House prices to crash

[redneb]

Just about to sell my flat and get somewhere a bit bigger. Not looking forward to it at all.

I did this a few years ago and coz I couldnt be arsed to be in a chain, I just remortgaged the flat onto a buytolet mortgage releasing me some money to put down on my bigger place.

Best thing I ever did. The rent I get for the flat covers both BTL and house mortgage.

 

[Uncle C]

Well congratulation, you've just rewritten the laws of economics.

Just to get it clear, the income from a small flat pays for the mortgage on that flat and the mortgage on a bigger house. That's some business model.

 

[beorhthelm]

or just highlighted how much you can get in rents compared to the cheap mortgages. and consider one could move from a more expensive city flat to a cheap suburb or another town.

 

[Shropshire Seagull]

I did this a few years ago and coz I couldnt be arsed to be in a chain, I just remortgaged the flat onto a buytolet mortgage releasing me some money to put down on my bigger place.

Best thing I ever did. The rent I get for the flat covers both BTL and house mortgage.

Me too [similar] - my £90k 2-bed BTL mort is £230 pcm at the mo and my £125k 4-bed house mort is £325 pcm at the mo and my tennant pays £535 pcm.

Won't last forever once the base rate increases later this year.
Its also giving me a PAYE exosure as well - my SA said I was £24 underpaid and the Mrs £200

I like to call it Home Economics .....

 

[Hotchilidog]

I did this a few years ago and coz I couldnt be arsed to be in a chain, I just remortgaged the flat onto a buytolet mortgage releasing me some money to put down on my bigger place.

Best thing I ever did. The rent I get for the flat covers both BTL and house mortgage.

Hadn't considered this, but it could be an option. Thanks for the tip.

 

[Uncle C]

Almost four in 10 people selling their home have cut the price at least once since putting it on the market, according to a property website.

http://uk.finance.yahoo.com/news/40pc-property-sellers-cut-tele-3368912982.html?x=0

 

[brulee]

house prices are not going to crash but inflation is going a lot higher. over time wages will rise making houses more afordable

 

[Uncle C]

house prices are not going to crash but inflation is going a lot higher. over time wages will rise making houses more afordable

I hope your predictions are better than this bloke in Oct 2007.

He said "on this evidence it would seem the chances of prices falling by 15% or more are fairly remote". Then throughout 2008 they fell 15% or more.

I think its called the denial phase.

http://www.thriftyscot.co.uk/102007/three-reasons-why-house-prices-wont-crash.html

 

[Tim Over Whelmed]

Hey Unc, this "phase" seems to be dragging on a bit, doesn't it? Bought a house a couple of weeks ago, the price had dropped but circumstances dictated that one, in isolation!

 

[Uncle C]

Hey Unc, this "phase" seems to be dragging on a bit, doesn't it? Bought a house a couple of weeks ago, the price had dropped but circumstances dictated that one, in isolation!

This is not a precise science, if it was it would be all too easy. But, house prices have been falling for the last two quarters since the thread was started.

There is resistance, firstly from the Government who, like many before them, see house price growth as central to our ecomony and secondly from sellers who are refusing to accept little if anything below the maximum price their houses reached in 2007. There is a slow realisation that things will change (hence 40% dropping their prices) and eventually house prices will fall back to somewhere near the normal long term multipier of salaries.

Just wait to see the panic that ensues when interest rates start to increase. I bet very few who are currently paying less than 1% mortgages have used the spare money to pay down the debt.

 

[severnside gull]

Harbingers of Doom

"The horses and riders I saw in my vision looked like this: Their breastplates were fiery red, dark blue, and yellow as sulfur. The heads of the horses resembled the heads of lions, and out of their mouths came fire, smoke and sulfur.
A third of mankind was killed by the three plagues of fire, smoke and sulfur that came out of their mouths.
The power of the horses was in their mouths and in their tails; for their tails were like snakes, having heads with which they inflict injury."

-Revelation 9:17-19

 

[beorhthelm]

Almost four in 10 people selling their home have cut the price at least once since putting it on the market, according to a property website.

only 40%? i'm surprised by that, would have thought it be higher. suppose theres a difference between those that want/need to move and those that just put the property on the market to see what happens. or estate agents are being more honest and realistic with inital prices (we dropped 5k and got more viewings in 2 weeks than we'd had in previous month or so).

