'Squaring the house price circle' blog discussion

vickyo

We have a small terraced house, an ideal first time buyers house. I found out that I was pregnant so we put the house up for sale and have had no interest whatsoever! Now we are wondering whether we should try to rent our little terrace out to buy somewhere bigger, but this seems risky. What do the Money Savers think? Jnr is due in just 4 months!

jaype

Vickyo - if prices fall then you will be losing money twice over. This is the time to take as little risk as posible as you have a baby to think about. People seem to think house prices will go up forever, but at the end of the day we are now at a point where normal people can't afford anything so the market has ground to a halt as there are no new buyers. I can't predict the future, but if I were you I would reduce the price and see if you get interest. You don't have to sell at a lower price, but if people start coming round suddenly, it will show you what the original problem was... You may even get people competing to buy the 'bargain' so you don't lose out after all!

ghj_3

No one knows what’ll happen to house prices

Houses are an asset and should be considered as such

Seem to recall various economists predicting house price falls of 30% in 2004. Are these the same economists making the same predictions now?

Save for those who might feel that they have no alternative but to sell, it must be expected that the remainder, probably the majority, will stay put, rather than accept significant falls in house prices.

Then, if there are less houses being sold, the usual consequence for a market where the commodity is in short supply is that prices will tend to rise.

superged

I'm a broker and I do a lot with BTL investors and for years I have told them to avoid apartments like the plague.

A lot of apartments have a limited life before they will need completely redeveloping, even the nice ones. I have always said they are the slums of tomorrow. There are exceptions to this being in London or central Manchester or Liverpool or any major city however....

I know many developments that are in towns and suburbs that have failed to sell and developers (Let alone some BTL investors) have tenannted some of these apartments out at very low rents just to cover them.

The major problem I see is that houses are desireable and apartments are not. Reductions seen in the market can be attributed to 2 things, desperate vendors selling up to avoid meltdown and apartments going for a fraction of their list prices. I am regularly offered apartments at 30% off list just to get shut and I still wouldn't buy them at 50%. Both of these are significant and will naturally reduce the average sale prices.

The lack of liquidity in the mortgage markets is also harming the prices a bit but I think if this improves over the next few months then house prices will remain about where they are but apartments WILL fall as many of the lenders are making it very hard to buy them.

vickyo

jaype wrote: »

Vickyo - if prices fall then you will be losing money twice over. This is the time to take as little risk as posible as you have a baby to think about. People seem to think house prices will go up forever, but at the end of the day we are now at a point where normal people can't afford anything so the market has ground to a halt as there are no new buyers. I can't predict the future, but if I were you I would reduce the price and see if you get interest. You don't have to sell at a lower price, but if people start coming round suddenly, it will show you what the original problem was... You may even get people competing to buy the 'bargain' so you don't lose out after all!

Yes, I think we will reduce the price, we were always open to the idea of taking around 10% less, as long as the house we want to buy does the same!

Annpan

cheeky_lil_monkey wrote: »

no my point is - if we hit neg equity, which those not long on the market (depsite a good deposit) are likely to do first, we won't be able to move as there's no way to get a mortgage for another property when you're in neg equity. Plus we've put all our hard earned cash and our first time hefty 15% deposit into this place and now we're looking at losing a lot on it - a little unfair don't you think??

I agree that it's unfair for you to have put money into your property only to loose out to those vultures waiting in the wings to swoop down and grab your hard earned equity for as little as possible. I hope there's a turn around and they miss the boat and have to work their buts off to get on the housing ladder as we did in the 1970's!!!

jamtart6

Annpan wrote: »

I agree that it's unfair for you to have put money into your property only to loose out to those vultures waiting in the wings to swoop down and grab your hard earned equity for as little as possible. I hope there's a turn around and they miss the boat and have to work their buts off to get on the housing ladder as we did in the 1970's!!!

I think I am said vulture!

cobblestones

I too am fed up with the doom and gloom merchants but if it helps to stabilise prices then it is not altogether a bad thing. But have a little perspective!

The house price crash of the 90’s was due to a huge hike in interest rates – to 15%. This will not happen, if it did house prices and negative equity would be the least of our problems.

If the banks are tightening up their credit facilities and not lending to bad credit risks how can this be a bad thing?

Negative equity is only a problem if you are looking to move or sell in the short term – wait it out, after the panic comes the calm.

People are not moving at the moment because they are being cautious, when the dire predictions don’t come to pass there will (hopefully) be slower more sustainable growth.

With the happy destruction of the self cert mortgage average house prices will no longer be artificially inflated to more than 25% over 3 times average wages! I longingly await the day.

Poacher57

I've just been reading Martin's Blog in which he summarised his talk on Radio 1. He stated that a house is an asset. I have been on many financial management courses and read lots of blogs and I think there is an argument to say that a house cannot be classed as an asset until it is completely paid for i.e. without mortgage. Until that time it is a liability and a very big one at that. Any other opinions on this??;)

Little_Muvva

I bought my first house in 1990 for £72,000. I eventually sold it in 1998 for £34,000, less than half the original purchase price. Since I had a 100% mortgage (at the aforementioned 15%) I had to get a negative equity mortgage on the next home. Luckily I had taken out a repayment mortgage so had paid around £10k off the balance.

Anyone who went through this will be terrified of it happening again. Luckily my mortgage is now much lower than the value of my house so I will just have to sit tight, as many of you suggest.

Falling prices affects people with high mortgage balances - particularly if they took out a mortgage of 95% or more and it's these people I feel for.

:think: