FTB - Would you?

MiserlyMartin

One thing is sure, when interest rates to return to normal or even below normal - even 3%, houses will be a lot more expensive to buy with a mortgage. Mervyn King and all his chums can put it off for as long as they like but eventually normality will need to be restored - houses will adjust accordingly.

Procrastinator333

Exocet wrote: »

It's fairly futile trying to argue the point. There are very few who change their minds, or accept the power of argument on here. It is more a case of typing your own thoughts, and that act alone may help in clarifying your own feelings, thoughts and 'predictions' on the market. Sometimes others who are on your side of the argument may post something which adds to the picture you have, or link to an article which contains elements which dovetail with your POV.

The whole house price argument is an exercise in futility I think.

I'm not expecting to convince others, like you say opinions don't really change. I expect to see elvis before I see hamish type buying a house is a bad idea.

But that is fine, putting my thoughts and reasons out for people to pick apart is for me a good way to see if I'm deluding myself.

Linton

Procrastinator333 wrote: »

Linton, what are you smoking. In this thread, your advice is - It is impossible to predict house price movements so just buy when you can.

Than I look in another thread and find this:



I thought it was "futile" to predict prices?

There are two different issues

1) Affordability - ie how difficult will it be for a FTBer to buy a house.

I am saying that it will always be very difficult. I have no idea of the actual numbers, but say there are 50000 FTBer houses coming on the market each year and 250000 people wanting to buy. Prices will adjust so that only 50000 of those wanting to buy can actually afford to do so - supply and demand.

What that price point is depends on the wider economy. For example if credit is restricted so that there are only 75000 mortgages available then prices may fall so that most of the people who can get mortgages can afford to buy BUT you will still have 200000 people who would like a new house but cant get one.

2) The price of a house in ££££s

That as I say depends on the wider economy. Predicting that seems a little tricky, especially to the level of detail required to predict the factors that can affect peoples ability to pay for houses. But from a aspirant FTBers point of view it doesnt matter much - if he cant get himself in the lucky 50000 he wont be able to buy.

Looking at things from this point of view makes the impact of things like double income households, Bank of M&D, shared equity etc obvious. If you can get yourself into the 50000 in this way prices must rise to push someone else out.

OK this is too simple. The number of houses on the market will change by market forces, but I would suggest over a much longer timescale than the above. It's the above process which will dominate unless the supply of houses comes very much closer to the demand.

Countering any increased supply drive to lower prices, there is the cultural factor. Basically one observes that people are prepared to pay as much as (or more than) they can sensibly afford to join the 50000. A house of less value than that is regarded as inappropriate for someone of their standing. We see this pretty clearly in these threads. Cheap houses are seen as sheds, too small, or in areas no-one wants to live (surely a self fulfilling label).

So what happens if houses were to magically get cheaper? People would more easily be able to afford and would therefore want bigger and better houses. So the average FTBer house price increases and we are back to where we started.

So as I say, FTBer houses will always be nearly unaffordable, though actual house prices are unpredictable.

Procrastinator333

Linton wrote: »

There are two different issues

1) Affordability - ie how difficult will it be for a FTBer to buy a house.

I am saying that it will always be very difficult. I have no idea of the actual numbers, but say there are 50000 FTBer houses coming on the market each year and 250000 people wanting to buy. Prices will adjust so that only 50000 of those wanting to buy can actually afford to do so - supply and demand.

What that price point is depends on the wider economy. For example if credit is restricted so that there are only 75000 mortgages available then prices may fall so that most of the people who can get mortgages can afford to buy BUT you will still have 200000 people who would like a new house but cant get one.

2) The price of a house in ££££s

That as I say depends on the wider economy. Predicting that seems a little tricky, especially to the level of detail required to predict the factors that can affect peoples ability to pay for houses. But from a aspirant FTBers point of view it doesnt matter much - if he cant get himself in the lucky 50000 he wont be able to buy.

Looking at things from this point of view makes the impact of things like double income households, Bank of M&D, shared equity etc obvious. If you can get yourself into the 50000 in this way prices must rise to push someone else out.

OK this is too simple. The number of houses on the market will change by market forces, but I would suggest over a much longer timescale than the above. It's the above process which will dominate unless the supply of houses comes very much closer to the demand.

Countering any increased supply drive to lower prices, there is the cultural factor. Basically one observes that people are prepared to pay as much as (or more than) they can sensibly afford to join the 50000. A house of less value than that is regarded as inappropriate for someone of their standing. We see this pretty clearly in these threads. Cheap houses are seen as sheds, too small, or in areas no-one wants to live (surely a self fulfilling label).

So what happens if houses were to magically get cheaper? People would more easily be able to afford and would therefore want bigger and better houses. So the average FTBer house price increases and we are back to where we started.

So as I say, FTBer houses will always be nearly unaffordable, though actual house prices are unpredictable.

If it is just me, I apologise, but I just don't follow this post. I can't work out the points you are trying to make.

Linton

Procrastinator333 wrote: »

If it is just me, I apologise, but I just don't follow this post. I can't work out the points you are trying to make.

A response to your claim that my posts are inconsistent:

It is impossible to predict house prices as they are a complex function of the wider economy.

It is also futile - If you are an average FTBer looking to buy a house you will gain nothing by waiting for the market to change. At any time in the future it will be equally difficult to buy one.

The bear prediction that at sometime in the near future there will be a price crash that will enable all the poor homeless bears to buy somewhere cheap just wont happen.

chucky

Linton wrote: »

The bear prediction that at sometime in the near future there will be a price crash that will enable all the poor homeless bears to buy somewhere cheap just wont happen.

of course it won't happen, they've got to keep the HPC dream alive

Graham_Devon

Linton wrote: »

The bear prediction that at sometime in the near future there will be a price crash that will enable all the poor homeless bears to buy somewhere cheap just wont happen.

You've got the bear prediction completely wrong then.

Houses are never going to be "cheap". Ever.

What they can be, is affordable.

Can you explain how you will gain nothing if you wait? Say you do wait, and in a years time, houses are 15% cheaper than today. So the house you wanted was 150k, but is now 128k.

How has that person who waited for a year, gained nothing?

chucky

Graham_Devon wrote: »

You've got the bear prediction completely wrong then.

Houses are never going to be "cheap". Ever.

What they can be, is affordable.

are you now the official bear spokesman - the big bear that speaks for all bears...

Linton

Graham_Devon wrote: »

You've got the bear prediction completely wrong then.

Houses are never going to be "cheap". Ever.

What they can be, is affordable.

Can you explain how you will gain nothing if you wait? Say you do wait, and in a years time, houses are 15% cheaper than today. So the house you wanted was 150k, but is now 128k.

How has that person who waited for a year, gained nothing?

Because for house prices to fall something must have happened to make it more difficult to buy a house - interest rates up or required deposit up or mortgages restricted or increased chance of unemployment or whatever.

sjaypink

I want to be a FTB. i have found THE perfect house.

Can you still get self certs? How much can you lie?

...Unfortunately, I am serious :cool: