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Debate House Prices
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The big price falls are over.
ad9898_3
Posts: 3,858 Forumite
Ok, many of the regulars here maybe a little shocked at my stance on this, but after the Nationwide figure today, it kinda got me thinking. With the base rate set to stay low for sometime to come it is giving a lot people out there pause for thought(not me by the way:D), I don't think we can underestimate the impact of low rates at the moment is having on the market, BTL landlords who don't have to refinance are unlikely to be forced to drop rents to any significant degree, which gives all those STR's and FTB'rs food for thought, why keep renting ?
If they can buy now and fix a good deal, with a lowish LTV (especially STR's), I believe this is what they are doing, this is stopping prices falling significantly further. Sentiment is also a powerful tool, which the government and media have used to maximum effect over the last few months.
Don't get me wrong, I still feel there will not be any 2000-2007 HPI for a long time, but my feeling is that we are in a trough now, and that trough will likely last for some considerable time, (years probably), with minor +'s and -'s either way. Now I'm open to be being persuaded that I'm wrong........ so if you have a good argument, go for it.
If they can buy now and fix a good deal, with a lowish LTV (especially STR's), I believe this is what they are doing, this is stopping prices falling significantly further. Sentiment is also a powerful tool, which the government and media have used to maximum effect over the last few months.
Don't get me wrong, I still feel there will not be any 2000-2007 HPI for a long time, but my feeling is that we are in a trough now, and that trough will likely last for some considerable time, (years probably), with minor +'s and -'s either way. Now I'm open to be being persuaded that I'm wrong........ so if you have a good argument, go for it.
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Comments
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Oh ye of little faith!
Wait until the cold winter months, the spring bounce will be a faint memory, unemployment will still be shooting up and house prices will continue spiralling downwards.Krusty & Phil Madoff, 1990 - 2007:
"Buy now because house prices only ever go UP, UP, UP."0 -
No way. As soon as the base rate rises, the housing market will collapse. It is currently like the van at the end of the Italian Job!!
The fundamental is this. The prices are just too high. A person wanting to live in a bog standard terraced house in or around London, on an average salary, still needs to borrow 8 or 9 times their salary.
Banks will not lend this anymore.
Prices have to fall. Whether this is through a crash or whether it is by staying the same for 10 years whilst salaries catch up a bit - who knows. But either way, if the banks will only lend 4 times salary, then houses will have to come down to about this level.
With a 2 bedroom flat at 250k, that means it would only be able to be bought by someone on 62.5k a year. someone on that salary should be able to buy more than a 2 bedroom flat!!!!!
Things have to change.
People are only managing because of 0.5% base rate. as soon as it goes up, there will be a collapse.
and you don't need any fancy graphs to know that. what goes up must come down. it is common sense.0 -
I did say back in Jan a lot of repos were being purchased by professional landlords for cash!
From what I hear it is people buying homes now but is that not the way the market goes investors first in, general public after.
OK True story of the day for you.
A 6 bed detached repo was put on today my family member (EA) for £150K:)
10 viewings today first 4 all offered asking price(not surprising really but the are ain't great).
I think now that property priced sensibly is selling.
The increase in prices indicates general public buying because anyone paying cash and can complete in 3 weeks will drive prices down (that is what I did)0 -
add to this the 'everything in the garden is looking rosy' news about the economy this a.m.The_White_Horse wrote: »No way. As soon as the base rate rises, the housing market will collapse. It is currently like the van at the end of the Italian Job!!
The fundamental is this. The prices are just too high. A person wanting to live in a bog standard terraced house in or around London, on an average salary, still needs to borrow 8 or 9 times their salary.
Banks will not lend this anymore.
Prices have to fall. Whether this is through a crash or whether it is by staying the same for 10 years whilst salaries catch up a bit - who knows. But either way, if the banks will only lend 4 times salary, then houses will have to come down to about this level.
With a 2 bedroom flat at 250k, that means it would only be able to be bought by someone on 62.5k a year. someone on that salary should be able to buy more than a 2 bedroom flat!!!!!
Things have to change.
People are only managing because of 0.5% base rate. as soon as it goes up, there will be a collapse.
and you don't need any fancy graphs to know that. what goes up must come down. it is common sense.
did you reach for the sambuuca this morning, ad?0 -
Either that or more 6 bed detacheds are selling than crummy 1 bed newbuilds.
Be interesting to see the TYPES of property selling as well as the volume and average price of transactions.0 -
I think the BIG falls are over, but there will be some small ones.
My prediction of 0% YoY come January should be close.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
The_White_Horse wrote: »No way. As soon as the base rate rises, the housing market will collapse. It is currently like the van at the end of the Italian Job!!
The fundamental is this. The prices are just too high. A person wanting to live in a bog standard terraced house in or around London, on an average salary, still needs to borrow 8 or 9 times their salary.
have you done the calculations of how much a mortgage cost in 1991-1993 to see how much it cost on an average salary to buy a house?
you''l be surprised that it was more difficult then than it is now.
even if you take the todays interest rate at 8%.0 -
Either that or more 6 bed detacheds are selling than crummy 1 bed newbuilds.
Be interesting to see the TYPES of property selling as well as the volume and average price of transactions.
i'm with you on this one - there will be different types of property selling more than others.
younger people and FTB's are finding it more difficult to buy so the smaller properties will be slower to sell.0 -
I did say back in Jan a lot of repos were being purchased by professional landlords for cash!
Define a professional landlord?
Someone who is investing because "its a better return than on bank deposit rates". Doesn't qualify in my mind.
A lot of small time property developers were still acquiring land and redevelopement sites in 2008. Even with low interest rates that are finding it either unprofitable or the bank won't fund them.
The message has still to reach a lot of people.0 -
have you done the calculations of how much a mortgage cost in 1991-1993 to see how much it cost on an average salary to buy a house?
you''l be surprised that it was more difficult then than it is now.
even if you take the todays interest rate at 8%.
Having an income, when buying a house, is vastly more important than mortgage costs.0
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