House Prices continue trend of stability.

Woby_Tide

theoretical stuff as I wasn't paying attention to this sort of thing the last time prices 'crashed', but with people saying they are saving up deposits to buy places once prices drop. I was wondering though how over last few years housing market seems to have lots of properties available with people 'cashing in' on equity. If prices did fall(and with people having stretched in more cases than before) apart from obvious increase in repo properties(though no idea how much difference that will have with lower rates technically than previous crash) is there as much choice on the market for properties? i.e. do people choose not to move because their equity is eroded or they are in negative.

Just wondering if last time it was a case of rising prices, more (expensive) properties to choose from, whereas in the troughs it's less properties to choose from but more affordable?

kinesin_2

The CML (Council of Mortgage Lenders) has seen a massive increase in repossession this year.
http://news.bbc.co.uk/1/hi/business/4721783.stm
With the economic climate in the UK getting colder and job loses on the increase, there will be a lot more forced sellers setting the market rate.
The actual interest rate now and in 89 isn't the issue, but the percentage of take home used to service that debt.
The massive rise in gas/elec/council tax prices is eating into ever homeowners take home wages and at a rate far above inflation and related wage increases, further reducing the any spare money - hence one of the reason for trouble on the high street, hence job loss at the like of allsports, and then the forced sell up that follows etc etc.

eurows

Yep your landlord has 2 houses and you are renting and paying of his mortgage and you think he is a loser ?????

Personally I would not be bragging about wasting my money on a new freelander / going to Teneriffe, if I was renting I would be saving that cash towards a house deposit. And people wonder why they are stuck renting.

mmmm...strange.......how all these renters are always saying how great renting is and how cheap it is and how the landlord is subsiding their rent etc etc.

So why are they always complaining about house prices and wanting to get on the ladder and looking at https://www.rightmove in secret?

I don't need to save towards a deposit. I can pay 60% towards the price of a house. What muppets like you don't seem to grasp is I choose to rent. ITS CHEAPER. When it becomes cheaper to buy I WILL.

Dopes like you think houses always go up and your small brain cannot cope with the facts. I will buy in two years time. If I wanted to buy now I would go to an auction. BUT I DON'T WANT TO.

By the way Tenerife has 1 'L'. If you rented you would be able to spell it and go there.

Woby_Tide

eurows wrote:

I don't need to save towards a deposit. I can pay 60% towards the price of a house. What muppets like you don't seem to grasp is I choose to rent. ITS CHEAPER. When it becomes cheaper to buy I WILL.

Dopes like you think houses always go up and your small brain cannot cope with the facts. I will buy in two years time. If I wanted to buy now I would go to an auction. BUT I DON'T WANT TO.

By the way Tenerife has 1 'L'. If you rented you would be able to spell it and go there.

!!!!!! has one 'r'

deemy2004

Inflation is the main danger to house prices, and all indicators suggest its going to go much higher than forecasts.

You only have to see the way the £ is trending, down 10% from its highs against the $, to see future inflation on the horizon.

With rising inflation the BOE will at some point have to bite the bullet and RAISE interest rates, so all this talk about cuts will look as daft as it would have done at the start of 2005. Give it say till Feb 06, and we may see the first hikes in rates, the first of a trend

Dick_Dastardly_3

House prices will go down it only a matter of time. At the moment they have stabilised, once people realise houses are no longer an investment gravy train then sentiment will cool further. A number of BTL's will be forced out as they can't keep payments/profitability up due to no capital gain, thus no increase in equity holding.

For people to say that you have paid off two years of a 25 year mortgage viewing that as an important/significant factor is sheer misunderstanding of what a 25 year repayment mortgage is. In the first part of the term, your payments are almost exclusively paying interest, the capital reduction is very small in comparison to the amount paid, it is only after say the first 10 or so years that any real dents in the capital is made. If you don't believe me go a check your statement vs the amount paid, it will be an eye opener. So in the short term the arguement of 'I am paying off my mortgage and building equity, rather than renting' is nonsense in a stable market on a 25 year repayment ( in the first section of the term), and makes even less sense given the precarious position of the over-inflated UK house price market.

My view is that house prices will move down considerably, mine has fallen by around £25k in value from its peak, some that I have seen have also moved down substantially, already, and I expect more to come, as I am likely to move up the ladder and am mortgage free, I am happy for it to fall, as it will result is a lower gap between mine and the next, lower fees (estate agent, solicitors, Stamp duty, etc) all of which are wasted money.

meanmachine_2

Let's be honest, if the Bank weren't worried about inflation they would have started cutting rates by now - and dramatically so.

There is definitely at least a 20% premium on houses which account for the "fear factor", the buyer's belief that "OK they're expensive,but they're going to be even more expensive next year - help!".

Take that away and you realise "Jeez, £200K for a one bed flat that cost just £80K a few years ago. How on earth did that happen? And why?!!"

FaTB

!!!!!!_Dastardly wrote:

House prices will go down it only a matter of time. At the moment they have stabilised, once people realise houses are no longer an investment gravy train then sentiment will cool further. A number of BTL's will be forced out as they can't keep payments/profitability up due to no capital gain, thus no increase in equity holding.

For people to say that you have paid off two years of a 25 year mortgage viewing that as an important/significant factor is sheer misunderstanding of what a 25 year repayment mortgage is. In the first part of the term, your payments are almost exclusively paying interest, the capital reduction is very small in comparison to the amount paid, it is only after say the first 10 or so years that any real dents in the capital is made. If you don't believe me go a check your statement vs the amount paid, it will be an eye opener. So in the short term the arguement of 'I am paying off my mortgage and building equity, rather than renting' is nonsense in a stable market on a 25 year repayment ( in the first section of the term), and makes even less sense given the precarious position of the over-inflated UK house price market.

My view is that house prices will move down considerably, mine has fallen by around £25k in value from its peak, some that I have seen have also moved down substantially, already, and I expect more to come, as I am likely to move up the ladder and am mortgage free, I am happy for it to fall, as it will result is a lower gap between mine and the next, lower fees (estate agent, solicitors, Stamp duty, etc) all of which are wasted money.

Good post Mr. Dastardly some very good points well made.

mystic_trev

There have been some interesting points made here, and I tend to agree with the "Bears" that we are in for a correction of at least 20% in the next couple of years. Lets face it that's only a the one year rise for the 2004 year - so it only takes off the "froth"

I'm a Property investor with two properties, one bought in 1996 and another in 1999. One property has more than trebled in value and the other more than doubled! I'm hanging onto those as they are long term investments and to sell would mean me having to pay CGT along with other costs. However, I am selling my home and moving into rented accomodation. I'd rather sit on the cash and watch the Property market crash. Even if we do have the so called "soft landing" prices aint going to start rising for at least the next five years, and probably longer. We need a 40% correction to reach the long term trend, and bearing in mind the last Property crash went 20% below that, if I had bought in the last couple of years I'd be concerned....very concerned.

wibble68_2

mystic_trev wrote:

We need a 40% correction to reach the long term trend, and bearing in mind the last Property crash went 20% below that, if I had bought in the last couple of years I'd be concerned....very concerned.

I think these statistics seem to go straight over some peoples heads.

The market has been a one way bet for the last 10 years giving a false sense of security.

General sentiment at the moment is that prices are not going up but surely they can't go down.

I believe that this kind of sentiment will gradually erode over the next 12 months.

However if prices remain stable for the next 4-5 years then the dream "soft landing" has occurred.

But my opinion is that a "soft landing" cannot be declared until 2010.