellers is astonishing. We blame media, estate agents, Gideon etc but, no-one’s forcing you to go for maximum price and rip off someone less advantaged than you who’s dead scared they’ll never be able to afford a bit of security to raise a family if they don’t dance to your tune…