This is not a precise science, if it was it would be all too easy. But, house prices have been falling for the last two quarters since the thread was started.

Just wait to see the panic that ensues when interest rates start to increase. I bet very few who are currently paying less than 1% mortgages have used the spare money to pay down the debt.

falling nationally, in London some boroughs are now above their peak and most are with 10% of getting there after starting to rise. hopefully the ripple effect will turn the region and the rest of the country soon enough.
I wouldn't be so hopefull of a panic, most mortgagers with a memory will recall and be able to budget for interest rates of upto 8% variable, 4-6% for those on deals closer to the base rate. will be some time before we see a base rate that high, time enough for people to adjust.

 

[Jim in the West]

House prices will almost certainly gradually fall over the next few years. One of the key reasons is that demand is massively constrained as the banks have no money (notwithstanding today's announcement ref lending targets). The days of being able to get a 100% mortgage are gone forever, and the house price bubble of the early to mid 2000s was a complete aberration. Base rates will also rise slowly, possibly to around 5% - 6% in two to three years' time. The London ripple effect will probably have some impact in the South East over the next year or so, but otherwise there isn't much to underpin house prices in the medium term.

 

[Uncle C]

I wouldn't be so hopefull of a panic, most mortgagers with a memory will recall and be able to budget for interest rates of upto 8% variable, 4-6% for those on deals closer to the base rate. will be some time before we see a base rate that high, time enough for people to adjust.

Wow, you have some faith in the Great British Public to be able to organise their finances like that.

The latest data I could find is that UK consumers currently have a total of £1.457 trillion owed. The vast majority of this figure – some £1.24 trillion – is secured debt in the form of mortgages, with the other £216 billion taking the form of unsecured personal loans, credit card debt, bank overdrafts, store finance or auto finance. This figure approximates to Britains entire GDP.

And you believe they could survive significant interest rate rises.

http://news.loan-arrangers.co.uk/imf-slams-uk-personal-debt-levels_18911516.html

 

[Eastleigh Seagull]

Base rates will also rise slowly, possibly to around 5% - 6% in two to three years' time. .

Given that the BoE have only moved rates by a quarter of a percent at a time then they will effectively have to raise rates almost every month from now to be at that level in 2 years time. Given most analysts expect at most 1-2 rises to 1% by the end of the year this is just a little scaremongering.

 

[Uncle C]

Given that the BoE have only moved rates by a quarter of a percent at a time then they will effectively have to raise rates almost every month from now to be at that level in 2 years time. Given most analysts expect at most 1-2 rises to 1% by the end of the year this is just a little scaremongering.

I agree, but a move to just 1% doubles the current rate.

 

[Hatterlovesbrighton]

I agree, but a move to just 1% doubles the current rate.

True, but for most people who are currently on rates between 3-5% it won't double their repayments.

 

[Alex Alex Dawson oo! oo!]

I agree, but a move to just 1% doubles the current rate.

Didn't the CML put out something recently indicating that something like 2.3 million households will struggle to pay an additional £100pm on their mortgage (equates approx to a 1% increase on a £120K mortgage).

 

[Tim Over Whelmed]

Sorry Unc just don't see it, people with money to invest got very scared and then thought "I've got money to invest", that money hasn't gone away. People will look to put it somewhere and houses are still a good bet, you spend £200k on a house that you can rent for £850-950, still not a bad return even without the capital asset appreciating.

 

[Shropshire Seagull]

All products, including housing, are impacted by the simple law of economics - supply and demand. The value/cost of said products are thus directly linked to the supply and demand.
In the UK, for the foreseeable future, our population dictates there will always be over-demand for housing - there simply isn't enough to go round.
Sure, the availability of funds from lenders to buy property has some impact on buying but this doesn't take away the demand - these people just go into renting.
So, people who can afford to, become landlords to meet the rental demand from those who want property but cannot afford to buy- they can afford the repayments but can't find the deposit.

Only when demand dries up will prices crash - and that just isn't gonna happen anytime soon.