NI Co-Ownership Housing Scheme - I need out!

A.L.D.A

Joe in NI unlike the south we never built too many houses. Projections as to the number of houses we need to build varies widely. On the Planning Service site (somewhere) you will find a projected need for 20,000 units a year PLUS an allowance of 2000 per year for to replace ones that are beyond their useful life. I think that estimate may be a bit on the high side, but at present we are probably not building one third that number!!! It puts the newsheadlines about 5000 unfinished houses into chilling perspective. News stories like this are meaningless without context.

I agree that it is an opportunity to buy for social housing, and housing associations are buying up sites, but their budgets are increasingly limited. IMO unless there is a major change we are heading into severe problems. At the minute we are deleveraging, liquidity is limited, there are fears for employment and disposable income is falling. However there is an underlying problem on the supply side that is growing each year and it will end in grief if not addressed soon.

saverbuyer

A.L.D.A wrote: »

There is a housing shortage in NI ask any Housing Association. More people are renting and are paying around £600 a month to rent.

What you are seeing is people buying where they see the potential for profit. I have clients who are buying cash for rental and in the hope of future gain. For many cheaper houses rental returns are now making sense. An increasing percentage of sales are cash sales!!!

One of the problems IS lack of mortgages!!! Look at YoY mortgage approvals. We have gone from one extreme to the other. If I remember correctly the Governor of the Bank of England did recently mention that the average deposit in the UK was over 30%! When I bought my house 10% was norm. (and fair) I think mortgage situation will gradually improve in the coming year.

Regarding vacant houses, I once did research on that issue, there are many legitimate reasons for houses to be vacant. It is not the pot of available houses that some think. People in hospital, short term overseas contract, armed forces, elderly in care, caught up in the Planning process etc etc. Then there are those in total disrepair.

A fair price for a house is the cost of construction, service connections, finance costs, cost of land plus reasonable profit. When the purchase price drops below the cost to build people do not build. Perhaps this is part of the reason there is 5000 ghost houses. This of course is a drop in the ocean. Have you any idea how many additional houses per year we need in NI? Could you hassard a guess what the year on year short fall is? Any idea how large the budget is for social housing?

I think the market is bottoming out, you think otherwise. I can see your reasons for thinking as you do. We will see as we run through 2012 and into 2013. I take my position as someone who advised not to buy in the years of madness, and I don't believe expensive houses are good for the economy or that they should be treated as a investment.

Mind you I don't predict any mad recovery in prices. I think prices will struggle to keep place with inflation for a year or so, once the economy starts top stabilise supply side of the equation is going to be a problem as is the availability of development land.

Why would I ask a housing association? What exactly would I ask? How many are on their waiting lists? Waiting lists are open to anyone. I can be living in my five bed detached on the Malone Road and still get on the list. It means nothing.

Where does this “most people are paying £600 per month to rent” come from? Perhaps Belfast but in my area I could rent a detached property for that amount. Besides rent don’t really have anything to do with it. We do not have a shortage of rentals in NI. What we have is a heavily subsidised rental sector dependant on housing benefit. You’ll find that that is being cut. This will have the effect of reducing overall rents by reducing this artificial ceiling rigging the market.

Interest rates are at their lowest level for 300 years. They can only go up. I think in your rental figures you fail to recognise this and that the cost of home ownership isn’t just mortgage payments but lots and lots of other costs. Please if your going to say its more expensive to rent produce some figures that look at average interest rates not these artificially low, never seen before interest rates.

Future gains in the BTL market are unlikely. Most lower end properties relay on housing benefit for their yield. Capital appreciation will not be happing for decades.

Mortgage approvals are not the problem. In NI we even have 100% LTV products in the market provided you MEET LENDING CRITERIA i.e. you can afford it. Mortgage rates are at there lost rates for years.

Do you not get the relationship between deposit and price?

Yes there are many reasons for vacant houses. One being high prices. Can I draw your attention to the many hundreds of vacant city centre apartments and country mansions?

A fair price for a house is what someone is prepared to pay. That’s called a free market.

The costs to build a house are fluid. The can rise or fall. Just because a developer paid through the nose 4 years ago to purchase development land does not me that we NOW should pay to maintain their profit margin. Material prices may be going up (because of a devalued currency which is again not static) but land and labour cost continue to fall. Builder will have to change their business model to reflect this or they will become another bankruptcy statistic.

Do you have any idea about the number of houses we need to build? Do you have any idea on what this supposed shortfall is or are you just going to invent figures to further your argument. Are these figures from independent sources or builders simply saying “time are tight we need more work”?

ALL external factors point to a continued fall in the NI housing market. The credit bubble is over. There will be no return to easy lending in my lifetime. What will happen is builders either build at a level banks are prepared to lend at or they will go bust and a new builder will come along.

saverbuyer

A.L.D.A wrote: »

Taking 3 first. I think 10% is a reasonable deposit to expect. What is happening is people see a house say £120,00 and have £12,000 - £15,000 Put in offer and find the house is then valued at £100,000 plus there is a list of repairs. They then can't buy as they would need over £30,000 or the person selling to drop £20,000. If the people are currently renting their rental costs are likely to be similar to the cost of the mortgage.

I have no desire to see house prices return to 2007 levels, that was madness. However we are not building anything like enough houses each year and we are heading into the 4th year of this. Somewhere down the line that will cause problems.

Markets behave like herds, 2006 the herd was for buying now caution rightly prevails. NI once had the cheapest houses in the UK, it saddens me to see how that changed, but I genuinely believe we are heading for a serious problem in the medium term. If you have a population that is increasing and you don't build what happens! We need to get house construction moving again at a reasonable level in order to prevent future shortages and we need adequate land to build on. That will ensure that house prices stay down.

The above example is flawed. If I agree to by a 2 bed terrace at 1 million it does not follow that a bank should lend me 1 million to purchase it. In the situation above the bank is protecting their stake. They are saying in a resale they could only expect to get 100K back on this house.

In this example the buyer would be best to renegotiate with the vendor at a price of 100K therefore saving 2-5K of there deposit and about 50K over a 25 year mortgage.

What are you talking about the rental costs would be the same. Based on what interest rates? Remember a mortgage lasts 25 year or more. Not to mention the cost o homeownership like repairs, redecorating, insurance, and the money lost by not having the deposit in the bank.

Why do we need more houses? Where will this population increase come from? Birth-rate is decreasing not increasing. We are in the middle of the explosion of the biggest credit bubble in history with Europe dying around us. You expect us to be sheltered.

saverbuyer

ballyblack wrote: »

Agricultural land is getting more expensive right now and will eventually raise the price of building land

But development land prices are not rising they are falling and have been for 4 years. I would even say that agriculture land in real terms is falling.

A.L.D.A

It is good to see the price of land fall, and it is being bought. Once all the repos clear the system I wonder what will happen?

saverbuyer

A.L.D.A wrote: »

It is good to see the price of land fall, and it is being bought. Once all the repos clear the system I wonder what will happen?

With 1872 property seizure orders in 2010 even with record low interest rates and the amount of excess credit given during the last 10 years I can’t see them “clearing the system” anytime soon. Add NAMA ,the apartment oversupply, the 60000 vacant properties, mortgage interest relief, inflation, no wage inflation and 5000+ ghost estates and I can’t imagine us having an undersupply for a few decades yet.

Also repos are a part of a properly functioning market.

Credit determines house prices here not the number of repossessions.

And yes it is good to see the price of land/sites in NI CONTINUE to fall as has been the case for 4 years.

Obviously not so good for the ones that bought or built in the last 10 years.