house prise rise or crash??

Peeper_2

zag2me wrote:

*Yawn*

People can argue this until they are blue in the face, fact is no-one knows. Some people will say crash, others will say rises.

I have to agree. There is no correct answer to this one. Although you will always meet someone who thinks they know the key to it down at the pub. There are too many contibuting factors. Personally after watching the local market for some time now, it doesn't seem to be moving much at all. But this could change, especially if we get a new government.

My advice would be, if you think you can afford it now, buy it. If the bottom drops out of the market, it's not a problem as long as you don't panic and sell! You might be miffed that you bought at the higher price but generally all house prices rise over a ten year period. A good property bought today and sold at the right time is always a good investment. Think of it as a long term investment that you can cash whenever the profits are in your favour.

wibble68_2

I think it's worth remembering that in 1990 the Halifax said that house prices had bottomed out.

This was the first year that the market stayed flat after several years
of booming prices.

It's difficult to say if prices will rise or fall, but analysis of the current housing market situation by vested interest groups, needs to be taken with a pinch of salt.

Anyone who believed the Halifax in 1990 and went out to buy a house, would have almost certainly ended up in negative equity due to prices falling considerably in the early 90's.

The market did not pick up again until 1996.

Ritter

I think house prices will keep on rising but not at the pace seen over the last few years. I believe there is such a pent up demand from ftb that this alone will prevent prices falling. There is also a high level of immigration too. Where will these people live? If they don't buy themselves then an investor will and let the property out anyway.

Then I think of my own kids. They have been to university and run up debts (not large ones but they start out adult life in the red all the same). This must have an effect on their ability to save for then buy a property. They may not be able to buy now because of this but surely one day they will. They add to the demand eventually. I know of several people who help their children out; either by buying for them (lucky so and so's) or even by buying to let and then one day selling up and giving the built up equity to their kids so they may use that as a deposit for their own home. One way or another the demand for property is still there and this stops prices falling even if it means they don't rise.

In my view the demand for property, a home we all need to live in, pushes the prices slightly higher month after month. What I hope for though is the opposite. For my kids.

meanmachine_2

Ritter wrote:

In my view the demand for property, a home we all need to live in, pushes the prices slightly higher month after month. What I hope for though is the opposite. For my kids.

I'm afraid the housing market doesn't work like this.

It's rather like a stampeding rhino. It charges off in one direction, gets knackered then charges off in the opposite direction.

I've never known the housing market to move "slightly higher" or "slightly lower", and those predicting a soft landing are banks, building societies and estate agents. Notice a common link?

Sadly, the market always moves in the direction that shafts the greatest number of people. This is the reality of all finance. It sucks people in with the lure of low rates then, once committed, slowly squeezes them for every penny they've got.

The fact is, the market;s been wrung dry and there is no equity left in property anymore. Anyone who buys now, thinking their house is going to turn into their own private cash machine and pay for their annual holiday or next 4WD is set for a big disappointment.

wibble68_2

Ritter wrote:

I think house prices will keep on rising but not at the pace seen over the last few years.

I don't believe house prices can keep rising indefinately.

As far as I'm aware there has never been a so called "soft landing" in
the housing market.

Feel free to correct me if I'm wrong.

dag_2

Does anyone actually know how much of the UK's housing stock is currently owned by private homeowners? And how much is owned by private UK investors, private foreign investors and institutional investors? And if these figures have changed over the past century?

And also - does anyone know how much of the UK electorate is made up of homeowners? Or tenants, lodgers and homeless people? And how much this has changed too?

And does anyone know if these statistics vary from one region to another?

Anyone know if anyone's collected this information already, and where we can find it?

The reason I ask is this. Like many of us have said, there are many factors that affect the housing market. However, one of the factors which no-one seems to be mentioning is the political will behind the rising house market.

Correct me if I'm wrong, but in the post-war boom years, after the slum clearances, the number of private homeowners started rising. Maybe it was helped by the council right-to-buy which happened a few decades later - but my point is, there was a strong political support for the rising market.

Government taxation policies reflected this; the most obvious example is the abolition of domestic rates. By taxing the rateable value, domestic rates were effectively an income tax on the benefit of owning a property rather than renting it, and was applied fairly uniformly, no matter how many properties you owned. This served to moderate the housing market to some extent.

Admittedly the poll tax was abolished after the riot - but the council tax that replaced it wasn't as closely linked to property value as the domestic rates. Even the Lib Dems "local income tax" is less progressive, since it only taxes the before-housing-costs income of people who live in a particular area, regardless of whether they're homeowners or tenants. Foreign institution investors, or Van Hoogstraten types who don't live locally to the properties they own, would be totally exempt from the Lib Dem local income tax. My point here is: taxation policies continue to support the rising market, right across the current party political spectrum.

However, when the majority of the housing stock is owned by foreign or minority institutional investors, and the majority of the electorate are their tenants, the political support for a rising market won't be anywhere near as strong as it is now. Political parties will win elections on the ticket of promising to crash the housing market.

I admit we're still a very long way off from this scenario - but it could happen.

If there are no first-time-buyers, then buy-to-let investors will pick up the bottom end of the market - but only as long as political support still exists - which, in turn, depends on homeowners being in the political majority.

Last time I checked with national statistics, at least 60% of the housing stock was still owner-occupied - but that's not as much as twenty years ago. So I think it's definitely on its way down.

slater14

I dont think governments are overly concerend with housing bubbles (they should be). Its all to do with that old chestnet - Interst rates.

Lower interest to kick start your economy (good thing) money becomes cheap and creates a housing bubble (bad thing) so you raise interest rates which stifles the economy (bad thing) but stops house prices overheating further (good thing)......and round and round the merry-go-round goes.

There will be a correction (crash) for as many reasons as there was a bubble....one thing that I am pretty certain will happen after Thursday is a new layer of tax on BTL. Why? because the focus of this bubble is being squarely placed on the shoulders of BTL'ers and the vast majority of people (who dont own second properties) will not be affected and will see it as fair (because it doesnt affect them) to tax somebody who appears to be able to afford more than one property.

Once the correction (crash) starts picking up speed, BTL'ers will be forced into a position not unlike endowments and pensions, they cant afford to keep it, but they cant afford to sell it....ergo - a group of individuals who are trapped into paying whatever new tax Mr Brown can get away with.

Its going to be an "interesting" 36 months, thats for sure!....(yes, the pun was intended)