House Price Crash 3

gil13

I think the BOE should consider doing a 0.50% and be done with it, get the job done early. I think some inflationary pressures will come off into 2nd half of next year as energy prices come back down. I just hope that they do not concentrate too hard on the housing market, it might be that they will have only a small impact on it anyway(unless they want to cripple the economy with mega increases, which ain't gonna happen). It is the banks willingness to lend and lack of supply which is driving prices higher and if interest rates increase does this not give the banks opportunity to skim a margin and increase their profits and thus the circle goes on and on. I think if the BOE get the rate done early we stand a better chance of this not dragging out over a number of years, do 0.50% and hold it for a time see what the economy does. Nobody want's the risk of interest rate increases hanging around indefinately and it's nice to feel the end is is sight. Unless you have lots os savings and then you don't care about your mortgage and in the media and on street there will always be people in both camps.

Market_Oracle

Why house prices are still rising



http://www.marketoracle.co.uk/Article74.html

The early 90's don't compare with today.... yet

scorpio_princess

Jim_B wrote:

Come to Hampshire. The EA windows here are full of places for sale.

It's the same story here in Norfolk - the property supplement of the local paper is always bulging, with the same properties week in week out. Anything over £175,000 just isn't shifting, anything under goes quickly - and on the rare occasion that anything under £100,000 comes on the market, it's snapped up in a matter of hours. Now if that isn't an indication of a slowing housing market, I don't know what is. Wages around here aren't brilliant - the only people that can afford property are a)2 or 3 reasonably high earners clubbing together, b)those with huge amounts of equity who are downgrading, c)property developers (who annoyingly buy up all the flats and other cheaper homes - the only places in reach of an FTB around here - in order to rent out d) lottery winners! Because property is so expensive here people assume that salaries are high, but it's just not true. I don't know anyone who earns over 20k a year. I believe that people from London and the south east are buying 'second homes' here and therefore pushing prices up to ridiculous levels - this seems to be a problem in a lot of rural areas, and it's upsetting to people who can't continue to live in the area they were born and raised in.

Something's gotta give!!

Doozergirl

Jim_B wrote:

Come to Hampshire. The EA windows here are full of places for sale.

That's the general idea! :rolleyes:

ashm1

http://news.bbc.co.uk/1/hi/business/5242344.stm

Older article but I found it useful.

Are you thinking a sharp peak rise and fall following inflation easing in 2007 or a new plateau somewhere between 5-6% ?

As for FTB's I think the option the government is favouring is to concrete over the South East and other regions of the UK.

See you on the M25!


Kind regards,

Ashley.

mystic_trev

3year swap rates (prob best guide to fixed rates in the future) are currently 5.33%....up from 5.12% last month.

Angela_D_3

PoorDave wrote:

Quite right. Negative equity is only a problem if you have to sell.

Or remortgage which many of our friends on wanna be have already done or about to do or are in the process of.
People don't seem to realise their house isn't a bottomless pit of money.

F_T_Buyer

Market_Oracle wrote:

Why house prices are still rising



http://www.marketoracle.co.uk/Article74.html

The early 90's don't compare with today.... yet

Oh, lets just look at the interest shall we and assume the debt never has to be paid back. Lets also ignore the affect of MIRAS on this too... Even excluding those issues that data look far too benign...

It even says rates won't significantly affect market price until it's above 6%. Right, so the fact that net yields on investment property (a massive proportion of current buyers) is at 4.68% doesn't matter. Oh. It really must be different this time.

NEWSFLASH: "Turkey's declare vegetarians the new fad"

ashm1 wrote:

http://news.bbc.co.uk/1/hi/business/5242344.stm
As for FTB's I think the option the government is favouring is to concrete over the South East and other regions of the UK.

Well, they have a lot of concreting to do. 90% of the country infact!

Chrysalis

mrsS wrote:

but negative equity only crystalizes when you sell the house.

As long as you can afford the mortgage repayments the fact that the house now may be worth less than you paid for it only affects you if you sell. If you stay put for 3 years and it goes back to what it cost how does this make you lose your home?

being unable to afford the repayments on your mortgage (and being repossessed) is a result of rising interest rates-not falling house prices.

correct but one leads to the other, you seem to be blatantly ignoring this so your imagination can think their is no bust in boom and bust.

if one cant afford their mortgage payments then one of 2 things generally happens you get repossessed or you sell up before the former happens.

Market_Oracle

F_T_Buyer wrote:

Oh, lets just look at the interest shall we and assume the debt never has to be paid back. Lets also ignore the affect of MIRAS on this too... Even excluding those issues that data look far too benign...

It even says rates won't significantly affect market price until it's above 6%. Right, so the fact that net yields on investment property (a massive proportion of current buyers) is at 4.68% doesn't matter. Oh. It really must be different this time.

NEWSFLASH: "Turkey's declare vegetarians the new fad"

The fact is that house prices are still rising, and the reason is obvious, which is that they are still affordable. Regardless of wishful thinking, way back when economists were forecasting a sharp fall in the UK housing market i.e. 2001, was the time when they were the most affordable in decades, which is probably why they have risen so much since then.

It will take a rise in interest towards 6% to impact significantly on market sentiment.