....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

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 [/B]

You have missed the boat. This is all a bit like the stockmarket. The worst possible thing to do is to feel rushed into buying now. Hold tight as long as you can.

b.t.w there are some pretty good landlords out there. I have had no problems with mine (via Archers) - they fix things when needed, keep out of our way, and are OK.

Me and my partner have had some hair raising experiences when it comes to renting in Yorkshire.

Some of the accommodation available is substandard to say the least. We were terribly harrassed by our landlord/lady in the last place we lived in and she screwed us after we left when it came to give the bond back.......and then had the nerve of saying "I hope there is no animosity between us"!!!!!!!!!!!!!!!

She lives permanently in one of the flats in a housewhich is split up into 2 flats and is looking after a "sick relative" . She declared herself as this relatives "carer" and even though she lives there permanently she constantly said that she didn't!!!! we used to see her everyday........ She made us pay us rent in cash ...sounds like the benefits agency would have their field day with her as she never answered the door to anyone and why would a landlord want cash only?????

Whats the stance on this does anyone know?

The only reason she would want cash is so it is not traceable, either by Benefits Agency, Inland Revenue etc etc.

Landords are supposed to pay Income tax on there rental income, assuming it is above there personal income tax allowance.

You could always shop her!! I heard there is an anonymous number you can call, but not sure what it is.

If you were due the bond then I do not see why you let it drop.

thanks for the advice .....definately food for thought there. I don't like it when people screw money out of the DSS and earn money on the side without paying their way. As a tax payer who earns an honest living and cannot even afford a house yet.....it leaves a bitter taste in the mouth.....who says crime doesn't pay eh?

they will crash one day.....just wait for the interest rates to start climbing...............i hope so anyway!

Why do the British delude themselves with this futile notion of being wealthy because their house price is going north? The only people who gain are the lending institutions, the estate agents and the surveyors. Joe public benefits if he either moves downmarket or relocates to a cheaper area. I recall one of Gordon Brown's first pledges when he said nomore boom/bust.
The government is partially responsible for this "boom" as they have ignored the supply side of housing.

People are living longer, want to live alone etc. Moreover there are the speculators who want to make money out of a basic human need - shelter. There are too many programs on the television about making money out of houses and unfortunately too many willing gullible subjects.

There needs to be a crash. It may not manifest itself as a crash as in the early nineties unless there is an unforeseen event similar to 11 sept 01 but anyone who swallows the estate agent
hype is duping themselves.
He who laughs last laughs loudest.
I rent and I'm prepared to wait until the cows come home until they drop as they surely must. What goes round comes round.
My advice to first time buyers is "Stay away" and precipiate the crash that must happen. My advice to the government in the next November budget is hammer those who are buying to invest with appropriate taxes (capital gains etc) to deter them.

I'm what the market calls an "in-betweenie" as I have sold my house and now rent. Why...

What people need to remember is that ALL markets and economies ebb and flow. There is little argument that the property market is reaching it's "peak", the only debate is whether it will fall and if so how much. On the other hand, the stock market is coming out of a "trough". I have therefore taken the 6 figure sum I made from the sale of my house and invested in stock, ISA's and high interest accounts. Buy low, sell high!

Property in my opinion will come down (perhaps not as spectacularly as in the 80's) and when it does I will be in a position (as a cash buyer) to get myself a bargin! There are no bargins to be had in the property market now so if you need somewhere to live then rent!

Ahh - property my cup of tea. :)

There have been good steady increases in property prices as we all know, both nationally and in the north - concering us mostly, Sheffield.

Here is where we must make a unique *distinction* between "price" on one hand and "value" on the other - the two at the present time, in the present market are related, but can affect each other differentially to each other aswell.

For example what has caused the "price" increase - is it a newfound hugh well of public cash spending power? Well, that is a yes/no answer, reasons as thus.

