anyone else want a CRASH...?

Hereward

sm9ai wrote:

True, but if a loaf of bread is 50% of your wages, then is it overpriced?

Well rich folk can afford it so it still sells. So therefore the bread is not overvalued?

It is upto the purchaser to decide if something is overpriced, and if they feel that the loaf of bread, in your example, is too much, then they have the option not to buy it. They could go out and buy the raw ingredients and make the bread themselves.

Overvalued is a different concept: if the bread only cost 10p to make, but the baker wanted £100 then the bread is clearly overvalued, but if somebody buys it then it is not overpriced (but I would like to add that if you bought a loaf of bread for £100 then there may be somthing wrong with you).

sm9ai

Hereward wrote:

but I would like to add that if you bought a loaf of bread for £100 then there may be somthing wrong with you.

So therefore buying a house in todays climate means there may be something wrong with you?


Anyway in other news, tonight with trevor mcdonald on housing for key workers. People had to travel miles to work. I wonder how much increased road congestion is related to higher house prices?

I_Claudius

sm9ai wrote:

True, but if a loaf of bread is 50% of your wages, then is it overpriced?

Well rich folk can afford it so it still sells. So therefore the bread is not overvalued?

i guess the point is that there wouldn't be enough people willing / able to buy £100 loaves of bread; so no market for them and they wouldn't sell

seems the property market doesn't view prices at the £100 loaf of bread level yet, as crazy it may seem there is still a market for

also banks don't fall over themselves to come up with new wacky ways to make people overstretch themselves to enable them pay for a loaf of bread they cannot repossess

i guess loaves of bread not the best analogy really - not a particularily lasting asset either!

Hereward

Me wrote:

Overvalued is a different concept: if the bread only cost 10p to make, but the baker wanted £100 then the bread is clearly overvalued, but if somebody buys it then it is not overpriced (but I would like to add that if you bought a loaf of bread for £100 then there may be somthing wrong with you).

sm9ai wrote:

So therefore buying a house in todays climate means there may be something wrong with you?

No, but if you bought a property for £1m and the cost of the raw materials was only £1,000 then there could be as it would be cheaper for you to go out a build your own property. Buying property in today's market is difficult because there are overvalued properties on the market that sellers seem to think will sell, and there are some buyers who are willing to buy them. With a little research these overvalued properties can be weeded out and leave the correctly valued properties. It is then up to the buy to decide if they are willing to pay the price for these properties.

The view I get from those who want a property price crash is that they are not willing to pay the current price for a property as they consider them to be both overpriced and overvalued; however, this is just their view of the market and there are other buyers who are willing to purchase properties because they believe that they are not overvalued and are at a reasonable price.

tomstickland

sheraz2 wrote:

^Totally agree, the FTB wishing for a crash are hypocrytical and as selfish as they make the BTL out to be.

They don't care what implication a free falling housing market may have, they just care about getting on the ladderthemselves, even though this free fall they wish for doesn't make brilliant reading for themselves as well. My grandad always said that you should never let a greedy person make a decision. These FTB are so caught up in their own world they don't even understand how a crash is not all good news for themselves as well.

Would-be FTBs are a mainly ignored section of society why only want to be able to buy somewhere to live for a reasonable amount. Yes, they resent seeing "investors" buying up the cheap property to let out. They also resent working hard and still not being able to afford even a basic property.

I've got a friend who earns £20K pa. There are NO suitable properties in the town for £60K, even 1 bed flats. Selfish !!!!!!! that he is he wants to buy somewhere to live.

PoorDave

sm9ai wrote:

True, but if a loaf of bread is 50% of your wages, then is it overpriced?

Well rich folk can afford it so it still sells. So therefore the bread is not overvalued?

But a loaf of bread could never make the jump to 50%, it would never get to 49%, or 48% etc. Things don't generally jump in value like that (unless there are massive sudden changes in external factors acting on the market). House prices haven't done that - it's been a gradual rise.

The bread is not overvalued to the seller of the loaves if he/she sells all they make (to the rich folks.)

PoorDave

tomstickland wrote:

Would-be FTBs are a mainly ignored section of society why only want to be able to buy somewhere to live for a reasonable amount. Yes, they resent seeing "investors" buying up the cheap property to let out. They also resent working hard and still not being able to afford even a basic property.

I've got a friend who earns £20K pa. There are NO suitable properties in the town for £60K, even 1 bed flats. Selfish !!!!!!! that he is he wants to buy somewhere to live.

Life is as much about working smart as it is about working hard.

Have you turned your friend on to matched betting etc so they can make a big deposit?

Also, if your friend is serious, they should expect to have to borrow more than 3x salary these days. Tough but true i'm afraid.

What have you suggested to help them out?

PoorDave

Hereward wrote:

No, but if you bought a property for £1m and the cost of the raw materials was only £1,000 then there could be as it would be cheaper for you to go out a build your own property. Buying property in today's market is difficult because there are overvalued properties on the market that sellers seem to think will sell, and there are some buyers who are willing to buy them.

I'm afraid you can't say they're over valued if a buyer is willing to pay the price asked.

Value = what someone (you only need one buyer!) is willing to pay for something.

lynzpower

roswell wrote:

Id say YES there is enough housing for everyone, NO not all at the right place and not the right sizes and not the right area`s.

Price / location / size would have no beering on your need for housing if you were homesless and the sooner the UK public understand this the better, you dont see the occupans of shacks in africa complaining that its not the right size / place / price you find them greatfull that they have a roof over there heads and this is what I mean by homeless.

There is enough housing stock. after all if its not council owned its BTL if its not BTL its owned by a inidividual or company. It may not be the right place right size right colour but its somewhere to live.

Actually, I disagree with this

1. Price
Not only buying is too expensive, as is renting. Many of my clients have over the years tried to find private rental properties but they are priced above Housing benefit thresholds. Housing benefit wont pay a grand a month for a 2 bed flat in some parts of london- thus the fmaily remain homeless and living in a hostel, moved weekly and living in the next room & sharing bathrooms & facilities with drug users/ released offenders and any other "transient" population.

There is enough housing stock. after all if its not council owned its BTL if its not BTL its owned by a inidividual or company. It may not be the right place right size right colour but its somewhere to live.[/

not if you cant afford the rent, its not an option as I discussed above.

The choice is a) the taxpayer pays more via the HB system, or b) the landlord reduces thier rates ( sometimes this does happen) or c) nothing and everyone ends up in limbo.

2. What is homeless?
If you think living with your kids in a setting as described above and being moved very frequently often to another borough with no support systems/ having to move schools for your kids/ hospital treatment disrupted and so forth for a few weeks then youll get moved again isnt homeless I dont know what Is. No tenancy , no security, no address. Additionally being severely overcrowded makes you legally "homeless at home" .

cwcw

Can I point out that a lot of people use the "it's cheaper for me to pay rent then pay for a mortgage so renting is better" argument, but this is too simplistic.

If renting is cheaper than a repayment mortgage, but the interest element of the repayment mortgage is less than the rent would be, then the mortgage is still better. You would be building up equity in a house which is likely to yield a much better annual rate of return in the long term than a high interest savings account would (3.9% after tax for the market leading accounts).

If renting is cheaper than an interest only mortgage, or cheaper than the interest element of the repayment mortgage, then it may indeed be better to rent, although there are other considerations to renting such as being at the mercy of a landlord, not being able to alter your own home, lack of long term stability, no "light at the end of the tunnel" as you will always have to pay rent - it won't stop after 25 years, etc. These also need to be taken into account.