This is bizarre. An interest rate cut is expected soon and houses are not selling...

beingjdc

General prices are 50% higher than they were at the last peak, if you want to make that comparison. Also, remember that if you're trying to compare the exact figure, you got tax relief on the mortgage interest back then, and you don't now.

DirectDebacle

The main reason for houses not selling is because they became unaffordable and despite recent falls in value, are still too expensive. Until there is a further significant fall in prices the market will remain depressed no matter what the interest rate. We already have historically low interest rates.

The banks are wary of lending at the moment and when they start to relax, their lending criteria will have changed to somewhere where it was in the 80's and earlier. 3.5-4x income, min 10% deposit that sort of thing. With that sort of commonsense lending house prices are going to fall a lot more. Sellers are well behind in that thinking but will eventually wake up to the new reality.

Avge wage for U.K. around £25k. 4x income mortgage = £100k.

Only reason houses were selling so fast in the last couple of years is that banks lent irresponsibly to people they shouldn't have lent to encouraged by a profligate Govt. wallowing in the opinion polls of feelgood.


I liken it to drug pushers and drug addicts. You can't have one without the other and the Govt were the drug producers. I blame no-one, it just happened and now everyone has to go cold turkey for a while. It will settle down and find its' own level. Order will be restored.

1st time buyers will be coming back in with flats around 60-70k, terrace and small semis 90-110 and so on.

Remember around 60% of homes in the country do not have a mortgage, they are owned outright. Of the 40% that do only a small % will be in neg equity or getting re-possessed. Media makes it like it's the end of the world. It aint.

So in answer to the OP it isn't bizarre, it is part of an ongoing natural adjustment to changed circumstances.

HankMcSpank

Gangstabird wrote: »

When my flat was repo'ed in the early 90s blah, blah, blah, ..................this is a good time to buy blah, blah, blah, .................

Let me get this straight - you've had a flat repossessed previously & now you're offering the forum property buying advice? :rolleyes:

The others have summed it up nicely...it's not just about interest rates. It's a combination of the cost of the property (way higher now than then) multiplied by the cost of borrowing.

Gorgeous_George

Take a young couple with a typical £150K mortgage and let's see what may happen.

Repayments, even if the interest rate falls to 3.5%, are £750 per month! Affordable when the young couple first set up home all starry-eyed but increasingly less so when the unexpectedly high gas/electric bills fall through the door. Add increasing petrol costs to get to work and higher food prices and suddenly life is tough.

We all know what they can do to entertain themselves for free but then baby number one comes along and drains any last 'savings'. Mum gives up work or goes part-time and the mortgage needs to be paid with just one wage coming in.

Life's tough and low inflation doesn't help this young couple.

GG

GDB2222

epz wrote: »

simple, most people think prices will keep falling and there is a greater likely hood of job losses which is affecting confidence.

what people dont seem to have grasped is house prices have fallen this far, this fast BEFORE any major job losses in the real world.

Yes, in fact it's the fall in house prices that is causing the recession that is going to lead to job losses.

hethmar

Add to all the foregoing the fact that even when interest rates fall they are unlikely to be passed on to mortgage holders as the bank needs to attract savers.

dealornodeal_3

Property Prices have hardly fallen.Average prices have only fallen between 1 and 7%. Its the sellers and EAs holding on to what they once had?

http://www.propertysnake.co.uk/site/postcode/po4

beingjdc

dealornodeal wrote: »

Property Prices have hardly fallen.Average prices have only fallen between 1 and 7%.

Erm.

Nationwide are about to announce a figure for falls closer to 20% than 10%...

hethmar

Wheres the link for that being please?

dealornodeal_3

beingjdc wrote: »

Erm.

Nationwide are about to announce a figure for falls closer to 20% than 10%...

Well ive checked prices on here since 2000, and I think Nationwide are well and truly misimformed

Check out the prices yourself?

http://www.ourproperty.co.uk/?referrer=overture&keyword=www.ourproperty.co.uk