December prices up 1.7%

padington

Express are going nuts ...

http://www.express.co.uk/news/uk/752153/house-prices-increase-brexit-big-surge-since-EU-exit-vote-smashes-economists-expectations

StevieJ

padington wrote: »

Express are going nuts ...

http://www.express.co.uk/news/uk/752153/house-prices-increase-brexit-big-surge-since-EU-exit-vote-smashes-economists-expectations

Remind me again, is this good or bad news?

PeterPanic

I offered on a house in December and am currently waiting to complete. Does this mean I have just made £5.5K while I am waiting?

chucknorris

PeterPanic wrote: »

I offered on a house in December and am currently waiting to complete. Does this mean I have just made £5.5K while I am waiting?

Did you deduct all your expenses for both buying and selling, e.g. fees? Stamp duty, solicitor, estate agent and other miscellaneous fees (e.g. mortgage arrangement, valuation etc)?

lisyloo

chucknorris wrote: »

Did you deduct all your expenses for both buying and selling, e.g. fees? Stamp duty, solicitor, estate agent and other miscellaneous fees (e.g. mortgage arrangement, valuation etc)?

I don't get it chuck.
If the OP was buying a house anyway those fees apply anyway.
I think Peter is saying it's an EXTRA £5.5K, which only applies if Peter isn't selling as well.

padington

StevieJ wrote: »

Remind me again, is this good or bad news?

There is no singular objective moral truth, morality is subjective.

westernpromise

StevieJ wrote: »

Remind me again, is this good or bad news?

This is superficially a simple question but if one thinks it over it yields some interestingly counter-intuitive answers.

About 70% of the country owns and 30% rents (give or take - not important for these purposes). These two situations contain more than just two perspectives. Of those 70% who own, the majority own one house. Whatever its market price from time to time, they still own one house. Those who own outright should be indifferent to price movements as long as they understand this. It must be said that many are not and mistake this inflation for profit.

Within this overall group of owner occupiers, others own on mortgage finance, and they may gain from price rises, in two ways. One, a price rise adds equity which obviously gives a greater cushion against negative equity (if the price goes up 10% this year you can afford for it to fall 9% next year; the house value will be the same as now). Two, if the V in LTV goes up, this lowers their LTV and hence may lower the interest rate when they refinance. Of course those who gain by this are then limited only to those who are on the threshold between one LTV level and the next. If you are already in one of the lower ones or otherwise not within reach of a lower one, you do not gain.

Other types of owner also gain. Anyone in negative equity gains. Regardless of the finance situation, anyone with a million-pound house who wants to downsize to one 60% of the price gains from inflation. Sell up at a million pounds and they'd turn £400k of house into cash, whereas at £1.1 million they'd turn £440k into cash. So downsizers gain. Likewise, those selling to rent gain the higher property goes, as this lowers their BCR. Potential upsizers lose comparably. It is hard to say what the split is between upsizers and downsizers of course.

Also within the owned sector, landlords, probate sellers and second home sellers gain. These can all sell, pay the tax and pocket the rest without needing to use the money to replace the property.

So within owners we have a large proportion of indifferents (some of whom may think they gain but are actually wrong to do so), some proportion that genuinely gains, and some who genuinely lose.

You'd think renters must be different, but I'd suggest the same categories - gain, lose, indifferent - apply to them, just in different proportions.

Those who rent, would like to buy, can't afford to and can now afford to even less, correspond closely to upsizers; price rises mean buying gets even harder. They lose.

Those who rent but don't want to buy at all are indifferent, but possibly shouldn't be. If they are renting socially, their rent is not much related to house prices, but if they're renting privately, then it is. When house prices go up rents go up less, if at all - because the demand is for buying. When house prices go down, rental demand rises (obviously, because shelter is still needed but you don't want to own it). So renters who don't aspire to buy gain by rising house prices, as it holds their rent down.

Likewise, renters who aspire to buy and can afford to do so may gain by price rises. Buying in a falling market is actually harder than buying in a rising market, because your rent may go up, the deposit is thus harder to scratch together and is likely to be higher, the salary multiple you can borrow will fall, and transactions grind to a halt so the chances of finding anywhere decent are lower. Of course what this group needs is a gradual upward price drift; they lose from spikes.

