First time buyers priced out...

julieq

shortchanged wrote: »

I would still like to see you justify this statement julieq.

That's not really that difficult though.

Observations:

Prices are being sustained about 10% shy of peak levels.

There are very few first time buyers.

Therefore prices are sustained without first time buyers.

Commentary:

Why? Because there is strong demand for rented accomodation.

Why? Because first time buyers are not able to enter the market.

It's not a question of what you WANT to buy a property for, it's a question of what you can by property for. That's essentially set by yield with a few other factors including renovation costs etc. No business likes overpaying, and they'll be less emotional about a purchase than someone living there, buit there is a price floor set by relative yields from different investment types. Below that property will be snapped up.

shortchanged_2

chucky wrote: »

people buy investment property to make their profit through the property increasing in value.

others buy property because it provides a steady cash flow yield month after month. don't get me wrong it's better to buy at the lowest points in the cycle, but not everyone does.

it depends why you invest in property, for the yield or capital appreciation.

So if you look at buyers priorities surely someone who is buying a house to live in is more likely to pay more for a property than someone that is buying a property in order to make money. The BTL is taking the bigger risk that for them it is purely a financially motivated transaction therefore the ethos must surely be 'buy low, sell high'.

I suppose what I am getting at is that if you are having a property market at the 1st part of the chain driven by BTL'ers rather than FTB's then there is going to be less incentive to pay higher prices for property.

IveSeenTheLight

chucky wrote: »

people buy investment property to make their profit through the property increasing in value.

others buy property because it provides a steady cash flow yield month after month. don't get me wrong it's better to buy at the lowest points in the cycle, but not everyone does.

it depends why you invest in property, for the yield or capital appreciation.

As you can see from my links above, BTL is expanding.
Many investors buy at the bottom of the cycle. With my links above again regarding house building, net migration etc, it's quite plausible that investors want to get in before prices increase.

Many believe we are in for a period of stagnation, possibly small falls (less than double digit) and don't want to risk for what is only potential small falls before getting embroiled in greater competition.

I remember Donald Trump quoting something like "It's an amazing time to buy" If you remember he started off buying real estate when there was a recession on.

System

Are you saying:

"BTLers are buying properties and renting them back out to the people who would have bought them normally."

Just in a much more complicated way?

Thrugelmir

[QUOTE=HAMISH_MCTAVISH;42610862
Also don't forget, at some point in the next few years, lending will start to be significantly more available. Probably from 2013 onwards, as the SLS has to be repaid by 2012.

[/QUOTE]

This statement doesn't make sense. The SLS is providing banks with capital funding. Enabling them to maintain their existing mortgage books in an orderly way. As capital redemptions are made by borrowers, this money will used to repay the SLS. So there's no new mortgage lending available. The pool would have contracted somewhat by the end of 2012.

IveSeenTheLight

shortchanged wrote: »

I suppose what I am getting at is that if you are having a property market at the 1st part of the chain driven by BTL'ers rather than FTB's then there is going to be less incentive to pay higher prices for property.

I thought we were discussing prices being sustained, not increasing prices.
Remember property is not a liquid assett and supply has dramatically reduced, meaning that good rental investment opportunities may not be so easily available and there is still competition to obtain that property.

remember also the downsizers wishing to capitalise on previous house price growth.

DervProf

HAMISH_MCTAVISH wrote: »

True, but getting back to the reason we all mention deposit restrictions don't prevent HPI, they merely delay it.

Likewise -

QE, lack of building new homes, increasing population, low interest rates, media hype, loose lending etc don't prevent house price crash, they merely delay it.

shortchanged_2

IveSeenTheLight wrote: »

I thought we were discussing prices being sustained, not increasing prices.
Remember property is not a liquid assett and supply has dramatically reduced, meaning that good rental investment opportunities may not be so easily available and there is still competition to obtain that property.

remember also the downsizers wishing to capitalise on previous house price growth.

Well I am actually referring to downward pressure on property prices from a lack of FTB's which julieq seems to dispute.

julieq

DervProf wrote: »

Likewise -

QE, lack of building new homes, increasing population, low interest rates, media hype, loose lending etc don't prevent house price crash, they merely delay it.

Agreed for the 3 of your list, but not the first two (and I'd replace "house price crash" with "house price deflation" because crash is too emotive a word and has no clear generally agreed definition. The first two are the dominant factors.

Of the rest, we don't have particularly low mortage rates now: prices are still sustained. We certainly don't have loose lending: prices are still sustained. If anything, media hype is about prices falling: prices are still sustained. And the reason prices are sustained is that overall demand for housing (rented and owner occupied) remains high because of the very small amount of slack in the system.

It's really a matter of opinion that lending was loose on the whole, really the figures for loan to value and default rates don't support that view at all. But after one of the biggest losses in confidence in history in the financial market and after a massive reduction in lending and at a period where many fear job losses and see increasing inflation, prices are still sustained 10% shy of their peak. That would suggest that the effect of media-fuelled over-exuberance on prices was very limited.

Graham_Devon

julieq wrote: »

Agreed for the 3 of your list, but not the first two (and I'd replace "house price crash" with "house price deflation" because crash is too emotive a word and has no clear generally agreed definition. The first two are the dominant factors.

Of the rest, we don't have particularly low mortage rates now: prices are still sustained. We certainly don't have loose lending: prices are still sustained. If anything, media hype is about prices falling: prices are still sustained. And the reason prices are sustained is that overall demand for housing (rented and owner occupied) remains high because of the very small amount of slack in the system.

It's really a matter of opinion that lending was loose on the whole, really the figures for loan to value and default rates don't support that view at all. But after one of the biggest losses in confidence in history in the financial market and after a massive reduction in lending and at a period where many fear job losses and see increasing inflation, prices are still sustained 10% shy of their peak. That would suggest that the effect of media-fuelled over-exuberance on prices was very limited.

I'd have to disagree with the line in bold.

For existing owners, when has there ever been a time of lower rates?

For those looking at buying, the story is somewhat different. But I can't think of a time when mortgage rates have been any lower, and don't think they could feasibly get any lower. So I'd have to disagree with the suggesting that mortgage rates are not particularly low.

We'll most likely never see them as low as this again in our lifetimes.

The rest, however, was reasonable, but misses, again, all the stimulus and new policies which have been created to enable people to carry on. It's difficult to say that lending wasn't a problem, when the taxpayer has had to shell out for SMI, (upping the interest rate, making it easier to claim, making it so you can claim earlier) bank bailouts (including NR, which has really held back on reposessions, instead, just letting arrears build up) amongst other stuff.