Express - HOUSE PRICES SET TO SOAR

IveSeenTheLight

abaxas wrote: »

Great news.

Just how exactly are these houses going to be sold is no-one can afford them?

It's not a question of no-one being able to afford them.
The point is that there is sufficient effective demand to support prices at the level they are set.

IveSeenTheLight

nembot wrote: »

I said a few months back prices would be lower in 12 months time and I still stand by that statement today.

Must be close to 12 months ago wasn't it?
I take it you have a rolling timeframe.
One day no doubt you'll be proven to be correct.

IveSeenTheLight

Graham_Devon wrote: »

I believe the story is correct. I.e. house prices will continue to soar.

However, as the story makes no attempt to try and ignore, it ALL hinges on the lowest interest rates in history.

Rock-bottom interest rates, cheap mortgages and a shortage of supply

Mortgages are only "cheap" because of these rock bottom interest rates. So it's not really 2 reasons there, it's one. They are not cheap realtively. They are bloody expensive relative to historical alignment between base rates and mortgage rates.

Imperative. Pretty strong word. And if interest rates rise, they say it would be catostrphic, and plunge into a double dip. Possibly the biggest admittion I have ever seen from the express that everything hinges on the lowest interest rates in history. They don't even attempt to suggest that anything else is keeping momentum going.

If interest rates stay as low as they are, house prices will continue to rise. This isn't good news, not really. As we are back to square one with 125% mortgages etc. This time however, instead of 100+% mortgages keeping the high prices propelling, it's ultra low interest rates.

Either way, when those mortgages ceased, the market fell. When the interest rates rise, the market will fall.

Maybe something else will be along by that point which enables people to afford a home they otherwise wouldn't be able to afford. Who knows. But it seems likely that "creating ways" to get people buying houses they simply cannot afford is certainly on the cards.

I've been bearish, but have been wrong. I never quite grasped how far things would be taken to try and keep house prices propelling. Everything I was looking at was based on history and, what I thought, common sense....but I'm slowly coming round to understand that common sense simply does not prevail...and "systems" will most likely be put in place to keep house prices as high as possible.

We are pretty much comitted now. Most of the countries wealth is in bricks.

I'm wondering when you will consider the third point raised (highlighted in red for clarity)

sss555s

I'm pretty sure the government will use inflation to melt the problems away over the next few years.

You will probably find wage rises overtake house rise % for a few years to make mortgages affordable without large price cuts. It wasn't that long ago i remember getting 10%+ wage rises and thinking that was the norm just like we think the low interest rates are now.

If the government owes £2zillion then 5 years at 10% inflation makes that more like £1zillion cutting the debt in half.

I'm pretty sure Maggie used inflation to get us out the last hole Labour left us in.

mbga9pgf

Erm,

Why arent greece doing the same?
Oh, thats right they did.



Epic FAIL

HAMISH_MCTAVISH

mbga9pgf wrote: »

Erm,

Why arent greece doing the same?

Because they have absolutely no control over their own monetary policy, interest rates and currency.

Epic Fail.

mbga9pgf

Neither will we once bond holders refuse to swap valuable currency for trashed toilet paper.

Blacklight

Public sector will get take a hit in the pensions, it has to happen, it's the obvious place. People who leave won't get replaced. VAT might well go up. Doesn't necessarily mean massive job losses and a return to the strikes of the 80's.

Lets just say by some miracle that house prices crashed by 50% in the next six months (as per the HPC 2008 forecast) - the 'it's so unfair' brigade would rush out and jump on the housing and BTL bandwagon like a shot, create new accounts on HPI.com and never look back.

It would be unprecedented scale carnage in a frenzy of every greedy, whinging Gen-Y'er to scramble to buy up as much as they could before prices rise. This of course would lead to price hikes.

That's of course if anyone who has bought a house in the last eight years was prepared to sell it at a 50% loss.

It's just not going to happen. Not now, and no amount of tin-foil hat wearing, doom mongering and crossing of fingers and hoping for a new world order or divine or alien intervention will help.

puddy

i dont really understand a lot of these things but read this section quite a bit to see what people say.

it would seem to me that all of you are correct, because the situation or 'problem' is more complex than just a set of one level of issues at play

keeping the housing market moving is

low interest rates
lack of supply (not just in terms of building but also of sellers waiting for prices to go up before they put up for sale)
a slight loosening of lending criteria (compared to straight after the crash)
stamp duty consessions
downsizers
long term sentiment (prices only go up)

hampering it in the short term

lack of clarity about austerity cuts to come
the election
world financial instability
lack of ftb
lack of sentiment about how on earth prices can keep increasing

hampering it in the long term

lack of ftb
rising unemployment
higher inflation
possible higher interest rates if things change

so all these things are balancing out in favour (just) of the first section, but at any time, the balance could tip over into the 2nd and 3rd section of points. at the moment, the pundits and experts feel that the positives outweigh the negatives and are able to continue for the next couple of years. but as they have said, if inflation or interest rates or supply changes, then those predictions wont come true.

i dont really know what i actually feel about it all. if im honest, i like the thought that the house will be worth more than we paid for it last year, but the evidence from sold and asking prices dont support that and i cant see how they can increase in this area

an example. the houses in this stree are all identical. they are 3 bed semis, with a utility room on the side that is not attached to the next house along. some people have spruced their utilities up (like me when we moved in) and some have dismantled them completey, others are more like little sheds. obviously i dont know the internal conditions of the houses but they are all th same size.

now, in 2007, the house next door to us sold for 168k. looking on sold prices, it was a little on the high side but prices seemed to be around 160k mark.

18 months on, we offer 136k for this one and buy it 6 months later (a year ago).

some time after moving in, a house opposite which had been boarded up for some time (repo) sold for 80k. clearly needing a lot of work, the workmen were in and out all day every day. from what i could see they had electics done, bit of roofing, windows, flooring etc. the house then sold 2 months later for 105k.

the house next door but one to that, then sold for 50k. we know its rented out, but 50k!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! obviously i dont know the internal condition

thats the last house sold in this street so far. so from looking at simply the figures in a row of houses which are all the 'same', the prices have gone from 160ish to 50k!

our road joins another road further down. there are 2 houses up for sale. one is on at 169k the other at 182k. the second sold in 2008 for 176k. im going to be monitoring it, i cant believe it will sell at that price. the houses are slightly different to ours (i think ours are better and bigger) but i cant see why the price difference to our street.

Blacklight

jenner wrote: »

thats the last house sold in this street so far. so from looking at simply the figures in a row of houses which are all the 'same', the prices have gone from 160ish to 50k!

Therein lies a fundamental issue that most people overlook when shouting about evidence 'round their way' that property prices are crashing through the floor - they never take into account the state of repair of the places that sell around the £50k mark.