Anecdotal - compare now to 18 months ago

Batchy

I was looking at a spreadsheet i prepared from over 18 months ago. Back then was looking at 25% deposits, and still around 6.99% rates, most likely with Barclays.

We was looking at houses that cost £200k that fitted the bill.

In 2010 we actually Ended up, with paying 15% deposit, rate only 3.94% and brought a better house than the 200k was going to buy 18 months before, for 20% less.
I also saved stamp duty as was FTB

Compared to 2007 prices, we have had the crash...

if 2007 prices would have carried on, I would have paid DOUBLE for the house I brought in 2010! Is that technically a 50% drop... no its not...of course. But I hope you understand, affordability has halved, and then some due to the cheaper interest rates, on top of that weaker currency, the foriegners are flocking over here to buy, effectively. Except, wages compared to 18months ago have actually increased. So... people still be finding themselves in a compfortable position, where they are homegrown.

I just dont think it can go any lower... to be honest!

PasturesNew

I can afford the same house today as I could 18 months ago because my savings haven't increased. So, it's just down to actual price drops. So my affordability's probably just a few % better.

bingobob777

Batchy wrote: »

I was looking at a spreadsheet i prepared from over 18 months ago. Back then was looking at 25% deposits, and still around 6.99% rates, most likely with Barclays.

We was looking at houses that cost £200k that fitted the bill.

In 2010 we actually Ended up, with paying 15% deposit, rate only 3.94% and brought a better house than the 200k was going to buy 18 months before, for 20% less.
I also saved stamp duty as was FTB

Compared to 2007 prices, we have had the crash...

if 2007 prices would have carried on, I would have paid DOUBLE for the house I brought in 2010! Is that technically a 50% drop... no its not...of course. But I hope you understand, affordability has halved, and then some due to the cheaper interest rates, on top of that weaker currency, the foriegners are flocking over here to buy, effectively. Except, wages compared to 18months ago have actually increased. So... people still be finding themselves in a compfortable position, where they are homegrown.

I just dont think it can go any lower... to be honest!

I think you'll actually find that for the vast majority of people wages have actually increased alot LESS than the governments manipulated inflation figure.

You'll also find alot less people earning any wages soon.

You'll then find alot less people able to afford their mortgages when interest rates go up.

So yes they can comfortably go alot lower.

Kenny4315

Batchy wrote: »

Except, wages compared to 18months ago have actually increased. So... people still be finding themselves in a compfortable position, where they are homegrown.

I just dont think it can go any lower... to be honest!

I'm not sure where your getting this statistic from but it is incorrect.

I have several tenants and all have them have received either 0% rise the public sector employed, forced to take a cut to protect their job, those in hard hit businesses, or received a lower than inflation rise other.

Batchy

bingobob777 wrote: »

I think you'll actually find that for the vast majority of people wages have actually increased alot LESS than the governments manipulated inflation figure.

You'll also find alot less people earning any wages soon.

You'll then find alot less people able to afford their mortgages when interest rates go up.

So yes they can comfortably go alot lower.

I can see that, but, your missing the point.

Everybody has their own opinion of how safe their job is!
Not everyone will lose their job, maybe Max another 1% of the workforce? to put unemployment up another 1%, but even that is optimistic.

The point I was making, is, even if you havent had a pay rise, houses are cheaper now, than at any point in the future. If you in the mood to buy, maybe its because you was one of the luckier ones, even if you never, its still cheap cash flow wise now, than it has been.

18 months ago I was looking at a 5 year fix at 6.99%, today the same is more like 4.99%, real prices have dropped (forget inflation). So not only is it cheaper capital wise, its cheaper, cash flow wise. Even with food inflation, fuel inflation. etc etc. Rents are very often linked to RPI, |(housing associations for example) so going forward rents with high inflation will only go on to rise even more still.

However, the big point is, its only actually possible... IF you have either equity or a DEPOSIT, available to you.

Batchy

Kenny4315 wrote: »

I'm not sure where your getting this statistic from but it is incorrect.

I have several tenants and all have them have received either 0% rise the public sector employed, forced to take a cut to protect their job, those in hard hit businesses, or received a lower than inflation rise other.

true my gf works public sector and had all overtime curbed... so in effect a pay cut, also a pay freeze going forward.
But the overtime is back, the work HAS to be done, and only people can do it. Thye cannot be replaced by machines.
A weekend of overtime makes a much bigger impact on wages than any 1.9% payrise has ever had.

Like my gf, i had job scare for the last 18 months too, but its stabalised... and payrises are back on, so too are bonus's, etc.

We felt the pinch, but, it never pinched. It just was stressful thinking about it, what we was expecting to be a nightmare, just never happened, the nightmare, was thinking about it too much... we all need to just get on with life... live, holiday have fun too.

If the whole economy thinks like this, the austerity cuts will be short lived as growth will shoot up.

PS, everyone is having kids at the moment... feels like the 90's all over again!...

Recession... kids... then few years later... GROWTH... lol

Kenny4315

Batchy wrote: »

houses are cheaper now, than at any point in the future.

I'm normally pretty optimistic about houses and I make most of my income from them, either via rental or selling, but I'm certain there's going to be a drop this year in the 12% region, not a crash but a steady price erosion.

The end of the year and the start of next will be the best time, if you can hold your nerve, and also get financing sorted.

Batchy

http://www.statistics.gov.uk/cci/nugget.asp?id=10

it has only been negative for 3 months... out of a couple of years... lets not OVER COOK IT.

Its on its way back up, and the excluding bonus, has been positive throughout. I expect it will be back up to remain well above 2-3% throughtout 2011.

Batchy

Kenny4315 wrote: »

I'm normally pretty optimistic about houses and I make most of my income from them, either via rental or selling, but I'm certain there's going to be a drop this year in the 12% region, not a crash but a steady price erosion.

The end of the year and the start of next will be the best time, if you can hold your nerve, and also get financing sorted.

Maybe, I think we will see regional variations...

I was surprised to see west midlands +10% on rightmove annually Jan 10 to Jan 11... fascinating in fact. WHY?

Batchy

Kenny4315 wrote: »

I'm normally pretty optimistic about houses and I make most of my income from them, either via rental or selling, but I'm certain there's going to be a drop this year in the 12% region, not a crash but a steady price erosion.

The end of the year and the start of next will be the best time, if you can hold your nerve, and also get financing sorted.

I think with RPI inflation at 5% ish... we will see prices hold steady... the inflation will make them cheaper... defining factor being mortgage availability.

The banks wont be much of a bank if they are not into Lending money via mortgage. They will just have cash deposits... im sure making more money from unsecured lending is the way to go... I THINK NOT!

Batchy

PS, I think we will actually see far less tourism out of the country.

More home holidays, to seaside resorts... camping etc.

travel with fuel costs high is expensive
the knock of strikes has been bad
snow has been bad
ash cloud has been bad
taxes are bad
baggage extra's are bad
currency exchange rates are bad

I know where my money wont be going this year...TRAVEL COMPANIES.