U.K. Home Prices Decline as Outlook Worsens, Hometrack Says

joguest

http://www.bloomberg.com/news/2011-10-31/u-k-home-prices-decline-0-2-as-outlook-worsens-hometrack-says.html

"U.K. house prices dropped for a sixth month in October and a slowdown in London’s housing market will cause the pace of decline to accelerate in the coming months, property researcher Hometrack Ltd. said.
The average cost of a home fell 0.2 percent from September and was down 2.8 percent from a year earlier, the London-based company said today in an e-mailed report on its monthly survey of real-estate agents. Prices based on Hometrack’s gauge have fallen every month except one since July 2010. "

Pimperne1

Three percent over a year. Not too unhappy with that considering how much they went up before 2007. Jo, you really are the turkey voting for Christmas.

DervProf

Three percent over a year. Quite happy with the fact that houses are one of the few things that are a little bit cheaper than they were a year ago.

geneer

In real terms, oh around 8%.

Rinoa

2.8% is around £4500 off the average house.

Is it better to lose £4500 ~ or pay £7000 annually to rent one.

Pimperne1

DervProf wrote: »

Three percent over a year. Quite happy with the fact that houses are one of the few things that are a little bit cheaper than they were a year ago.

And mortgages are significantly cheaper than they were in 2007 (at least mine is).

Graham_Devon

Good.

..........

joguest

Rinoa wrote: »

2.8% is around £4500 off the average house.

Is it better to lose £4500 ~ or pay £7000 annually to rent one.

Say, you're thinking of taking out a £125,000 mortgage to buy that average house - on a 25 year mortgage @3%, total interest payments over the 25 years = £52,830, whereas if you wait a year and buy the same house with a £120,500 mortgage (actually it's going to be less than this if your deposit has grown in the interim and accrued interest rather than paying dead money on debt) then the total interest payment over 25 years = £50,928. A net improvement of £1901.

How much does it cost to repair, maintain, decorate and insure a house for 12 months? If it's more than £600 then you're better off renting with house prices falling at 2.8% per annum (assuming an interest rate of 3% on the mortgage).

There's really very little financial difference either way with prices falling at this rate. If they fall faster then it's an absolute no-brainer - rent.

Pimperne1

joguest wrote: »

Say, you're thinking of taking out a £125,000 mortgage to buy that average house - on a 25 year mortgage @3%, total interest payments over the 25 years = £52,830, whereas if you wait a year and buy the same house with a £120,500 mortgage (actually it's going to be less than this if your deposit has grown in the interim and accrued interest rather than paying dead money on debt) then the total interest payment over 25 years = £50,928. A net improvement of £1901.

How much does it cost to repair, maintain, decorate and insure a house for 12 months? If it's more than £600 then you're better off renting with house prices falling at 2.8% per annum (assuming an interest rate of 3% on the mortgage).

There's really very little financial difference either way with prices falling at this rate. If they fall faster then it's an absolute no-brainer - rent.

Its might be a no brainer if you ignore the possibility that they could go up 5.2% over the year (as they had done in September 2010 - Land Registry).

joguest

Pimperne1 wrote: »

Its might be a no brainer if you ignore the possibility that they could go up 5.2% over the year (as they had done in September 2010 - Land Registry).

Ah, yes, the random point in time methodology.

OK, here's another random point in time: September 2007. Over the last four years the land registry shows prices in england & wales have fallen 10.9%, or 2.62% per annum.

Obviously it depends on where you live - if you're not living in London/areas of the southeast, then renting (and delaying purchase) has made financial sense over the last four years.

Pimperne1

joguest wrote: »

Ah, yes, the random point in time methodology.

OK, here's another random point in time: September 2007. Over the last four years the land registry shows prices in england & wales have fallen 10.9%, or 2.62% per annum.

Obviously it depends on where you live - if you're not living in London/areas of the southeast, then renting (and delaying purchase) has made financial sense over the last four years.

Not really random. I took the latest LR figures which showed a drop of 2.6% to Sep 11 and then looked at the previous year which showed a rise of 5.2%.

Here's another one then, May 09 Average Price £152,597, Sep 11 £162,109.

10.9% over four years though - not really a "crash" is it?