What's the housing market like at the moment?

[Tricky 10]

I am in the position of having/needing/wanting to move out of my city centre flat (Riverside) to move in with my good lady.

 

I wish I had met her a year earlier, as I would have sold it if I had been in this position last summer!

Now I think I may struggle to sell it, and am thinking of letting it out instead.

 

The only trouble is I envisage we will be wanting to move on again within the next two years, so I am not sure what property prices will be like in 2010 - will they be anything like they are now?

If I thought I could get more for it in 18-24 months than now I would let it out until then, otherwise sell it now.

 

What would you do with the money? (assuming the sale + costs netts you more than the outstanding loan)

[Guderian 10]

What would you do with the money? (assuming the sale + costs netts you more than the outstanding loan)

 

The sale would indeed net me more than the loan, by a fair bit.

To be honest a lot of the money would have to go to paying off some existing debt I have accrued - debts which are making life pretty tough for me from month to month.

 

If I sell - some of the equity would pay off these debts, giving me more disposable income each month.

If I rent, it would cover my mortgage - living with my g/f has effectively been offered to me gratis - so again I would be better off each month.

[Tricky 10]

The sale would indeed net me more than the loan, by a fair bit.

To be honest a lot of the money would have to go to paying off some existing debt I have accrued - debts which are making life pretty tough for me from month to month.

 

If I sell - some of the equity would pay off these debts, giving me more disposable income each month.

If I rent, it would cover my mortgage - living with my g/f has effectively been offered to me gratis - so again I would be better off each month.

 

The reason for asking is that if things do go completely tits up (nationally and/or personally), a roof over ones head or an alternative source of income is a good way of spreading risk.

 

I wouldn't expect house prices to rise in real terms during the next decade - they didn't last time. And I would put my money on that you're more likely to receive less in two year's time than you will now, although Tony and Phylis might disagree.

 

I suppose you've got to do your sums and calculate the rental income vs the cost of the mortgage and the interest on your debts, but I wouldn't factor in any appreciation in the value of the property.

[Phylis 10]

The reason for asking is that if things do go completely tits up (nationally and/or personally), a roof over ones head or an alternative source of income is a good way of spreading risk.

 

I wouldn't expect house prices to rise in real terms during the next decade - they didn't last time. And I would put my money on that you're more likely to receive less in two year's time than you will now, although Tony and Phylis might disagree.

 

I suppose you've got to do your sums and calculate the rental income vs the cost of the mortgage and the interest on your debts, but I wouldn't factor in any appreciation in the value of the property.

 

"The North East of England was the only area to see a monthly rise in prices, up 4.1% in June and 3.1% for the year. That made the average house price in the region worth £133,508."

 

Just a little extract from the same article Tony was looking at. Not all areas are experiencing such a massive downturn. 1% falls on average with London falling 2.5% in a month and the NE of england rising by 4.1%.

[Tricky 10]

Bleak news today

 

 

Well, someone had to post it.

[Tony 10]

It is bleak as a headline, but remember that it has to be seen in context. There are simply no sales to speak of.

 

Anyone who doesn't need to sell isn't. Anyone who needs to sell has no choice but to take a cheeky bid. Any survey that you look at today is wildly distorted. How the medium term picture will pan out is what's interesting me and I don't think that there will be much of a change as markets settle and liquidity increases.

 

It's summer. Nothing much will happen now other than needy vendors accepting increasingly silly offers. I'd ignore the banner headlines until October - unless you are after a bargain of course

[Tricky 10]

In Robert Preston's blog there's an article about a proposed rescue plan to alleviate the liquidity crisis.

 

The most interesting part is the almost unanimous reaction to it from the readers. GBs reputation for economic competence appears to have no support at all any more. Not just less support but virtually none.

[Tony 10]

The rescue plan could turn out to be folly but GB has managed to back himself into a corner with the expertise of a supertanker pilot in Bridlington harbour. The 40% of underwriting that is required is nearer to 60% when a few other factors are taken into account.

 

An open cheque? Cack handed nationalisation through the back door? I honestly don't know, but there is little choice now. Intervention is essential.

 

And the 'no borrowing in excess of security' legislation that I've been banging on about for ages is equally essential, but there no sign of it yet.

 

The sooner he goes the better. I pity Cameron mind - he will pick up a job as messy as Thatchers in '79.

[sphinx 10]

I don't see the way the housing market is going as a slump. Rather, the prices are now going in the direction where they actually SHOULD BE! House prices have been way too overpriced over the last few years. Now they will hopefully get to the level where there will be a sensible ratio between the average salary and the average mortgage. Greed has fuelled the housing boom, which also created many winners. Unfortunately, now there will need to be as many losers to bring the housing market to a sensible place.

[Tricky 10]

Unfortunately such is the way of the world that the process of putting house prices back "where they should be" will have a huge negative impact on the economy.

 

As Tony said, but probably better, if there is a house price crash, the value of our houses is going to be the least of our worries.

[tezmo 10]

In my opinion, the situation is so volatile at the moment that you would be best advised not to take action based on anyones prediction - simply do what you can best afford to do at the moment

[Tony 10]

An interesting article has appeared on the Observer / Guardian website which reflects exactly what I have been saying for some months now, but it's still a scary idea. The CEBR has confirmed what as been obvious to many observers for some months. I still firmly believe that any time between now and Easter 2009 will be a good time for a bargain.

 

From The Guardian

House building grinds to a halt - and sows seeds of next boom

Richard Wachman The Observer, Sunday August 3 2008

 

The credit crunch might already have sown the seeds of the next house price boom, according to a report out tomorrow from the Centre for Economic and Business Research (CEBR).

 

A sharp fall in house building, with 20 per cent fewer completions forecast for 2008 and 10 per cent fewer in 2009, is likely to be one of the key factors in prices recovering by the end of next year.

 

The CEBR says average house prices should rise by 30 per cent between late 2009 and 2012, 'partly driven by the shortfall in housing supply that the reduction in completions will inevitably precipitate'.

 

The construction industry is responding to the near paralysis of the housing market via a sharp slowdown in housebuilding programmes, according to the CEBR's report.

 

The number of housing completions in the next year or so will be well below the government's targets for housebuilding over the next five years. The embattled construction sector, already hit by higher labour costs, falling equity values and rising costs of credit, will react to falling prices and dwindling transactions by putting development projects on hold. This shortfall in completions will be one of the key factors driving the housing market recovery from 2010.

 

These are the key findings from the CEBR's latest consumer and housing prospects report.

 

House prices, already falling in most areas of the UK, will decline by 15 per cent peak-to-trough from the end of 2007 to the middle of 2009. As the construction sector reacts, housing completions will fall well below the government's targets of around 185,000 per annum for England, to 141,000 in 2008, 134,000 in 2009 and 139,000 in 2010.

 

Richard Snook, an economist at the CEBR and one of the report's authors, said: 'The credit crunch caused a shock in the housing market and we are now seeing the second-round effects of falling confidence and a slowing economy.

 

'When prices have fallen in the past we have seen house building slow down quite quickly but take a lot longer to come back, which leads to demand outstripping supply.'

 

Ben Read, the CEBR's senior economist, said that the fundamentals of the housing market were still relatively tight. He added: 'Whilst the short-term prospects for the housing market look bleak ... the sharp drop in building completions will mean higher prices if and when the credit markets sort themselves out.

 

'The government will be concerned that with every year that passes it gets further away from its house building targets, and with developers unlikely to respond quickly when the market bottoms out, prices may recover more quickly than people imagine.'