FT - UK house (asking) prices reach record high as Rightmove surges 1% in May

CLAPTON

shortchanged wrote: »

How do you think house prices got where they are now?

Let me tell you. It was caused by a raft of loose lending which included such things as IO mortgages, liar loans, high income multiple loans and 100% + mortgages.

Now guess what. These levels of lending are now not present therefore many people cannot now actually 'afford' to pay the prices that people are asking. Low interest rates are saving a number from being forced into selling so many sellers can currently sit and wait for eternity with interest rates as they are.

Of course there are some on here that are advocating the return to those levels of lending again but it is simply not the answer. It is simply just adding fuel to the fire again and an overpriced property market does more harm than good as I'm sure we can all see now. It is an unproductive form of wealth creation.

many of us want to see more money to be made available for house building

Mr._Pricklepants

Graham_Devon wrote: »

Maybe pricklepants can enlighten me how he knows the finances on every house in his local area within days, but I certainly won't hold my breath.

No problem.
Firstly, I see properties coming on the market and going STC within days. Initial asking price can easily be found online and selling price a few months later also.
But more importantly, you TALK to people. No, I don't know the finances of every household in my area, but I talk to people who move out and move in. Don't you ever have those conversations with your neighbours? "Oh hello mister neighbour, I noticed you're selling and it has gone 'sold' already. Yes, Mr. Pricklepants, and I was amazed at the interest. It was sold within days and I had several buyers competing and I achieved more than I thought I'd get for it"
Don't you ever have those conversations? Probably not as you spend your life on here.

shortchanged_2

FTBFun wrote: »

Not a structural shortage of property then? As the increase in rental prices in recent times indicates there's a supply restriction somewhere - whilst still having a demand for property in some manner of occupancy.

Yes OK the supply and demand argument.

But can you honestly say with hand on heart that if the mortgage lending that is in place now or pre boom levels were always in place, that house prices would be at the level they are now?

Be honest now.

FTBFun

shortchanged wrote: »

Yes OK the supply and demand argument.

There is no other argument.

"Lax" financing is a factor that affects demand as it allows more people to purchase property (i'm not going to say afford, as it appears a certain proportion could not).

But can you honestly say with hand on heart that if the mortgage lending that is in place now or pre boom levels were always in place, that house prices would be at the level they are now?

Be honest now.

I expect that they'd be a little lower but not as much as some here claim - there is simply not enough housing, of the right type, in the right places.

shortchanged_2

CLAPTON wrote: »

many of us want to see more mopney to be made available for house building

In that case ask builders to stop acting like a cartel and manipulating house prices so they remain high by building so few new houses.

If this level of demand is so great that so many talk about, then there shouldn't any problem shifting stock.
The reason why new builds don't sell is because they are too flippin expensive.

Many people on here talk about supply and demand and many say the demand is great. So why don't builders supply that demand?

paulmapp8306

shortchanged wrote: »

How do you think house prices got where they are now?

Let me tell you. It was caused by a raft of loose lending which included such things as IO mortgages, liar loans, high income multiple loans and 100% + mortgages.

Now guess what. These levels of lending are now not present therefore many people cannot now actually 'afford' to pay the prices that people are asking. Low interest rates are saving a number from being forced into selling so many sellers can currently sit and wait for eternity with interest rates as they are.

Of course there are some on here that are advocating the return to those levels of lending again but it is simply not the answer. It is simply just adding fuel to the fire again and an overpriced property market does more harm than good as I'm sure we can all see now. It is an unproductive form of wealth creation.

Partly yes - along with a shortage of supply.

HOWEVER, pricews can only go down so far. They go down to a level where people cant afford to sell them for less - and yes that depends on how much they paid for them, as well as how much a new property will cost.

The point is - that level was reached, which is why prices are static at present.

For instance - property bought in 2005 for £200k with a 15% deposit. People want to move up - and the new properry - whicl bigger - is valued at the same £200k. They need to raise a deposit of £15k as well as cover the remaining mortgage on their home. So - over that time they have cleared maybe £45k from their mortgage, so have to make £140k to clear that mortgage, plus £15k for the new home. They can therefore afford to sell their existing home for £155k.

Now that is a loss of around 25% in the value of that home BUT they cant afford to sell for less, or they cant afford the new home. So they put the house on for £160/165k in the hope of making a little spare - and can afford to drop the price slightly to sell the home BUT they cant go below £155k. Just because the new buyer cant go to more than £140k does not mean the current owner can afford to sell for that low. They would prefer to stay where they are and see how things are a few years down the line.

That is the place we are now at. SOME people can afford curent asking prices, and SOME people are getting mortgages (me being one of them). SOME people can afford to sell at current levels and want to. HOWEVER, prices in general cannot come down as sellers cant sell at that point, and their is enough demand/availability of mortgages for those who can/want to sell at current levels to susstain that level.

As I said - there not goin up in price, so actually falling slightly in real terms, BUT the market is not going down (bar some slight fluctuations) and is unlikely to in the near/medium future.

Dont get me wrong - I think houses are too higly prices, despite going through a purchase, and I think they need to be 30-50% lower to be at their "real" price - both from an affordability perspective and a realistic value - BUT Im realistic enough to realise thats not going to happen due to many reasons (partly as Ive excplained, partly the governments unillingness to let prices drop - among other reasons).

paulmapp8306

Oh - as for low interest rates "saving" a number of people - well sopme yes, but not necessarily those looking to sell. Ultimately if they could afford to buy before the interest rates came down (so if they bought their home pre 2007) then they will still be able to afford their mortage when rates rise again. Sure some who have bought in the last 2-3 years will get a shock - and maybe forces to sell BUT most of thoes bought at current price levels - so again will be able to sell for the same kind of level. Once again prices wont have to be dropped.

shortchanged_2

FTBFun wrote: »

I expect that they'd be a little lower but not as much as some here claim - there is simply not enough housing, of the right type, in the right places.

So how do you think people would have paid the prices back then if the banks were lending at current levels?

There has to be a point where cost and financing have to meet, otherwise something is simply unaffordable whichever way you look at it. The banks had the option to control house prices by keeping a strict control on lending but as per usual they got greedy and carried away.

paulmapp8306

shortchanged wrote: »

In that case ask builders to stop acting like a cartel and manipulating house prices so they remain high by building so few new houses.

If this level of demand is so great that so many talk about, then there shouldn't any problem shifting stock.
The reason why new builds don't sell is because they are too flippin expensive.

Many people on here talk about supply and demand and many say the demand is great. So why don't builders supply that demand?

Partly because materials/labour etc cost more than it used to - so prices have to be highish for builders to actually make a proffit, and secondly BECAUSE they make a proffit. Why - as a buisiness - build twice as many houses, to only make the same overall proffit? theres no incentive to do that.

On a similar - but to my mind much more relevant - subject, why doesnt the government build housing - thereby cutting the HB burden and lowering demand for privately owned housing at the same time? Thats much more realistic, but its not going to happen anytime soon.

homelessskilledworker

Mr._Pricklepants wrote: »

No problem.
Firstly, I see properties coming on the market and going STC within days. Initial asking price can easily be found online and selling price a few months later also.
But more importantly, you TALK to people. No, I don't know the finances of every household in my area, but I talk to people who move out and move in. Don't you ever have those conversations with your neighbours? "Oh hello mister neighbour, I noticed you're selling and it has gone 'sold' already. Yes, Mr. Pricklepants, and I was amazed at the interest. It was sold within days and I had several buyers competing and I achieved more than I thought I'd get for it"
Don't you ever have those conversations? Probably not as you spend your life on here.

http://www.youtube.com/watch?v=aEQcsuXnnnc

This is so Prickpants and MrRees