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House price rises

I am confused about this whole subject.
On the one hand I have read conflicting information that house prices have risen anywhere between 8%-12%. Then I read we are heading for a market crash due to unsustainable lending, supply and demand issues, tax issues etc etc. Who is to be believed and how do they calculate these rises and why are there discrepancies???? :confused::confused:
THE LONG AND THE SLOW ROAD SEEM TO APPLY TO DEBTS AND DIETS... THE TWO THINGS I WANT TO SEE THE BACK OF...:D
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Comments

  • Greed
    Greed Posts: 20 Forumite
    When the rich can't get 10% a year from the stock exchange, or 10% a year from banks, then they come and hassle property and buy and sell it to each other - adding 10% a year.
    Property hotspots they are known as.
  • The growths are caused by many factors. Greed has pointed to one - those with money buying property as investment. There are of course others and my strong belief is that alot of the drive is from people who see prices are skyrocketing and believe that that will continue indefinitely and are thus willing to pay every penny they can afford to get in on it (in the fear that if they dont now, they never will).

    However, this belief is fundamentally flawed which is where the biggest potential cause for a crash comes from. To sum it up - affordability. Yes prices are rising ridiculously. To make it obvious that things cant continue unchecked, extrapolate our current growth to 2020. I am in NI and we have average growth of 1.3. By 2020 sustaining this will yield an average house price of £10 million. No one in their right mind thinks this will happen. The reason? Well who could afford it? Average earnings are about £25k (incidentally even less in NI) - so this housing would require a 400x mortgage for an average earner.

    That is a bit of a nonsense analysis because it is almost unthinkable that things go that far, but it highlights the problem. Wages are no growing close to the rate of housing. So the longer we see these rapid growths, the less affordable the housing becomes, the more people who will be priced out, the less the demand and the more likely a drop in price - aka a crash.
    2 + 2 = 4
    except for the general public when it can mean whatever they want it to.
  • zkeithz
    zkeithz Posts: 30 Forumite
    Basic common sense prevails. You do not have to be an economist to work it out.

    The main source of house price information contained in the media is put out by the major estate agents Halifax and Nationwide. They have traditionally held extensive data in this respect.

    The clever thing is they report "asking prices" not "sold prices", hence there has traditionally been an upward push on prices.

    Prices have risen between 100% and 150% in the last 10 years, depending on whose figures you take and which regions, nonetheless there is no doubt we have seen significant rises.

    Ask yourself the question. What drives the market? purchasers of course. What do purchasers need? Lots of cash of a wacking great mortgage. How much can the purchaser borrow? typically between 3 to 5 times annual salary depending on circumstances.

    It is clear therefore that earnings drive house prices. The next question is, quite obviously, how much have earnings increased in the last 5 to 10 years? I doubt very much if the average wage earner has experienced an increase of much more than 20% in 10 years.

    Therefore the market is categorically not sustainable. Prices are due to come down. Unless the government review rules on lending and introduce variants like the 50/70 year or lifetime mortgage!!

    Most 20 somethings earn typically 12K to 18K, according to, I know there are higher earners, but I am talking about the average workers. Work it out 4x18K = 72K anyone seen a property under £100K lately?

    I am a surveyor and own my own commercial practice, hardyconsultants, We don't do housing, but I am being constantly bombarded by information relating to auctions and repossessed properties, which has increased significantly in the last 18 months. It appears to me the writing on the wall is becoming more visible

    Regards

    Keith
  • zkeithz wrote:
    Basic common sense prevails. You do not have to be an economist to work it out.

    The main source of house price information contained in the media is put out by the major estate agents Halifax and Nationwide. They have traditionally held extensive data in this respect.

    The clever thing is they report "asking prices" not "sold prices", hence there has traditionally been an upward push on prices.

    Prices have risen between 100% and 150% in the last 10 years, depending on whose figures you take and which regions, nonetheless there is no doubt we have seen significant rises.

    Ask yourself the question. What drives the market? purchasers of course. What do purchasers need? Lots of cash of a wacking great mortgage. How much can the purchaser borrow? typically between 3 to 5 times annual salary depending on circumstances.

    It is clear therefore that earnings drive house prices. The next question is, quite obviously, how much have earnings increased in the last 5 to 10 years? I doubt very much if the average wage earner has experienced an increase of much more than 20% in 10 years.

    Therefore the market is categorically not sustainable. Prices are due to come down. Unless the government review rules on lending and introduce variants like the 50/70 year or lifetime mortgage!!

    Most 20 somethings earn typically 12K to 18K, according to, I know there are higher earners, but I am talking about the average workers. Work it out 4x18K = 72K anyone seen a property under £100K lately?

    I am a surveyor and own my own commercial practice, hardyconsultants, We don't do housing, but I am being constantly bombarded by information relating to auctions and repossessed properties, which has increased significantly in the last 18 months. It appears to me the writing on the wall is becoming more visible

    Regards

    Keith

    Yes.Lots of terraced houses around me for 50-60k
    In an Acapulco hotel:
    The manager has personally passed all the water served here.:rotfl:
  • BT_man
    BT_man Posts: 68 Forumite
    Leighthal wrote:
    Yes.Lots of terraced houses around me for 50-60k

    Where do you live? What's the job market like in that area?.....
    some people label me a troll.
    Totally Realistic Opinion Let Loose
  • zkeithz
    zkeithz Posts: 30 Forumite
    It would be helpful to know where?
  • empfun
    empfun Posts: 608 Forumite
    The opening up and influx of immigrants to the country will create demand for housing. Thus property value will be reflected accordingly. The basic law of supply and demand.
    I know nothing
  • FaTB
    FaTB Posts: 162 Forumite
    Greed wrote:
    When the rich can't get 10% a year from the stock exchange, or 10% a year from banks, then they come and hassle property and buy and sell it to each other - adding 10% a year.
    Property hotspots they are known as.

    .....And those same rich "financially switched on people" will be the first to head for the exit and take profit, the moment they see the market has peaked, or that they can get a better return elsewhere !!
  • empfun wrote:
    The opening up and influx of immigrants to the country will create demand for housing. Thus property value will be reflected accordingly. The basic law of supply and demand.


    So why do BTLers keep buying up one bedders?

    Can't cram too many Poles into one of them.

    You do realise the law on HMOs has been changed recently?

    If BTLers were hoovering up 4-5 bedroom houses you might have a point. But they don't cos they can't afford it.
  • talksalot81
    talksalot81 Posts: 1,227 Forumite
    So why do BTLers keep buying up one bedders?

    Because the increase in capital value of 2 such properties will be more than that of a single property costing twice as much...

    I think most BTLs working on 1 bedders either has thought hard about it or hasnt thought at all. I think that more likely someone working with such a property is betting heavily on increases in capital value (which I guess is in many respects supported by reports of so many empty properties). I think a 1 bedroom for BTL would need to be well though out to return a good yield because you would be targetting a rather specific market. A 2 bedroom property would be much more universally marketable... that leads me to believe that the letting of a BTL property is often seen as a secondary way of making profit.
    2 + 2 = 4
    except for the general public when it can mean whatever they want it to.
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