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

pennypuppy

[quote=championmongo1;7945443
Decent houses in good locations (i.e. not council estates) have continued to sell although very very slowly. /quote]


Did you sell your own house or did you rent it? I want to hear you have managed to move over with your fiance ....I love a nice ending.:heartsmil

IvanOpinion

talksalot81 wrote: »

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.

There are ways of manipulating rental and mortgage to basically deem a property as revenue neutral thereby avoiding tax or, in some instances gaining back. You can not simply dismiss a model simply because you think NI is 'different' ... a rental model is viable anywhere and if more people resign themselves to renting for a few years it will become very buoyant and in itself push rental prices upward. We still have an 'I must own my own house' mentality in the UK ... if that mindset changes then rental may be the preferred FTB market.

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.

You discuss anything to do with money with 3 different analysts and you will get three different answers ... basically depending on what they want to porttray. I agree that at the minute, definitely in the FTB market, the smart money is on price drops .. however I seriously doubt they will be in the order of 50% (as some people seem to be "predicting"). In the middle market it is harder to tell, there may be some 'adjustments' downward (some of the stock was definitely being priced at the very top end of expectations) while on others the prices may simply stagnate.

I think the main decider on this will be how desperate people are to sell ... people will be looking to upgrade or get onto the property market which will make the FTB end 'interesting'. On the other hand in the middle ground people are more settled and often are quite happy to bide their time because they have their preferred house. The panic selling will only affect those that have got into financial difficulties or are moving job etc.

I have little knowledge of the upper end of the market apart from knowing that the builder doesn't seem to be having too much trouble shifting his £500-600K houses (maybe he is lucky)

Ivan

eljapo4

IvanOpinion wrote: »

There are ways of manipulating rental and mortgage to basically deem a property as revenue neutral thereby avoiding tax or, in some instances gaining back.
Ivan

Ivan would you care to elaborate on how this can be done, me and my gf are buying a house at the min (completion date 31/1) which we plan on renting for a yr so we can save a few pound before moving in to it and neither of us fancy paying the tax man anymore than we have to!

talksalot81

IvanOpinion wrote: »

There are ways of manipulating rental and mortgage to basically deem a property as revenue neutral thereby avoiding tax or, in some instances gaining back. You can not simply dismiss a model simply because you think NI is 'different' ... a rental model is viable anywhere and if more people resign themselves to renting for a few years it will become very buoyant and in itself push rental prices upward. We still have an 'I must own my own house' mentality in the UK ... if that mindset changes then rental may be the preferred FTB market.

As the previous poster, I would be very interested in knowing what you refer to. Most of the information I get is with respect to people who believe that rent is something they can use to avoid tax but who actually end up doing so illegally. Rental levels are along the lines of the supply and demand. It does not matter how much you want to rent a house, if it costs more money than you have, you cant rent it. That is often acknowledged as one of the reasons why NI rent is low, people cannot afford to rent at higher prices. Unlike mortgages, people cannot do it on debt and thus there has been little change in rental costs.

You discuss anything to do with money with 3 different analysts and you will get three different answers ... basically depending on what they want to porttray. I agree that at the minute, definitely in the FTB market, the smart money is on price drops .. however I seriously doubt they will be in the order of 50% (as some people seem to be "predicting"). In the middle market it is harder to tell, there may be some 'adjustments' downward (some of the stock was definitely being priced at the very top end of expectations) while on others the prices may simply stagnate.

I think the main decider on this will be how desperate people are to sell ... people will be looking to upgrade or get onto the property market which will make the FTB end 'interesting'. On the other hand in the middle ground people are more settled and often are quite happy to bide their time because they have their preferred house. The panic selling will only affect those that have got into financial difficulties or are moving job etc.

The levels of the market are stongly correlated. If someone in a low end house wants to move to a more valuable property and they get less for their own than expected, then they will afford less towards a mid range property. Certainly at this level, people will not have vast excesses to cover a difference. Ok so they are forced off the ladder and into rental - the middle will stay put. All that does is compounds the problem! The low end devalues and a 'step' forms between levels, increasing with time. Eventually, those mid levels are going to be forced to move on and will find that because the prices did not drop slowly and steadily, the ones at the low level are a long way short and the mid level takes a steep and fast dive. That is of course unless you are willing to bet that a declining/stagnant market will then change. Another analogy... that would be like being happy to occupy a plane as it was hurtling towards the ground on the belief that some unknown factor will come along and make it all better. From a risk assessment point of view, you just would not be making those calls!

