Has the housing market hit freefall yet?

IvanOpinion

Bongodrums, in the long term buying a house has always proved to be a good investment .. the only reason people would need to be worried is if they bought at the top of the market and need to sell quickly.

Before anybody takes me up on it .. yes there is a possibility that today could be the start of something that totaly bucks the trend however I still believe that overall house prices will generally continue to outpace inflation.

ivan

talksalot81

You are right IvanOpinion, but it assumes that the investment remains affordable at all points. If the servicing of the investment becomes more than the investor can afford, the investment can prove to be very poor.

IvanOpinion

But then I would never condone or recommend that someone stretches themselves beyond their means

Ivan

talksalot81

IvanOpinion wrote: »

But then I would never condone or recommend that someone stretches themselves beyond their means

Ivan

But the bottom of the housing ladder represents just that for most FTBs.

Furthermore, to answer your edit of an earlier post - mathematically, how can HPI outpace inflation on the longer term? If you go long enough, it is mathematical fact that almost nobody can afford housing. If you say that this is not the case because you dont see that inflation/HPI scenario being the same forever, what do you think would induce a change in it?

IvanOpinion

talksalot81 wrote: »

But the bottom of the housing ladder represents just that for most FTBs.

Been there and done that. it is likely that people will have to consider renting for longer to accrue a suitable deposit or they may have to go for a house they don;t want to stay in just to get on the ladder .. or consider moving further afield.

Furthermore, to answer your edit of an earlier post - mathematically, how can HPI outpace inflation on the longer term? If you go long enough, it is mathematical fact that almost nobody can afford housing. If you say that this is not the case because you dont see that inflation/HPI scenario being the same forever, what do you think would induce a change in it?

The edit was purely to fix a spelling mistake I noticed .. not add or change anything. I can't amend history, it has shown that housing as a long term investment is a good choice, you just got to buy at the right time and sell at the right time ... however even if you buy at the wrong time, as long as you are willing to hang on to it for a while it will still offer a good return.

Ivan

talksalot81

IvanOpinion wrote: »

Been there and done that. it is likely that people will have to consider renting for longer to accrue a suitable deposit or they may have to go for a house they don;t want to stay in just to get on the ladder .. or consider moving further afield.

The edit was purely to fix a spelling mistake I noticed .. not add or change anything. I can't amend history, it has shown that housing as a long term investment is a good choice, you just got to buy at the right time and sell at the right time ... however even if you buy at the wrong time, as long as you are willing to hang on to it for a while it will still offer a good return.
Ivan

The problem is that the inflation busting rises you are discussing will result in prices rising much more rapidly than an individual can save. On your low end house, someone is going to have to save at least £7k pa to even keep up with rpi level HPI. Now I know this is possible for me, but for many others I know, this is just not possible by the time all outgoings are considered. That means that every day, these people are further away from affording their own housing. The longer the trend suggested continues, the more the number of people in this situation increases. Logically a point will be reached where is it outright impossible to afford your own house unless you already have one or family has one. But at that point, demand will be zero for the bottom of the ladder (since no one can afford it) and hence the market grinds to a stop. The alternative you suggest is people move further afield, that does the same thing to demand. These are extrapolations I realise, but if we do not accept that things must eventually change, then this is where we are forced to end up i.e. 'normal, average' people will never do anything but rent.

IvanOpinion

I thought I had read somewhere that we are one of the few/reducing number of countries were it is more likely that people will buy their own property instead of renting .. maybe we are just catching up with rest of the world ... or possibly falling behind to the global norm?

It is a tough one, maybe the government should consider building a few more housing estates but where do you site them and, given the reputation and hostory of various estates, will people want to live in them?

At the minute we are seeing that a simple two-up-two-down is no longer acceptable at the bottom end of the market, people want 3 bedrooms, en suites, family room, garage, two parking spaces etc. Maybe people need to cut back on their expectations????

Ivan

Parisien

IvanOpinion wrote: »

I thought I had read somewhere that we are one of the few/reducing number of countries were it is more likely that people will buy their own property instead of renting .. maybe we are just catching up with rest of the world ... or possibly falling behind to the global norm?
Ivan

Yes Ivan, in Ireland/Uk we have some of the highest owner occupiers rates in the developed world, I believe is in the 80 per cents, bizarrely in Germany the rental market acounts for 80 percent of the market, no doubt there are cultural/economic issues at play here!

This is why in the Anglophone world we always go on so much about house prices/equity etc, whilst in Germany, they just shrug their shoulders when you mention houses/ownership etc!

talksalot81

IvanOpinion wrote: »

At the minute we are seeing that a simple two-up-two-down is no longer acceptable at the bottom end of the market, people want 3 bedrooms, en suites, family room, garage, two parking spaces etc. Maybe people need to cut back on their expectations????

Ivan

I am not sure that is right. I would not mind a two up two down, but at the right price. My parents had similar jobs/skill levels to me, they could afford something better than the most basic. My colleagues the same. If I could get a two up two down on 3.5x salary, I would go for it. But when it costs 7x, it does not seem all that sensible. Other people agree hence the unwillingness you speak of.

Colin_Kee

Just side-tracking off all of this scarey talk of HPI's, RPI's & Inflation.. About 2 months ago (on another post) I had commented on the number of houses for sale in our development (In Craigavon) there were about 11 out of the 80 Odd houses for sale. Since that time about 3 have sold 1 of which is back on the market, which to me would indicate the buyer has pulled out. Two were for sale so long the vendors put them up for Auction with Wilsons Auctions in Portadown. Neither sold and both are now on with multiple agents (one of them is on with 3 agents the other 2 agents) 3 other developments around us have numerous houses for sale in them (few of which have actually sold) and a new development of 25 houses being built close by has had the first phase of about 10 houses released and only 1 of them has sold.

I don't care what anyone says.. houses in this provence/country are completely out of reach of the "avarage" person It would be impossible for any couple to buy a house on a combined basic "average" salary never mind a single person on one salary. It is completely unsustainable. something has to change to make things more balanced (and from what has been muted around in the news today about the "inflated" public services of Northern Ireland having to tighten the purse strings it certainly wont be pay rises closing the void) I really do think as the year ends and a new one begins, people will start to feel the pinch and realise that this madness is completley unsustainable (especially if food prices go up as well what with the shortage/high demand on worldwide grain & Dairy supplies).

Another point too. (Not that I'm suggesting for one minute that they ever did it before) but I've heard that "some" financial advisors are being a bit more reluctant now also to help people "stretch" the truth about their incomes to help them secure a higher mortgage than they would normally get at 3.5 x Income (maybe a bit of a knockon from what happened with Northern Rock & the housing crisis in America.