House prices to crash

[BLOCK F]

We want stable house prices rises in line with inflation Bozza. A House price crash now is not going to aid the fragile recovery so lets stop this self fulfilling prophecy.

Nothing anybody says is going to prevent house prices coming down either in an orderly fashion or rather faster.Prices will have to be rebased.Interest rates are not going to stay low for ever and no longer are mortgages with little or no deposit going to be available,so the inevitable will happen,prices will fall.When they have reached a reasonable level of affordability,I dare say lesser deposits than 25% will be demanded and hopefully,normal business can be resumed.This does not mean soaring prices,fuelled by artificially low interest rates....look where that got us....excessive borrowing,unaffordable debt,people mistakenly thinking they were rich,remortgaging to purchase goods and services that they couldn't truly afford.
Stable house prices rising in line with inflation are fine once a sensible base price has been established.

 

[Notters]

No, this is a problem, but not the biggest problem by any means.

The biggest problem is that house prices are artifically high - they are way in excess of a level which is affordable to someone on the average wage. Once prices come down, then we can worry about mortgage affordability, and it stands to reason that they should fall.

The problem with them falling too significantly is that it will put a lot of people in negative equity, so perhaps the best outcome will be for house prices to remain flat in actual terms for the best part of a decade while inflation rises at a reasonable rate of 2 or 3% p.a.

Personally I don't understand why a tax isn't made on second homes. Owning a second home needs to be made an unattractive investment opportunity because it contributes nothing to the economy and has driven prices up stupidly.

Only an 8 foot wide studio flat with no windows! There's a one bedroom basement flat on my road up for £250k

 

[Simster]

There is. Its called capital gain tax.

Indeed, and it doesn't work because this is paid on profits from gains in equity. What then happens is that people simply rent out their second homes until house prices are high enough to make a tidy profit.

Also what are the rules on CGT? I have a feeling it might apply on a third home, not a second one. I could easily be wrong though.

I'd like to see a tax on purchasing a second home I think, or maybe a tax on rental income. My point is that needs to be discouraged. We're in a position where our we need to invest in our pensions and yet it's often more attractive to buy a second home instead. That seems wrong to me.

 

[Uncle C]

so perhaps the best outcome will be for house prices to remain flat in actual terms for the best part of a decade while inflation rises at a reasonable rate of 2 or 3% p.a.

This might ideal, but this is a BUBBLE and bubbles go pop.

 

[Uncle C]

Also what are the rules on CGT? I have a feeling it might apply on a third home, not a second one. I could easily be wrong though.

I think you are wrong.

I'd like to see a tax on purchasing a second home I think, or maybe a tax on rental income.

Its called income tax. Rental income is not free of tax.

My point is that needs to be discouraged.

Fewer landlords equals fewer places to rent for the homeless.

You seem a little envious of landlords. Dont worry, they are about to get the comeupance, when the value of their empires collapse and they cannot finance the loans.

 

[Deleted User X18H]

Also what are the rules on CGT? I have a feeling it might apply on a third home, not a second one. I could easily be wrong though.

You seem a little envious of landlords. Dont worry, they are about to get the comeupance, when the value of their empires collapse and they cannot finance the loans.

Ooh cynical!

 

[Westdene Seagull]

Indeed, and it doesn't work because this is paid on profits from gains in equity. What then happens is that people simply rent out their second homes until house prices are high enough to make a tidy profit.

Also what are the rules on CGT? I have a feeling it might apply on a third home, not a second one. I could easily be wrong though.

I'd like to see a tax on purchasing a second home I think, or maybe a tax on rental income. My point is that needs to be discouraged. We're in a position where our we need to invest in our pensions and yet it's often more attractive to buy a second home instead. That seems wrong to me.

As a landlord I need to correct you, CGT is applicable on anything after your main home. Income tax is payable on the rent. I can ofset my CGT liability with any costs for re-development etc.

I'm not sure people owning more than one property is a bad thing. Two of my flats have council tenants in and they would never get to the top of the council housing list. I invest in property as a pension scheme as most my traditional pension pots are worth jack shit. Despite what the TV programmes might have you believe owning second properties is expensive and hard work - well it is if you're a landlord with morals.

 

[Simster]

Also what are the rules on CGT? I have a feeling it might apply on a third home, not a second one. I could easily be wrong though.

I think you are wrong.

I'd like to see a tax on purchasing a second home I think, or maybe a tax on rental income.

Its called income tax. Rental income is not free of tax.

My point is that needs to be discouraged.

Fewer landlords equals fewer places to rent for the homeless.

You seem a little envious of landlords. Dont worry, they are about to get the comeupance, when the value of their empires collapse and they cannot finance the loans.

I had my chance to be a second home owner about 6 years ago, but sunk my equity in a bigger place to live instead. In hindsight I'm quite pleased I did because the equity on my home has probably increased as much as it would have done by sinking that extra money into a flat, so I'm really not envious at all.

My opinion has been formed because I believe second home ownership is making the problem far worse than it should be. Realistically, second homes are usually the same properties as first time buyers are after, so demand is set too high and prices FTBs out of the market.

 

[Uncle C]

I had my chance to be a second home owner about 6 years ago, but sunk my equity in a bigger place to live instead. In hindsight I'm quite pleased I did because the equity on my home has probably increased as much as it would have done by sinking that extra money into a flat.

Wise move. Just one lot of rates, electric water gas telephone standing charges, insurance, maintenance etc.

 

[Simster]

Wise move. Just one lot of rates, electric water gas telephone standing charges, insurance, maintenance etc.

In my particular case, it's worked out well because I like the area and I won't need to move again when our third child comes along in November, and my house is now valued higher than one might expect because of the lack of similar sized accomodation in the area.
Conversely, my brother kept his flat in Brighton and seems to have plenty of aggravation on a regular basis - keeping it occupied, maintenance and all those utilities you mentioned I guess.
All in all, I think we got lucky.

 

[Uncle C]

"Property website Rightmove found sellers slashed prices by 1.7pc during the month to 7th August, sending the average asking price down by £4,091 to £232,241. Soaring numbers of sellers outnumbered buyers, with the imbalance in supply and demand compounded as many house-hunters took summer holidays. Rightmove found available stock per agent rose to its highest August level for three years, up 41.3pc on a year earlier to 29,220 a week. In more good news, they said that market conditions "bear some similarities" to the fabulous second half of 2008 when the credit crunch left prices more affordable by 7.1pc. The news will add to hopes of lower prices in the housing market, coming after the RICS recently said its members reported better value homes for the first time in a year last month."

Just love the bit about house price falls being due to people going on holiday - typical Estate Agent crap.

 

[Deleted User X18H]

Wise move. Just one lot of rates, electric water gas telephone standing charges, insurance, maintenance etc.

The Tenant should pay all of those. Well except property insurance.

 

[beorhthelm]

prices will not "crash" all the time no one can borrow. you still have to be able to get a mortgage to buy somthing, even if its dropped 20%. property simply wont come onto the market.

also, buy to let market isnt about to go wrong for landlords. simple fact for most is rent < mortgage, and if more people move to rented the rental market will just go up to offset higher mortgages. also, properties can be held in a pension, so with the tax relief you can potentially take quite a large hit and still be ok.

we've finally had an offer on our flat. we had more viewings in July than in the previous 3 months.

 

[Uncle C]

The Tenant should pay all of those. Well except property insurance.

Maintenance?

Many people dont let and use them as holiday homes, and for letting it only works if you have a tenant 365 days a year. Many dont and are often faced with damaged properties when they come to re-let.

 

[Kalimantan Gull]

I'm not saying I want a house price crash.

What I'm saying is that as a nation we seem to have an obsession with house prices soaring. Higher house prices means higher mortgages.

What other 'cost of living expense' do we obsessively encourage to go higher and higher? I don't recall people getting quite so excited when petrol becomes ever more expensive.

As someone who wants to buy and can't afford it, its annoying and I want prices to come down.

But as soon as I've bought one, I want the prices to rise so I can make money. That's the obvious difference between houses and petrol, we don't keep and sell on our petrol.

 

[Uncle C]

prices will not "crash" all the time no one can borrow. you still have to be able to get a mortgage to buy somthing, even if its dropped 20%. property simply wont come onto the market.

I have read that several times and still cant make out what you are getting at. Nobody has to buy anything, its just the asking price that has to fall.

also, buy to let market isnt about to go wrong for landlords. simple fact for most is rent > mortgage, and if more people move to rented the rental market will just go up to offset higher mortgages.

Come back to me when mortgage rates hit double figures

also, properties can be held in a pension, so with the tax relief you can potentially take quite a large hit and still be ok.

Puting properties in a pension fund is fraught with complications, you cant just put and take as one might think.

 

[Uncle C]

As someone who wants to buy and can't afford it, its annoying and I want prices to come down.

But as soon as I've bought one, I want the prices to rise so I can make money.

And there in a nutshell is whats been wrong with the housing market.

 

[seagullsovergrimsby]

I'm hoping that the value of my property will increase after the article in the Sunday Times which says that researchers into the socio-economic North-South divide now puts Grimsby in the South.

 

[larus]

And there in a nutshell is whats been wrong with the housing market.

Exactly. It's the something for nothing mentality.

Same with the city mentality. Gambling with our money (pensions, ISAS etc); make a loss, not problem. Make a profit; big bonus.

 

[8ace]

As someone who wants to buy and can't afford it, its annoying and I want prices to come down.

Agree.

But as soon as I've bought one, I want the prices to rise so I can make money. That's the obvious difference between houses and petrol, we don't keep and sell on our petrol.

Disagree - I see it as somewhere to live not an investment.