Is it too late to sell a house in Northern Ireland???

quazimodo

I have been following alot of investments lately and i got rid of my savings and bought gold. I have made 3% in a week.Gold is around $910 per ounce if taken for inflations sould be $2100 per ounce. I have a few properties i had 5 bedrooms house i turned into 3 small flats and my house i live in. I am remortgaging apartments to get my value out of them now. i get good income from it. I am trying to pay off as much of my home morgage as possible with flats buy to let remortgage. :P i see 10% drop this year and 10% the next. We are trailing the states by a year. If anybody has few thousand they dont need (i know most people dont) then buy gold bullion coins in future you wont regret. I studied estate management (could have been an estate agent but didnt need to be, they are horrible people generally and lie a great deal) when valueing proprties we took for 10% loss in value of pound every year due to inflation. So if you get 6% from a bank on cash savings you are at best actually losing 4% so i put my money in gold to hedge this inflation, and loss of value of pound. look. Check out gold!!!!!!!!!!!!!

IvanOpinion

talksalot81 wrote: »

I think that predictions of impending price rises are typically made by VIs with an intention to mislead or by people who simply are not grasping the gravity of our situation.

Is that not just another of those generalisations akin to the those predicting price drops for the last 4-5 years who now pat themselves on the back for predicting it? if only they could hone those crystal balls to do something useful

One could equally argue that predictions of price drops are basically being made by those who missed the boat big time and are desperately hoping it comes back into dock so they can get on. it came part of the way in but that is as close as it gets ... at what point do they start swimming before they miss it totaly again.

There is no 'gravity' of situation here (unless you are being forced into a position of buying or selling) ... as last year and the year before there will be buyers and there will be sellers. People who are desperate to sell will, in the main, have to consider taking a cut in their profits .. a smaller number may have to take a loss of varying degrees. Those who don't want to do this simply sit for a couple of years until the market picks up again ... which as history has shown it always does.

Ivan

talksalot81

Of course there are people on both sides. But those who have predicted drops for years have not done so based on the fundamentals. Prices have risen rather unreasonably but out and out 'unaffordability' is something new to the market. Until a year and a half ago or thereabouts, we have been at affordability levels which have been observed previously and have no been immediately followed by a crash. At this time, we are in absolutely uncharted water. Never has affordability been so bad, certainly within the UK, the market has dropped significantly before it got to this level.

As far as those predicting... well there are many young people like myself doing it. I have been as far as the education system can take me, I have gained experience in a range of work areas and earn significantly above the norm for NI. But I cant buy a house!!! My parents bought a detatched house (stretched mind you) with equivalently lower paid jobs, my colleagues had little issue and my grandparents and those of that generation had even less issue. So why is it so 'reasonable' that I (and my peers) are left in the current situation? How can you argue that the market has a prayer of sustaining itself when we cannot afford to buy first timer properties? Are you suggesting that someone else will buy these? If so, it should be pointed out that that is a slippery slope which is bad for most people. If investors buy up all the FTB property, you dont think they would just stop? Oh no, they would now be the big money men and they would start buying up the ladder. The conclusion is that it everntually becomes impossible for almost anyone to afford their own property. I think that is a really unlikely situation.

There is a gravity to the situation. NI has a serious problem with respect to young people. Most are either in denial and just begging to be allowed so far into debt that their lives will barely be worth living else they have accepted that is not worth it and are just waiting on their parents dying. That is a horrible situation and I dont really know how you can debate that.

leftieM

Page 10 of the quarterly house price index on the Property News website shows a graph plotting the RPI (retail price index) and the NI HPI (house price index) for the last 22 years so the two can be compared. It's worth a look.

IvanOpinion

talksalot81 wrote: »

Of course there are people on both sides. But those who have predicted drops for years have not done so based on the fundamentals. Prices have risen rather unreasonably but out and out 'unaffordability' is something new to the market. Until a year and a half ago or thereabouts, we have been at affordability levels which have been observed previously and have no been immediately followed by a crash. At this time, we are in absolutely uncharted water. I agree with you on that .. makes life a bit more interesting Never has affordability been so bad, certainly within the UK, the market has dropped significantly before it got to this level.

As far as those predicting... well there are many young people like myself doing it. I have been as far as the education system can take me, I have gained experience in a range of work areas and earn significantly above the norm for NI. But I cant buy a house!!! My parents bought a detatched house (stretched mind you) with equivalently lower paid jobs, my colleagues had little issue and my grandparents and those of that generation had even less issue. So why is it so 'reasonable' that I (and my peers) are left in the current situation? How can you argue that the market has a prayer of sustaining itself when we cannot afford to buy first timer properties? Are you suggesting that someone else will buy these? If so, it should be pointed out that that is a slippery slope which is bad for most people. If investors buy up all the FTB property, you dont think they would just stop? Oh no, they would now be the big money men and they would start buying up the ladder. The conclusion is that it everntually becomes impossible for almost anyone to afford their own property. I think that is a really unlikely situation.

Is it? The UK is one of the reducing number of places were a majority of people will own their own home in their own lifetime. In many other countries rental and 30 year, 40 year and inherited moirtgages are the norm. Maybe the UK market is moving in that direction? I personally would not like to see that happen however it works very well in other countries.

