How much can house prices keep rising ?

economic

westernpromise wrote: »

Buying somewhere you might also later want to use adds a layer of challenge to the decision of what and where you buy. While I'd love to move back to Little Venice, for example, it ain't happening while there are 4 of us who'd have to live under that roof.

Your thinking on this sort of thing morphs once you are no longer able to think only about what works for you as an individual. Once you have a family, you have to start thinking multi-generationally about preserving the family's painfully-accumulated capital. This is something I've only recently begun to do, not least because four members of my family have died in the last five years and I've observed at first-hand what happens if you don't.

If it were just about my own needs and economics, for example, I should probably sell the place in Little Venice. It has quadrupled in 18 years to about a million quid, but its price is levelling off now and it's not going to inflate at that rate over the next few years. Hence now might be a good time to extract the cash and put it to work elsewhere. But, but, but:

1/ I have 2 daughters who within 10 years will be working, probably in London. I don't want them renting some one-room dump south of the river on a graduate salary. I want them living somewhere pleasant and safe.

2/ To sell and re-buy a £1 million second property would a/ crystallise a £100k tax bill and b/ cost me another £100k in SDLT and other transaction costs. These are absolute cash losses. Worse, what if I had to pay £50k more on rebuying? Or £150k more? Then I'd be chucking £350k of family capital away.

3/ The tracker BTL mortgage on it has 11 years left and is at a rate unmatchable now. If I sold and rebought, as well as the £200k cash loss there would also be the higher cost of the BTL mortgage - and that's if such things are not legislated out of existence.

4/ The current tax attack on the private rental sector will make it contract, which is bullish for rents, especially if house prices were to come off. Any withdrawn equity would have to perform that much better in contrast to provide the same income.

All of which says Don't sell; we still need it. In effect I am treating the rental as part of the family's stuff. Like the main home, we own it because we need it. You don't speculatively sell the family home to rent. In 40 years' time I'd expect my daughters to be doing the same thinking.

One of the reasons crashtrolls are such a stopped clock about property is that they completely fail to understand this kind of non-cash, non-immediate-gratification motive, or indeed any motives other than their own. The state unfortunately is just as ignorant.

yes i see where you are coming from and makes perfect sense. i am 33 so not young whilst not that old. i already have a place (2 bed in highgate) which is fine for me. i guess i should look at any addtitional property as purely an investment instead of a place to live, and certainly london right now does not look a good investment and it is worth waiting to see what happens.

preserving family wealth is something i am talking about with my parents. they have around £2m in net worth including their home (they are in their early 60s). working very hard for this (and actually never bought another property so the money came pretty much all from earnings) and spending wisely as well as paying a ridiculous amount of income tax over the years, it would be such a shame to pay a single penny in inheritance tax. granted a lot of it would be spent as they retire very soon however with state pension, private pension and possibility to downsize their home, i would imagine there would be quite a bit left over.

Srgur

Wouldn't life be a bit boring if we all liked and disliked the same things.

It is boring. In terms of contradiction this statement is the Holy Grail.

Srgur

One of the reasons crashtrolls are such a stopped clock about property is that they completely fail to understand this kind of non-cash, non-immediate-gratification motive, or indeed any motives other than their own. The state unfortunately is just as ignorant.

Beautifully put - considering every point you made purely focuses on YOUR own motives. I agree, nothing you have done at any point was of benefit to anyone else other than you and your family. It is churlish to call this ignorance however, it is self preservation and ingrained in us all.

Zxcv_Bnm

Srgur wrote: »

Beautifully put - considering every point you made purely focuses on YOUR own motives. I agree, nothing you have done at any point was of benefit to anyone else other than you and your family. It is churlish to call this ignorance however, it is self preservation and ingrained in us all.

wasn't that his / her point? there are people who think the only reason anybody ever has to buy or hold is that prices are going up, and that everyone will sell if they fall.

but this is not true - if you are thinking 50 years ahead you don't care about downturns because over 50 years there aren't any. No?

padington

London prices on zoopla just took a heavy smack down of about 5%. About 6 weeks ago they upped it about 5% and now a take down.

Weird.

bownyboy

padington wrote: »

London prices on zoopla just took a heavy smack down of about 5%. About 6 weeks ago they upped it about 5% and now a take down.

Weird.

I noticed that too. We're in Surrey and our 3 bed semi just went down by £50k. Always take zoopla with pinch of salt anyway.

AdrianC

padington wrote: »

London prices on zoopla just took a heavy smack down of about 5%. About 6 weeks ago they upped it about 5% and now a take down.

Weird.

And this bears a resemblance to reality how?

padington

AdrianC wrote: »

And this bears a resemblance to reality how?

It's become one key indicator when assessing prices that's why. Albeit a pinch of salt indicator. It does sway the market to some extent. Inxperienced estate agents and inexperience buyers and sellers take stock of it rather more than they should.

westernpromise

bownyboy wrote: »

I noticed that too. We're in Surrey and our 3 bed semi just went down by £50k. Always take zoopla with pinch of salt anyway.

Illiquidity indicator I would say.

One house nearby sells for a high price - all others go up £50k. Next month, the opposite.

Just bespeaks low volumes.

midimanuser

The Estate agents are the ones that are to blame.


Their was tons of malpractice going on before the financial crash.


Solicitors and agents where manipulating the land registry values.


Most agents put a property £20 - £40k higher than what the seller wants.


Great for the seller and the agent. But not for the buyer, or the next person that comes to buy on that road.

Because they will use what number 20 sold for as the basis for their next sale. And this will just continue to inflate prices while people are prepared to buy and intrests rates are low.


Raise mortgage rates and prices will have to slow down.


Prices in London has seen stagnation and some sellers are dropping prices by £100k!!!


Just think how overvalued they are when you can afford to do that.


The price is not what the property is worth, it's the price that someone is willing to pay.


Common sense should dictate and buyers should walk away from the market.