Increasing the rent - tenants angry.

marathonic

saverbuyer wrote: »

The good news is that the drops show no sign of stopping.

I agree that the latest figures show that the drops are still >10% p/a.

For anyone in the market for a house in the next 5 years, the options are to wait out the fall until figures show consistent rises again or else to pick a point where they feel there is more potential upside than downside.

Personally, I opted to buy in December because I feel that, whilst prices will not suddenly start rising dramatically, I don't feel that they will be lower than current levels in 5 years time.

With the capital on my mortgage being paid down at a rate of about 2.75% per year during the initial years of my mortgage (increasing in later years), I can sustain that level of annual drops without losing anything.

If drops continue in excess of this, my 25% deposit will start to erode.

I decided not to wait until prices start rising again because it's only when the market is falling that you're likely to avoid bidding wars. Likewise, my valuation from the bank came in at a little over 4% higher than what I paid for the house so I'm starting off in a reasonable good position (the offer itself was actually almost 15% below asking price and I know for a fact that such reductions from asking price will not be available in a rising market.

Of course, noone knows what way the market will go. The next Residential Property Price Index report is due out next week and it goes up until December 2012 (when I bought my house). It's the subsequent reports that will tell me whether my timing was good or bad - and only a lucky few will have perfect timing.

From observing changes in asking prices in PropertyPal over the past year, I can tell you that January 2012 drops in my area were significant. There was also drops for January 2013, although less significant. Also, in recent months, I've seen the first evidence of rising asking prices (although that is likely the estate agents 'playing games').

I'm considering renting a room to a lodger as well. If I did that, my mortgage would be paid down quicker and I could sustain more drops - however, this is not comparable to renting as, at the end of the day, I'd be living in shared accommodation.

marathonic

saverbuyer wrote: »

Average salary here is 18k. Until prices reflect average salary they still won't buy.

The median price for a terraced property in Northern Ireland as of the end of quarter 3 2012 was £65,000 (at the peak, the average terraced house was £157,400).

Historically, properties at the higher end of the market, i.e. semi-detached and detached properties, have usually been purchased by second time buyers or third time buyers with the aid of capital appreciation on their starter home (or, in some cases, inheritances).

Assuming a 10% deposit and a mortgage of four times salary for a single person, a £65,000 house would require a salary of £14,625. Where is the problem?

Thrugelmir

marathonic wrote: »

Assuming a 10% deposit and a mortgage of four times salary for a single person, a £65,000 house would require a salary of £14,625. Where is the problem?

4 times salary on £14k very unlikely. Doesn't leave much to live on.

Bordering on financially irresponsible lending. Something the banks have to be wary of with the FSA breathing down their necks.

Average lending multiple now is 3.25 according to CML.

marathonic

Thrugelmir wrote: »

Average lending multiple now is 3.25 according to CML.

Well even that ties in well with the quoted average salary of £18k.

I don't see the median price dropping any more than 10% from current levels as it should be affordable for most - especially when it's a couple purchasing.

chewmylegoff

Good luck getting a 4x mortgage on 14k, I'm sure saving up £6,500 on that sort of salary will be child's play too!

Thrugelmir

marathonic wrote: »

Well even that ties in well with the quoted average salary of £18k.

Which means the median salary is lower than this.

marathonic

Thrugelmir wrote: »

Which means the median salary is lower than this.

True. But, with home ownership rates at about 65%, one could reasonably assume that a lot of those on a below median salary are in the rental market and, unless their salary increases, will stay there.

The property market is unlikely to fall to a level where homes become affordable to a person on significantly below median salary.

This is not a new thing either - the peak of home ownership in the UK was just a little over 70%.

Thrugelmir

marathonic wrote: »

The property market is unlikely to fall to a level where homes become affordable to a person on significantly below median salary.

Given that the market is dependent on the availability of credit. Then jury's currently out. Until the bubble is finally burst.

LydiaJ

Conrad wrote: »

Thing is I recall naysayers telling be in the mid nineties the time to have got into B2L was the 1980's.

I doubt very many people thought there was much point getting into it before the Housing Act of 1988 and the introduction of the AST.

sabretoothtigger

£65,000 house would require a salary of £14,625. Where is the problem?
4 times salary on £14k very unlikely. Doesn't leave much to live on.

Seems perfectly liveable. 5% would be 3250 a year, double that to include repayment or the possible rate increase and that is still livable. Nowhere near comfortable but we cant all live in luxury, margins are going to get squeezed at some point in the recession and people will have to make do with less. Housing is one of the few places it makes sense to pay more vs renting

Alot of people are not living near a 65k house or flat even, thats your real problem. Renters could end up in tents at some point if everyone is squeezed via rates or some factor

I'm sure saving up £6,500 on that sort of salary will be child's play too!

Nothing good ever comes easy. Someone who cooks their own meals, rides a bike instead of spending money on transport could do it