House Prices / Flat Resale Possiblities

test45

It's been suggested that I seriously consider looking at a first house at the moment (caused mostly by the belief that house prices will rise a lot over the next few years and effectively price me out of the market - stemming mostly I think from reports that house prices might begin rising as much a 8% a year in the near future).

Is it likely that house prices will begin to rise again (and will it be a sharp rise)? I think I would be looking in a few years time either way (and, in a few years time, I wouldn't expect to have that much more savings to put on a deposit or expect to be able to get a larger mortgage) and any large rise would likely cause issues.

Also for my current lifestyle I feel I would be aiming for a flat rather than a small house (as I need one bedroom and a decent lounge / kitchen rather than multiple bedrooms).

Are there any particular issues with flats when compared to houses (the service charge / ground charge appears to add several hundred pounds to yearly cost of a flat). Will the increase in value as house prices rise (and to the same extent as house prices) and will they be easy to sell when wanting to move on?

Hugbubble

test45 wrote: »

Are there any particular issues with flats when compared to houses (the service charge / ground charge appears to add several hundred pounds to yearly cost of a flat). Will the increase in value as house prices rise (and to the same extent as house prices) and will they be easy to sell when wanting to move on?

Another issue is the length of lease, also whether you need parking- not all come with a space

Also, I don't think flats tend to hold their price/ increase in price as much as houses do (except maybe in London???), especially one bedders. Also not so sellable, I guess (don't get me wrong- I live in a flat and love it- it suits me and my lifestyle, but if there is any chance you would be re-selling in just a few years, or having babies, you may wish to think about trying to get a more practical house)

Mini_Bear

My only thought is if prices keep rising who is going to be able to afford to "get on the ladder?" Surely its people with a vested interest in properties (parents, estate agents, politicians etc)
House prices cannot keep going up if wages dont follow, no-one would get accepted to a mortgage!
I would plan to save as much as poss and buy something that needs a little work (if you can).
just my tuppence - good luck whatever you decide.

Fire_Fox

I would get a two bedroom flat rather than a one bedroom if you can afford it. Two bedrooms is so much more flexible: you can take in a lodger if money becomes tight (redundancy, illness, interest rate rises), you can move a partner in and start a family, let the entire flat out to professional sharers or someone who wants to work from home.

PasturesNew

I'd say: Save hard, but no need to panic buy.

Houses are full of win. Why I want a house and not a flat is:
- no service charges
- I decide what/if maintenance is done, by whom, to what standard, at what price
- I can look for a garage, potentially integral
- I can have my own parking (garden) that is clearly mine and nobody will randomly park in
- I can park right by my door to get stuff in/out
- People won't be running up/down stairs and letting communal doors bang
- A house is more likely to have a private garden, somewhere that's mine to sit outside in
- A house you can extend if you want (subject to the necessaries), e.g. conservatory, lean-to, porch.
- A house/garden you have more space to do stuff you want, e.g. bung in a shed to store stuff
- If I want to do stuff like "wedge the front door open for 1-2 hours while I am in/out and sorting out my car or bringing the shopping in, then I'm upsetting nobody else"

It's just more "entirely yours to do what you want with" and you don't feel "ransomed by the effectiveness/efficiency of the management company - and held hostage to the anti-social behaviour of other tenants and their visitors"

Of course houses have more maintenance issues, that you have to deal with, but it's up to you to decide what's done/when and at what cost, so you're more in control.

So, houses give you more "control" over your living environment than, say, a flat that is right next door to it.

phlash

The second time today I have made this comment, which is just a reflection of how deep rooted the media/vested interest scare tactics are.

If you "miss the boat", the boat will have to come back to port because the boat needs passengers to be boarding, continuously!

Some key reasons why I think house prices are not going to rush off anywhere:

Biased data - Recent house rice rises have been based on very low transaction volumes. If you look at how they have been bought, it is with a large deposit (i.e. spare cash has been soaked up). These types of purchases have, on the whole, been of larger/better quality houses - naturally more expensive. With a lower volume of sales, this trend distorts the average, hence you get monthly price rises. However, your basic bread and butter housing is still selling at depressed prices, if selling at all, because the likely purchasers are struggling to get credit, next point.

Lending - 'Normal' purchases have smaller deposits and rely heavily on bank lending. The banks still have no appetite for lending on property. They do need to 'repair' their balance sheets, and at the moment the banks are not sold on turning the credit taps on.

Debt levels - There is no need to over egg this point, we are all fully aware there is a lot of debt. But, it is MASSIVE, and it could get more expensive for the UK if their credit rating is lowered. Yes, that means more tax on us, in order to pay the interest on the money the UK government has borrowed. More tax = less spending power.

Public sector cuts - The UK economy is highly dependant on the public sector. Any cuts to the public sector greatly affect the UK economy. There is no need to prove the relationship between economic output and house prices, this is straightforward and well documented. Public sector cuts will be large after the election, they have to be because of the huge debt levels the UK has.

UK bubble - The UK housing boom, saw one of the biggest growths out of all the developed countries. Other countries, with much smaller bubbles (the US) have reacted downwards far more aggressively. Our leading indicators therefore put us standing on a pretty crumbly and rocky edge, certainly not built on solid foundations.

Interest rates & fiscal stimulation - A 0.5% base rate is incredibly low, lets not forget this. The government has printed billions of pounds in order to sure up the economy. This is not real money, it was simply printed (well pumped electronically). Even with such drastic action, the UK economy posted just a 0.1% growth in GDP, this was a tragic result for such unprecedented action. It is a sure sign that the 'recovery' is to be a long and sluggish affair. Post election, we may begin to see more of this unfold. To that effect, house prices are directly related to the economy and could perform very badly.

Wages - In order for house prices to rise, you need wage inflation. There is none. Lenders will not return to the lending criteria in the 'good years' and therefore house prices will be naturally depressed by a cap on lending multiples. If this is capped and earnings are not increasing, then prices cannot sustainably rise, as the market is heavily dependent on mortgage borrowing, and mr and mrs average do not have the cash to purchase without borrowing.

Enough for now, this is far longer than intended.

ukclarkkent

out of the lack of experience i bought a flat in cardiff 6 yrs ago because it was what i could afford at the time but if someone asked me to recommend doing the same i would have serious doubts.

flats are ideal for getting you into a place of your own as they're generally smaller and more affordable so there's a major benefit but as has been mentioned above there are negatives. i suppose, though, the same could be said about any property. the points mentioned about communal living are true as i'm experiencing them too so take a good look at them and think about each one.

i've got a 2-bed flat and i have the flexibility of making the spare double room into a bedroom or a dining room with table and chairs and a sofabed. i've had a double bed in there for 6 yrs but it's hardly ever used. no need for a lodger so i've just bought a sofabed to make better use of it.

i am paying peverel om a service charge of about £115 a month for what seems like nothing on top of my council tax. it hurts me to do it but that's the deal with managed flats. this is the 1 thing that i wouldn't recommend to a friend. i don't pay water rates or have a need for buildings insurance as it's included but i just feel i'm getting less for what i'm paying for. plus it can go up at any point without my control.

but if you want to move into a place of your own and start paying towards a mortgage then a flat's your best bet right now. if you're desperate to get somewhere then do it. if you can wait for a house then i'd do that instead.

this probably doesn't help in anyway but it offers something else from a flatowner.