Is it me? Or has anyone noticed that we are in the largest bubble of all time?

HAMISH_MCTAVISH

If you leave the sock drawer open at nights, are the sock puppets too shy to breed?

One of the more important questions in life I think.

Oh, and BTW, nice "first" post there "Jimmy".....

Jimmy_31

HAMISH_MCTAVISH wrote: »

If you leave the sock drawer open at nights, are the sock puppets too shy to breed?

One of the more important questions I life I think.

Oh, and BTW, nice "first" post there "Jimmy".....

Thanks i think or are the quotes supposed to be sarky or something.

Neil_in_Bristol

Whether renting or buying is better value for money depends on a number of things, such as whether house prices are rising or not, how high interest rates are, and how high rents are.

Those who are renting waiting for a crash to happen (like I was) might well find themselves still priced out in 10 years time.

Equally, people who blindly believe that they should "get on the ladder" at all costs could end up stuck in a house that they can't move out of for some time.

Morglin

Orpheo wrote: »

The trouble with bubbles is that it is delusional to believe that they will remain inflated. Yet people do.

They won't remain 'deluded' for long, if this is right:

http://blogs.telegraph.co.uk/finance/ianmcowie/100009765/why-mortgage-lending-slumped-by-a-quarter-and-house-prices-may-fall-by-a-fifth/

Lin

Neil_in_Bristol

Morglin wrote: »

They won't remain 'deluded' for long, if this is right

Lin

The problem is, these kind of articles have been turning up for 10 years. It may all go wrong (or right depending on your point of view) this year, or it might be another 2 years away. Or maybe nothing at all will happen.

I can't post links, but hopefully you can cut-and-paste these into your browser (from 2002):
cdnedge.bbc.co.uk/1/hi/business/2066931.stm
cdnedge.bbc.co.uk/1/hi/business/2577069.stm

Homersimpson

I bought my first house in december 2009, before doing so I looked at all the statistics and worried myself to death that the price would fall rapidly after I bought it. I feel for people trying to buy their first house as it is a very expensive business.

The problem as I see it is that the government know that if house prices drop significantly it would be bad for a lot of people (voters) it would also be bad for the banks as a lot of people might just hand back the keys and declare themselves backrupt if their houses suddenly lost 50% of their value and they were struggleing to pay the morgage anway and they didn't have the equity to cover it (which I wouldn't for example). The government have tried to keep prices high with stamp duty breaks for first time buyers, shared ownership etc.

The problem is also that lets say my house is worth in my eyes 160K, if the market dictates that its worth 80k then I can:

Hand the keys back and declare myself bankrupt
Sell it at a huge loss
Stay put.

Me I would stay put if I could still afford the mortgage and so would a lot of other people. There arn't enough people who need to move rather than want to move bringing the supply to the market. We have no supply and no demand so prices arn't going anywhere in a hurry.

If all of a sudden a lot of people needed to sell then prices would probably go down, if a lot of people wanted to buy then the reverse is likely to occur. Basic supply and demand.

I can confidently predict that over the next five years house prices with rise sharply/rise a bit/stay the same/fall/fall sharply!

I think that houses are probably 10-20% overvalued but i'm not confident that they will fall that much at the moment. My advice to anyone who wants to buy is not to get too hung up on comments on these forums (including mine!) or newspaper articles that are intended to sell papers after all (house prices are ok and stable wouldn't sell many copies of the daily rag would it!), if you want to buy a house and you can afford it comfortably then go for it. Don't waste your life waiting for a crash that might not happen.

Running_Horse

Truth is most of us buy when we need to buy. No doubt a few remarkably clever people follow the market, dipping in and out to make a killing. I had negative equity in the 90s, but £120,000 positive equity when I moved in 2007. No doubt some of that has disappeared, but I don't care. I have a secure family home that costs half what rent would. Even if prices had soared I can't cash in until downsizing in 20 years. This whole house price argument is tedious and somewhat pointless.

Neil_in_Bristol

Running_Horse wrote: »

This whole house price argument is tedious and somewhat pointless.

For people who own houses, perhaps. But for those young people who might have to wait until they're 40 to buy a house, it's very important. Not that talking about it will change anything, of course!

HAMISH_MCTAVISH

Neil_in_Bristol wrote: »

For people who own houses, perhaps. But for those young people who might have to wait until they're 40 to buy a house, it's very important.

Prices rise, prices fall, but in about 18 years of every 20, trying to time the market is a mugs game. If you're in the middle of a huge crash with prices falling at 8% a quarter, then sure, wait a year or so. Otherwise, as we've seen, the additional rent and higher post crash mortgage costs will eradicate most of the savings from waiting.

In 2007, prices were high but cheap mortgages were readily available with no deposit. Today prices are lower but mortgages are expensive and huge deposits are preventing most potential FTB's from buying.

It's swings and roundabouts.

But the one thing that remains constant over the long term is the less time you spend enriching a landlord, the cheaper your lifetime housing costs will be.

Not that talking about it will change anything, of course!

True.

Neil_in_Bristol

HAMISH_MCTAVISH wrote: »

But the one thing that remains constant is the less time you spend enriching a landlord, the cheaper your lifetime housing costs will be.

If you're not enriching a landlord, you're probably enriching a banker thanks to the interest portion of your mortgage. (And even if you are enriching a landlord, they're probably passing most of it on to the bank, too!)