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

ukcarper

crash123 wrote: »

I bought after the last crash and instead of buying a 2 bed we bought a 3 bed. maybe this time instead of buying a flat you can buy a 2 bed.
Stagnation may happen but I think we will have a slow decline for a few years so wages can catch up.

After the last crash houses prices compared to wages were the lowest the have been since the war if not longer. But I agree to get to the average they need to fall a bit more that’s not to say they will though and unlike a lot of people on here I don’t profess to know what they will do.

DervProf

Linton wrote: »

In the world (or the country) we live in there is insufficient housing for everyone to have a nice 4 bedroomed detached in a non-grotty part of the country. But there is sufficient for many 2-salary families to get one.

It could also be said that in our country it is very difficult for those on modest incomes to have a 2 bed semi, even in an "average" part of the country. I don't think this is a good thing, and find it odd that there are those that seem to enjoy this situation getting worse.

RenovationMan

Here is a 2 bed semi up for sale for £79,950. With a 5% deposit of £4000 and a 25 year 6% repayment mortgage of 632.93 per month, which compares very reasonably to rental costs.

http://www.rightmove.co.uk/property-for-sale/property-34827080.html

Personally, if I were in the market for a 2 bed house I would go for a terrace rather than a semi. There would be a much wider range of nicer houses to choose from in that price bracket. This is certainly in the range of most couples on a modest budget.

One could probably buy a cheaper 2 bedder that this that required a lot of work. This is one of the reasons that I have managed to climb the housing ladder so quickly. We buy the most expensive house that we can afford, but on an interest only mortgage. We use the repayment portion of the mortgage to renovate the house and bring it up to standard. In our experience, the renovation work always raised the value of the house (and therefore equity stored within) to a level far above the increase in equity achieved by repayments.

In the example above, someone could buy it on an IO basis and have a spare £253.17 a month to spend on renovation. A tidy sum when you're doing much of the work yourself.

crash123

ukcarper wrote: »

After the last crash houses prices compared to wages were the lowest the have been since the war if not longer. But I agree to get to the average they need to fall a bit more that’s not to say they will though and unlike a lot of people on here I don’t profess to know what they will do.

I don`t profess to know but I say what I think may happen.
I could have bought in 1988/89 but I thought houses were too expensive so I waited until 1993. I got the bottom wrong by about 2 or 3 years.

The house I bought peaked at about £190K and are for sale at £175K but still not selling. A repro sold for £2k less that what it did in Q3 2004 which was £168k. I still think we have a bit further to go.

If I was in the same position now as I was all those years ago I would be sat patiently on the side lines waiting to see what happens. The western economies are in a mess.
Just my opinion which could be wrong but you makes you own mind up.

Linton

Going4TheDream wrote: »

I am probably being a bit dim here, but can you explain housing shortage....do you mean we have thousands and thousands of homeless people or you mean we have thousands and thousands of people living in the wrong types of homes........?

Neither. Thousands and thousands of people are living in houses that they believe are of lower status than they think they are entitled to.

A good thing about the rental market is that it can take up an excess of population over houses simply by packing them in tighter.

Linton

DervProf wrote: »

It could also be said that in our country it is very difficult for those on modest incomes to have a 2 bed semi, even in an "average" part of the country. I don't think this is a good thing, and find it odd that there are those that seem to enjoy this situation getting worse.

The situation is a logical consequence of the number of houses being built, the number of people, rising expectations of the type of housing to which one is entitled and changes in society leading to smaller households. It will continue to "get worse" as long as those factors are in force.

Whether one selfishly enjoys it or not or whether one thinks one has gained the moral high ground by saying it is a Bad Thing is completely irrelevent.

Pimperne1

Just bumping this thread as there is some great stuff on this page alone (provided my comment doesn't take it over to the next one in which case it should read "Just bumping this thread as there is some great stuff on the previous page"). No wonder you were banned from HPC Hamish.

Thrugelmir

RenovationMan wrote: »

In our experience, the renovation work always raised the value of the house (and therefore equity stored within) to a level far above the increase in equity achieved by repayments.

That's one of the big myths of the boom. As the cost of the improvements added little to no value in many instances. Merely by buying a property and selling it at a later date (unaltered) would have generated a similar net profit.

RenovationMan

Thrugelmir wrote: »

That's one of the big myths of the boom. As the cost of the improvements added little to no value in many instances. Merely by buying a property and selling it at a later date (unaltered) would have generated a similar net profit.

I didn't realise that my renovations adding value to my house was one of the big myths of the boom!

Just joking, I know exactly what you mean and I remember watching that Sarah Beany and shouting at the TV when some knob ripped out all the lath and lime plaster and oak beams (which they burned in a bonfire in the garden :eek:) in a 200 year old cottage because they didn't like the wonky walls and floors! In the end they saw sense and put it all back with reclaimed beams and the bloke went on a lime plastering course and re-did all of the rooms.

In the end they made slight profit just because house prices rose so much in the 12-18 months the were 'renovating' it. Sarah nicely mentioned that if they had just bought it and locked the front door and left it for 18 months they would have made double their profit. :rotfl:

Gone are the days when splashing a bit of magnolia around will make a difference. The stuff we have done is more structural.