BoE's ability to kill the housing market

Rich2808

I agree prices are beyond ridiculous now in London - but that is why they appointed Mark Carney. He isn't good for much bar creating housing bubbles and destroying young people's futures as he did in Canada.

As has been observed above you could try the help to buy equity scheme - from next Monday as has been said you can take advantage of the 40 per cent interest free loan for five years on new builds.

Another option is shared ownership.

Both have the advantage that you can benefit from house price growth but if the Ponzi scheme starts to fail and prices fall you only bear part of any loss. Other option is try a cheaper area - Bexley or Barking and Dagenham or Romford. They all have good links to the city.

And look at the positives - there are worse things than not being the owner of an overpriced one bed flat in need of modernisation in Anerley!

Thrugelmir

richdeniro wrote: »

Remember with housing the Bank of England can kill the market in a day at any time. They just make a big increase in the reserves that financial institutions need to keep or directly restrict mortgage availability. Something will happen very soon I am sure.

No more cheap money from the BOE. The FLS for mortgages is over with lenders having to drawdown booked funds by end of 2015. Started in 2012 with repayment due to commence in August 2016. All monies to repaid by 2018. Noticeable how best mortgage deals have been 2/3 years fixed more recently.

lawriejones1

My own view is that we will vote to leave. Big business and a coterie of rich MPs and individuals telling us how silly we are to want to leave will be seen as condescending to a lot of us. Couple this with scaremongering from the right wingers and support for stricter immigration checks and it will be close. I can see us leaving.

This could result in the cracks in the Conservative party growing ever-wider until it splits. Cameron may want to remain PM if he loses the vote, but this won't be palatable to either side of the party. Only a 'Yes' vote will secure his survival.

If the Tories split, who knows where we go from there? Labour is barely credible and the Lib Dems are a joke.

As for house prices, well, I reckon they'll go up. Or down. Or stay there same.

Thrugelmir

lawriejones1 wrote: »

If the Tories split, who knows where we go from there? Labour is barely credible and the Lib Dems are a joke.

Does it matter? There'll still be political parties around.

Rich2808

Russia and China and Singapore and Malaysia and Saudi Arabia aren't in the EU - hasn't stopped their citizens buying up half of prime central London. I doubt Brexit will make much difference - world economic factors and the banking system will decide things. Plus housing is now the No 1 issue in the Mayoral election - so expect a bit more action on housing delivery.

Jason74

Hi Rich,

I really feel for you in terms of the not great buying options out there at present. I'm in that area myself, and like you look at local prices and just shake my head in disbelief. The only thing I would mention is that in one sense, that particular flat has a lot going for it purely because of where it is. Crystal Palace park is just round the corner, both the station and the triangle are in comfortable walking distance, and the road itself is very nice. The asking price seemed cheap for the area (and I know how ridiculous that sounds given we're talking 220k for a grotty 1 bed flat), so there was always going to be strong interest. That said, 250k is pure "open day madness" and I wouldn't be surprised to see it come back onto the market at some point.

On a wider level, things are as you say grim for FTBs in that neck of the woods at the moment. I had a scan on Rightmove and Zoopla to see what might suit you and got a shock at how little there was. The only thing that would have remotely interested me close to your budget was this

http://www.rightmove.co.uk/property-for-sale/property-38458455.html

And even that had the disadvantages of managing to be both a bit out of the way yet on a busy road, and also over a shop. Crazy to think that the link below actually looks decent value comparitively (and is well under your budget), although I would go nuts in something that small

http://www.rightmove.co.uk/property-for-sale/property-52319989.html

In your shoes, I would really struggle to know what to do. Yes, your friend is right that the Bank of England can kill the market at any time, but I would personally agree with those who said that the chances that they actually will do that as remote. Mwpt as it right in my opinion that the powers that be do not want to see significant house price falls, and I don't see that changing in the short term.

But for all that, my own sense is that there are unresolved issues from the previous financial crisis, and that these will come back and bite us at some point. If I'm right, mortgaged to the hilt is probably not the best place to be. But that view is based more on a gut feel than a true understanding of the data, so it could be wrong (and there are plenty of people on here who believe I am).

I think on balance, if I was a potential FTB at this stage, I'd probably buy if I could find something that I could be happy living in. Western Promise makes a good point about going for a long term fix to enable you to fix your costs and pay down a fair chunk of the mortgage while doing so. That approach gives you some hedge against both falling prices and rising rates in the first few high risk years. Continuing to rent also has the cost that you're spending money on rent each Month and getting no long term benefit from it, although of course if prices did fall significantly (I don't think they will, but certainly wouldn't rule it out), the rent cost might prove money well spent

But it's a horrible dilemma to have, and I don't envy you. All I can do is wish you luck, especially as I suspect that my post hasn't done as much to help you as I'd have hoped. And as a very off topic aside, are you the same Richdeniro that posts on the CPFC BBS. IF so, good to see another Palace fan on here :T:T:T:T

Generali

A note regarding the BoE and the housing market. Yes, the BoE can destroy the housing market but why would it? I think the OP is worrying about something that is vanishingly unlikely to happen.

Good luck with the purchase. I feel for you buying in the current febrile market. Maybe it's worth holding off until the SDLT changes come through and things calm down a bit.

buglawton

Has it occurred to anyone that the UKs property market looks a bit like the Chinese stock market? Both are driven partly by covert govt policies plus speculative investors. Both are somewhat detached from the real economy. The Shanghai stock prices tripled over a few years, in the UK property hotspots there have also been gravity-defying gains over a few years. The Chinese stock market is predicted to keep falling till it reaches from whence it came a few years ago...

Rich2808

buglawton wrote: »

Has it occurred to anyone that the UKs property market looks a bit like the Chinese stock market? Both are driven partly by covert govt policies plus speculative investors. Both are somewhat detached from the real economy. The Shanghai stock prices tripled over a few years, in the UK property hotspots there have also been gravity-defying gains over a few years. The Chinese stock market is predicted to keep falling till it reaches from whence it came a few years ago...

As you say events can occur which no one can foresee or predict.

About ten years ago to the day Northern Rock published their accounts. Another record year of lending, solid financial base, profits up 19 per cent and dividends up 23 per cent. Within months there was a near run on the bank and shortly after the bank collapsed.

No one this time ten years ago saw what was about to happen. I would not want to be overly leveraged on London property at current interest rates. But if you do but make sure it's somewhere you actually want to live, fix for five years and enjoy your ever more crowded journey to work.

http://www.n-ram.co.uk/~/media/Files/N/NRAM-PLC/documents/corporate-reports/res2006pr-annualreportandaccounts.pdf

richdeniro

Jason74 wrote: »

But it's a horrible dilemma to have, and I don't envy you. All I can do is wish you luck, especially as I suspect that my post hasn't done as much to help you as I'd have hoped. And as a very off topic aside, are you the same Richdeniro that posts on the CPFC BBS. IF so, good to see another Palace fan on here :T:T:T:T

Thanks mate - yep that's me, season ticket in the Upper Holmesdale :-)