What's the housing market like at the moment?

[shadow08 10]

Thanks to everyone for a good debate,

Good luck to all.

 

My friend told me in the boozer that the world ends in 2012 so if thats true

non of us will have to worry about property prices anymore , Tee hee!

 

Cheers

 

Shadow08

[sham71 10]

an interesting excerpt from an article that explains why mortgage rates today are actually higher than they were at the time of the last crash......

 

".....We are now paying the most expensive mortgage rates since mass homeownership began. People conveniently forget that when mortgages peaked at 15% (in 1992), most were tax-deductible. Basic tax at 33% left borrowers actually paying 10%.

 

With the key mortgage-setting rate (which is not the base rate but Libor, the rate the banks charge to lend to each other) currently at 6%, many borrowers will soon find themselves paying something in the region of 7.5%, unless Libor is brought lower.

 

The gap between 10% and 7.5% doesn't give much to boast about.

 

But it is much worse than that. When borrowers were paying this notional 15% but actual 10%, inflation was running at 11%. In other words, we were paying negative interest rates because annual wage inflation quickly wiped the pain away.

 

By contrast today, with inflation at 2.5% and salary increases pegged at that level, borrowers are paying 5% real interest rates, which will take years for inflation to erode..."

[Dave h-j 10]

".....We are now paying the most expensive mortgage rates since mass homeownership began. People conveniently forget that when mortgages peaked at 15% (in 1992), most were tax-deductible. Basic tax at 33% left borrowers actually paying 10%.

 

You'll have to explain this one to me..

 

The only relief I remember was MIRAS (capped at 30k and scrapped in 2000) and basic rate in '92 was more like 25%? Are you talking BTL investments?

 

EDIT: Also I can see that base rates actually peaked in 1989 (at 15%) and in 1992 peaked at 12% (lets add 2% for SVR rates to be safe).

 

EDIT: Ah found the article in Scotland on Sunday: http://business.scotsman.com/banking?articleid=3952249 Still doesn't explain the numbers though..

[Phylis 10]

Trying to talk your way out of a hole Sham?

 

Im with Tony on this one. Dont see there being much if any fall in prices over the rest of this year. Easter is the time that the property market tends to pick up. So should see some improvement over the next couple of months.

[Dave h-j 10]

Trying to talk your way out of a hole Sham?

 

Im with Tony on this one. Dont see there being much if any fall in prices over the rest of this year. Easter is the time that the property market tends to pick up. So should see some improvement over the next couple of months.

 

Unfortunately I think you are just as bad.

 

Easter may be a traditional time for the market to pick up, but this isn't a normal situation. If people can't get mortages at reasonable (high enough) levels then they may hold off buying a property until they can get the one they want.

 

What happens next all depend on what the banks do - but my guess (assuming things stay as they do in the economy) is for static/sub-inflationary rises only for the next 12 months..

[pete_jim 10]

An interesting article in the Financial Times this weekend listed various areas in the UK and what was happening in terms of properties being sold. Most places came out as property being sold for near the asking price, Sheffield generally had property being sold for 5-10% less than the asking price except for 'Ecclesall' (actually named in print in the FT!) where property was selling for 9% above the asking price. Lights blue touch paper......

[vision 10]

Buffey - there are many reasons, but a few of the main ones are:

 

3. Buy to let - this has caused massive speculation in the property market. It was seen as a one way bet because even though the returns on the rent wouldn't cover the mortgage, increases in the value of the property more than offset that (I WAS in to buy to let, but got out over the last 2 years - maybe a bit early, but its not a profit until you have the money in your hand. I wouldn't like to be trying to sell a BTL property now).

 

But now BTL has the following problems that will kill it stone dead (leaving only the old school property landlords who own hundreds of properties)

 

c. BTL mortgages are now very difficult to get unless you have a very good deposit

d. the new capital gains rules starting next Monday will encourage any BTLer who has bought in the last 2-3 years to sell as the tax has been reduced from 40% to 18%.

 

The end of BTL will take a massive amount of specualtive demand out of the market.

QUOTE]

 

 

 

You have made a massive assumption here that all BTL landlords will sell up as they are in trouble. Many small landlords bought their properties when houses were much cheaper and far from losing out, rents are increasing and they are making a good profit. It wasn't a difficult sum to work out that when prices kept going up that it would be foolish to buy BTL houses as the outgoings were not going to cover costs easily.

 

All the BTL people I know don't want to sell as their rents are rising and will continue to do so because fewer people are buying houses.

[Tricky 10]

Short of a world war or the Russians going mad I'm going to stick my neck out here with something of a prediction.

 

• No material change in the next twelve months. +/- 5%
  
• Likely merger of two or more of the larger institutions.
  
• New mortgage products the like of which we have not yet seen.
  
• Steady price growth to be seen again by Easter of 2009.
  

 

Brave man.

 

The way I see it, house prices in London are overvalued beyond the point of sustainability. House prices in Yorkshire and Humberside are high but not unsustainably so. (This is compared to the 2.7% trend in real terms.)

 

The scenario you predict above is a drift back towards the norm and then a pick up in line with it. It may well happen.

 

But in my opinion, the slightly more likely scenario is that prices in London will fall sharply and that will have a knock on effect on house prices here and on the economy as a whole.

 

I predict that house prices in Q1 2010 will be lower than they are currently, both for the UK and for Yorkshire and Humberside.

[sham71 10]

Trying to talk your way out of a hole Sham?

 

Im with Tony on this one. Dont see there being much if any fall in prices over the rest of this year. Easter is the time that the property market tends to pick up. So should see some improvement over the next couple of months.

 

http://news.bbc.co.uk/1/hi/business/7336010.stm

 

Its not me in a hole, Phylis. 2.5% down in ONE month.

 

Any comments?

[Tomataheeed 10]

http://news.bbc.co.uk/1/hi/business/7336010.stm

 

Its not me in a hole, Phylis. 2.5% down in ONE month.

 

Any comments?

 

I heard the man from the Halifax talking about this on the radio this morning - its a bit more mixed than this one number... as ever. 5% falls in Wales and West Midlands - prices still rising in London would you believe. Even in one City such as Sheffield I'm sure its different in different parts of the city. I'll declare my interest here as "agendas" have been a theme of this thread - I'm trying to sell.

[sham71 10]

http://news.bbc.co.uk/1/hi/business/7336066.stm

 

 

Mortgage approvals at a 16 year low. First time buyers at the lowest level since 1975. Good to see that people are being cautious before jumping in at or near the top of the market.

[Tomataheeed 10]

. First time buyers at the lowest level since 1975. .

 

That's not good. Perhaps I'm just being hopeful because I'm selling, but people that want to buy won't wait too long. I imagine lots of people are just holding off for a couple of months to see what happens.