Another report that says housing market continues to cool

spottydog

Kenny4315 wrote:

When I say cash is king, it surely is when your talking about buying houses, if I go to buy a house and say the money in the bank we can complete in 2 weeks, I'd expect to get a very generous discount off the price, at least 10% and even more on more expensive properties. Alternatively go to buy a house and say well its like this I have to arrange a mortgage, and need to sell my own house, blah blah, blah the seller probably won't accept much of a reduction/won't take an offer until your in a position to really get down to business.

Sorry can't agree here unless you're buying from a forced seller or maybe for a family argueing over probate. Most sellers still need somewhere to live and 2 weeks isn't giving people enough time to arrange anything (ever tried getting removal men in to quote and do everything within a couple of weeks or finding a rental place and getting all your references completed, I've tried and not succeeded unless I pay over the odds). Whereas I can't see why anyone would accept an offer from someone who's property was not even under offer the difference between a whole cash buyer and someone who is buying with a mortgage isn't really that different in fact from the experiences of myself and my friends/family that cash buyers tend to be much more of a pain that mortgage buyers (i.e expecting the earth without paying anything for it).

The way I look at my home is this. I always have a repayment mortgage (don't want to gamble on my home) and the difference between renting and mortgage is that after 25 years I finish paying the mortgage but if I rent I continue paying until I die (and that would be a fair chunk out of my pension). I have also bought my home in London with plans of retiring away from the south east so what I am paying extra now to buy a London home is also a form of saving for when I retire and sell my home for something cheaper.

Kenny4315

spottydog wrote:

Sorry can't agree here unless you're buying from a forced seller or maybe for a family argueing over probate. .

What I mean is that you can complete immediately if the cash is in bank, whether it is 2 weeks or 4 weeks or 8 weeks. Under Offer means nothing in the UK, as you know this is not binding, until exchange of contract, get in a chain and its anyones guess if you can complete or not. There are surely less issues with a cash buyer than someone with a mortgage as the building society will impose various checks and valuations to cover themselves, as well as the actual buyer.

So most people looking to sell would be happy as larry to get a cash buyer. Why do you think professional property developers can get such good deals ? Any seller wants to to shift the property, especially in the current scenario where prices are at best stagnant.

Do you suggest that no one will need to move for work, get divorced, get married, have kids, change jobs, die, decide to move abroad, need the cash for a business, etc, etc, etc because these are all factors that result in the need to move/sell properties and often in some speed. Sure some folk can just sit it out if things crash for years but not everyone, and there's enough that need to move/want to move to force prices downwards.

As for investment, it depends entirely on the purchase price against the sell price, and timing is everything. At present buying is not a good investment, at best the market will be at current price levels in a number of years time, and is likely to take a large hit over the next 2 years. If you are a ftb then renting is a cheaper and less risky venture for at least the next 2 years. If a £200k house falls by only a measly 10% that's £20k lost, and over a 25 year mortgage, you'll have paid pretty much none of the outstanding capital. Also the mortgage payments are likely to be more than the rent for the said type of property.

wibble68_2

Mr_Proctalgia wrote:

Meany - If you choose to rent and save then good for you, however personally I think you ought to have your bumps felt. Why not buy and save instead, you know yourself that the long term trend is going to be upwards, is it because you think you can rent a better place than you could buy?

Another short sighted view that prices can only go up.

Mr Machine is quite right to sit it out for the moment. He clearly wants to have a small affordable mortgage.

There is a very real possibility that the market could be in for a correction in the next few years.

The latest crap from the nationwide has confirmed my suspicions.

"Continued controlled slowdown", utter nonsense.

A market driven by sentiment doesn't work like this and never has.

Ironically the banks came out with this kind of rubbish in 1990 so why should we believe them this time.

On the other side of the coin you will find Mr Stansfields comments.

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However, Ed Stansfield, of Capital Economics, who is one of the leading housing “bears”, said: “The big picture of slower economic growth, record housing market valuations and stretched affordability suggests that significant further falls are likely.”

He noted that the three-month house price rise recorded by Nationwide dropped from 0.6 per cent in the three months to July to 0.3 per cent in the three months to August.

Mr Stansfield also pointed to data from Australia showing that house prices fell by 0.1 per cent in the year to the second quarter of 2005, after several years of double-digit growth, as in the UK. He said the figures “cast fresh doubt on the view that somehow house price inflation has a magic floor at zero”.

________________________________________________________________

Keep toughing it out MeanMachine you'll be laughing in a few years time.

jb478914

I do so love property price threads.

It seems that it's such an emotive subject (obvious with so much money being involved), which is why debate can get heated and also why there are diametrically opposed views.

So my current feeling about the housing market is one of pessimism, but this would be for both emotive reasons and also the sound economic reasons quoted by previous posters.

