Nationwide Nov08: -0.4% Mom, -13.9% Yoy

Really2

King_Of_Fools wrote: »

So in the past year houses have lost the same amount that they took 4 years to gain!

No they have lost half of what they took 4 years to gain.;)

Topcat10

Cissi wrote: »

That's only part of the equation though. The important question is how much equity do you have in that house (something that could be difficult to know in today's market) and how much interest could that equity be earning if invested elsewhere = lost opportunity cost as mentioned by NDG (granted, this is also declining as interest rates go down).

We sold well before the peak (in 2005, because it suited us personally to move at that time). The money that we got from the sale is sitting in a high interest account, and the interest pays for a good part of our current rent in a much larger house. The remainder of our rent is less than the interest part of our previous mortgage payments so renting is definitely cheaper for us. At the time, there is no way we could have afforded to buy an equivalent house - it's looking like we soon will though :T

Depends what you want out of life. Not much point in attaining a family sized home when the kids have left and gone to Uni. Most people want a family home when the kids are at home so they can all enjoy it. Same with family holidays. In the end you can't take money with you and the goverment will have most of it in death duties anyway. Life's too short for thinking only in terms of money.

kennyboy66_2

dopester wrote: »

Well running such high national debts depends on the willingness of the market to lend. That is right. The Government has to ask the market to buy gilts. The market sets the price it wants for the yield, not the Government.

And at the moment the market wants higher returns for the debt the UK Government wants to borrow, making it more difficult to service. And the insurance to cover the borrowings is sky-high, in case UK Gov defaults. We shall see if the market has the appetitive to let UK Gov to borrow itself to debt oblivion - because there are signs the market is uneasy about the debt levels and ability of UK Gov to service their obligations.

I tend to agree that borrowing looks like it could tip out of control, however why are 30 year gilts yielding only 4.03% ?

It hardly is a shining demonstration of "bond vigilantism".

Topcat10

dopester wrote: »

Well running such high national debts depends on the willingness of the market to lend. That is right. The Government has to ask the market to buy gilts. The market sets the price it wants for the yield, not the Government.

And at the moment the market wants higher returns for the debt the UK Government wants to borrow, making it more difficult to service. And the insurance to cover the borrowings is sky-high, in case UK Gov defaults. We shall see if the market has the appetitive to let UK Gov to borrow itself to debt oblivion - because there are signs the market is uneasy about the debt levels and ability of UK Gov to service their obligations.

I guess you are either very young then or very old because I know no-one who worries about such things when considering buying a house. Whether the garden can accommodate a trampoline is more like it...can the kids walk to school...where will I put the xmas tree, etc is all the stuff of normal family life.

Most family conversations go like this: "Blimey we need more space - we can't move in here especially when the next baby comes" " Let's move then"

Rather than "Blimey we need more space" "Oh we can't possibly move I'm really worried about the state of the gilt markets" "Der Why what's wrong with them?" "Well nothing actually, I just worry about them anyway"

chrisandanne

I have to say Topcat you got that spot on in my daughters case...that is exactly how she thinks.

Also the sellers become buyers in the same market....so hopefully when people realise they can get reductions they will expect less for their house and prices will drop across the board.

This of course assumes they can get more for their house than they paid for it or the same and the bank will allow them to borrow more for their next purchase. Also that their job is safe and they have confidence in their continuing ability to repay.

People who bought in the last few years may find that however much they want to move for schools..more bedrooms..whatever, can't because they are in negative equity and the banks won't lend stupid multiples. A lot of people are going to be trapped in the house they have. A x

IveSeenTheLight

mitchaa wrote: »

Yes agree, but if the drops remain constant from now on in, none of us will be around long enough to see the bottom that some are predicting.

Now mitchaa, a little bit of an exageration.
with 14.8% drop from peak and a monthly ratio of -0.4%.
People would see 70% drops in just under 22 years.
I'd like to think many of us will still be around long enough to see that.

I wouldn't gloat too much though.
It's 0.4% this month, but could return to higher drops next month.

I wouldn't recognise the bottom till there is at least 3 consecutive months of rises.

IveSeenTheLight

dopester wrote: »

Fine. By not selling... by remaining where you are.. that doesn't lock in prices. If near identical property across the street sells for £50,000 less that you had in mind for the value of your property, then next door sells for £100,000 less 12 months later, and then one just up the same street sells at £175,000 less 18 months on... all of that crashes the market value of your own property.

You do realise this simple truth yes?

Are you talking UK averages.
In which case in 18 months, we'll be getting paid circa £20k to take on property
Only kidding

skap7309

IveSeenTheLight wrote: »

I wouldn't recognise the bottom till there is at least 3 consecutive months of rises.

Thing is, there are also so many factors involved. When i turn on the news and Sir Trevor informs me mortgage lending is rapidly unrestricting so to speak, the credit cruch is showing serious signs of ending, unemployment is easing rapidly etc, then i think within 3-4 months it will filter through to the housing market. Do i think i will see this for at least 12 months?

.........................100% no.

Topcat10

chrisandanne wrote: »

I have to say Topcat you got that spot on in my daughters case...that is exactly how she thinks.

Thanks for thanking me - thought I was talking to myself LOL:p

PS I like your signature:rotfl:I will be using that;)

themanbearpig

mitchaa wrote: »

£1500 paid in interest on mortgage What about the many millions of people with low mortgages and high priced homes in comparison? The sort where the mortgage is £150 and the rental value of the property would be ITRO of 10x this amount. Your point is only relative to the stretched FTB.
Another point to note here is, you will eventually recoup your mortgage interest at some point in the future (True or false?) Can the same be said about your rental payments? Lets not get into an argument about rental vs mortgage though, as we will be here for days.

The £150 mortgage and £1500 rental scenario is the point to note here though;)

(No im not suggesting buying is better than renting at the moment before you start)

Say you bought a new house, and got a mortgage is leveraged at 20% of the value of your house a year ago, and it was worth £200k. So your 25yr £40k mortgage is costing you £150 a month in interest and £100 capital reduction. The 15% average reduction in house prices in the period 07 08 means that your interest is no longer being covered by the increase in your house price. So now your giving £150 to the bank in interest, and losing £30,000 a year on the value of your property. So this year, you would have spent on average £2650 a month on paying for interest and fall in capital value (and people say renting is money down the drain.HA)
Now lets assume(BIG assumption) that house prices continue to fall at the current rate for a year. So another 15% off the current value after a year(170,000). (so around 28% from peak - a quite realistic figure)
So you can hold on now, and continue lossing £2400 a month for nothing (remember you need to add the repayment of £100 a month ontop), and have a house worth £145k in 09.
Or you can only sell your house for now £170,000, getting 85% of the value from a year ago, after clearing the mortgage, you only have 138k of capital.
Now renting a property worth around £170-200k would usually cost between £800-£1000 pm.
From the your capital, you can gain £800 a month just from a simple savings account. And if you plan to buy a property with the £138k in the future, you dont equate the interest being spent on rent as a loss, as the decreasing value of property means your buying power in relation to property prices is increasing at 15%, and, the interest from your house sale only equates to 6%. So you are actually gaining £1k a month on your capital (in realation to property). So your 138k will be worth an equivalent of £150k now, in a year. So you're £5k better off renting (in this purely theoritical, but realistic example)