Base Rate Cut; Will house prices take off again?

hgllgh

the bank of japan took rates down to 0% .. yes 0 .... zero ... zilch ... but they still had the mother of all property crashes ... -60% over 15 years caused by their own credit crunch.

The US has been reducing rates since 2006 but they are still experiencing their biggest property crash in decades.

UK property is 50% more overvalued than the US according to ABNAmro and with our own "subprime" market bolted onto the US subprime fallout surely we are going the same way as the US. A quarter point here or there doesn't look like its going to make much difference.

firsttimetom

Is it just me as a owner that sees a property as a home not a investment all the time

I would love the chance to own a home, and really that is all I would like, but like many I haven't yet been given the chance as Iwas born to late (early 20's). I only realistically started looking for my own place last year adn the prices are just unbelievable. Thats why I'm looking for a HPCI'll just keep saving in the mean time and the prices will fall accordingly.I honestly think their is nothing they can do this time. It won't be like 2005 (which I can't remember as I was taking no interest in property at the time), this will be more like the early 90's.

adr0ck

hgllgh wrote: »

the bank of japan took rates down to 0% .. yes 0 .... zero ... zilch ... but they still had the mother of all property crashes ... -60% over 15 years caused by their own credit crunch.

.

you cannot compare the Japanese property market with the UK market

adr0ck

the average uk house price is something like £195K

if there was a 50% crash as someone mentioned that would give average price at less than £100K

can someone please tell me then how you build a average house for £40K........i would love to know

hgllgh

adr0ck wrote: »

you cannot compare the Japanese property market with the UK market

It was the principle that I was trying to get over but seeing as you have made the assertion, why can we not compare the Japanese market to the UK. It doesn't really matter how they (and the UK) got there but both have/had stupidly overpriced property, similar population levels, similar interest rates and Japan had twice the levels of employment that we have now in the UK (which probably doesn't even take into account the millions on other types of benefit that are not registered as unemployed)....

jamescredmond

adr0ck wrote: »

the average uk house price is something like £195K

if there was a 50% crash as someone mentioned that would give average price at less than £100K

can someone please tell me then how you build a average house for £40K........i would love to know

easily, if you're a builder. the serious outlay lies in land purchase.

there's more chance of getting served down my local by the pope than seeing a 50% cut.

barring global meltdown/war/comet strike.

in which case it'll be: a pint of holy water my old mate benedict.

lethal0r

the rate cut will get you around £15 off your mortgage repayments a month. thats almost unnoticable and wont affect anything.

Vaux-Hall

SquatNow wrote: »

And employed eastern european migrants instead.

Seriously, you are aware that we have the highest unemployment level in history arn't you? You do realise that they've just taken them off the figures? DLA? "Training"? Paying kids to stay at school!

In the old days kids left scholl at 16 and went on the dole. Now they are PAID MORE than dole money to stay at school and stay off the figures.

We don't - it was over 3m in the mid 80s - but it's not the relevant figure anyway for house prices. Because we are in a growing population, the figure that's more important is the employment data; as long as employment is going up, it doesn't matter so much if unemployment is as well. The key is the relationship between no. employed people and availability of property. Somone may lose their job and their house, but if there are two more people in work that can afford to buy it, it's not going to necessarily drag house prices down.

WTF?_2

oasisfeverish wrote: »

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.

Regardless of whether you are interested in the investment aspect of property ownership the simple fact is that you don't want to be paying ridiculous amounts to buy your own place. At current price levels, most people are effectively entering into debt slavery by taking on a mortgage.

It's great that you are thinking of the future for your new child but absolutely bonkers/tragic that the only hope the FTBs might have in the future is from decades of savings started by their parents.

If commodities like food or energy had increased in the last few years by the amount that houses have done the population would be up in arms now. Yet people appear to be brainwashed into thinking that forking out a king's ransom for a home (and borrowing up to your neck to do it) is a good thing.

(The reason house prices inflated was primarily down to the availability of easy credit to buy them. Consider that if the current attempts to keep the party going by cutting interest rates, dishing out central bank loans and outright propping up failed banking enterprises continue, all that excess cash is likely to find its way into other asset bubbles - like food and energy. Should be interesting to see how people react that that kind of inflation).

dannyboycey

Interest rates could be cut to 0% and prices would still crash. I'm absolutely serious.