Property price in 2029

jacqui12_2

Hi please can anyone help i bought a property in 2005 for 91000 today the propertys value is around 66000 fingers crossed. It is an interest only mortgage and i cannot change because of credit rating and debts due to divorce.

How much would the property be worth in 2029 and how much would i have to save to meet the shortfall supposing there is one.

thank you in advance

w00519772

I wish I had a crystal ball, but I don't. I have read reports suggesting that prices will rise in the medium term ie five years. This is just speculation.

If I were you, then I would save. Maybe get some financial advice. I am no expert. Just my opinion.

qwert_yuiop

That would require annual appreciation of around 3% per year for the next 15 years, every year. Doesn't sound too much when you look at it that way? You do need to avoid any further depreciation or period of stagnation of course.
I'd keep putting any savings I could into reducing the debt.

Who knows what the world of 2029 will look like? We might all be speaking Russian.

CEON44

Keep watching the index over the years for a guide. It is updated quarterly. From Q1 2014 up to Q1 2015 prices increased by 6% although are slumping again. Of course this is no guide to future performance but keeps you aware. Strange though how prices on mainland UK have now passed the 2008 highs yet here things have remained stagnant. Imminent interest rate rises wont help either

http://www.dfpni.gov.uk/lps/ni_rppi_q1_2015_statistical_report.pdf

qwert_yuiop

CEON44 wrote: »

Keep watching the index over the years for a guide. It is updated quarterly. From Q1 2014 up to Q1 2015 prices increased by 6% although are slumping again. Of course this is no guide to future performance but keeps you aware. Strange though how prices on mainland UK have now passed the 2008 highs yet here things have remained stagnant. Imminent interest rate rises wont help either

http://www.dfpni.gov.uk/lps/ni_rppi_q1_2015_statistical_report.pdf

That little graph on page 4 looks like the Matterhorn followed by Death Valley.

It's often said that a period of inflation would sort out the negative equity problem. However, I'd expect interest rates to be raised if that happens, leading to higher monthly payments. So get that debt down now.

bingo_bango

It might be a reasonable assumption to look at CPI as an indicator of how much prices will likely rise over the next X number of years.

The mortgage boards are full of threads about exactly this point, but there is no consensus of agreement in any of them. There are so many factors which could affect the market that it would be impossible to try to adopt a model that would accurately take into account every influence, let alone try to predict what impact they might have.

At least with CPI we know it is likely to remain around 2% for at least the next 5-10 years.

With an annual 2% increase, the property will be worth £92K in 2032 (£87K in 2029).
At 3% it is worth £91K in 2026 (£109K in 2032, £100K in 2029)
At 4% it is worth £94K in 2024 (£128K in 2032, £114K in 2029).

Please bear in mind that the figures are rounded in some cases to the closest £1K.

As to how much you may need to save, that is unfortunately not a question anyone can answer for you. All you can do is choose a figure from the ones I have provided, and try to guess which will apply! Personally I would work on the worst case scenario as a baseline, and then you know what the biggest likely debt might be.

I could show you figures at 1% annual growth, but I really don't want to depress you.

Edit: Should have said that the sweet spot for you is 2.5% annual growth. This will bring you back to flat equity in 2028/29.

qwert_yuiop

bingo_bango wrote: »

At least with CPI we know it is likely to remain around 2% for at least the next 5-10 years.

That sort of prediction can be taken with a large lorry load of salt. How can anyone say what inflation will be in 2025?

I'm Sagittarius. Happy days are just around the corner, apparently.

In_For_A_Penny_2

jacqui12 wrote: »

Hi please can anyone help i bought a property in 2005 for 91000 today the propertys value is around 66000 fingers crossed. It is an interest only mortgage and i cannot change because of credit rating and debts due to divorce.

How much would the property be worth in 2029 and how much would i have to save to meet the shortfall supposing there is one.

thank you in advance

I'm not sure what you're planning to do in 2029. At this point with an interest only mortgage you will still owe the full the full value of the mortgage. Do you then plan to sell and downsize or perform some equity release?

My priority would be to come up with a savings/investment plan to cover the eventual mortgage repayment at the end of the term (which I assume is 2029). House price changes are likely to be of little relevance to you.

bingo_bango

qwert_yuiop wrote: »

That sort of prediction can be taken with a large lorry load of salt. How can anyone say what inflation will be in 2025?

I'm Sagittarius. Happy days are just around the corner, apparently.

Agreed, but what else is there to go on? Whether or not CPI is the defining factor, OP still needs 2.5% growth in the long term to reach stable equity in time.

qwert_yuiop

Inflation as measured via cpi is not necessarily linked to house prices of course. There hasn't been any actual house price inflation since 2004.

Yes, you're right, but there always seems to be some surprise every time stats are released. So 2025 can only be a guess.