House Prices UP 4.9% - but still half of peak?

motorguy

I see house prices are up here again, however i recall reading that house prices are something like 50% of what they were at their peak in 2007.

Given that the SE of england is now something like 20% over their peak in 2007, and the rest of mainland are getting close to their peak gain, can we expect to see significant rises again in the next few years?

BigAl94

No - almost certainly not. The economy here is a mess, disposable incomes are still falling coupled with potential interest rate rises will keep the lid on prices for some time to come.

qwert_yuiop

The bubble was a once in a lifetime madness based on bankers gone daft, leaving 60,000 in negative equity. Seven times your salary? "Come on down!"

I'd say a crash in London, which may already have started, is more likely.

However, I'm bidding at a farm up the road, because I want it, and it probably won't be sold again before I'm 100. If it's worth half what I pay for it in 5 years' time, and there's no reason why it won't, I'll be regretful in a house I want to live in.

So my prediction is "no". Prepared to eat my hat of course.

And I hear the adjoining 76 acres may be coming up for sale next year...

marathonic

I think there will be continued rises, but not significant. I argued until I was blue in the teeth on this thread about how price rises were imminent.

My argument was based on the NIRPPI report, the most accurate available.

The latest report is available below:

http://www.dfpni.gov.uk/lps/ni_rppi_statistical_report_q2_2014.pdf

It shows a 10% rise over the latest reported 1-year period.

My post above was made at the bottom of the market and, although bullish, it doesn't appear that I was bullish enough.

NAR

I can see a 4-5% increase perhaps over the next two quarters as the buying market is getting stronger. But undoubtedly once the interest rate rises start to set in I would expect the growth rate to halve.

steveymp

Nowt happening outside greater Belfast Commuter area, although asking prices are rising, houses outside Belfast are sitting in a stagnant market

In my new house 2 years now and quite happy with what I paid as I'm going nowhere (touch wood) in the foreseeable future.

Short of the odd small development there is nothing being built outside Belfast area. This shows you the builders and banks confidence in this area.

qwert_yuiop

NAR wrote: »

I can see a 4-5% increase perhaps over the next two quarters as the buying market is getting stronger. But undoubtedly once the interest rate rises start to set in I would expect the growth rate to halve.

I see two members of the monetary policy committee wanted to raise rates, but were outvoted. They wanted rates to go from 0.5% to (scary organ chords here) 0.75%. Admittedly a 50% rise, but it doesn't look like borrowers are going to be slaughtered - not this year anyway.
If rates go up, we won't have a decrease in growth rates - we'll have another crash.

If you've got a mortgage, now must surely be the time to overpay as much as possible.

NAR

qwert_yuiop wrote: »

If you've got a mortgage, now must surely be the time to overpay as much as possible.

Very good advice which I agree with. I have been overpaying for the last 4 years and in 4 years time I know I will have a very small, managable balance to pay off.

marathonic

qwert_yuiop wrote: »

I see two members of the monetary policy committee wanted to raise rates, but were outvoted. They wanted rates to go from 0.5% to (scary organ chords here) 0.75%. Admittedly a 50% rise, but it doesn't look like borrowers are going to be slaughtered - not this year anyway.
If rates go up, we won't have a decrease in growth rates - we'll have another crash.

If you've got a mortgage, now must surely be the time to overpay as much as possible.

Some very valid points. It's difficult to know where rates are going as the news goes back and forth between 'imminent rate rises' and 'no rate rises for 12-18 months' on a daily basis. However, regardless of your thoughts on future interest rates, overpaying a mortgage can never be a bad idea.

The news has always been slinging back-and-forth and most of us know of people who locked into 5+ year fixed rate mortgages in every one of the past 5-6 years under the expectation of imminent rises - and you couldn't blame them if they happened to be selecting their new mortgage deal on a news day like today - of which there have been many over the past number of years.

I'm not saying that rate's will, or won't, rise soon because noone knows.

Personally, I bought at a good price at the bottom, in December 2012. Through a combination of my initial deposit, the capital paydown of the mortgage and the reported 12% rise since then, I'm now at a level where I've less than 60% LTV and can lock in a 2.88% 5-year fixed rate with Ulster Bank (my current lender) when my current deal ends in December - assuming the fixed rate doesn't increase in the meantime. This is the most tempting way forward for me.

snowmen

qwert_yuiop wrote: »

The bubble was a once in a lifetime madness based on bankers gone daft, leaving 60,000 in negative equity. Seven times your salary? "Come on down!"

I'd say a crash in London, which may already have started, is more likely.

A large proportion of the peak prices here were due to people buying a property, not even moving into it, and then selling it at a profit 3 months later. Admittedly, the bank had to lend them the money somewhere along the line but unfortunately people were silly enough to keep buying the properties at the inflated prices and this fuelled the problem.


Crash in London will never happen. There are just too many jobs and too many people wanting to live there for a crash. The equivalent of a crash in London would be no price rise at all from year to year.

marathonic

qwert_yuiop wrote: »

If rates go up, we won't have a decrease in growth rates - we'll have another crash.

This is a bold prediction. A lot of the experts are expecting rates in the medium term to rise from 0.5% to 2.5%. The bears among us all refer to this as a 500% increase in your mortgage.

However, whilst it's obvious that the base rate of 0.5% is unsustainable, the margin between base rate and SVR rates on mortgages is unusually high as well.

Most of the predictions I've read anticipate the 2% rise in the Bank of England base rate to be accompanied by an average rise in SVR's of around 0.8%.

Given that the SVR for Ulster Bank, probably Northern Irelands biggest lender, is currently 4%, this would give an expected increase to 4.8%.

Looking at this from a monetary point of view, this would increase the repayments on a £100,000 mortgage over 25 years from £533 per month to £579 - representing an increase of £46 per month. This is hardly a figure that's going to give rise to mass arrears in mortgages.

Of course, the above is all based on the predictions of various experts and even the experts get it very wrong but to say that rate rises are going to result in another crash is nothing more than scaremongering.