Fresh Start about House Prices

neilhew

I totally agree, many things in life have effectively reduced in price, and that is part of the reason for this site, to ensure value for money. How about a campaign to reduce house prices, especially at the lower end of the market. It really is the estate agents who push up prices. And it has little to do with demand. After all, there is a strong demand for food, yet that is a competitive market. Estate agents will push for every percentage rise that they can get. Percentage commissions for estate agents should be illegal. Remember, it is our children and grandchildren who will need to buy homes in the future. My job is as a surveyor, and I see the techniques that estate agents do use to justify higher prices, one favourite is that high prices are good for the economy, incorrect, the less you pay for your mortgage, the less demands for pay rises, the less inflation, and the more money that there is to spend elsewhere in the economy.

Kenny4315

Quote Thorpeedo :

Try telling my other half.... !! She see's spare capacity in the budget and wants to move! Not save it till we can get a decent return on it !

Just put your foot down with the missues, show her whose boss and who's wearing the trousers !!! Unless of course she is a 6 ft 4 inch, Russian shot putter / wrestler and in that scenario agree to move next week !

On a serious note if prices start moving down there will be plenty of novice BTL / developers who will want/need to sell, and even more experienced guys who will want to cash in close to the top of the market. The population in the UK is not significantly different now to 5 years ago when prices were basically less than half they are now. What goes up will must down, at least to a level of sensibility.

Pennywise

EdInvestor wrote:

And with an interest rate reduction likely at the same time....

But what about the almost inevitable rise in income tax or national insurance. Good old Gordon is still borrowing and spending (wasting) like there's no tomorrow. He's been incredibly lucky so far, but it seems his luck is about to change. A 3% hike in income tax will really hurt.

meanmachine_2

neilhew wrote:

I totally agree, many things in life have effectively reduced in price, and that is part of the reason for this site, to ensure value for money. How about a campaign to reduce house prices, especially at the lower end of the market.

I quite agree. I wish all the estate agents, lenders and so on on this site would push off. This place is designed for meanies like me who refuse to pay over the odds for all sorts of good, include bricks and mortar.

Why should property be any different? It's like a Sony shop owner coming onto this site and trying to flog TVs, even though they've risen by 50% in the last 3 years. "Oh well sir, I know they're expensive, but next year you'll be paying even more. Don't want to miss the boat blah blah".

That wouldn't be acceptable, so why is it acceptable for salespeople (EAs) to come on this site and peddle their untruths? Grrrr.

John_M_Business

meanmachine wrote:

I quite agree. I wish all the estate agents, lenders and so on on this site would push off. This place is designed for meanies like me who refuse to pay over the odds for all sorts of good, include bricks and mortar.

Why should property be any different? It's like a Sony shop owner coming onto this site and trying to flog TVs, even though they've risen by 50% in the last 3 years. "Oh well sir, I know they're expensive, but next year you'll be paying even more. Don't want to miss the boat blah blah".

That wouldn't be acceptable, so why is it acceptable for salespeople (EAs) to come on this site and peddle their untruths? Grrrr.

Come on, you can't really think that everyone on this board who are bullish about the market are all doing it for a reason. Like me, they're saying what they see - rather than speculating on what will happen.

IMHO there are more doomsayers that not on this board, but then I've been reading these kinds posts for almost a year and seen nothing in the real world to mirror what has been predicted by some doom-merchants. Still, the end of the world is nigh ... er... sometime.

However, a board like this, for all it's passion is so far removed from being influential that a 'campaign' won't happen. If prices fall, they'll fall because they do, if not, then they won't.

The difference between houses and other boards on this is that we're actually (in most instances) buying off each other. Therefore if we get a 'great deal' then there's probably someone who's getting a 'bad' one.

DrStep

Just to add- the reports from whoever are always confusing.

IT all really depends on how it is worded - and the effect it achieves. Clever use of language can turn something right around. 'If something is reported to rise dramatically it may mean didly squat if it was from a low level anyway. E.g. House transactions have soared 100% (when infact 1 extra house has sold - from 1 per year to 2 per year)

The proof of the pudding is by looking at graphs of where house prices to earning ratio is going. This may mean being a few months behind the property market as it is impossible to call the peak of prices (or the bottom). If you can afford a nice house at a good rate of payment - then buy it basically.

michaels

DrStep wrote:

Just to add- the reports from whoever are always confusing.
The proof of the pudding is by looking at graphs of where house prices to earning ratio is going.

Why is everyone so hung up on this ratio.
May be an example will help.

Assume a mortgage can be fixed at 5% for 25 years - based on an income and the share of income someone is willing to spend on housing a house price could be calculated.

Now suppose the same mortgage could be fixed for 25 years at 4%. Using the same ratio of income to housing costs will give a house price 20% higher and therefore a HIGHER ratio of houes prices to income. However in both cases the SHARE of income spent on housing will be the same . Thus for me affordability should be the measure that is watched rather than ratio to incomes - the later has an implicit assumption that interest rates do not change, and if you beleive that I would suggest that historic data shows that they do.

meanmachine_2

Good point. And affordability, if used as a criterion, means that house prices are likely to fluctuate over the coming years.

At the moment a £200K house is "affordable" if taxes stay as they are and int rates don't rise and I don't lose my job.

A 200K won't be affordable should taxes rise (which they are), int rates rise (hmm, not sure where these are going) and unemployment doesn't rise.

SO yes, the ideal time to buy, if you can afford to wait, is when the economy is stuffed, int rates are high and unemployment is high. Ergo, in these circumstances affordability is low.

However, if you look at the stats, you'll find that affordability is at its lowest for many years - similar to 1990, right before... the last housing crash.

michaels

Taxe increases are a good point - it is obviously interest costs as a proportion of net income that is the key. Can you point us to the data for this?

nelly_2

Tax's wont increae cos Tony Blair said they wont... honest