The property boom is well underway now.

Harry_Powell

Davesnave wrote: »

Sorry, that was me thinking around the doomsday idea which you introduced with the word armageddon.

Given that some of us own our homes, there is the question of where to invest. I'd argue that improving energy efficiency or buying farm land could be more sensible responses to changing world conditions than picking up a BTL, which people 'traditionally' did, that 's all.

I'm a glass half-full person too.

I think you should also add 'where to live' into your responses to a changing world. I personally think that in the short to medium term, more people will be priced out of car ownership and have to rely on public transport. We have moved to a location that has good public transport links into London, for exactly that reason. Equally, it'll be important to live in a location that is within easy walking distance to a high street with a decent range of shops.

Davesnave

Harry_Powell wrote: »

I think you should also add 'where to live' into your responses to a changing world. I personally think that in the short to medium term, more people will be priced out of car ownership and have to rely on public transport. We have moved to a location that has good public transport links into London, for exactly that reason. Equally, it'll be important to live in a location that is within easy walking distance to a high street with a decent range of shops.

I wanted the above when we had toddlers/kids. Now I like a bit of space around, so the nearest 'proper' supermarket is 10 miles, but I can walk to the town shops, the bus stops at the gate and the station is within walking distance too.

Back in ye olde days, when I lived as a child in rural Dorset, few had cars. Then, an electric van used to take the village folk to town once a week. Quite progressive thinking for 1957.

System

Harry_Powell wrote: »

You can't put your life on hold and live in fear because a few Chickin' littles are running around hysterically announcing that the sky is going to fall in.

ah, I used to love that story, goosey lucy, turkey lurkey, ducky lucky!

Really2

Joeskeppi wrote: »

ah, I used to love that story, goosey lucy, turkey lurkey, ducky lucky!

Well until Heston Blumenthal got hold of them.

Thrugelmir

ukcarper wrote: »

So where do you think house prices will end up

House prices will be determined by peoples ability to borrow, taking into account that higher deposits will become the norm in the years to come. Yes, there'll still be 90% mortgages available but at a cost and under certain lending criteria. What will change is the amount of money available to lend at this level. Lenders will over time will reduce the risk exposure on their overall loan books back to the more historic average of 3 to 3.5 times income. The days before NR, Lehmans, HBOS, B&B etc decided to rewrite the rules. Mortgage rationing is not beyond the realms of possibility, certainly from the smaller building societies and lenders.

In some ways LloydsHbos is critical to the future direction of the UK housing market. With its dominance over current UK mortgage lending what ever it does will directly affect millions of borrowers. Can Lloyds refinance the debt it needs to, to repay the UK Government. More importantly at what cost will the refinancing take place at. Could result in far more expensive SVR's for many. The other main lenders will merely follow suit, and maximise profits, they have no need to undercut.

Given 5 years. As the Dot Com share boom faded and died. Property per se will no longer be the main topic of conversation. Something else will have taken its place.

Another uncertainty is the state of the economy. With the level of economically inactive people reaching record highs, even excluding students. That's a burden to be carried by those that are economically active. May well affect disposable income in the years to come for Mr Average, and that's on top of the restructural surgery that we know is going to take place .

Interesting challenging times ahead.

ukcarper

In the seventies most of the things you say applied but house prices still grew faster than inflation from a lower base I admit.

stueyhants

ukcarper wrote: »

In the seventies most of the things you say applied but house prices still grew faster than inflation from a lower base I admit.

If you look at the historical interest rate since the 70s you can see how prices have risen against a backdrop of lowering of IR. (For those picky posters, I know base rates do not equal mortgage rates .... they are aligned enough to make this a valid point !!)

http://www.bankofengland.co.uk/statistics/rates/baserate.pdf

We are probably going to have a sustained period of Low IR going forward, but I can't see them getting much lower to allow the next leg up in prices above general inflation.
If you can't use IR to help prices and prices already reflect two income households, what is there left to boost prices ?

3,4 or 5 income households, 50% shared equity purchases ?

ukcarper

I might be silly but why do people keep going on about mortgages of 3 to 3.5x earnings if interest rates can obviously make a big difference to what you can afford to pay for.

Kohoutek

stueyhants wrote: »

3,4 or 5 income households, 50% shared equity purchases ?

Interesting idea.

I think an overlooked cause of HPI has been Labour's support through the benefits system for more atomised family units, i.e. 50 years ago a single parent would virtually never live alone for social reasons, but today there is less prejudice and could argue the benefits system activity encourages it. In this situation, you don't even need population growth to drive prices up.

I suppose housing benefit directly affects the rental market more than the mortgage market, but it probably encourages BTL landlords to buy up property, pricing out ordinary people.

ukcarper

stueyhants wrote: »

If you look at the historical interest rate since the 70s you can see how prices have risen against a backdrop of lowering of IR. (For those picky posters, I know base rates do not equal mortgage rates .... they are aligned enough to make this a valid point !!)

http://www.bankofengland.co.uk/statistics/rates/baserate.pdf

We are probably going to have a sustained period of Low IR going forward, but I can't see them getting much lower to allow the next leg up in prices above general inflation.
If you can't use IR to help prices and prices already reflect two income households, what is there left to boost prices ?

3,4 or 5 income households, 50% shared equity purchases ?

can you please explain the graph in your link