I have assumed you to be senior to myself in years so made the naive presumption that you would have some knowledge of what happens in a crashing market. It is not just those who are seemingly in financial issues at this stage or who lose a job who are at risk. As simple example, it can be anyone at all on a special deal mortgage. If they find themselves in negative equity, they are forced onto SVR which would be an enormous jump right now and, on such large mortgages, would be enough to send even relatively comfortable finances, right to the edge. At this stage, IR cuts are not helping a lot - that is why GB and AD are whingeing at the banks for not tracking the rates! These people are not an irrelevant minority. Furthermore, when a crash does occur, all the bold talk you hear from bulls at the top (i.e. if they fall, I will buy 3) goes right out the window. People stop buying and they have to be forced into it, just as with the selling that you propose. It then becomes a game of who is forced first - is it the one with no debt and relative freedom or is it the ones who are tied in to the biggest debts of their lives.

You are free to disagree with me of course but it appears to me that you are making assumptions that something will happen without any evidence or even suggestion of what that something might be. I think it is much more sensible to work on the principle that unknown factors are not going to be crucial parameters to my outlook.

IvanOpinion

eljapo4 wrote: »

Ivan would you care to elaborate on how this can be done, me and my gf are buying a house at the min (completion date 31/1) which we plan on renting for a yr so we can save a few pound before moving in to it and neither of us fancy paying the tax man anymore than we have to!

Generally I leave this sort of thing to my advisor but putting it as simply as possible you have to balance the mortgage on the property plus a fair cost of maintenance and other legitimate expenditure against the rental income . If I understand it correctly the idea is to show zero profit or even a slight loss between the two.

Ivan

IvanOpinion

talksalot81 wrote: »

As the previous poster, I would be very interested in knowing what you refer to. Most of the information I get is with respect to people who believe that rent is something they can use to avoid tax but who actually end up doing so illegally. Rental levels are along the lines of the supply and demand. It does not matter how much you want to rent a house, if it costs more money than you have, you cant rent it. That is often acknowledged as one of the reasons why NI rent is low, people cannot afford to rent at higher prices. Unlike mortgages, people cannot do it on debt and thus there has been little change in rental costs.

You are ignoring that there is a significant contract market in NI whereby people on short-medium term contracts are looking for rental property. I have never rented to a 'local'.

The low end devalues and a 'step' forms between levels, increasing with time.

I have made that point on several occasions. many people jumped off the property market in 2003-2007 thinking the top had been reached waiting for the 'crash' to come. A mate of mine who did this now could not even afford his old house back (even after a 25-30% drop)... he has resigned himself to remaiing in rental property for the forseeable future.

That is of course unless you are willing to bet that a declining/stagnant market will then change. Another analogy... that would be like being happy to occupy a plane as it was hurtling towards the ground on the belief that some unknown factor will come along and make it all better. From a risk assessment point of view, you just would not be making those calls!

That is a poor analogy ... since in reality the housing market may fall however it will eventually recover (usually in a 5 year or less timescale. Therefore the analogy is more like a plane dropping from 35,000 feet to 30,000 feet before steadily climbing to 40,000feet .. only the panicers and those that had no choice to jump would be affected.

I have assumed you to be senior to myself in years so made the naive presumption that you would have some knowledge of what happens in a crashing market. It is not just those who are seemingly in financial issues at this stage or who lose a job who are at risk. As simple example, it can be anyone at all on a special deal mortgage. If they find themselves in negative equity, they are forced onto SVR which would be an enormous jump right now and, on such large mortgages, would be enough to send even relatively comfortable finances, right to the edge. At this stage, IR cuts are not helping a lot - that is why GB and AD are whingeing at the banks for not tracking the rates! These people are not an irrelevant minority. Furthermore, when a crash does occur, all the bold talk you hear from bulls at the top (i.e. if they fall, I will buy 3) goes right out the window. People stop buying and they have to be forced into it, just as with the selling that you propose. It then becomes a game of who is forced first - is it the one with no debt and relative freedom or is it the ones who are tied in to the biggest debts of their lives.

I have survived through previous 'crashes' and turned them to my advantage (repossessions can be great investments). I have also survived 15% interet rates when there were no deals to be had. We often hear about people going from some deal to SVR ... that only happens in the minority of cases .. more usualy they go from some deal to another deal. Yes some people have stretched themselves too far and I have always advised people that if they can not handle an additional 2-3% on the mortgage rate then they should think long and hard about taking it on. Most people though can muddle through simply by reprioritising their finances ... the biggest issue though is trying to convince some of the younger generation that alchohol, fast cars, holidays and generally having fun is not 'priority' when things get tough.

You are free to disagree with me of course but it appears to me that you are making assumptions that something will happen without any evidence or even suggestion of what that something might be. I think it is much more sensible to work on the principle that unknown factors are not going to be crucial parameters to my outlook.

This is what worries me about your analysis ... I think even you (although I could be getting various threads/boards mixed up) agreed we were in pretty much unknown territory at the minute ... there is no crystal ball there is more than 'unknown factors' but we can not rely fully on previous experience because back then (whenever that was) it was different market. Anybody who says they KNOW better than anybody else (even with vast swathes of university degrees or years of market analysis experience) is only fooling themselves. All it might take is a failure in some crop, a major outbreak of BSE in Brazil, OPEC reducing production or another terrorist attack in New York and things could easily go spiralling out of control.

