Yet another problem for property owners

Nylontokyo

"Finally, even if this recovery is genuine, there's another problem looming for property owners. Governments and central banks around the world have been pumping money into the economy on a scale never seen before, and the Bank of England is among the worst offenders. In the normal scheme of things, this would be massively inflationary. So assuming that everything's well on the way back to normal now, all this stimulus will need to be pulled out of the economy.
But that's easier said than done. At some point, it will involve raising interest rates – perhaps quite sharply – to combat rising inflation. Higher interest rates would be very bad news for anyone who has bought property relying on current low borrowing rates to be around for the foreseeable future.
What's the conclusion? House prices will fall for a good while yet – this crash isn't going to be any different to the rest. And if you already own a house, and are planning to switch lenders, it probably makes sense to get a fixed rate."

http://www.moneyweek.com/investments/property/why-house-prices-will-keep-falling-14788.aspx

ad9898_3

I posted earlier today saying the first 20% was 'free HPC' courtesy of the financial meltdown, what we have next is a 'normal' house price crash caused by a recession, with job losses, tax hikes and hiking of the artificially low interest rates at some point in the medium term. Look for falls of less than 1% per month from now on, interspersed with the odd rise in the indices, my feeling is another 20% down over the next 2-3 years, unless of course we have another unforseen catastrophe.

Gorgeous_George

It's only a problem for some property owners.Those with zero or near zero debt or with mitigation plans in place will have NO problems.It's important to not overstate the problems regardless of how bad they are.GG

amcluesent

Once inflation starts to rise, then it'll make sense to stop hoarding cash switch & into tangible assets. Demand for houses will therefore rise as peeps worry that cash-in-the-bank is dwindling away.

JonnyBravo

ad9898 wrote: »

I posted earlier today saying the first 20% was 'free HPC' courtesy of the financial meltdown, what we have next is a 'normal' house price crash caused by a recession, with job losses, tax hikes and hiking of the artificially low interest rates at some point in the medium term. Look for falls of less than 1% per month from now on, interspersed with the odd rise in the indices, my feeling is another 20% down over the next 2-3 years, unless of course we have another unforseen catastrophe.

Agree apart from the 20% bit I've highlighted.
Think it'll be nearer 10% down (but add in inflation and in reality it might be 20%)
When this first started I went for the 20-30% option on someones poll, at Christmas I said I thought I was wrong and the 30-40% option looked a certainty. I'm changing back to my original 20-30%.
Just goes to show, even now over a year in, it's still hard to see too far ahead..... (for me anyhow!)

Really2

JonnyBravo wrote: »

Agree apart from the 20% bit I've highlighted.
Think it'll be nearer 10% down (but add in inflation and in reality it might be 20%)
When this first started I went for the 20-30% option on someones poll, at Christmas I said I thought I was wrong and the 30-40% option looked a certainty. I'm changing back to my original 20-30%.
Just goes to show, even now over a year in, it's still hard to see too far ahead..... (for me anyhow!)

I have literally had my money on 30% (well 27%:)) since last August. I was thinking 35% nominal but I think 30% nominal will be about right.
Was 30% not what most economists were saying the housing stock was over priced by before the crash?

lostinrates

Really2 wrote: »

I have literally had my money on 30% (well 27%:)) since last August. I was thinking 35% nominal but I think 30% nominal will be about right.
Was 30% not what most economists were saying the housing stock was over priced by before the crash?

30% was certainly the headline figures behind new builds. I was shameless in using this figure in talking to estate agents: but with some rather deliberately blonde interpretation. I'm trying to remember but wasn't the 30% over price of newbuilds in relation to the existing market then?

Really2

lostinrates wrote: »

30% was certainly the headline figures behind new builds. I was shameless in using this figure in talking to estate agents: but with some rather deliberately blonde interpretation. I'm trying to remember but wasn't the 30% over price of newbuilds in relation to the existing market then?

I belive the figure was that housing was 30% over priced not newbuilds.
Newbuilds were generaly 10% more expensive than the equiverlent price established.
I presume that was down to no work needing doing etc and all fixtures and fittings being included.

I dont think new builds have ever been 30% more than established, they would have never sold any.:D
http://www.timesonline.co.uk/tol/money/property_and_mortgages/article2963482.ece
No mention on it being 30% for newbuilds here. Nice try but im happy:)

baileysbattlebus

Really2 wrote: »

I belive the figure was that housing was 30% over priced not newbuilds.
Newbuilds were generaly 10% more expensive than the equiverlent price established.
I presume that was down to no work needing doing etc and all fixtures and fittings being included.

I dont think new builds have ever been 30% more than established, they would have never sold any.:D
http://www.timesonline.co.uk/tol/money/property_and_mortgages/article2963482.ece
No mention on it being 30% for newbuilds here. Nice try but im happy:)

According to Nationwide newbuilds are currently about 6.5% (Q1 2009) more expensive than other properties and over the last 10 years it has averaged around 8%.
You have to go back to the mid 1980's when the gap was around 20 - 23%.

People are happy to use Nationwide as a house price indicator so should be reasonably happy to use their figures for the price differentials between different properties.

Really2

baileysbattlebus wrote: »

According to Nationwide newbuilds are currently about 6.5% (Q1 2009) more expensive than other properties and over the last 10 years it has averaged around 8%.
You have to go back to the mid 1980's when the gap was around 20 - 23%.

People are happy to use Nationwide as a house price indicator so should be reasonably happy to use their figures for the price differentials between different properties.

Hi Thanks, I think it was just a stab to try to make out I had paid over the odds. I don't think anyone actually ever believed new build houses (not flats) were 30% more expensive than the equivalent established property. (to buy a similar house to mine established are on the market for £325K, so acording to that established are still way over my buy, but I know asking and selling prices are two different things)

I find it funny that STR was and is seen as astute where as buying at a big discount and getting a low lifetime tracker is meant to mean I made some kind of mistake.

If the bottom is 30% I think I made a better call than most on here as I actually believed in what I thought and have been able to pay down 7% of my mortgage in the last year.:)

lostinrates

Really2 wrote: »

I belive the figure was that housing was 30% over priced not newbuilds.
Newbuilds were generaly 10% more expensive than the equiverlent price established.
I presume that was down to no work needing doing etc and all fixtures and fittings being included.

I dont think new builds have ever been 30% more than established, they would have never sold any.:D
http://www.timesonline.co.uk/tol/money/property_and_mortgages/article2963482.ece
No mention on it being 30% for newbuilds here. Nice try but im happy:)

Nice try at what?
Having a quick google, I was wrong, 30-40% of all houses...not just newbuild.
http://www.timesonline.co.uk/tol/money/property_and_mortgages/article2963482.ece

But I am almost positive I rememebr headlines realting purely to newbuld and 30%.

I can't find what would have triggered this memory (almost certainly would have been linked via MSE though) it was none of these:

http://www.moneywise.co.uk/news-views/2008/02/04/new-build-properties-risk-negative-equity

http://www.lovemoney.com/news/mortgages/the-true-value-of-new-build-property-1820.aspx

http://www.lovemoney.com/news/the-property-ladder/avoid-this-property-peril-155.aspx

http://www.earth.co.uk/News/new-build-homes-do-not-always-lose-value-says-hbf_206.html

Though the last would seem to confirm what I was thinking, despite it being from the other side of the argument