Interest rates being low, as we all know means we can afford that bit more towards a purchase. In line with this, and hence the demand prices have risen - so essentially you are buying property priced "high" but not neccessarily paying its "actual" value. There are lots of ways to calculate value, but lets just stick to this for the moment. So, you buy your house today for £130,000 that some 24/30 months earlier may have been around £105,000. The increase is related to the fact you have more spending power, not because you have had a sudden salary increase, but rates are lower and you can afford not to pay more neccessarily but but the same amount again (it works out same if you consider low interest, but then the increase in house prices).
Banks are willing to lend (some have seen the biggest borrowing in history). But here comes the counter productive side of buying like this in the current climate. I am trying to highlight the dependance of the value of the house on interest rates, and indeed peoples salarys.

If people seriously think the UK economy is totally stable, I would think again. You don't only need to consider the leafy suburbs you are moving into but the global climate. Any attack on the UK that exposes vulnerability and you might find that dream home will be biting into you harder than you first thought.

Ever wondered why so many large properties in exclusive areas have come up on the market over the past 3/4 years? Simple really, some of those I have spoken to bought in the 1980's, and took a pretty bad hit at the time, buying too high - then hitting the property depression (or bust as its known). They are getting good money now, so they are cashing out so to speak, to recoup some of that money.

Either way for me, once qualified as a surveyor / valuer I am likely to be a symbol of hate, so I'm trying to drain all my honesty now.
:D

1Man&hisBMW

Did anyone see the house programme on C5 last night (Tuesday) at 7.30 that was about Sheffield?

Originally posted by alchresearch
Did anyone see the house programme on C5 last night (Tuesday) at 7.30 that was about Sheffield?

I didn't watch it last night, but I think it was a repeat and I saw it during the summer. They won the house didn't they? The fella whose house it was is a mate of a mate.

Originally posted by 1Man&hisBMW
Ahh - property my cup of tea. :)


1Man&hisBMW

Property is also my cup of tea, not for a job more an interest


Some good points here1Man&hisBMW, but you have missed out the point about supply and demand, there are more 1st time buyers coming to the market than houses available.

More single people are buying, more divorced people are restarting on the ladder etc etc, add in the fact that they don't make land anymore and you a have a crazy market.

One other point
Mortgaging is still a more cost effective way to IMHO. For what I pay in mortgage on my house even if I had a 100% mortgage it would be less than paying rent for it.

Mikey -

Appreciated, I see what you are saying.

Where I am coming from somewhat bypasses the supply and demand issue. The reason there is demand the moment, is because of the interest rates - although not everybody even now can afford to buy. At the moment alot of people are also being price out of the market, leaving only those capable of affording payments able to buy. But, there is also something else - landlords are not in the present climate selling houses in any quantity, hence keeping the supply tight, becuase they are having good times in the rental market for those who can't afford to buy. For example look how many of the new flats around West One, West St. etc are owned by investors!

Additionally there isn't much in terms of expansion going on say in the more affluent areas of Sheffield such as Dore, Fulwood, Whirlow etc. The properties there are benefitting from this lack of new build due to this.

I appreciate that in your area (Dore?) houses command rents of around £795pcm for say a 4 bed. In that case it is more cost effective in a sense to buy, however it depends on if you wish to take on the financial obligations for x-period of time.

1Man&HisBMW

What are the house prices based on? a fried of mine bought a house on Westfield, renovated it, spent thousands of pounds bringing up to standard, I E, central heating, decorating, new work surfaces, chandalier, wall lights, created beautifull gardens, made a driveway for a car with high wooden gates that locked.

Lived in the house for five years, then tried to sell it, she had numerous estate agents who did nothing at all and paid out hundreds of pounds to them. It took two years of hard work and finally, thankfully, she sold it and only broke even, she did not make one penny profit.WHY?

I have read and seen other properties go for tens of thousands of pounds profit, is it the area that makes the difference? although just adjacent to where she lived there were very decent people as well as some scrubbers a few streets away, but I do not understand why there should be such a vast difference in the selling price of houses.

