South East more confident of house price rises than ever recorded

chucknorris

HAMISH_MCTAVISH wrote: »

I agree.

But I also think we're many years away from that.

Prices must rise until sufficient numbers of people are priced out so as to effectively ration the limited supply of housing.

But the average Loan to Income ratio today for FTB's is only 3.45 with capital repayment and interest payments taking up just 18.4% of income. For home movers it's just 3.15% and 18.1% of income.

Borrowing remains far lower than it was 7 years ago, we're still only issuing around half the mortgages each year than we were before the credit-crunch, and regulation has placed significant restrictions on the number of higher LTI mortgages that can be issued by banks.

My guess is the mid 20's, for prices to fall (i.e. more than just get a bit sticky) as there will also have to be some kind of economic downturn, and I think that this is more likely to happen around then (no guarantees of course).

Generali

I've got a mate in London that earns well north of a quarter of a million quid. He's between houses having sold up a while back and even he's struggling to buy a place.

Now admittedly he has pretty high expectations of what he wants but that shouldn't be unreasonable if you can afford to spend a million squids on a house.

London isn't sustainable IMHO and it'll be interesting to see what happens to prime central London now this Chinese FX-busting bank has been put out of business.

chucknorris

Generali wrote: »

I've got a mate in London that earns well north of a quarter of a million quid. He's between houses having sold up a while back and even he's struggling to buy a place.

Now admittedly he has pretty high expectations of what he wants but that shouldn't be unreasonable if you can afford to spend a million squids on a house.

London isn't sustainable IMHO and it'll be interesting to see what happens to prime central London now this Chinese FX-busting bank has been put out of business.

I think in real terms London just simply doesn't represent value (but the problem is that neither does renting there either), if I hadn't invested years ago, or simply bought my own place I'm not sure what I would do (thankfully that isn't a problem that I have to solve). Although there is always the 'I'll downsize (move away) later in life' plan (and hope that there isn't a real correction, rather than merely a cyclical movement).

Thrugelmir

michaels wrote: »

Currently I can't see the supply and demand equation leading to anything other than further rises though I suspect the BoE will try to control funding further via whatever means it has given it can't pull the interest rate lever.

The £70 billion that the BOE supported the mortgage market with under the Funding for Lending Scheme has to be repaid at some point. Noticeable that the best deals are now restricted to 2 year terms. As lenders utilise and advance their remaining funds under the scheme.

padington

A clever move by Osborne would be to lower the tax for selling BTL property and top end stamp duty for a limited period. This would reap a ton of tax and keep a lid on the market (which would be popular ) and increase the amount of owner occupiers.

It would also remove possible weak hands in a careful way that would cause an unwelcome crash when the next economic storm kicks in.

It would also help ensure the next FTB will lock in some equity after the special offer period ends. Timed with the election, it could be popular too.

Thrugelmir

padington wrote: »

A clever move by Osbawne would be to lower the tax for selling BTL property and top end stamp duty for a limited period.

GO needs every penny. Expect tax rises not decreases. I suspect some people are sleep walking into the already announced changes to interest relief on BTL mortgages.

padington

Thrugelmir wrote: »

GO needs every penny. Expect tax rises not decreases. I suspect some people are sleep walking into the already announced changes to interest relief on BTL mortgages.

Prime stamp duty rises lost pennies, not made pennies.

HAMISH_MCTAVISH

Jason74 wrote: »

The price to income ratios in the capital are absolutely eye watering, and I think there has to be a question as to how much further that can go.

The average price to average income ratio in London may be, as you put it, "eye watering", but given the lending restrictions in place nowadays the average loan to income ratio of actual buyers certainly is not.

So it's not people precariously borrowing their way into the market at severely stretched lending multiples that are fuelling price rises, it's people that can genuinely afford to buy at these levels due to having sufficient income, wealth, or equity in a previous house.

As to how much further it can go, that would seem to be purely a function of supply and demand, and how many more people need to be priced out for the market to find equilibrium.

Today there are more buyers with enough income and/or a high enough deposit to afford these prices than there are sellers of property at these prices.

That's why prices nationally and in London have risen and continue to rise.

I am personally of the belief that the shortage of housing is so severe many more people need to be priced out in order to allocate the scarce supply of stock.

Affordability is nowhere near bad enough for actual buyers that price falls, or even a halt to rises, looks imminent.

But obviously an external event could change things at any time.

padington

This says it all to me ...

'I’ve never felt as confident or optimistic for the future of this organisation'

( Graham Beale, chief executive of Nationwide)

Evident stagnation or crash with home lending well down, me thinks not.

cells

HAMISH_MCTAVISH wrote: »

The average price to average income ratio in London may be, as you put it, "eye watering", but given the lending restrictions in place nowadays the average loan to income ratio of actual buyers certainly is not.

So it's not people precariously borrowing their way into the market at severely stretched lending multiples that are fuelling price rises, it's people that can genuinely afford to buy at these levels due to having sufficient income, wealth, or equity in a previous house.

As to how much further it can go, that would seem to be purely a function of supply and demand, and how many more people need to be priced out for the market to find equilibrium.

Today there are more buyers with enough income and/or a high enough deposit to afford these prices than there are sellers of property at these prices.

That's why prices nationally and in London have risen and continue to rise.

I am personally of the belief that the shortage of housing is so severe many more people need to be priced out in order to allocate the scarce supply of stock.

Affordability is nowhere near bad enough for actual buyers that price falls, or even a halt to rises, looks imminent.

But obviously an external event could change things at any time.

Project forward 20 years and 55% of the country will be renters and 45% owners.

The stats will still be pretty as regulations will only allow people who can borrow at sane ratios to be owners and everyone else will be a renter

Even though I would benefit from continued HPI and increasing rental sector I dont think its going to be positive if the nation goes below 60% owners.

Not sure what can be or should be done but I have a feeling the gov will try to regulate BTL away (encourage or force sales) and also put in much higher taxes (for example maybe up capital gains tax to 45% from its current 28%) with the idea that less BTL will mean more owners