House Prices

....Are they ever going to go down?

Hope not. My house is my pension as I've had several jobs so no big pension to look forward to.

Doubt it, may stop rising, but not fall. The economy is too stable.

Buy in the right location and you can not go wrong

Originally posted by mikey

Doubt it, may stop rising, but not fall. The economy is too stable.

Buy in the right location and you can not go wrong

I agree - I cannot see the house prices dropping, however the rate of increase (inflation) may slow to zero for the short term.

I can see them plummeting I'm afraid. The underlying economy is not strong. Even if they remain stable, moving upmarket (or buying a new property) is a financially poor move for most people, particularly at the upper end of the market. With interest rates of 4%, interest alone for 400,000 property is £16,000 per year - at least double typical rents - and if prices are stable, there is little point in not renting.

The escalating effective stamp duty on property will be the final straw, and must be the most backward looking little trick of our current government. Stamp duty is a tax on mobility, that penalises the most vulnerable groups in our society; those without stable jobs who are forced to move frequently. It is also a major cause of pollution and environmental problems. Without this, some people may feel like moving more often rather than dumping another X-grand in the governments coffers every few years because their new job is further away than their old one.

I predict chaos in the housing market, despite the utterings of estate agents and politicians.

Originally posted by Carynne

 

I predict chaos in the housing market, despite the utterings of estate agents and politicians.

Do you beleive this is the case for the UK housing market or the Sheffield housing market (which the current thread is asking)?

Originally posted by Carynne

I can see them plummeting I'm afraid. The underlying economy is not strong. Even if they remain stable, moving upmarket (or buying a new property) is a financially poor move for most people, particularly at the upper end of the market. With interest rates of 4%, interest alone for 400,000 property is £16,000 per year - at least double typical rents - and if prices are stable, there is little point in not renting.

 

The escalating effective stamp duty on property will be the final straw, and must be the most backward looking little trick of our current government. Stamp duty is a tax on mobility, that penalises the most vulnerable groups in our society; those without stable jobs who are forced to move frequently. It is also a major cause of pollution and environmental problems. Without this, some people may feel like moving more often rather than dumping another X-grand in the governments coffers every few years because their new job is further away than their old one.

 

I predict chaos in the housing market, despite the utterings of estate agents and politicians.

Both. The prosperous end of the Sheffield market will be particularly hard hit. At the end of the day, the fundamental principle of a relationship between house price versus overall lifetime income will always apply. House prices have outstripped income, and the ratio will in time be restored, either through a sudden fall or prolonged stagnation (which from the point of view of anyone planning to buy or move upmarket, boils down to the same thing). If I was advising someone considering a house move the facts are pretty clear that with sagnant prices, the logical thing to do is to rent, unless the advantages of owning a home are considered overwhelming.

This is the problem of the UK housing market. Maggie thought her great gift was to make us into a country of homeowners. They should have reminded her that the poorest regions on earth earth (e.g the Indian subcontinent) have a large proportion of home ownership, but sophisticated flexible economies (the USA) have a very high proportion of rented properties. A largely home owning economy is liable to go hugely pear shaped.

See the "Rent or Buy" calculator at

http://www.themovechannel.com/sitefeatures/calculators/buy_or_rent.asp

There are almost no circumstances when house price inflation is less than 2 or 3 % (and certainly never when they are stagnant or fall), that buying will enhance your financial state. Enter some numbers and see what you get.

A myth that has bedevilled the housing market in the UK is that renting is somehow "money down the drain". This is quite simply not true at all, and is less true than ever right now.

This is a post from Carynne back in April, are you in the rental market by any chance?, The house prices have still gone up since April and I would probably up by at least 5% on my investment if I had bought a house in the right area. First time buyers are still coming to the market and are still driving the market.

No Offence Carynne, but I still don't agree with your point of view,but then again I am no economist.

I must say, I would be really really surprised if they don't drop at least a bit. The drivers are what's happening at the upper end of the market (300K+, buyers very nervous, clobbered with stamp duty) and at the lower end (100K-). I would hold tight and not buy right now. The implications of even a small drop in prices are huge for your purse and future financal wellbeing. There is lots out there to rent, and 4K for a years rent will be small fry in comparison with likely price shifts. Keep in mind that even if prices are static, on a 200K property thats equivalent to 8K or so per year of lost interest from the bank or mortgage interest, even at todays low interest rates. Unless you think that prices will actually rise by 8K over the next year (extremely unlikely) you will be a winner. Most likely they will fall a bit (even if only by 4%, thats 8K + 8K = 16K - loads more than the rent you would fork out).

Mikey - I agree with what you're saying. It does look a bit suspicious. I had my house valued 12 months ago and again last week and the price had risen by 15%. I would have had to invest nearly 1/2 million quid to get that.

Look at all the landed gentry in this country, they haven't been renting since 1066, have they?

Originally posted by Carynne

See the "Rent or Buy" calculator at

 

http://www.themovechannel.com/sitefeatures/calculators/buy_or_rent.asp

 

There are almost no circumstances when house price inflation is less than 2 or 3 % (and certainly never when they are stagnant or fall), that buying will enhance your financial state. Enter some numbers and see what you get.

 

A myth that has bedevilled the housing market in the UK is that renting is somehow "money down the drain". This is quite simply not true at all, and is less true than ever right now.

I agree with this. Why on earth would we be suggesting that Carynne would be in the rental market. Landlords make most of of their money from changing house prices, not from rent (that just pays the bills). The last thing a landlord would want is a drop in house prices. Prices are pretty unsustainable. I don't think we will see a fall, but we will see a very very long period of stagnant prices until things catch up.

I'm looking to buy as I'm not getting any younger and hate lining the pockets of greedy landlords who do absolutely nothing to improve the substandard accommodation that is available to rent in Sheffield. I've seen some right rubbish!

If renting was more attractive I wouldn't mind waiting to buy a house, but I'm so tired of renting now.......I have thought that if I had not gone to University and had got a job straight away after my A levels I would have got a reasonable house at a very good price...........alas no............just when I want to buy one...the flamin' prices go up grrrrrrrrr