Property prices will have stabilised by this time next year. Yes or NO?

Don't have the inclination or time to read seven pages that probably contain 5 pages of bickering and baiting but I voted stabilise with a BUT ....

I do not think the mortgage market will be any better meaning that the volume of sales will be lower than now as people stay as they are and those who did plan to buy cannot because they lack the deposit etc.

Even when interest rates were 15%, unemployment was rising and house prices were falling 'last time' lenders were still offering 95% and had fairly reasonable (against BBR etc) pricing.

The difference this time is that the appetite to lend has gone and deals will not be available to movers and FTBs without 25% plus (not many people - even strs - have this amount of deposit).

Some of the rate cuts will filter through and will keep those currently 'on the brink' on the right side of repossession but will not really mean better deals as more and more are forced onto SVR and struggle through as the rental alternatives are not great.

Lower numbers of forced sellers mean stagnation (or small fluctuations) in house prices and sales numbers in most areas.

Good news is the increasing inflation wears away at the real value of that mortgage debt.

Falling house prices does not mean cheaper mortgages leading to a recovery or return to normality or 'traditional multiples' etc etc. The outlook is bleak for all - existing owners, STRs, FTBs - let's not kid ourselves, no one but the truly cash rich will be taking advantage over the next 6 - 12 months.

Today's cut is an attempt to protect those on the brink and is more about business than mortgage borrowers and savers.

It allows lenders to recoup some of their losses while giving them room to make it easier on struggling borrowers and shows the MPC etc will accept the inevitable stagnation of the housing market.

As long as you can afford your mortgage you do not care what the price of your home is.

You don't look to move, you cut your cloth etc etc but you are not forced into repossession or accepting a low offer. Just like a price has to be paid to be realistic, an offer has to be accepted to be realistic. That's what the MPC/government is looking at.

geoffky wrote: »

paying 3% on a overpriced asset is still paying far too much...i am not losing £4k in value each month but your house is...

As most people buy their home as a place to live, I do not agree that this applies to someone's main residence - especially if they are not looking to sell, but even home movers are somewhat protected by the fact that the next house will have also dropped. It's the 'price to change' that really matters.

I agree with this only if you assume that an investor is in negative equity and needs to sell therefore losing the deposit that they put in and possibly more (the downside of gearing).

However, let's assume I spent £17000 in deposit and purchase costs etc to buy a house worth £100,000 last year.

At 6.39% the £85,000 mortgage costs me £5431 in interest a year and I receive £6600 in rent a year.

I have rental surplus of £1169 pa.

I pay £420 pa to insure the property.

I have a net return of £749 pa which is a return on capital employed (£17,000) of 4.40%.

As long as I do not sell I am still making a positive return on the money I have invested (£17000). Not a great one, but enough to allow me to sit out a number of years to hopefully start getting some capital appreciation again.

However, if I am forced to sell now for £85,000 I have lost all my capital put into the house and you are correct. If I am forced to sell.

But consider this.

If I am on a Tracker Buy to Let rather than fixed, my mortgage costs me 2.75% less than it did last year. My mortgage now costs me 3.64% - £3094 per year.

I now have rental surplus of £3506 pa.

I pay still £420 pa to insure the property.

I now have a net return of £3086 pa which is a return on capital employed (£17,000) of 18.15%.

I am not bothered if the nominal value of the house falls as I am more than happy that the return I am getting on the £17000 I committed last year is well in excess of anything available in any bank account. I can afford to sit out as many years as you like for the house to regain its value.

The drop to 3% has been very good news for me. No matter what you may like to think.

Your sweeping statement ignores that some (but not all) investors in property did their homework.

You are right in some cases but not all.

Dan: wrote: »

I will accept your apologies in 12 months time.

I am now ready to accept all your apologies.

!!!!!!? wrote: »

Remember to bookmark the URL of this thread and mail it to yourself in the future!


http://www.futureme.org/

See you in 12!

Shame old !!!!!!? aint around anymore :rotfl: