I've pulled out of our house sale..........

IveSeenTheLight

chriseast wrote: »

I agree that it isn't indicative of houses prices across the UK, just of my area, though I am in the most expensive place in the South West and one that isn't usually as badly affected by any loss of confidence in house buying.

I agree that Scotland is still cheap, having sold there in March, and prices are still rising there as well, though they will never reach the sort of prices that England has.

What has hit home to me more than anything though, having sold and put my money away in a high interest account, is how little I fully appreciated the value of money.

We have about £370000 to put into the new house. That wouldn't even buy the house I am renting here, for £900 a month,

A good honest sincere post.
With £370000 to spend maybe you should consider moving to Scotland, you could easily get a house up there within your budget

Seriously though, I hope you and your wife find the house of your dreams and within your budget

merlinthehappypig

IveSeenTheLight wrote: »

A good honest sincere post.
With £370000 to spend maybe you should consider moving to Scotland, you could easily get a house up there within your budget

Seriously though, I hope you and your wife find the house of your dreams and within your budget

The one thing we both agree on is that we aren't moving back to Scotland......We lived there for four years until March this year and, whilst we love the scenery and the house prices, four years with no summer finished us off.

I hope we find the house for us as well, but I really can't get the figures to add up at present. Because of ISA's, unused tax allowance etc we actually get to keep about £1650 a month interest from the money invested, so are £750 a month up after the rent is paid.

Even if this house drops to the £499000 price I still need to borrow £150000 to buy it, after stamp duty and other expenses are accounted for. This will cost me about £1050 a month, including mortgage life insurance and buildings insurance, which I don't currently have to pay. Council tax on the new house is band G so £1400 a year more than at present on band D. I would no longer have any interest from the bank so I'm moving from a £750 a month profit to a £1900 a month loss, without taking into account any maintenance costs which are currently the landlord's responsibility.

This might just be o.k. in a period of rampant HPI, but when most people, even the optimists, think that house prices will remain stagnant at best over the coming few years and could drop, this just looks plain daft to me, unless I am missing something.

IveSeenTheLight

chriseast wrote: »

We lived there for four years until March this year and, whilst we love the scenery and the house prices, four years with no summer finished us off.
LOL:rotfl: LOL:rotfl: LOL:rotfl:
I'm a Scotsman so I know what you mean

I hope we find the house for us as well, but I really can't get the figures to add up at present. Because of ISA's, unused tax allowance etc we actually get to keep about £1650 a month interest from the money invested, so are £750 a month up after the rent is paid.

Even if this house drops to the £499000 price I still need to borrow £150000 to buy it, after stamp duty and other expenses are accounted for. This will cost me about £1050 a month, including mortgage life insurance and buildings insurance, which I don't currently have to pay. Council tax on the new house is band G so £1400 a year more than at present on band D. I would no longer have any interest from the bank so I'm moving from a £750 a month profit to a £1900 a month loss, without taking into account any maintenance costs which are currently the landlord's responsibility.

This might just be o.k. in a period of rampant HPI, but when most people, even the optimists, think that house prices will remain stagnant at best over the coming few years and could drop, this just looks plain daft to me, unless I am missing something.

I certainly see why you are happy to keep renting.
I couldn't dream of buying a property valued at £500,000

merlinthehappypig

IveSeenTheLight wrote: »

I certainly see why you are happy to keep renting.
I couldn't dream of buying a property valued at £500,000

That to me hits the nail on the head, though. It's VALUED at £500000 (actually it was valued at £649500 when it first went on sale) but it isn't WORTH £500000 or it would make sense to buy it.

Doc_N

IveSeenTheLight wrote: »

I dont see how this example shows what's going on in the market across the country.

The following recent release shows more accurately what has happened in the last quarter.
http://www.nationwide.co.uk/hpi/historical/Q3_2007.pdf

It's an indication of what's happening in one previously very popular price right now, and there are similar reports from elsewhere. The Nationwide figures are of little value now, because they only run to the end of September, and they're based on pre-Northern Rock data. Northern Rock and its aftermath have changed everything - that's when lenders stopped their sub-prime lending and buyers realised that they would do better by waiting for prices to fall as a result.

The next set of figures from Nationwide will be very different, and take account of the very changed situation we're now in. As evidenced by the headline and article below from today's Times:

UK house market is ‘heading for crash’

The property boom of the past ten years has left the British housing market in danger of following the slump in American house prices, the International Monetary Fund said yesterday.

In a bleak warning, the IMF found that homes in Britain were overpriced by up to 40 per cent — far more than the overpricing in the US before the current property slump began there. The finding will fuel fears over housing market prospects after growing evidence recently that prices have already begun to fall in some parts of Britain.

The warning came as it emerged yesterday that the Bank of England discussed whether to lower interest rates this month to shore up Britain’s growth. But there was substantial reluctance among the Bank’s Monetary Policy Committee to rush into lowering borrowing costs, with only one of the nine-strong panel voting for a rate reduction.

The IMF report said: “The extent of house price overvaluation may be considerably larger in some national markets in Europe than in the US. The estimates suggest that a number of advanced economies’ housing markets outside the US could be vulnerable to a correction.”

WTF?_2

Doc_N wrote: »

It's an indication of what's happening in one previously very popular price right now, and there are similar reports from elsewhere. The Nationwide figures are of little value now, because they only run to the end of September, and they're based on pre-Northern Rock data. Northern Rock and its aftermath have changed everything - that's when lenders stopped their sub-prime lending and buyers realised that they would do better by waiting for prices to fall as a result.

Yep - I think it's going to get very nasty indeed in the UK housing market.

In the US they are well into a crash and that's even with a booming economy and rising stock market, as well as lower interest rates than the UK and relatively cheaper houses.

So it's not essential for a recession to happen to bring on a UK crash (though it surely would cause one or massively exacerbate an existing crash). The question will be which comes first, one will definitely cause the other given that much of the UK economy depends on consumer spending which a housing slump will hit.