House prices cannot "recover", simple common sense!

Max_Headroom_3

Pete, I'm sure you're right. But if there are 1,000 first time buyer houses for sale in a town and 100 BTL landlords carefully looking, it isn't going to shape the values of those houses.

The days of a BTL being the ultimate "must have, keep up with the Jones" purchase to gleefully discuss around the dinner party table are gone.

Pete111

[QUOTE=Max Headroom;

The days of a BTL being the ultimate "must have, keep up with the Jones" purchase to gleefully discuss around the dinner party table are gone.[/QUOTE]


....Tell me about it. I only got six months worth of dinner table smugness out of our decsion to buy a house and not sell our flat back in mid 07. (not strictly BTL as we had lived in it for several years but 'ouch' nevertheless..)

You are probably right re landlords buying in general (mortgage transactions are well down as we know) but the mindset of the masses still points towards property being a nice little earner I reckon - despite some particularly hilarious/terrifying episodes of Property Snakes and Ladders!

ILW

Max_Headroom wrote: »

So how is this "recovery" back to "normal" going to be financed? Where's the money going to come from? And why will people spend it in the same lemming like way?


I walked past an estate agent today, and a grotty tiny 2 bed house in the worst part of town with a front door that opened straight onto the street which is a major traffic route permanently snarled up with traffic was in the window for one hundred thousand pounds...!

.

That would fetch the best part of a million in many parts of London.
Location, Location, Location.

zappahey

Max_Headroom wrote: »

And as if that weren't enough, the main reason people were able to be frightened into spending far more than they should was because they were repeatedly told (and believed) that if they didn't borrow silly money and buy now, they'd have to borrow even more next month and more the month after. And if it all went wrong they could sell for a profit anyway so where's the risk? I think it's fair to say that that sentiment has now been well and truly buried.

My discussions with friends back in the UK would suggest different and I'm coming around to Cleaver's (IIRC) view that many, particularly younger, people see current prices as an opportunity to "get on the ladder" as they have never seen houses so cheap and have only known them to go up.

Now that the media are telling everyone that economic recovery is on the way, they are understandably nervous that this is a return to "business as usual" and they should get into the market pronto.

In terms of recent prices, they are picking up bargains, though who's to know if that will remain the case in the long term.

carolt

But are there are enough of them with jobs, good credit records and deposits?

Cleaver

carolt wrote: »

But are there are enough of them with jobs, good credit records and deposits?

No idea. Beginning to look that way though.

And, in my completely novice financial view, if people want to sell houses, and other people want to buy them, some financial institution will step in and facilitate the transaction somehow.

Max_Headroom_3

But even if that were true (and it no doubt is to some extent), where's the money going to come from?

It's a hugely proven fact that lending the quantities that were being loaned out is completely unsustainable. So either they're lending much less, or we're headed for another huge blowout. Or somewhere in-between.

Personally I feel we've gone from a stage of three people looking at two houses and all trying to buy, to two people looking at three houses and all trying to get it cheaply.

It's a totally different sentiment with a totally different amount of available leverage behind it, with a totally different global economic situation and a totally different level of income to support it.

As I say, house prices might wobble a bit on the way, but there's only one true direction really...

Pete111

A couple of my team have started making noises re buying citing the fact that 'prices have fallen a fair bit in London' as the key reason

They are on reasonable salaries but nothing special. I think in both cases, the bank of Mum and Dad is waiting in the wings however. (though I know when my friends and I were buying our first places 5 years or so ago TBOM&D was very much in evidence too so this is not a new phenomenon ).

Cleaver

Max_Headroom wrote: »

But even if that were true (and it no doubt is to some extent), where's the money going to come from?

No idea, and I wouldn't pretend to have enough economic knowledge to attempt an answer. My very crude way of thinking is that if a load of people want houses, lots of people are selling, then someone always seems to find money to lend from somewhere. And if there isn't money available? Well, just print it and lend it out.

I'm being over simplistic, obviously. Maybe I just know a strange set of people, but all of my friends who 'missed the boat' around 10-7 years ago have all either saved big deposits, are happy to take advantage of low interest rates or are borrowing from the big bank of Mum and Dad who don't want to see them 'missing the boat' again.

Idiophreak

Lol, I love that people suddenly have faith in the banks that they're not going to make the same mistakes again...Once buyers' confidence is back up, lending confidence will return, the multipliers will shoot up, the LTV will rise and banks will start remembering where they put their blind eyes. No, it won't be sustainable - but I don't think anyone really thought it was the first time round... Coupled with the continuing effects of BTL, immigration, shared equity and the rest...House prices will be higher than ever before we know it...