IMO Hal, people buy houses in Westfield, and other estates, because they are relatively cheap. Once you start altering the house and adding extras that make it more expensive then you will have fewer people interested. We live in Walkley and have done quite a bit of work over the 2 years we've been here and the latest valuation gives us a 65% increase in 2 years. I guess the answer is location, location, location.

Originally posted by max
IMO Hal, people buy houses in Westfield, and other estates, because they are relatively cheap. Once you start altering the house and adding extras that make it more expensive then you will have fewer people interested. We live in Walkley and have done quite a bit of work over the 2 years we've been here and the latest valuation gives us a 65% increase in 2 years. I guess the answer is location, location, location.

Max - I agree.

I don't believe you should treat your home/house as an investment - however I think if you want to see the price of your home increase then buy a run down house in a desirable area rather than a good house in a deprived area.

Originally posted by Dug
Max - I agree.

I don't believe you should treat your home/house as an investment.

Totally agree.

Think your'e right Max, it depends where the property is built as no one wants to live near the criminal element in our society, mind you there are some nice areas and decent people around Westfield, sadley, it is a mixture of good and bad tennants and the bad minority gives a place a disreputable name.

This is the best place I can think of to post this.

Due to the massive house prices in the area we want to buy, Hillsborough, Loxley Stannington. We are now looking further away to places such as barnsley.

I have just found a wonderful modern 3 bed house with two gardens and a conservatory for £75k. We would have no chance of getting a house like this in Sheffield except of course in places like Pitsmoor which we definatly don't want.

Anyway the house is in a place called Athersley North. Does anyone have any idea where this is and what the area is like?

No idea what it is like there but...
try this site : http://www.upmystreet.com/

Nomme

With the stupid increase in house prices over the past few years, I was wondering what advice people would give to anyone on a lower income who would like one day (not necessarily yet) to own their own home in Sheffield. Is it best to wait and see what the housing market does, or jump on the bandwagon now? Should you go for a cheaper area, or risk going somewhere a bit nicer? Is renting the better alternative at the moment? And when will the madness in increases end?

imo the 'madness' will never end. It may slow down but prices will never go down. Mortgage rates are at the lowest for a long time with lenders falling over themselves to lend you money.

My advice would be to get on the ladder asap either on your own or with GOOD friend/s if you want a larger, more expensive property than you would otherwise be able to afford.

Good luck.

PS I'm not an estate agent this is my honest opinion.

There is nothing for it but to get on the bus! I think that people will buy or rent small apartments and studios until they can afford something bigger.

There are smaller apartments coming onto the market in Sheffield this year to fuel this demand. Watch out for stuff around the Upper Allen St / St Georges district.

Never say never!

I'm not so sure that prices won't decrease.

Our economy has been artificially simulated by borrowing on credit cards because it is so easy to get one and the timing of it being popular made UK survive recession when the world was suffering. On top of this lenders have been bending rules for people to take out a mortgage that is beyond the recommended lending limit based on their income to win customers.

At some point interest rates will increase and when it does, far more people are going to run into difficulty much sooner than the norm because of the two lethal combinations described above.

When worst comes to worst, there are only two solution to this outcome and that is to sell your house or have it repossessed.

Either way, houses enter the market in their masses.

Over supply of people wanting to sell means cheaper house prices but people won’t buy because interest rates is heading in the wrong direction and they think they can get a bargain if they wait longer.

Your guess to when it will happen is as good as anyone. The last time this boom-bust cycle happened was the late 80s/early 90s.

It might never happen but I personally think the condition created has the potential to head for disaster on the scale not experienced before.

We just bought a house in November. Standard 3 bed semi in decent area of Sheffield. We had to pay 15% over the asking price and we did not have the highest bid but becasue we were first time buyers then they chose us. Over 40 people viewed the house and there were 5 left in at the final bidding stage. We looked at several other houses and the story was always the same.

I think the reason is because there is limited new housing coming onto the market, the demographics are leading to more housing required and there are a large number of people wanting to buy but cannot afford to. As soon as prices slow down it brings more potential buyers to the market so prices bounce back up again.

