Buying A House? Would you pay £20k for a £5k car?

TheChicken

Greetings,

I am currently looking at buying a house and came accross this news link:

http://money.uk.msn.com/mortgages/mortgageguide/article.aspx?cp-documentid=8011664

Now I pose the question "Would you pay £20,000 for a car worth £5,000?
Well simply "NO!"

Well thats in essence what I would be doing if I bought a house today: Quoting the above website -

"The average UK price has risen by 120,860 pounds during the past decade from 70,696 pounds to 191,556 pounds -- an increase of 171 percent."

Yes I understand that prices do rise over time but a realistic rise of a £70,000 house over 10 years should reflect inflation so there fore it would equate to around £90,000.

Now I beg of you if you are buying a house keep this in mind!

Why are we offering over £100,000 of the actual value of the house?
Estate Agents, Mortgage Lenders and Property Developers...........Need I say more!

What can we do to change the market?

I believe that if all first-time-buyers started to make offers of the Actual value of the house using Land Registry Records and a simple sum, House prices can be changed to once again reflect their true value.

Please discuss and if you are buying really think about what I said.

Thanks
Ch!ck xx

real1314

TheChicken wrote: »

I believe that if all first-time-buyers started to make offers of the Actual value of the house using Land Registry Records and a simple sum, House prices can be changed to once again reflect their true value.

Good luck with that. Let us know how you get on.

JoJoArmani

what a strange post....

I have bought a house and paid what I think it is worth. To me it is worth alot more than I am paying for it as I NEED the space this house has.

Not everyone can wait around for fantastic price reductions - some of us have to get on and live our lives now.

best of luck to you...

Woby_Tide

daft analogy with a car though, cars in pretty much all cases are seen as depreciating items that no-one expects to hold anything close to its original value as it is to all intents and purposes a perishable product, (ignoring the house prices only ever go up mantra) a house is a purchase that in the majority of cases(and certainly long term), will hold or increase its value over time

Markyt

I'm putting my money in Micras instead now. As a bonus, i can live in it until the asset appreciates.

JoJoArmani

shouldn't this post be in the house prices forum?

They will love it....

neas

we all know this to be true... but its reducing the prices its not such an easy thing to do... only a crash can correct the prices.

And only people desperate to sell (repossessions) would start selling initially.. eventually it would sink in that prices are lower but dont expect overnight everyone to just offer 100k less for their houses... because its not going to happen... I want a HPC i want a cheaper house but its gonna be a while before i buy i think.

TheChicken

I understand there is always cases of urgency when buying a house and some people are not as bothered about the price but the actual property itself but with the national average wage at £24,000

That means that for an average middle-class person their maximum 100% mortgage at 4 times their wage would be £96,000 which is way to low for the current average of house prices but very much on par to the true value of realistic house price increases.

Ch!ck

Kez100

Actually, people do pay £20,000 for cars worth £5,000. Cars cost a certain amount to build as, yes, the better brands may cost some more besides but margins still differ. Some brands or design will attract a higher margin.

Overall, the analogy made is a very poor one due to - as others say - the difference in the type of asset. They don't seem to have a grip on big market either. People have been trying to get everyone to abandon certain fuel companies for ages but it just doesn't happen.

cowbutt

Attempting to apply a simple inflation indexing to property has a number of problems, the most obvious being the practical; how do you ensure that every prospective buyer only offers a maximum of the inflation-indexed price? If only one buyer defects (even by only a pound, because for whatever private reason they have they really want that house) then the seller is likely to accept their offer rather than that of their competitors and consequently that'll reset the expectations of other sellers.

Secondly, the only inflation figure that could be used in valuing homes for sale is... the housing inflation figure. Any other inflation index won't fully reflect the relative supply and demand of homes versus other goods. Even a national housing inflation figure won't truly reflect the local supply/demand balance (whether at a regional, county, city or street basis).

In some ways, it's surprising that the prices paid for housing increase at all, since the majority degrades over time once it has been built (unless, like artwork and antiques, it has particularly rare and sought after features or craftsmanship).

Ultimately, the value of a home is determined by what the best-funded buyers are prepared to pay for it, and what the seller is prepared to accept. These values will be different for every buyer and seller, because everyone has different priorities; some rational ("I want a home with a greater degree of security than a rental property", "buying a home in this street gets my kids access to a great school, and funding a place at a comparable fee-paying school would cost even more", "I think the value of this home will appreciate in value" and "I want a home that I can customise to my requirements with minimal hassle") and some irrational ("OMG, if I don't buy now, I'll NEVER BE ABLE TO! Arrrgh! PANIC!" and "The bank is prepared to lend me stupid amounts of money, which I don't know how I'll ever repay or even afford the monthly repayments, but I don't need to worry about that whilst I'm on the three-year teaser rate")

Jorgan_2

TheChicken wrote: »

Why are we offering over £100,000 of the actual value of the house?
Estate Agents, Mortgage Lenders and Property Developers...........Need I say more!

Estate Agents, Mortgage Lenders and Property Developers do not control the housing market, its controlled by the buyers & sellers. The seller dictates the asking price and between them they dictate the sale price.