The best indicator of house prices

Pimperne1

myhouse wrote: »

To answer your question, a number of factors.
I would say the appalling state of surrounding countries has allowed the UK to be considered a safe haven for funds. This of course has funded a mini boom on top of an existing bubble which hides an overall UK house price drop.
Lender forebearance, the govt being quick off the mark on reducing the deficit and thereby soothing market fears early on and a whole host of other factors.
But mainly IRs. Just because low IRs didn't prevent a drop in one country doesn't mean it wasn't a big factor in preventing drops here.

Whatever factors you may or may not agree with, there is simply not the money swilling around anymore to fund property at existing prices outside London and Oilland. If people simply can't afford to buy, those vendors who need to sell will set the new lower price levels.

Though the surveys indicate very little change in prices, a look at the main house selling sites shows a large percentage of properties at discounted prices and still not selling.

Apart from the fact that those vendors who "need to sell" have needed to sell for the past few years without a significant affect on house prices.

This is pretty much a worst case scenario for those who wished for an HPC, a pretty sharp fall followed by a quick correction followed by years of stagnation. Even with years of stagnation, because of the low IRs and higher rents, homeowners are still sitting pretty.

HAMISH_MCTAVISH

Pimperne1 wrote: »

This is pretty much a worst case scenario for those who wished for an HPC, a pretty sharp fall followed by a quick correction followed by years of stagnation.

It is indeed.

As I have posted many times before, time is the enemy of housing bears.

Even with years of stagnation, because of the low IRs and higher rents, homeowners are still sitting pretty.

And fewer young people than ever before can buy houses, thanks to mortgage rationing.

House prices are only being held down artificially through rationing mortgages and preventing a million or more people from buying houses.

But those million plus people are being forced to enrich their landlords instead of themselves, and massively increase their lifetime housing costs.

Had you asked any of them before the crash if they thought it would make sense to fix a "problem" where a few hundred thousand people can't afford to buy a house, with a "solution" that involved preventing millions of people from buying a house, they'd have said you were mad....;)

myhouse_2

It's tired and incorrect to keep trotting out that the problems are due to mortgage rationing. Mortgage rationing is not the cause of the problem, it is a natural result of the fact that banks are over-exposed due to excessive lending in the recent past.
I don't consider renting dead money in many circumstances. Many people paying e.g. 5000 rent a year now are seeing much more than that coming off the houses they might wish to buy.
Is time really the enemy of the bear? Things certainly have been dragged out for some time, but the problems haven't been solved. Houses will have to become affordable eventually. It's just a matter of time.

HAMISH_MCTAVISH

myhouse wrote: »

Is time really the enemy of the bear?

Yes.

Average rent 5.5%
+
Average mortgage 3.5%
+
Average house price falling by less than 1%
=
Loss for those deferring purchase.

Not to mention that prices today in most places are higher than they were 3 years ago, so you've wasted 3 years rent, and missed out on 3 years of record low interest rates.

There was an 18 month window where deferring purchase made sense. Since then, not so much.

Houses will have to become affordable eventually. It's just a matter of time.

Houses are affordable now, after all, rent is higher than a mortgage, even with mortgage interest at 5%, in somewhere around 90% of the UK.

But most people can't get a mortgage... Thanks to mortgage rationing.

So you're only holding prices down temporarily and artificially by preventing millions of people from buying.

That's not sustainable for very much longer...

crash123

HAMISH_MCTAVISH wrote: »

The current financial woes are temporary. Like all previous recessions, this too will pass.
.

This is not a normal recession

myhouse_2

HAMISH_MCTAVISH wrote: »

Yes.

Houses are affordable now, after all, rent is higher than a mortgage, even with mortgage interest at 5%, in somewhere around 90% of the UK.

But most people can't get a mortgage... Thanks to mortgage rationing.

.

That doesn't mean housing is affordable across the spectrum. Rent is only higher than a mortgage because of low interest rates which won't last forever. Renting also means no maintenance costs, unlike the owner of a house. Plus, people don't necessarily rent - if they can't afford either or think that buying is simply poor value for money, they stay longer with their parents, or employ other strategies - get lodger in/ sub-let rooms etc.

Pimperne1

myhouse wrote: »

That doesn't mean housing is affordable across the spectrum. Rent is only higher than a mortgage because of low interest rates which won't last forever. Renting also means no maintenance costs, unlike the owner of a house. Plus, people don't necessarily rent - if they can't afford either or think that buying is simply poor value for money, they stay longer with their parents, or employ other strategies - get lodger in/ sub-let rooms etc.

Low interest rates only affect a percentage of the home owning public - it doesn't affect those who own outright or who are on their lender's SVR or some of those who are on longer term fixes (I am currently paying nearly 6% on a couple of properties). I think your "stay longer with their parents" argument plays into Hamish's hands - he knows that, he also knows that the longer this goes on the less the parent and child are prepared to put up with it.

Graham_Devon

Pimperne1 wrote: »

This is pretty much a worst case scenario for those who wished for an HPC, a pretty sharp fall followed by a quick correction followed by years of stagnation. Even with years of stagnation, because of the low IRs and higher rents, homeowners are still sitting pretty.

It's actually the worst scenario for EVERYONE.

Theres no need to pretend it hurts one side of the argument more. It doesn't. If you want HPI, or are invested in property, a long period of stagnation is of as much benefit to you, as it is to those wanting lower prices.

All this pretence that it's the worse scenario for those wanting prices to fall is nonsense, and only stated to make YOU feel better. Hence why Hamish will jump on your wagon and start claiming "yes yes yes" and justifying what you stated. The need to help each other out and follow on peach others posts in terms of support is very see through and clearly helping justify your own thoughts.

The worst case scenarios, is of course rising prices and more stimulus....maybe long term government influence on the property markets. It's certainly not a bit of stagnation.

Pimperne1

Graham_Devon wrote: »

It's actually the worst scenario for EVERYONE.

Theres no need to pretend it hurts one side of the argument more. It doesn't. If you want HPI, or are invested in property, a long period of stagnation is of as much benefit to you, as it is to those wanting lower prices.

All this pretence that it's the worse scenario for those wanting prices to fall is nonsense, and only stated to make YOU feel better. Hence why Hamish will jump on your wagon and start claiming "yes yes yes" and justifying what you stated. The need to help each other out and follow on peach others posts in terms of support is very see through and clearly helping justify your own thoughts.

The worst case scenarios, is of course rising prices and more stimulus....maybe long term government influence on the property markets. It's certainly not a bit of stagnation.

That's not all complete bllxoo but most of it is.

Graham_Devon

Pimperne1 wrote: »

That's not all complete bllxoo but most of it is.

Thanks.

I suppose the discussion is over until you get someone backing you up again?