Crash Cancelled and Gay Elephant

Generali

jojo1964 wrote: »

House prices are only one small part of our economy, and with a rising population, combined with house building projects being curtailed simply means that demand will outstrip supply, leading to increasing prices.

Demand can't outstrip supply: you can't buy what isn't being sold.

ad9898_3

Heyman wrote: »

Here's one for the 'it's in the paper so it must be true' brigade - no more silly house price crash then

http://www.express.co.uk/posts/view/94263/New-hope-on-house-prices

I find the comments underneath the article far more realistic than the article itself. The issues I mention below have a direct effect on the housing market, all have either happened or will happen in the near future, look at them and then decide where the market is going.

1. Unemployment ................ UP , 3 million forecast by year end, 33% up on now !!!
2. Bank Lending .................. DOWN, 50% from 2007 peak.
3. Interest Rates .................. UP , in the medium/long term.
4. Repossessions ................. UP , 75,000 forecast this year.
5. Mortgage Approvals ....... DOWN , 38,000, compared to average of 94,000 and peak of 126,000 in Nov 2006.
6. Deposit required ............. UP, interest rates maybe low, but forget the headline deals unless you have 40%.
7. BTL................................ DEAD , on the scale that propped up the market between '04 and '07.
8. Public/Private debt ......... UP , massive household/ government debt and it's rising.
9. Tax ............................... UP , we all know of the tax bombshell just around the corner.

Anyone want to buy a house ???

Heyman_2

The comments below the Express article are pretty scathing! Not too surprising when the article states that they expect the bottom of the market to be reached 'within the next few weeks' :rotfl:

It is, in all honesty, the WORST time to be a FTB now. Most of the mortgage deals out there are pretty horrendous compared to what you could get a couple of years ago, what with very high Tracker margins (e.g. HSBC are doing a +4.09% tracker :eek: ) or Fixed rates with extortionate fees (2 years for £1499 anyone?).

Plus you need a big deposit in what is (still) a failing market, so when your expensive 2-year fix comes to an end in 2011, you won't get another deal and the lenders SVR is likely to be high....

ad9898_3

Heyman wrote: »

The comments below the Express article are pretty scathing! Not too surprising when the article states that they expect the bottom of the market to be reached 'within the next few weeks' :rotfl:

It is, in all honesty, the WORST time to be a FTB now.

On the subject of your first point, if I was the editor of the Express, I could say 'Aliens have landed in Trafalgar Sq.' It would be sensationalist, and, being the headline of a national newspaper, would reach alot of people........ it would also be complete bollox.:D

Onto your second point, I'm a FTB'r and it is without doubt the BEST time to be one, prices are still falling, plenty of time to save before any HPI is likely. And for me personally as an FTB'r I have 50% of the purchase price of a detached house, and within 3 years will have 90-100% of it, even if prices didn't drop another 1%.

The WORST time to be an FTB'r I would say was between 2004-2007, especially if you took out a high LTV mortgage.

See my above points to see if our economic circumstances will allow 'the bottom within weeks':D

Max_Headroom_3

Generali wrote: »

Demand can't outstrip supply: you can't buy what isn't being sold.

A bizarre theory there Generali. Of course it can, people can want/need/require anything in excess of its availability, the thing doesn't need to exist in the numbers required for the demand to be there.

Imagine you were making widgets and the most you could make were 100/day, but you had potential orders for 150/day. You'd have demand outstripping supply wouldn't you?

Lotus-eater

Max_Headroom wrote: »

A bizarre theory there Generali. Of course it can, people can want/need/require anything in excess of its availability, the thing doesn't need to exist in the numbers required for the demand to be there.

Imagine you were making widgets and the most you could make were 100/day, but you had potential orders for 150/day. You'd have demand outstripping supply wouldn't you?

OK I admit I thought exactly the same thing, then ended up having a debate with myself if a need is the same as a demand. I ended up even more confused and gave it all up as a bad job.

Heyman_2

ad9898 wrote: »

Onto your second point, I'm a FTB'r and it is without doubt the BEST time to be one, prices are still falling, plenty of time to save before any HPI is likely. And for me personally as an FTB'r I have 50% of the purchase price of a detached house, and within 3 years will have 90-100% of it, even if prices didn't drop another 1%.

The WORST time to be an FTB'r I would say was between 2004-2007, especially if you took out a high LTV mortgage.

What I meant was - the mortgage deals now are pretty awful for your average FTB with 10% deposit, for example.

Of course, if you have a big deposit then you are always going to reap the rewards, but the average FTB usually doesn't and my point was that even though prices have already fallen, the availability of mortgage credit or lack thereof means that FTBs have a lot less choices.

We bought in 2006 and I'm currently paying 1.29% on my Mortgage loan - as an FTB I couldn't get a deal anywhere near that at the moment....

undercover_pillow

Some papers LOVE stories that spell doom and gloom or have outrageous claims, if you look beyond all the crazy headlines you can just see they're after a quick buck or two.

I'm saving up right now for a house, how do you know when the market has properly hit rock bottom tho?

Pillow

Generali

Max_Headroom wrote: »

A bizarre theory there Generali. Of course it can, people can want/need/require anything in excess of its availability, the thing doesn't need to exist in the numbers required for the demand to be there.

Imagine you were making widgets and the most you could make were 100/day, but you had potential orders for 150/day. You'd have demand outstripping supply wouldn't you?

It depends on how you define supply and demand really.

In your example, the price would rise thus reducing quantity bought.

So you're wrong to say demand outstrips supply: demand would fall to reflect the new market conditions.

Heyman_2

Some papers LOVE stories that spell doom and gloom or have outrageous claims, if you look beyond all the crazy headlines you can just see they're after a quick buck or two.

I'm saving up right now for a house, how do you know when the market has properly hit rock bottom tho?

Pillow

It will only become clear when all the major sources of HP data (i.e. banks, land registry etc) start to report rises in their month-on-month figures.