How do you think the interest rate increase will affect the market ?

asandwhen

wisbech_lad wrote:

Yes, but opinions can be wrong. E.g. it could be my opinion that the moon is made of cheese, but it would be wrong.

My opinion is that you are disregarding momentum. Once prices start falling, then FTB's stop buying, because why not wait until prices get even cheaper? That is what happened in Japan (prices fell for 14 years)

I think you need to read my post again.

meanmachine_2

Everyone can have an opinion.

Doesn't mean I have to agree with it.

It's an odd opinion to have that prices can go up 300%, but that they can't go down because "people will just pile in".

That's dumb, and not born out by history.

asandwhen

given that theory the price of a mars bar is set to crash.

chris83_2

asandwhen clearly doesn't understand economics

people don't invest in mars bars

nevermind

Doozergirl

mikeyw wrote:

Is there a definitive house price index ?

There are so many metrics around some say the market is flat others say it's rising.....I know there are regional variances but is there a national figure that everyone uses ???

If share prices fall the FTSE reflects it - what reflects a fall in house prices ?

The Land Registry records details of every sale and is therefore definitive. It produces information every three months, but they need this period of time to get decent averages I suppose.

Does this work:
http://www.landregistry.gov.uk/propertyprice/interactive/ppr_ualbs.asp

You can search by all sosrts of dates and places. A quick search on the average house prioce on Harrogate in the year Jan-March 2005 to Jan-March 2006 shows a 3.89% increase.

You'd pay that in associated buying and selling fees.

meanmachine_2

asandwhen wrote:

given that theory the price of a mars bar is set to crash.

As I say, kindergarten economics.

If only this subject were as simple as saying "house prices only go up..."

They do go up, provided the increase is supported by the fundamentals.

A 300% increase in 8 years is a bubble.

You can have some of that increase - I'll give you 200%. But don't expect to hold on to all of it in the coming years. Or at least, be prepared for the unexpected, and make sure your investments are fully diversified.

Jorgan_2

mikeyw wrote:

Guys,

As a potential buy to let investor I was wondering how you feel today’s interest rate rise will affect the housing market ? Although this increase alone probably won’t make a huge difference, is it likely to be the catalyst for a pause and potentially a small correction ?

I’m still on the sidelines at the moment but wandering now if I should sit tight for 3 months and see how things look towards the end of the year ? I’m looking at the very popular 2 bed town house category and I guess if things turn nasty this is where overstretched BTL’s will have to start selling 1st.

Conversely I could sit and wait and watch another 5% value increase pass me by.

Any views from the experts out there ?

Mike.

Personally I would sit tight for a while & research the areas you are looking at. The rise in interest rates may take a little while to filter thru on consumers. By the way, two bedroom properties generally rent better than a 3 bed.

I was speaking to one of my buyers last week and asked him what he would do when interest rates go up by more than 1%, he is a full time landlord with about 40 properties. His reply made a lot of sense, although some on here would no doubt disagree.

He is going to start buying more houses. His theory is that people will have concerns over what the housing market will do, therefore go into rented or continue to rent while they try & figure out what the market is doing. If house prices drop in the area, he can buy them cheaper, the demand for rented will increase so he can put up the rent.

meanmachine_2

Jorgan wrote:

He is going to start buying more houses. His theory is that people will have concerns over what the housing market will do, therefore go into rented or continue to rent while they try & figure out what the market is doing. If house prices drop in the area, he can buy them cheaper, the demand for rented will increase so he can put up the rent.

He sounds like someone who is heavily invested in one asset and is blind to its risks.

If the price goes up I cant lose.

If the price goes down I can't lose.

Er, right. He's somehow found a risk free investment.

Jorgan_2

He has other assetts as well, he isn't blind to the risks involved, getting to a portfolio of 40 properties will involve some issues/risks along the way. He is geared to about 60% on some, less on others.

mikeyw

Well over a week has passed now guys - anyone noticed any impact ?

Nothing untoward in my local market (Harrogate)

What about others ?