the house price problem

ninky_2

Blacklight wrote: »

It's only really a 'problem' if you're not currently earning enough to fund the purchase. Plenty of people do earn sufficient to sustain the prices, which is why they remain at their current levels.

not really. they are only being sustained because interest rates have been put at an extremely low level and also because many properties are being paid for by rental income. if interest rates increase house prices are likely to go down. in addition many rental areas are now oversaturated and people have bought with insufficient yield margins.

i suspect we will see gradual fall in house prices (with temporary recovery) for at least the next couple of years.

Conrad

ninky wrote: »

i suspect we will see gradual fall in house prices (with temporary recovery) for at least the next couple of years.

Little chance of a fall Ninky. More than ever people need to sort thier own 'pensions' and for bad or worse, the Brits prefer property to city spivs investing thier money.

This abs olutely key point is missed by the economists time and again. One day they'll catch the zietgiest.

Blacklight

ninky wrote: »

not really. they are only being sustained because interest rates have been put at an extremely low level

I think this is a common misconception. Most homeowners bought when interest rates were high (much higher than currently). Quite a lot on fixed rates that haven't enjoyed the low interest on their mortgage in recent months.

House purchases have been at extremely low levels while interest rates have been low, plus credit has been limited to low risk borrowers.

ninky_2

Conrad wrote: »

Little chance of a fall Ninky. More than ever people need to sort thier own 'pensions' and for bad or worse, the Brits prefer property to city spivs investing thier money.

This abs olutely key point is missed by the economists time and again. One day they'll catch the zietgiest.

but this is because they've seen property prices going silly. with tales of people now losing out big time to btl the whole thing may seem less attractive. i think it's also time to offer better protection for tenants and btl doesn't do that. also lenders seem to be cracking down on consent to lets and offering less attractive deals on btl loans. it's also possible that foreign property may offer a more attractive proposition than british property.

ninky_2

Blacklight wrote: »

I think this is a common misconception. Most homeowners bought when interest rates were high (much higher than currently). Quite a lot on fixed rates that haven't enjoyed the low interest on their mortgage in recent months.

.

they also bought when employment levels were high and inflation low. they also expected property prices to rise so that they could always sell to pay off the loan.

Euphoria1z

since the 1970's and onwards, is there any 10 yr period where a property in britain has sold less than what it was bought for? i dont think theres been any property so far that hasnt increased in value over a decade.

taking any decade as an example, say the 70s, did we have easy credit? dont think so, so why did a property increase in value then? did we have low rates? doubtfull.

my point is, regardless of whether we have low rates or high rates, easyor ltd credit, over the long term, house prices have only gone up the way.

ninky_2

Euphoria1z wrote: »

since the 1970's and onwards, is there any 10 yr period where a property in britain has sold less than what it was bought for? .

okay, so you are taking the last 40 years history as proof that house prices always rise? not a very wide period of time to select from. particularly as it correlates to mortgages becoming more readily available and income multiples increasing.

can you show me a period in history in which house prices have risen whilst mortgage lending has tightened?

nembot

But in the short term, house prices however meander all over the place, from 30% below to 30% above the line (where we are now in my opinion).

12 months from now, I think prices will be lower than today and the next 12 months after that.

Ron2256

Euphoria1z wrote: »

taking any decade as an example, say the 70s, did we have easy credit? dont think so, so why did a property increase in value then? did we have low rates? doubtfull.

my point is, regardless of whether we have low rates or high rates, easyor ltd credit, over the long term, house prices have only gone up the way.

The 70s?
Have you heard of inflation before? If you haven't, use google.

Kohoutek

If you look at the evidence, which I know many people are averse too, historically after recessions house prices have dipped considerably.

As you can see, in the early 80s recession, there's a dip of 20% from 75k to 60k. In the early 90s recession, there's a dip of 40% from 110k to just over 70k.

Of course, the HPI morons insist that 'this time is different', despite the fact that QE and ZIRP cannot go on forever.