Note I do not fully disagree with what you are saying however I don't believe the picture is all doom and gloom. A minority of people that have no choice but to take action will be the losers in both a falling and rising market, the vast majority however will survive. Maybe a good recesion would make some people start thinking a lot more about what their priorities should be and to stop wasting money.

Ivan

ballyblack

Maybe a good recesion would make some people start thinking a lot more about what their priorities should be and to stop wasting money.

very true!

Talking to a friend of mine last week who has debt problems that he needs to sort out. However he said he was just going to forget about them for a week as he was going skiing.........!

championmongo1

It's always good to hear both sides of the argument, especially as we are essentially going into the unknown. I just hope that Northern Ireland as country continues to look forward and who knows, maybe Stormont WILL be able to attract lots of foreign investment!

talksalot81

IvanOpinion wrote: »

You are ignoring that there is a significant contract market in NI whereby people on short-medium term contracts are looking for rental property. I have never rented to a 'local'.

I am not ignoring it, the same thing applies. If the rental costs are too high, contract workers wont be able to afford them. They then just will not come. If rent is too high it is too high and there is no other source of money.

I have made that point on several occasions. many people jumped off the property market in 2003-2007 thinking the top had been reached waiting for the 'crash' to come. A mate of mine who did this now could not even afford his old house back (even after a 25-30% drop)... he has resigned himself to remaiing in rental property for the forseeable future.

The extrapolation of this is that every last person who does not own a house is thus basically resigned to not being about to afford a property for the forseeable future. As a previous home owner, your friend is inevitably in a better position than a fresh FTB. So who is going to be buying the property? I would be interested to know if you have data supporting a medium term stagnation followed by renewed growth. Everything I have seen indicates a short term stagnation followed by a fall.[/quote]

That is a poor analogy ... since in reality the housing market may fall however it will eventually recover (usually in a 5 year or less timescale. Therefore the analogy is more like a plane dropping from 35,000 feet to 30,000 feet before steadily climbing to 40,000feet .. only the panicers and those that had no choice to jump would be affected.

It was a short term analogy and is thus quite OK. In the longer term is would hold for anyone who could theoretically reach their financial limit.

I have survived through previous 'crashes' and turned them to my advantage (repossessions can be great investments). I have also survived 15% interet rates when there were no deals to be had. We often hear about people going from some deal to SVR ... that only happens in the minority of cases .. more usualy they go from some deal to another deal. Yes some people have stretched themselves too far and I have always advised people that if they can not handle an additional 2-3% on the mortgage rate then they should think long and hard about taking it on. Most people though can muddle through simply by reprioritising their finances ... the biggest issue though is trying to convince some of the younger generation that alchohol, fast cars, holidays and generally having fun is not 'priority' when things get tough.

I presume you were not in NI at the time of the last crash then? People going to the SVR as a minority, evidence please!? How do you propose they move on to a new deal if they find themselves in negative equity? It just is not going to happen in the current economic climate.

This is what worries me about your analysis ... I think even you (although I could be getting various threads/boards mixed up) agreed we were in pretty much unknown territory at the minute ... there is no crystal ball there is more than 'unknown factors' but we can not rely fully on previous experience because back then (whenever that was) it was different market. Anybody who says they KNOW better than anybody else (even with vast swathes of university degrees or years of market analysis experience) is only fooling themselves. All it might take is a failure in some crop, a major outbreak of BSE in Brazil, OPEC reducing production or another terrorist attack in New York and things could easily go spiralling out of control.

I am not relying on previous instances to make my arguement. You should hopefully have noted that I have not made an outright prediction. What I have done is looked at the fundamental factors as they currently stand and considered how things might realistically change. I am unwilling to make any sort of analysis if it relies upon the occurence of something that is current totally unforseen. My analysis is as fundamental as it can really. It seems totally illogical to me that so many people are happy to ignore the basic fundamental factors and base their views upon complex, multi parameter variables.

Note I do not fully disagree with what you are saying however I don't believe the picture is all doom and gloom. A minority of people that have no choice but to take action will be the losers in both a falling and rising market, the vast majority however will survive. Maybe a good recesion would make some people start thinking a lot more about what their priorities should be and to stop wasting money.

I just think you are far too optimistic about the numbers of people who would be effected. NI has become incredibly 'affluent' in recent years without any real contributor beyond the credit industry linked to housing. For a minority to be effected by a recession implies that much of the apparent wealth would remain... that is not really how a recession works, the apparent wealth will drop noteably... at least to my knowledge.

championmongo1

It's a nice sunny day so let's forget about the 'credit crunch' and enjoy this fine day with our loved ones!!! The spring is here, house prices have dipped a little but are beginning to sell again and the housing mary-go-round continues as ever!