I was quite surprised to realise that some renters gain from house price rises (and would lose by falls), but it appears to be true.

On balance I would have to say that modest upward price moves are overall beneficial.

lisyloo

So within owners we have a large proportion of indifferents (some of whom may think they gain but are actually wrong to do so)

Why are they wrong to do so if they plan to downsize at some point (which most people with a family home would). Obviously it's only a paper value until you crystallise any profit or loss, but in general gains have been cummulTive year in year.

PeterPanic

lisyloo wrote: »

I don't get it chuck.
If the OP was buying a house anyway those fees apply anyway.
I think Peter is saying it's an EXTRA £5.5K, which only applies if Peter isn't selling as well.

I am buying the house anyway and I have nothing to sell. The point I was making is that the market is so crazy that if the Halifax is to be believed (which I doubt) the house I am buying has gone up £5.5K before I have even completed and got the keys.

Due to divorce I have not been able to get a mortgage to own a property in the last 3 years and in that time the average 3 bedroom house in my area has gone up £100k. In that 3 years I have been in full money hoarder mode and managed to save £50k in cash. Now I used to think £50k was a decent amount of money and it was tough to save it, but I am actually £50k worse off than if I could have bought a house 3 years ago.

The person who bought the house 3 years ago, no doubt has the latest iphone and a lease car with credit cards maxed to the limit. They are better off financially than me who has a pay as you go phone, no car, zero debt and £50k in the bank.

If it wasn't for the payout I have received from my marital home there is no way I would be buying a house now, even with a £50k deposit, there is just no way you can save quick enough to keep up with rising house prices.

I actually did some maths on the first property I ever bought in 2000 which cost us £145k. I have more cash than it cost to originally buy the property, but even with that as a deposit I still couldn't afford to buy it now. That property has gone up in value £1600 every month for the last 16 years, can you imagine saving that amount of money every month for 16 years and being worse off than if you had just bought a property.

The government have rewarded those that get into debt and punished people who are prudent and save money.

GreatApe

PeterPanic wrote: »

I am buying the house anyway and I have nothing to sell. The point I was making is that the market is so crazy that if the Halifax is to be believed (which I doubt) the house I am buying has gone up £5.5K before I have even completed and got the keys.

Due to divorce I have not been able to get a mortgage to own a property in the last 3 years and in that time the average 3 bedroom house in my area has gone up £100k. In that 3 years I have been in full money hoarder mode and managed to save £50k in cash. Now I used to think £50k was a decent amount of money and it was tough to save it, but I am actually £50k worse off than if I could have bought a house 3 years ago.

The person who bought the house 3 years ago, no doubt has the latest iphone and a lease car with credit cards maxed to the limit. They are better off financially than me who has a pay as you go phone, no car, zero debt and £50k in the bank.

If it wasn't for the payout I have received from my marital home there is no way I would be buying a house now, even with a £50k deposit, there is just no way you can save quick enough to keep up with rising house prices.

I actually did some maths on the first property I ever bought in 2000 which cost us £145k. I have more cash than it cost to originally buy the property, but even with that as a deposit I still couldn't afford to buy it now. That property has gone up in value £1600 every month for the last 16 years, can you imagine saving that amount of money every month for 16 years and being worse off than if you had just bought a property.

The government have rewarded those that get into debt and punished people who are prudent and save money.

What if, as I and many believe, house prices 16 years ago were unduly undervalued?

How would that change the story?

PeterPanic

GreatApe wrote: »

What if, as I and many believe, house prices 16 years ago were unduly undervalued?

How would that change the story?

At the end of the day everybody needs somewhere to live, the less you pay for your house the better your life is going to be.

Incredible to think that just deciding to buy a house 3 or 4 years earlier than someone else could mean you are going to be much better off financially.

I know a couple, he works as a gardener and and she works part time in an office. I earn more than both of them put together, yet they own a house I could only dream of buying. How messed up is that. It doesn't matter how much you earn, the important thing is when you bought a house.