Base Rate Cut; Will house prices take off again?

SquatNow

Gorgeous_George wrote: »

Oh yes, wise words indeed !!!!!!.

Spend £400 on a HIP, £1,000 on a solicitor and £5,000 on an Estate Agent and then pay mortgage redemption fees to sell up. Follow this with a few hundred £££s to a letting agent for a credit check and pay rent until properties are cheaper. Then, pay £1,000 for a solicitor, £2,000 admin fees for a mortgage, £2,000 for Stamp Duty.

Add in new carpets and curatins and moving fees and by this time next year, we'll be millionaires Rodney.

What a plonker.

That said, it might just work.

GG

So a possible £12k in costs to sell. (And that's on the high side!)

And how much would a £200k house need to drop to lose more than £12k in value? 6%. Yes that's just 6%. SIX.


On MSE we advise people buying to offer 10-20% below asking price.

6% is NOTHING. It's a BLINK.. A COUGH. A house could lose that in a month.

The choice comes down to this... if you think prices are going to go:
UP: Keep the property and sit their happy as your asset value rises to the moon
DOWN: Sell now before NE means your stuck in the place until it get reposessed.

Gorgeous_George

If the right thing to do was to sell, then every house in the country should be put on the market.

It's easy to recommend such extreme measures with absolutely no responsibility IF you are wrong. One day you will be right and that'll give you a warm feeling but there will be more times when you are wrong.

You might be right this time - but you might be wrong.

I recommend that people look at their homes (owned or rented) as homes and that they take whatever precautions necessary to avoid financial difficulty. With interest rates falling, selling may not be the smartest move at present.

GG

WTF?_2

Gorgeous_George wrote: »

If the right thing to do was to sell, then every house in the country should be put on the market.

It's easy to recommend such extreme measures with absolutely no responsibility IF you are wrong. One day you will be right and that'll give you a warm feeling but there will be more times when you are wrong.

You might be right this time - but you might be wrong.

I recommend that people look at their homes (owned or rented) as homes and that they take whatever precautions necessary to avoid financial difficulty. With interest rates falling, selling may not be the smartest move at present.

GG

If you weren't so defensive that you go off on because I suggested that STR could be a good idea. you might have noticed that I qualified my original reply with:

If you're not attached to the property

Further, I've made it clear in my reply to your flamebait post that my advice applies to people 'on the ladder'. It might come as a surprise but most people don't buy their ideal home straight off - they get something basic but affordable, do it up, move on and get something better etc.


As such, if you are on the housing ladder and your believe that the market is about to make a sharp downturn it makes absolutely perfect sense to hop off the ladder locking in your gains, rent and then get back on the ladder when prices are lower, you have a large deposit in the bank and are chain free.

fc123

!!!!!!? wrote: »

IMO houses are extremely over-valued and it will be a long time before they reach such stellar levels of overpricing again. It's still possible to sell with a bit of clever discounting so if I were in the position of owning a house with lots of equity and it was just a step on the ladder rather than my 'home for the rest of my life' then I would be looking to lock in the profits. Rent until the market sorts itself out and then jump back in to take advantage of lower prices and being chain free with a large deposit.

It is the right time for us to sell this yr within our own lifeplan, not with what is happening in the mkt. I am dreading making the decision.
Give tenants notice in May? Or not. House could sit empty through the winer of 08/09, costing £££ every month it's not sold. What to sell it for ?? (no direct comp land registry figures for our St (of 6 but 1 is a vicarage so will never be sold) as we bought the last house that came up for sale in 1996. :eek:

Really trying not to stress, but what is the "right" price?

What if no-one can get a mortgage or cannot sell their home, so a chain never gets going?

The stres of making the decision is so doing my head in at the mo.

carpetbelly

PasturesNew wrote: »

If I were in charge *puts the God cap on*, nobody would get a mortgage over 2x their salary if they had any credit or loans.

To get 3x your salary you'd need no credit/loans.

No credit/loans for the first 3 years after any new or increased mortgage.

After 3 years the only way to get any credit/loan was to get it signed off by every previous company that's been borrowed from. So if you have 1 loan that company have to approve you getting a 2nd. If you approach a 3rd company for credit, 1 & 2 have to both agree. They'd be agreeing to the overall debt amount.

Can I keep this God hat on?

As sensible as this seems this is not going to happen and to be honest is also quite backwards thinking by the amounts of money you're involving. I've said this before but 2/3 times salary is not that good an indicator. Why do people seem to think it is?

There are people out there who do not earn much who manage to make everything count and can save and there are people out there who take home more and have no money management skills. Risk based calculations for mortgages are not a bad thing. People overstrething themselves is a bad thing.

I can understand why people moan at banks for lending large sums of money but, why not moan at the people applying and let them take responsability for their own actions? Err, I give up now, I'll end up writing to much and people will disagree and moan and tbh I've got a meeting shortly lol

Soprano

loopyh wrote: »

Just out of interest then would you recommend selling now or should I hang onto my property and wait for recession to pass?

I'd sell now before the 'price adjustment' comes along.

Nobody can predict how long a recession will last (if indeed we enter one).

GUESSWORK: I see more a 20-30% drop in prices from their peak at best.

But then again if I was good looking into the future, I would be putting the right six numbers on the lottery today.

jamescredmond

to answer the op: no. highly unlikely. rate could fall another full point but I don't believe this will generate a market upturn.

I agree with other posts here that highlight the tighter lending criteria.
with many lenders now sliding away from 100% + products and other gimmickry plus their increased circumspection when considering appl.s it's likely that the market will continue to cool. the causal factor isn't so much int.rate as lending availability.

btw, the IMF reported UK housing stock as being 40% overvalued.
HSBC thought a more conservative 30%. N'wide indicated 10%.

whichever one you choose, it's almost certain that we're staring at stagnation.

Austin_Allegro

movilogo wrote: »

Very soon banks will revert back to older systems - like lending 3 times of earning to a maximum
That means more & more people will find getting a mortgage difficult.

Houses on average will take longer to sell. Some sellers will be desperate and be forced to reduce price. But there will be a limit how low they can go. So, if that limit does not touch max mortgage people can get, there will be a deadlock in the market.

So, basically house market will slow down.

But not all people or all houses will be affected by this.

IMO we have already reached this deadlock, though the sellers aren't desperate, they just have an unrealistic expectation of what their property is worth, or are trying to move up the mythical 'ladder' and upsize. What isn't clear is how long the deadlock will last.

We won't get forced sales en masse until the economy starts to slow down seriously. There are already signs of this happening though; and I think there will be a knockon effect of stagnating/falling prices = less MEW = less consumer spending = economic slowdown = unemployment= forced sales = lower house prices = rinse and repeat.

mystic_trev

A friend of mine's an EA and came out with an interesting comment recently. He said you'd be surprised of the amount of people who won't budge on their sale price but somehow think the property they're buying should be discounted as it's a buyers market!

oasisfeverish

Is it just me as a owner that sees a property as a home not a investment all the time(excl. BTL LLs)?

I personally don't care whether prices rise or drop, all I know is that I can manage the payments, am not stretched in any way, and don't care if the value of my house went down this '30%' figure.

As the way I see it when my mortgage is paid off, even if I have paid tons for it and it's valued a lot less. I won't have to pay anyone anymore, others will still be paying rent, even if only £1 a month, but I won't be, I'll have a home that my child / children will be able to use should the housing situation be dire.

That's also why with the birth of my daughter last month, we now have a saving account, not for her 16th, 18th, first car or holiday. But for her deposit on a property, so that when that time comes for her to decide to purchase a property and build a future, she will have 16,18,25,30,35+ years of savings behind her. I really feel for FTBs today and hopefully this approach will help her avoid the issues FTBs are having now.