Thought I'd also canvass views on another issue that hasn't been brought up on these threads I've been following, to what extent could house prices be affected by climate related issues? eg houses in low lying regions being at a higher risk of flooding? (covered by insurance I'd imagine, but surely something one would factor in)

Kenny4315

One of the houses I mentioned in an earlier mail was near the river ouse, has never flooded as yet, but it was certainty something that crossed my mind, as it is directly on the river.

In a few years ago there where huge floods covering areas a mile from the river, a report in the local rag reported an OAP premium has gone up from around £300 to £870 this year, having rang up other insurers she has been refused a quote according to the report due to the flood risk.

One of the main problems is these greedy developers putting houses on natural flood plains, areas which are supposed to be natural water over-spill. In terms of effect on house prices themselves, doubt if its something that will effect the market price overall in the short to medium term, say the next 30 years. Although I think you are right in the assumption that those in flood risky areas may face a burden over time, both in the devaluation of property and the additional burden of costs.

meanmachine_2

Interesting.

The ONLY houses being built in my area are on flood plains. The locals all know this but the idiots from outside the area haven't a clue and don't even make a quick check on the net to find out.

I really do believe knowledge, rather than sentiment, fear, greed or blind hope gives you power, and after looking at all the data both past and present, only a blind, deaf, fear-driven, greedy wotsit would come to the conclusion than house prices are going to go up in the next few years.

Oh, and Estate Agents, of course. But it's their job to talk rubbish.

GDB2222

meanmachine wrote:

this last comment made me laugh.

Prey tell me how much land is currently "developed".

I think it's around 7%.

Quick!!!! Hurry!!!! You must buy before the other 93% is gobbled up!!!!

Look at Japan - tiny country and yet house prices have only....oh, er gone down in the last 10 years.

Capital values of houses and shares are both well down. The Nikkei 225 index of shares hit 39,000 at the end of 1989. It's now one-third of that level (12,600). Pretty much the same happened to housing in Japan. The cause was a huge speculative bubble in the 80's - caused by cheap borrowing and a mentality that said prices could only go up.

Share prices have gone down and stayed down. The Japanese now keep their money in the Post Office, earning 0.5% pa. The second biggest economy in the world has stagnated for over ten years, largely as a result of the speculative bubble bursting.

Now in the UK we have a huge speculative bubble in housing, caused partly by cheap loans. People forget that interest rates are historically pretty low at the moment. If the bubble bursts, it is not just house prices that will go down. The whole economy will be badly affected, with increased unemployment and many people thrown out of their homes.

Ian_W

wibble68 wrote: Mr Stansfield also pointed to data from Australia showing that house prices fell by 0.1 per cent in the year to the second quarter of 2005, after several years of double-digit growth, as in the UK. He said the figures “cast fresh doubt on the view that somehow house price inflation has a magic floor at zero”.

Oh, Sh*t!! You mean a house in Oz that was sold for £200k 12 months ago is now only going to make £199,800, well that's terrible news!! Ring Blacks right away and order a tent - my house is for sale as of now, I'm sure the EA told me they could only go up - was there a warranty, must have a look. :eek:

No just hang on, think about this, the river thing and flooding is important. Where I live, north of Watford, is about 400' above sea level and I'm sure I saw a map showing what a 1 foot[?] rise in sea levels would do to the country. Loads of the SE, east & West coasts etc gone - rising damp the least of their worries, swimming pools in the bedrooms - never mind the garden, being the norm, so cancel the tent from Blacks - house off the market - wait for global warming to make my house worth millions as it will be one of very few left. Panic over - no hang on ...

Oh, no - Japan and bubbles - simply hadn't thought of that!! No, wait I've read something about this, wasn't it the Jap economy that went t*ts up good style and dragged real estate [the most expensive on earth at the time] with it and isn't it lack of growth and high unemployment that's kept it that way for 10yrs. So you really think it could work the other way arond here, Mr GDB?

It's all getting just too much, really must go and lie down in a dark room with a little tincture for comfort and consider all my options. :think:

meanmachine_2

But Ian, this isn't a doomsday scenario being described...

It's just the flip side of a bubble that saw house prices soar by 20% year on year.

If you honestly think that a reverse of that for a few years is the same as the apocalypse then you're the doomster, my friend.

And in Japan, house prices cooled first, then everything else just followed suit.

Now doesn't that sound familiar?

GDB2222

Ian_W wrote:

Oh, no - Japan and bubbles - simply hadn't thought of that!! No, wait I've read something about this, wasn't it the Jap economy that went t*ts up good style and dragged real estate [the most expensive on earth at the time] with it and isn't it lack of growth and high unemployment that's kept it that way for 10yrs. So you really think it could work the other way arond here, Mr GDB?

:think:

Which came first, the chicken or the egg? The more conventional take on the Japanese problems is that the banks have been pretty much bust since the bubble burst. That is regarded by virtually every observer (except you apparently) as the single main cause of the ongoing economic problems.