At what point will the Houseprice reversal stop?

Paul_N_4

mitchaa wrote: »

try looking here..;)

http://www.nationwide.co.uk/hpi/historical/Q2_2008.pdf

Cambridge
Canterbury
Oxford
Carlisle
Aberdeen

All areas of the country that are still showing +ve growth, there's more than that, thats just the top 5

Oh if we're going down to town level of course. Need a bit more volume before they go -ve.

mitchaa

2006

narced wrote: »

Average house prices will go back to the long term average of 3.5x average income. They still have a long way to go yet.

That's where people go wrong.

Why should a mortgage based on a singular average £25k income be enough to be able to buy an average priced home? Someone in the singular format does not need a £175k 3 bed semi detached average home, he only needs to buy a 1 bed/2bed flat.

An average couple both earning British average salary of £25000 each should be able to buy an average priced 3bed semi detached home though, but then £175k is only 3.5x their joint income so in that sense it already is reasonably affordable.

I do not agree that a singular £25k income should be enough to afford an average priced home. It should be enough however to buy a 1bed/2bed flat.

IMO anyway, houses are never going to become stupidly affordable like a lot of people on here think they will.

sympatex

2004

mitchaa - i think you're spot on there. My gf and I are looking to buy our first house together and we fit your 2 average earners scenario perfectly and 3 beds are down to around 200,000 so another 8-10% is needed before we fit the 3.5X salary scenario.

We have a 10% deposit so we are practically there. However, wasn't it in the past it was 3x single salary 2.x both salaries? The problem is planning for when/if you lose that second salary, has the other halfs salary doubled?! I think it won't.

baby_boomer

2003

narced wrote: »

Average house prices will go back to the long term average of 3.5x average income.

I disagree - simply because there are so many double income families. The buy-to-letters on the lookout for rising retirement income will also step in before they fall that far.

We're not going to see average housing fall to under £100K. That would give a 9.6% rising yield - on a starting rent of £800 pm. Why would anyone invest in a pension if they could get that instead?

mitchaa wrote: »

An average couple both earning British average salary of £25000 each should be able to buy an average priced 3bed semi detached home though, but then £175k is only 3.5x their joint income so in that sense it already is reasonably affordable.

It doesn't quite work like that, since those averages are for full time workers and we have millions of women part time workers in the UK.

I think the mortgage companies may have overestimated the power of double incomes in the boom years, especially given our fragile modern relationships, but they can't be discounted entirely in the future.

For the pessimists, however, there is always the prospect of increasingly indebted students to factor into the housing equation. The student loan policy of the current government won't really START to impact on the housing market for another five years and it's being underestimated by most commentators.

neverdespairgirl

2001

mitchaa wrote: »

Nope if you had read the report released by nationwide yesterday you will find there are still quite a few areas within the UK that are STILL showing positive YOY growth.

That to me means that those houses are worth more than what they were this time last year;) Not just in Scotland either, quite a few places south of the border aswell.

Well - the Nationwide figures say:


House prices are lower than a year earlier in 12 out of 13 UK regions



Scotland is the exception - and it's Y on Y growth was 0.6%, considerably below inflation, so that means that even in the property "hot spot", the real value has declined.

Conrad

2003

mitchaa wrote: »

IMO anyway, houses are never going to become stupidly affordable like a lot of people on here think they will.

Those stupidly rapid gains were based on stupidly cheap money with stupidly easy lending criteria such as 125% ltv.:rolleyes:

dannyboycey

2000 or earlier!

m00m00 wrote: »

these have generally been in areas that require Cerberus as a guard dog though.

There are quite a few new developments where I live in some very nice areas where the sales people are getting desperate. Move in for £1, pay nothing for a year, no stamp duty, solicitors fees paid, brand new white goods chucked in....... they can't give them away.

chrisandanne

2003

I've gone for 2003, In my area this equates to a 40% drop on a modern (not new) 3 bed town house which costs c £135 now, it would bring it down to £81k.
The mortgage v rent on a place like this would be about equal assuming a deposit of 10% and interest rates not zooming up or falling.

hoggums

2000 or earlier!

I think posters are forgetting that a house priced at £200k that was affordable in 2006 is not as affordable in 2008, therefore prices cannot remain where they are. The population of Britain isn't going to start living in 2 bed flats because they can't afford a semi detached - who's going to buy the semis if that happens?

Nowadays you need a min 5% deposit - which I have no doubts will soon be 10% &
Interest rates will not be going down in the short term. There is still continuing talk of banks further tightening of lending conditions.

You cannot escape the fact that you have to price houses at what people can afford - and that's dependant on what the banks will lend you.

manhattan

2001

2001 is the magic number