Boiiiiiiiiing ........ splat

IveSeenTheLight

DaddyBear wrote: »

I agree that over the recent past, measured over the long-term, houses have increased significantly in value.
The problem is the word significantly. Property has inflated at such an insane level over the last 40 years that it is just unsustainable and has nowhere else to run.
We've had reckless levels of lending and now recklessly low interest rates. 2007 was the peak for property over the next 10 to 20 years in real terms. Prices have been stabilised but only thanks to unprecedented measures that cannot be sustained.
Anyone expecting house prices to double over the next 10 years in real terms is in for a shock.

Real terms, real terms.
Is that the mantra you are going to hide behind?

People buy property nominally. There is no denying that nominally they have to pay more now (on average) than they did last year.

If you want to talk real terms, why do people buy cars?
On average both nominally and in real terms they only go one way in value.

When you are talking real terms, I think you are really talking about investments and for the majority, homes are far more than an investment.

HAMISH_MCTAVISH

DaddyBear wrote: »

they have increased since the middle of last year

Yes they have. Up 10% or so.

but firstly it's not back to peak prices

Some areas are already back to peak prices. Some areas are now higher than the old peak.

and secondly there is a high chance of further significant falls.

There is a high chance of minor fluctuations. There is almost zero chance of further significant falls.

As for the signature, house prices started to rise in 2009, if I had wanted to ge selective I would have chosen mid 2007 to early 2009.

And if you'd chosen 2007 to 2010, comparing monthly results on a like for like basis, you'd find many markets (Aberdeen included) are significantly higher than they were in Jan 2007 as of Jan 2010. (latest data)

IveSeenTheLight

DaddyBear wrote: »

Anyone expecting house prices to double over the next 10 years in real terms is in for a shock.

I don't, I don't even think they will double nominally in 10 years.
That would need a compounded 7.18% growth each year.

The long term average increase (30 year trend) is just under 3% per year in real terms.
This would suggest approxiamately 24 years to double. Of course this is idealistic with a smooth house price growth and not considering both booms and busts.

HAMISH_MCTAVISH

DaddyBear wrote: »

2007 was the peak for property over the next 10 to 20 years in real terms.

Property will cross 2007 peak in real terms within the next few years as a national average.

Anyone expecting house prices to double over the next 10 years in real terms is in for a shock.

The mainstream projection is for a 40% increase in real terms within the next 10 years.

I rather suspect it will be higher. Although not double.

chucknorris

macaque wrote: »

As we have been told repeatedly, the buy to let market has been proping up the property market as house prices soar far beyond the means of home owners. It is becoming increasingly clear however that the buy let market is now in deep doodoos:

An HL analysis points out that nearly 183,500 buy-to-let mortgages were taken out in 2007, near the height of the market, representing £23bn worth of debt.
Many of those investors are uncomfortable today: the value of their investment has crashed 20%, while monthly repayments could surge if rates rise







http://www.liverpooldailypost.co.uk/ldpbusiness/business-local/2010/03/22/investors-hit-as-the-buy-to-let-bubble-is-finally-burst-and-mortgage-debts-rocket-92534-26081117/

I can confirm that at least 4 of the buy to let mortgages taken out in 2007 that your link reports were mine, but I was simply remortgaging from low trackers to even lower tracker rate mortgages, I hardly think I was the only one doing this.

I originally bought these properties in the 90's so I can confirm that I am certainly not 'uncomfortable' about it today.

Percy1983

On a simple point does nobody care about future generations? at this rate we are going to divide the country so that 1/3 of the people own all the houses and the other 2/3 have to rent from them.

I am nearly in the position to buy a property and it will be early next year when I have a decent deposit together, right now I can just about afford a small nothing special house, but if prices start rising again I will be stuck. I will then have the option of killing my parents to get half a house or rent and pay somebody elses mortgage which they got for next to nothing 15 years ago.

I know life isn't fair etc, but right now the system is shafting young people and its just going to get worse if prices keep climbing.

DaddyBear

Percy1983 wrote: »

On a simple point does nobody care about future generations? at this rate we are going to divide the country so that 1/3 of the people own all the houses and the other 2/3 have to rent from them.

I am nearly in the position to buy a property and it will be early next year when I have a decent deposit together, right now I can just about afford a small nothing special house, but if prices start rising again I will be stuck. I will then have the option of killing my parents to get half a house or rent and pay somebody elses mortgage which they got for next to nothing 15 years ago.

I know life isn't fair etc, but right now the system is shafting young people and its just going to get worse if prices keep climbing.

In a word no.
HPI is slowly destroying this country and yet the government is actively trying to encourage it. Madness.

madeupname1

Percy1983 wrote: »

On a simple point does nobody care about future generations? at this rate we are going to divide the country so that 1/3 of the people own all the houses and the other 2/3 have to rent from them.

...

I know life isn't fair etc, but right now the system is shafting young people and its just going to get worse if prices keep climbing.

Just a view from the other side of the fence. I got into buy-to-let after bad experiences with pensions (i.e. paying into them for a number of years and finding out that when you move jobs they are essentially non-transferable and therefore dwindle to nothing when costs are taken out). Property is an investment you can see and touch and, on average, prices will rise in the long term (which is where I'm looking since this is essentially my pension). I do not trust the government to look after me financially so I make my own arrangements. Its not about trying to shaft the next generation. BTW pretty much everyone plays the game. When you become a home owner and then decide to move, will you sell to the highest bidder, or will you sell for potentially thousands of pounds less to someone who may be more deserving? The chances are that the answer is the former ... pretty much like every other home owner who is looking after themselves and their families.

All the best with your purchase ...

Percy1983

By all means I wouldn't sell my house for less than market value, but I wouldn't buy a 2nd,3rd,4th... expecting the younger ones to pay for my pension.

Houses should be homes, not investments. I know that is an idealistic point of view but a lot of people would benefit. I do believe there should be a lot more taxes on seconds properties so it isn't as an attractive deal as it has been.

sabretoothtigger

ruggedtoast wrote: »

'If' rates rise?

phil_b wrote: »

As often is the case, the bears ammo comes in the form of predictions, if's, but's and maybe's.

Still waiting for those apocalyptic horseman folk!

WHEN rates rise, maybe if we were like japan and a self funded country but we borrow from the world and they'll not lend £100 for 50p interest per year

By we I mean the government, the uk companies and the British people are all net borrowers mostly from Asian savers apparently.
Unless anyone here is living in Singapore or there abouts their opinion doesnt even matter because debtors dont set their own terms

HAMISH_MCTAVISH wrote: »

Property will cross 2007 peak in real terms within the next few years as a national average.



The mainstream projection is for a 40% increase in real terms within the next 10 years.

I rather suspect it will be higher. Although not double.

Sterling index fell 25% in the last 5 years. So only a house which has risen 25% in price since then could be said to have kept its value