However as soon as interest rates rise byond a certain point then affordability becomes the issue for the people renting but wanting to buy.

The housing market has gone mad. I just can't believe how much they cost nowadays.

I looked at a 3 bed terrace 5 years ago that was £30,000. One near to it has recently been up for £70,000. <madness>.

There is no way it is worth that much.

I reckon the market will all go pear shaped in the near future. I can't work out how people are managing to afford them.

Also I can't believe the amount of personal debt folk seem to get themselves into on credit cards. I know of several people, who if the interest rates went up by only a small amount, would be unable to pay their mortgage.

My mate bought a house 6 years ago for £31,000. Four years later I nearly bought it off him for £45,000. Now, it's worth about £80,000. How the hell is anyone supposed to afford that? It's only a two bedroom terrace!

You're right about the credit card debt too. I can't believe how far into debt some people have gone with that.

Looking back on this thread, which started in June 2003, we were hoping prices would fall.

As supply continually decreases, and demand continues to rise, prices still continue to rise higher.

It seems that few people understand the basic laws of economics, such as those highlighted by Carynne. If the "elasticity" of house prices outstripping incomes is stretched too far, it will snap.

In the very near future (probably this month!) borrowing will hit £1trillion.

I have it on good authority (working for a major UK bank who specialise in mortgage lending) that we are expecting a downward trend in prices within the immediate future.

A major factor highlighting this is the fact that the insurance industry isn't insuring properties for their supposed "value", but their rebuild cost. If insurance premiums matched the "value/price" of housing, the premiums would be near unaffordable.

I came close to buying my first house a couple of months ago, a 3 bed semi detached for £95k. It is now "worth" £115k.

Good things come to those who wait! Elastic bands snap when streched too far.

smartie! (who drives a smart car!)

Hey steelblade, have you been to Pitsmoor recently??? you should check it out some time, it's not like it was 10 years ago. hundreds of thousands of pounds have been spent on the area, the area has more of a community feeling than any I have lived in in Sheffield, perhaps because people keep slaging it off! I would be very surprised if you could find a 3 bed house in Pitsmoor for sale, let alone for £75. Many people tried to put me off buying my house here 15months ago, all of those people are now eating their proverbial hats so to speak! It has a very low crime rate, people actually talk to each other, a diverse culture, range of independent shops, the only thing it does not have is a cash point machine. Honestly, it has changed greatly, we just need people to see for themselves instead off assuming it's still a crime ridden dump!

Originally posted by smartie
Looking back on this thread, which started in June 2003, we were hoping prices would fall.

As supply continually decreases, and demand continues to rise, prices still continue to rise higher.

It seems that few people understand the basic laws of economics, such as those highlighted by Carynne. If the "elasticity" of house prices outstripping incomes is stretched too far, it will snap.
House prices have far more to do with interest rates. At their present low levels there is the ability for increased borrowing. Interest rates are very unlikely to change much, and certainly not exceed 14% as they did in the price crash in 91/92.

Interest rates will stay stable for 5 basic reasons.

1. European parity. We are going into Europe whether you like it or not, and we have to have similar banking rates as Europe where they are even lower than they are in the UK.

2. Unemployment. This is lower than it has EVER been, and is likely to stay that way nationally.

3. Inflation. Inflation is as low as it has been in memory, and is actually still FALLING!!

4. The Bank of England. Unless they change the way that they have always set interest rates, they will no tmake large increases. To make a change would be potentially undermining to confidence in the entire economy, There is no reason to use interest rates only to control house prices - the market will do that like it does with anything else. Don't expect it to happen any time soon.

5. Demand is indeed increasing, and will continue to do so.

Originally posted by smartie
A major factor highlighting this is the fact that the insurance industry isn't insuring properties for their supposed "value", but their rebuild cost. If insurance premiums matched the "value/price" of housing, the premiums would be near unaffordable. But that's how it's always been, and always will be. Insurance has nothing to do with prices.