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House price crash?
Comments
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EdInvestor wrote: »....or maybe not.
#Longer term BTL investors ( those who bought before around 2000) will be selling now if they want to, as they do better under the old measures.
With 40% taper relief after 10 years they still pay 24% today against 18% in April. Have I missed something?
What the new rules could breed is a new generation of BTL LLs who look for a gain over a shorter term (3 years).
GGThere are 10 types of people in this world. Those who understand binary and those that don't.0 -
No idea if this link will work or not....
You can read / believe all you like re: the mortgages people are applying for etc etc.. but fact remains from the land registry, the ACTUAL sold prices is not going down, infact still going up. Oct (up 0.1%) and Nov (up 0.6%)
http://money.aol.co.uk/cheer-for-homeowners-as-prices-rise/article/20080103085509990011
GG makes an interesting point above... 3x earnings when rates were twice as high... is it therefore unreasonable to be borrowing 5x now?? I wouldnt say so even if others disagree.
So what is reasonable wage? 18k? That'd give you a mortgage of 90k plus a deposit you have saved from the years of paying no mortgage or living at home as a FTB. 10k deposit. 100k WILL get you a mid terrace in ALOT of the country still, you cant expect to pick and choose, i certaintly couldnt when i was a FTB 7 years ago..0 -
TighterThanTwoCoatsOfPain wrote: »You can read / believe all you like re: the mortgages people are applying for etc etc.. but fact remains from the land registry, the ACTUAL sold prices is not going down, infact still going up. Oct (up 0.1%) and Nov (up 0.6%)
http://money.aol.co.uk/cheer-for-homeowners-as-prices-rise/article/20080103085509990011
LR figures usually lag a little, but let's leave that aside. You cannot disregard mortgage approvals and transaction numbers when stating prices rises. Approvals are currently down by 44% year-on-year. Prices are reflected by affordability, and these statisics may only reflect the purchasing power of a dwindling number of higher earners capable or willing to buy.
If you were to exagerate this statistical flaw, you could argue that the average house price has risen to a million pounds if there were only two sales at this value in an entire year. Everybody else is priced out completely.TighterThanTwoCoatsOfPain wrote: »GG makes an interesting point above... 3x earnings when rates were twice as high... is it therefore unreasonable to be borrowing 5x now?? I wouldnt say so even if others disagree.
Higher borrowing at lower interest rates are more unsavoury than lower borrowing at higher interest rates. You cannot compare. I'll explain why if you wish.TighterThanTwoCoatsOfPain wrote: »So what is reasonable wage? 18k? That'd give you a mortgage of 90k plus a deposit you have saved from the years of paying no mortgage or living at home as a FTB. 10k deposit. 100k WILL get you a mid terrace in ALOT of the country still, you cant expect to pick and choose, i certaintly couldnt when i was a FTB 7 years ago..
You can't expect to lecture FTBs if you bought your first home in 2000.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
Gorgeous_George wrote: »With 40% taper relief after 10 years they still pay 24% today against 18% in April. Have I missed something?
Hi GG
There's also indexation relief for the long termers.Trying to keep it simple...0 -
Turnbull2000 wrote: »LR figures usually lag a little, but let's leave that aside. You cannot disregard mortgage approvals and transaction numbers when stating prices rises. Approvals are currently down by 44% year-on-year. Prices are reflected by affordability, and these statisics may only reflect the purchasing power of a dwindling number of higher earners capable or willing to buy.
If you were to exagerate this statistical flaw, you could argue that the average house price has risen to a million pounds if there were only two sales at this value in an entire year. Everybody else is priced out completely.
Land Registry figures are the best stats we have, no matter how imperfect - they show completed sales and the price completed at. My guess is that they'll be showing month-on-month falls in price by Spring, year-on-year before year end.0 -
Turnbull2000 wrote: »LR figures usually lag a little, but let's leave that aside. You cannot disregard mortgage approvals and transaction numbers when stating prices rises. Approvals are currently down by 44% year-on-year. Prices are reflected by affordability, and these statisics may only reflect the purchasing power of a dwindling number of higher earners capable or willing to buy.
If you were to exagerate this statistical flaw, you could argue that the average house price has risen to a million pounds if there were only two sales at this value in an entire year. Everybody else is priced out completely.
Higher borrowing at lower interest rates are more unsavoury than lower borrowing at higher interest rates. You cannot compare. I'll explain why if you wish.
You can't expect to lecture FTBs if you bought your first home in 2000.
Can you present better data than the land registry? Transactions are down, no denying that, but prices are probably holding up because people arent in the position of being forced to sell.
