House Prices - Which way are they headed?

Conrad

Prices will bump along the bottom now. Far less than 1% of home owners will be repo'd (arrears and court orders do not translate directly to repo's). Unemployment is about where was in 1997. If we assume another 1 million loose jobs, that's still a fairly minimal impact on prices, afterall state benefits will save many, and others will get redundancy pay - outs.

bendix

chucky wrote: »

the UK average house price - earnings ratio is currently at 4.02

Who are these strange 'average' people earning the average salary, and what sort of average house do they live in?

chucky

bendix wrote: »

Who are these strange 'average' people earning the average salary, and what sort of average house do they live in?

have no bl00dy idea - but they have a very average lifestyle with a average relationships by the mean and the mode, not sure about the median though

carolt

Conrad wrote: »

Prices will bump along the bottom now. Far less than 1% of home owners will be repo'd (arrears and court orders do not translate directly to repo's). Unemployment is about where was in 1997. If we assume another 1 million loose jobs, that's still a fairly minimal impact on prices, afterall state benefits will save many, and others will get redundancy pay - outs.

I find it impossible to believe you, an intelligent man, actually believe a word of this guff.

What do you think is going to happen once interest rates start to rise?

Or do you really believe we're in a 'new paradigm', and 0.5% is here to stay? :rotfl:

bendix

chucky wrote: »

have no bl00dy idea - but they have a very average lifestyle with a average relationships by the mean and the mode, not sure about the median though

Well, whoever they are, I'm not sure they're the kind of people I want to get to know, so best not spend too much time worrying about it.

Average! What a horrible thought.

baileysbattlebus

carolt wrote: »

I find it impossible to believe you, an intelligent man, actually believe a word of this guff.

What do you think is going to happen once interest rates start to rise?

Or do you really believe we're in a 'new paradigm', and 0.5% is here to stay? :rotfl:

I can't honestly see the BoE rate and the residential lending rate having such huge differentials when the BoE increases interest rates, can you?

New lending is not 0.5% as you know.

I posted on another thread that any where there is restrictive planning regulation see booms and bust in the housing market. Places where planning regulations are more discretionary tend not to.

Restrictive planning - the UK, parts of the US (California, Florida, Nevada), New Zealand and Australia - all have had property booms and all are seeing the bust. If you look at the rest of the US (apart from Detroit), they didn't have the boom and they aren't really seeing a bust and they don't have such restrictive planning regulations and prices just rose gently over the years with little in the way of HPI.

If that is what you want - fight to get the planning regs changed. Where we live we have huge tracts of open countryside on our doorstep - but nothing is being built on it - instead builders are buying up peoples' back gardens and building there - why is that?

So, IMHO, in the long term prices have only one way to go and that would be up. I don't mean in the next 2 or 3 or 4 years. Unless we change our planning processes and get rid of "the not in my backyard" etc, boom and bust in the housing market will continue.

Personally I think prices will probably go down a bit, up a bit, down a bit, up a bit and generally just bumble along for a few years. They may go down overall - who knows?

geoffky

Remember all the fools who were saying we would never have a house price crash because the government would not allow it or it was different this time and they crashed two months later well these are the same fools on here who dont think they are going to fall more..they could not see the crash when it was staring them right in the face so why should they see it now?


remember all the financial advisers and mortgage brokers we used to have on here......all gone

carolt

baileysbattlebus wrote: »

I can't honestly see the BoE rate and the residential lending rate having such huge differentials when the BoE increases interest rates, can you?

New lending is not 0.5% as you know.

No, but there are a lot of trackers/SVRs at historically low rates, without which the number of repossessions would be sky high, as you know, with a resultant knock-on effect on house prices.

At normal ates, let alone high rates, a lot of those just holding on by their fingernails will go under.

wolvoman

carolt wrote: »

No, but there are a lot of trackers/SVRs at historically low rates, without which the number of repossessions would be sky high, as you know, with a resultant knock-on effect on house prices.

At normal ates, let alone high rates, a lot of those just holding on by their fingernails will go under.

Why would there be so many just holding on by their fingertips?

Ok yes some have become unemployed (perhaps 500,000 ish). Some have had income cut (albeit only a few %).

Out of tens of millions of households only a small proportion won't be able to afford IR rises.

wolvoman

wolfman wrote: »

I'm lucky enough to earn a fair bit above the average salary in London (the missus too) (we're in IT not banking!!! just to clarify), so I know if I can't afford a decent place with an affordable mortgage, then the market still has some way to go. I'm just saving and waiting for a mortgage I can afford, on a place I would consider acceptable. I'm talking about a 1 bed, or possibly 2 bed flat (not a box flat either) in zone 3-5 of London, nothing unreasonable.

I'm in a decent part of zone 3 and a good 2-bed flat will cost around £240k.

Assume a normal deposit of say 15% means a mortgage of £204K. Avg London salary (£41k) x 2 = mortgage of only 2.5 x joint salary.

That'll cost about £1200 a month on a take home pay of over £5k. And this is 'unaffordable'?