There is a gravity to the situation. NI has a serious problem with respect to young people. Most are either in denial and just begging to be allowed so far into debt that their lives will barely be worth living else they have accepted that is not worth it and are just waiting on their parents dying. That is a horrible situation and I dont really know how you can debate that.

Again, other countries use the sort of model you are talking about .. and it works for them. Part of the problem is that a lot of people do not want to start at the bottom of the property ladder and climb their way up it .. it took us 3 houses and 15 years before we could afford our dream house. Maybe people will need to think about taking in a lodger for a few years to help pay the bills (a common practice in America). It looks like we will be building somewhere in the region of 5-6000 new houses at the bottom end of the market over the next 3 years or so .. that might help .. but who knows ... maybe there should be different means of taxing second and third (etc.) houses. The problem is that any idea is purely speculation on what may or may not happen and would take us even further into unchartered water.

Ivan

talksalot81

There is a significant issue with the 'model' used in other countries - it is not viable at the moment in NI. Rental costs are often less than in the UK. Even if you take current rental costs, what sort of investor is going to buy into that? It was one thing when the masses were piling in and capital gains was the key, but if your normal individual is priced out, capital appreciation is just not going to be the game we are playing. Investment would have to be based upon rental yield. Think about current yields.... even after tax and in only a moderate account, you would get more return in a deposit based account. Given that we would be considering professionals (amateur BTLs could not survive in this market), it seems flawed to think they would buy into such a low financial yeild - especially when there is a well acknowledged risk that the capital value could well decrease.

Basically, an analysis of the fundamentals indicates to me that the smart money is on price drops. There is nothing really to support further strong rises. That is not to say it wont happen, but, as someone doing data analysis for a living and having to justify my conclusions, there is no way on earth I could justify claiming that further rises are likely.

Sigur_2

The housing market may "correct" itself, but I don't believe it will crash. It basically boils down to supply and demand, and there's plenty of demand still.

I could be wrong, in a selfish way, I hope I am. I'd love to be able to pick up a cheap property.

talksalot81

Sigur wrote: »

It basically boils down to supply and demand, and there's plenty of demand still.

The housing supply is at an unprecedented level at this time. There are 5 times more properties available in belfast this January than last. By your logic, then you should expect a crash.

The supply and demand arguement is well known for bulls and works fine when someone wants to believe or fails to see the bigger picture. The reality is that supply and demand is far from the holy grail that many make it out to be.

Sigur_2

I'm interested in hearing more of your thoughts then, if you wouldn't mind expanding.

My discussions with Economists led me my opinion, but of course, there's always those who agree and disagree.

talksalot81

Sigur wrote: »

I'm interested in hearing more of your thoughts then, if you wouldn't mind expanding.

My discussions with Economists led me my opinion, but of course, there's always those who agree and disagree.

Well on the supply and demand arguement....

Simply put, supply is enormous at this time. This is just a black and white fact. Demand is complex. Many people look at it that demand is just anyone who wants a house, but this is flawed. Strictly speaking, most of us would love a millionaires mansion, but we cant afford it. So most of us do NOT contribute to a real world demand for this particular property. This is an important distinction because it is directly transferable to FTBs and the low end of the market. If young people cannot afford a property (and this IS the case, save for individuals getting deep into sub prime) then they cannot be considered as part of the demand. If you couple that to the fact that investors have dropped out or the market, the demand at the low end is very low. The high supply just compounds this. Compared to 2 years ago, there are many fewer people who are realistically looking to buy and there are many more looking to sell. Basically buyers can name their price. If a seller does not like it, they simply wont sell. They have the choice to either stay where they are or downgrade expectations. The former is what Ivan was proposing but it is not just a case of waiting it out. More often than not, people move because they have to. Perhaps my experience is unusual, but most people I know move because they need space for their family, they have to move for a new job.... something like that. It is rare that they just 'fancied a move'. As such, these people can only wait so long. Can they really wait 2 years? Even if they can, can they be certain things will have improved? That is a serious gamble and could end up hurting badly when they then absolutely must move. This is a good explanation for previous crashes not being fast. People do try and wait it out. and downgrade short term supply. But I suspect this is all counter productive because as soon as the market shows signs of picking up, the world and his wife puts their houses up and the situation repeats itself. The demand factor will not change strongly save for major changes in the credit market. People seem to be arguing that IRs are coming down and this will help. But this is naive and lacking in understanding. Why are rates coming down? We are facing the mother of all financial situations!! IRs may well drop, but dont bet on the banks still being willing to lend at the same LTVs or at the same income multiples. With a potential recession looming, one should definitely not expect that they can borrow more money! There is a strong possibility that people can borrow less and that may in fact drop your demand.

I just think that people are seeing what they want to. There are many good reasons why prices may well tumble. There are VERY few indicating that they will rise in the immediate future. Betting on the latter is really a bad analytical call and such predictions are frequently based on personal feeling and secondary predictions whilst ignoring the present facts. Would you prefer that on your next air flight that your pilot looked before take off and said "this gauge is reading strange, lets go back and check it out" or "this gauge is reading strange, but planes rarely crash and it is probably something silly and not worth worrying about, let's just take off"? The former is those who are cautious in the face of a possible crash, the latter are those who deny it and predict rises with everything just dandy.