Why house prices aint rising anytime soon

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StevieJ wrote: »

Ramp, Ramp, Ramp

Well someone has to counter the media. think yourself lucky I don't have the airtime Kirstie Allsop is getting at the min, or worse that I'm not the editor of the Daily Express.:D

julieq

This is a fairly well worn argument, but...

People don't buy average priced houses as first houses, so dividing average house prices by salary and working out multiples is completely spurious. There is still bucketloads of equity in the housing market, not everyone has bought in the last 2 years.

This is a low liquidity market. You cannot draw conclusions on prices from low liquidity markets, as the majority of sales will be driven by need, not desire. There's a natural turnover of sales due to deaths (it is a GREAT time to chase low cost estate sales of houses needing renovation for buying to let because if you're dealing with an estate you just want your cash NOW) but anyone with a choice of whether to sell won't.

Fundamentally there is not a lot of empty housing stock in this country (this is one big reason not to draw conclusions from what is happening in the US where there is a lot of land). Good quality homes will always sit at the edge limit of affordability, because people want to live in nice houses and will push themselves as high as they can go. Whether these are owned by occupiers or private landlords is immaterial.

People who make money investing, whether this is shares, property, commodities or anything else don't sit together in groups pontificating about what they think will happen and polling each other for affirmation, they go against trends based on looking at things as they are. When you're in a declining market it's easy just to follow the straight lines down and forget that markets are cyclical. If you're deep into a decline it's time to look into the upswing, not to extrapolate downwards towards the end of the world.

StevieJ

Good post :T

Pobby

Chucky has just mentioned certain areas that are very bubbly. South west, North east and Wales all of which not known for there huge wages. Wales is of interest to me as I was a very regular visitor and did think of moving there. The boom was slow to catch on. It seemed to start in Cardiff and slowly spread through the valleys.When I saw terraced house in Merthyr Tydfil breach the £100k mark I was amazed. A few years earlier £20 to £30k was nearer the norm imho. This all seemed to happen over a very short space of time. Indeed I remember around 2002 a detached house being available for £65k about 10 miles north of Cardiff.

ukcarper

House price inflation was out striping wage inflation in the early seventies with 3 + 1 multipliers.
I can speak from personal experience after buying a new house in spring 72 for £8k, which was £5.3k at the end of 71 and £11k at the beginning of 73.

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julieq wrote: »

This is a low liquidity market.

Indeed it is, but with over a million houses on Rightmove it isn't for lack of available housing for sale, it is because the prices are too high, either for the public to buy, or for the banks to lend on, or both. There is a reson that the best mortgage deals need 40% deposit, it is the banks know where the market is heading over the short to medium term, and if you buy a house they want you to lose your money before they start to lose theirs, if you get into trouble and need to be repo'd

It's all about prices, for the lenders and borrowers, and until prices come down to sustainable levels and the recession comes to an end, the number of transactions will be low and prices set at the margins.

chucky

Pobby wrote: »

Chucky has just mentioned certain areas that are very bubbly. South west, North east and Wales all of which not known for there huge wages. Wales is of interest to me as I was a very regular visitor and did think of moving there. The boom was slow to catch on. It seemed to start in Cardiff and slowly spread through the valleys.When I saw terraced house in Merthyr Tydfil breach the £100k mark I was amazed. A few years earlier £20 to £30k was nearer the norm imho. This all seemed to happen over a very short space of time. Indeed I remember around 2002 a detached house being available for £65k about 10 miles north of Cardiff.

without the earnings or wages these areas are what are currently dragging down the house price indexes - most other areas do not have the level of house price drops that are reported on this forum (with the odd exception). in saying about Wales, Merthyr Tydfill had a 6% increase in last month LR!!

it's a great time to grab a bargain and also a great time to over pay for a property.
it's all down to your local area not what goes on with Halifax and Nationwide average house prices.

Graham_Devon

chucky wrote: »

without the earnings or wages these areas are what are currently dragging down the house price indexes - most other areas do not have the level of house price drops that are reported on this forum (with the odd exception). in saying about Wales, Merthyr Tydfill had a 6% increase in last month LR!!

it's a great time to grab a bargain and also a great time to over pay for a property.
it's all down to your local area not what goes on with Halifax and Nationwide average house prices.

I agree, but in terms of discussions, the national average is what we all go on, and indeed, is what this thread is based on.

Local areas are far to varied to have a decent debate / discussion as everyone comes into the debate with a completely different angle instead of one point of reference.

chucky

Graham_Devon wrote: »

I agree, but in terms of discussions, the national average is what we all go on, and indeed, is what this thread is based on.

Local areas are far to varied to have a decent debate / discussion as everyone comes into the debate with a completely different angle instead of one point of reference.

again we agree - the problem is that people that read this forum and seem to think that and believe that what is said here happens across the whole of the country. it doesn't and some people need to get out more.

for the purpose of your thread the average index will be 10% to 15% less by this time next year with some monthly spikes. my bet is 12%.

the_ash_and_the_oak

people didn't used to buy average houses as their first buy

tbf dont really think people bought flats/apartments either tho