house prices continue to drop ....

Graham_Devon

IveSeenTheLight wrote: »

The upshot is that there is likely to be a reduction of owner occupiers as a percentage of property and an increase in rented (social and private).

And therefore, prices should drop.

As for property building. Builders aint building because they cannot sell. Well, not at a price they find building worthwhile at anyway.

Round my way, a plot of 8 were built two years ago. 5 are still on the market. Why would builders take on more building when they can't shift what they have already built?

IveSeenTheLight

N1AK wrote: »

More property would certainly help. In fact a decent amount of property building alone would be the ideal solution; although it will never happen. Everyone wants more property; no one wants it where they are.


The ability of people to buy property can be increased by making it easier to get more credit. However, this has costs:

• Most people seemed to blame the banks lending too easily for the recent economic issues...
• Bigger loans are more dangerous if interest rates rise.
• Bigger loans increase the amount of money people are spending on interest. I'm sure the banks don't mind that idea. It shrinks spending in the rest of the economy though.
• Total lending by banks is limited. Larger loans means less loans in total.

Decreasing property prices affect banks, although not that greatly. Unless they have to repossess the property it is the owner that ends up covering any loss in value.

With available properties not matching the increase in households and credit not being easily available, in summary then, people need to realise that home ownership will decline and only those of higher earnings will have the opportunity to become owners.

The rest will likely see them having to rent with increasing earners per household than there have been in recent years

Possibly we are returning to a households og the 50's such as the below

Graham_Devon

IveSeenTheLight wrote: »

Possibly we are returning to a households og the 50's such as the below

Be a bit of a squeeze now that the house that housed those families have all been chopped up into 4 executive studio apartments.

BTW, 1 house being converted into 3 seperate flats etc is always ignored when talking of building homes. Many thousands of large homes have been converted into 2+ living spaces. So it's not only building of new homes which has to be taken into consideration.

But thats another thread and last time I bought that up, it wasn't liked much

nearlynew

Amid all the arguments........


prices are still dropping.

IveSeenTheLight

Graham_Devon wrote: »

And therefore, prices should drop.

You jump to possibly the wrong conclusion.
what you cold see is owner occupancy levels in numbers remain the same whilst the increasing population are forced into tighter rented accomodation.
Alternatively, with higher household income due to increased earners per property, owners could eventually sell off to investors who find the increase in rental demand a profitable marketplace.

Graham_Devon wrote: »

As for property building. Builders aint building because they cannot sell. Well, not at a price they find building worthwhile at anyway.

Partially true, however builders even at the peak restricted property releases to ensure profits increased.

Naturally in a lower transaction market they squeeze even more to ensure their CM is met.

Graham_Devon wrote: »

Round my way, a plot of 8 were built two years ago. 5 are still on the market. Why would builders take on more building when they can't shift what they have already built?

Not disagreeing, but this just adds to the reduction property being built and the squeeze on prices.

Maybe your 'round my way' are does not have a surplass of demand, other areas are likely to not have enough.

The figures we see for this is on average throughout the UK and there are not enough properties being built to suit the house hold demad requirement (to buy or rent) due to population increases.

IveSeenTheLight

Graham_Devon wrote: »

Be a bit of a squeeze now that the house that housed those families have all been chopped up into 4 executive studio apartments.

BTW, 1 house being converted into 3 seperate flats etc is always ignored when talking of building homes. Many thousands of large homes have been converted into 2+ living spaces. So it's not only building of new homes which has to be taken into consideration.

But thats another thread and last time I bought that up, it wasn't liked much

Last I recalled, the broons lived in a small tenement.

I take your point about properties being split into multiple properties though, I don;t deny that.

Lates take a trip into the future.
Your son's now in his 20's but can't afford to buy.
What does he do?
Does he stay at home or go out and rent adding to the rental demand?

If he does stay at home, he is an earner and you household income is likely to increase.
Do you take rent from him to contribute to the househols.
This is what the Broons and many households did and possibly will return to in the future.

I plan to charge my son rent when he becomes an earner.
It'll incentivise him and teach him about budgeting and contributing to a household.
What he won't know is that any rent received will be put away to be returned at a later date when I deem it is in his benefit.

des_cartes

IveSeenTheLight wrote: »

It's not because of house prices are too high, it's because the lending criteria had tightened

It's not because of affordability to service the monthly mortgage payments that's the problem, its affordability to obtain the required deposit.

That's the here and now.

Reducing prices will simply restrict the lending further again and result in even less oppoertunity for people to become owners.

Why do you think lenders require a large deposit?

Do you think affordability to service mortgage payments should be based on historically low interest rates?

IveSeenTheLight

des_cartes wrote: »

Why do you think lenders require a large deposit?

Lenders increased their deposit requiremnts because the market was falling and wanted to reduc their risk.

This simply squeezes out people who may have been able to buy but no longer can. They're options have been taken away from them.

des_cartes wrote: »

Do you think affordability to service mortgage payments should be based on historically low interest rates?

Mortgage rates are quite low, but please don't confuse them with BoE rates.

I do also think it makes sense to benefit from the period of low rates now as opposed to waiting until the rates are higher.

As another poster referred, they have already had a number of years of low rates and can fix now for another 5 years still at low rates, meaning that for the majority of his mortgage, he will have benefited from low rates

Do you think rates will rise fast any time soon?
If so, why not take advantage of a fantastic long term fix (mind you, you do need higher seposits now to secure the best rates)

des_cartes

IveSeenTheLight wrote: »

Lenders increased their deposit requiremnts because the market was falling and wanted to reduc their risk.

If lenders are wanting 20%+ deposits that should be telling you something about what they expect to happen to house prices.

Mortgage rates are quite low, but please don't confuse them with BoE rates.

I do also think it makes sense to benefit from the period of low rates now as opposed to waiting until the rates are higher.

As another poster referred, they have already had a number of years of low rates and can fix now for another 5 years still at low rates, meaning that for the majority of his mortgage, he will have benefited from low rates

Do you think rates will rise fast any time soon?
If so, why not take advantage of a fantastic long term fix (mind you, you do need higher seposits now to secure the best rates)

I took my first mortgage out @ 7%. within a year it had doubled. Fortunately I didn't base affordability on 7% otherwise I would have had to sell. IMO anyone basing affordability on 5% ir's could be in for a shock. Of course rates may stay low, but as someone who has lived through rapid interest rate rises, I wouldn't want to take that chance. Even a 5 year fix has and end date (and a hefty fee!!)

satchmeister

MadnessOfHPC wrote: »

To be frank this thread should be locked as it's nothing more than blatant scaremongering especially when you consider the last Halifax figures pointed to a clear 0.2% rise in prices.

House prices are SOARING; it said so in the Daily Express recently and the EAs keep telling me that if I don't buy 'the superb, stunning one bedroom ex-council flat with the kitchen in the lounge' for £400k I will miss out. All that rent money is dead money and I need to get on the property ladder as property ALWAYS doubles every seven years.