For most people, the mortage is the month-to-month DD figure. What someone takes on as a mortgage now is likely to seem very little as a monthly out-going in 10 years time (given that their salary will go up quite a lot over that period). So its the month to month figure that matters for most. I understand your point about higher borrowing at lower rates (i.e. more gearing) but if the asset increases in value, gains are larger. Higher interest rates cause pain whatever the borrower's situation.
I didnt notice a lecture for the FTB there. Just someone recounting their own experiences. I think it makes sense that FTBs be aware that there is still a risk in NOT buying and waiting for a slump, as well as a risk in buying. With interest rates on the way down, I think these risks are more balanced than al lot of people on here seem to think. One risk of waiting is that you end up never buying because your salary doen't keep up with house prices - meaning you have to be paying more into a pension to afford to pay 25 years of rent when you retire.18 May 2007 (start of Mortgage):
Coventry Offset Mortgage £220800
Offset Savings: £0
Mortgage Balance: £220,800
14 Jan 08
Coventry Offest Mortgage: 219002
Offset Savings: 28200
Mortage Balance: £190802
And still chucking every spare penny into it!0 -
HammersFan wrote: »I didnt notice a lecture for the FTB there. Just someone recounting their own experiences.
Sorry, I should have put "you cant expect to pick and choose" in bold.I understand your point about higher borrowing at lower rates (i.e. more gearing) but if the asset increases in value, gains are larger. Higher interest rates cause pain whatever the borrower's situation.
For many, earnings are now rising below RPI. Whereas the cost of food, fuel, and travel are above.
There was a table listed on the Fool.co.uk forums a while ago that compared high rates/low mortgage against low rates/rates high along with higher earnings growth and the subdued we're currently experiencing. It was something along those lines. It would be nice to find it again.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
Turnbull2000 wrote: »Sorry, I should have put "you cant expect to pick and choose" in bold.
How is that a lecture? It has always been the case - being young, starting out on a career, with a low deposit, is as its been for a while. Mortgage payments, for me, have always seemed hard for a year or two but then things seem get a lot easier.
I honestly think people saving thinking that they will be able to dive in when prices drop and get a 4-bed with acres without needing a mortgage, are in for quite a disappointment.18 May 2007 (start of Mortgage):
Coventry Offset Mortgage £220800
Offset Savings: £0
Mortgage Balance: £220,800
14 Jan 08
Coventry Offest Mortgage: 219002
Offset Savings: 28200
Mortage Balance: £190802
And still chucking every spare penny into it!0 -
(slight edit in quotes)HammersFan wrote: »It has always been the case - being young, starting out on a career, with a low deposit, is as its been for a while. Mortgage payments, for me, have always seemed hard for a year or two but then things seem get a lot easier.
See above.
In additional, typical FTBs are now supposedly in their early 30's. Whether this is true are not (as the figures may include STRs returning, divorcees etc), is it fair to assume most individuals are near or already at their peak earnings potential at this stage?HammersFan wrote: »How is that a lecture? I honestly think people saving thinking that they will be able to dive in when prices drop and get a 4-bed with acres without needing a mortgage, are in for quite a disappointment.
With the price difference between now and 7 years ago, it's a bit cheeky to tell FTBs not to "pick and choose".
Do you really believe that's what FTBs are hoping for?Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
Turnbull2000 wrote: »Higher borrowing at lower interest rates are more unsavoury than lower borrowing at higher interest rates. You cannot compare. I'll explain why if you wish.
In all seriousness, could you explain.. I accept you're more exposed to smaller increases etc but interested in all others etc.. My arguement for fixing if the rate is sensible, they do still exist.
Refreshing to read from someone who can back up with facts etc rather than "there will be a crash because i want one"
My personal feeling is you can get a house for 100k, on 18k salary, and can also get a 25 year fixed rate mortgage at 5.5% if you want. I just cant accept people cant buy a FTB house if they want one.... most people i know have unrealistic expectationsTurnbull2000 wrote: »You can't expect to lecture FTBs if you bought your first home in 2000.
Apolgoies if it came over like that, not lecturing anyone.. at the time i bought my house i was warned by many that the House price bubble was just peaking and coulda got my house 10% cheaper 6 months ago and to consider waiting..... Mortgage rates were the same, perhaps a little higher than they are now.....well look how that turned out!
LR are considerably in arrears agreed, point was that whilst Lenders were saying in Oct and Nov that prices were falling, they werent? I cant suss where the apparant gap in the rise / fall appears?0
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