speedking

So you scrap stamp duty, all the FTBs have an extra £2k in their pocket. (1% x £200k). Doesn't that just mean they are prepared to spend extra on the property thus inflating the price? In a round about way the government (i.e. us) is giving money to the property sellers.

As the property price has gone up in line with the extra cash available there is no difference in affordability.

pslewis

That's true ..... FTB will spend whatever they have to secure a property - the Stamp Duty is simply diverted into the sellers pockets.

Steve vRS

A counter argument is that any house sitting at anywhere up to £280k now attracts offers from first time buyers of £250k!

Steve

njkmrs

Well there are buyers out there .Just read that house sales where up again in Feb after a quieter January .
Bellway have reported increased sales in the latter part of 09 .

Of course ,dont just believe me ,do a little research and see for yourselves .

Things are on the way up again .

john banks

You make it sound like house price inflation is a good thing?

njkmrs

I am all for house price inflation to remain steady and positive .
I would hate to think people buy property and then see its value plummet .
That serves no purpose to anyone .

I am not mad for Boom and Bust .Too many people can get caught when that happens and as most people buy property for emotional reasons etc ,I have no wish to see them get caught out ,but with a bit of care and research the majority can win .

Thats why I say its a safe bet long term .

fatscoobfella1

iTrader: (1)

Have you seen how many houses are for sale ???

There are a lot more compared to 2-3 years ago..

Makes you think why people would want to sell when things are bad out there?

That said my friend has just accepted an offer on his 2 bed terrace in blackrock..

Its been up for 18 months or so,initial price was £159,995

Accepted £125,000

njkmrs

Aye, theres quite a few for sale up here in Lancs and theres plenty springing up with Sold signs on .!!!

Steve vRS

I disagree at least in my area.

I'm watching the market in and around Lymm at the moment. the odd house is selling but very little and very few new houses are coming on to the market. Using Property Bee shows how long a lot of houses are being marketed for - at unrealistic prices!

Some of the price drops are interesting as well!

Steve

njkmrs

No not Lymm ,up near Rochdale ,which incidently was one of the worst areas for price drops .Maybe thats why they have started selling again .

john banks

It hasn't been steady and positive, it has been boom and bust for decades. There have historically been great times to buy and terrible times to buy, it is quite an unstable market. Now is I believe a terrible time to buy as prices inflated between 2001 and 2007 well beyond inflation and that has not yet been undone. When the prices have risen so much above the rise in earnings it has resulted in a situation where average people are life long debt slaves to own a rabbit hutch. There has been massive transfer of wealth from the young to the old, people that don't depend on government handouts are marrying and having children later, whilst the chavs breed at our expense. Society has become fragmented, industry has declined whilst we've become a country that seems to be mainly interested in selling property to each other. Some people feel richer because their house is worth more and have MEW'd heavily against it, the old who have the property wealth are just transferring it back to the treasury through inheritance tax. When you sell a smaller property to upgrade you have a much bigger step than you used to.

It is a right mess.

Only as far back as 1998, just married and out of university (and with the debt to go with it), my wife and I on average graduate salaries bought a 3 bed detached bungalow in a decent area, worked hard, had some fun and paid off the mortgage in 7 years. That was a good thing, house price inflation has ruined that chance for now since average graduates can't get jobs. Most of the cause can be related back to Western house price inflation based on a credit bubble.

njkmrs

I guess I just look at it from a more positive perspective .!!!
Everything in life is up and down ,you just have to smooth it out as best you can .Oil is up and down ,shares are up and down ,euro goes up and down ,but using a bit of sense gets you through .
You did well to pay off a mortgage in 7yrs for sure .And I am sure it paid dividends doing that .Yes, others pay the minimum off the mortgage and withdraw every last drop of equity to fund their lifestyles and that suits them .
People have to make their own choices and live by it .I just try and give people opinion ,on what works for me .


P.S . I dont charge for my advice !!!!!!! Its free to anyone who will listen .!!!!

john banks

How has house price inflation worked for you? Have you downsized or sold property to cash in your capital growth? Have you benefitted more than you would have done if prices had grown with rentals and average incomes from working?

For me, I've gained about £150k through growth in residential and commercial property, although I shouldn't count the latter as I haven't sold it. With £60k of outstanding borrowing on commercial property I've gained a bit through low interest rates that are on a base + 1 % deal on which I can also claim tax relief, but lost more through devaluation of the pound and poor return on savings recently (although RPI increasing has actually given a good return on NS&I index linked certificates over the last year).

Overall, stability would have been far better and quite easy to achieve if banks didn't lend to people or lend amounts that couldn't be paid back without the present subsidised interest rates. They are subsidising this against the pound and the financial future of us all and will make it worse in the long run.

Stupid Brits would rather see the currency trashed than see the nominal value of their houses reduce, ignoring the fact that their houses and incomes against world currencies have crashed horribly.

njkmrs

I am in a house now that I would not have dreamed of owning when I first left school and went to work .

This is down to House price inflation .I have bought properties as an investment and have released some equity out of them ,which helped to fund the property I am in now .

But I have also bought at the right price and added value ,so not all down to inflation .

I have taken educated risk and sweated as well .I am by no means rich and still work ,but my intention is to sell my properties when the time is right and cash in ,and take my cash out of this country .

Life is a gamble .It just depends on how much you are prepared to stake .

john banks

Have you sold any property yet or just refinanced?

njkmrs

I have not sold any yet .

I released some equity out of my BTL,s to finance my house that I live in .Thus getting a little Tax relief on them .

I have over 50 % equity in my house and do not wish or need to release this for a new Range Rover Sport or anything like that !!!

I will only sell when the time is right .

My BTL mortgages are fairly small and have a minimum 50%--60 % equity left in them again ,which would only be released to purchase further property .

john banks

The present situation is that you have the same property you've bought and against other property it isn't worth any more except for work you've put into them and what you've paid off. You've enjoyed an as yet unrealised increase in equity due mainly due to house price inflation exceeding your finance costs?

Whilst you won't risk negative equity, the sort of drop in house prices I'm expecting before I buy again would approximately halve your equity.

Are you wedded to property as your preferred investment class? What yield do you get from your BTLs in relation to the value your putting on them?

My landlord appears to be getting a few percent.

What you have said does explain your confidence in property values just as what I have said states why I think it is an overvalued asset bubble ready to go pop. Do you see any vulnerability in your position given the growth you've enjoyed or do you expect everything to continue like it did until 2006/7?

If massive capital growth is no longer the expectation of the housing market, then your yield is presumably important if you try to load them onto a "greater fool" as is the usual wise exit before bubbles pop. If the yield can't be stretched for ever, then neither can the values.

pslewis

So, what you are saying is .... house prices have a way to fall to correct the imbalance?

fatherpierre

When rent gets within 10% of the cost of an interest only mortgage will it become sensible to buy.

I rent a £400k house at present for £1000 per month whilst my money (savings)earns about 6%

My neighbour bought his £400k house and pays over £2000 per month for the same house.

His house has lost about £50k in value over 3 years and it needs a new roof, and he's spent money to get the new boiler.

My rented house has had a free boiler and washing machine so far. My money is still earning interest whilst his house is losing value.

We've decided to move soon....... Quoted £300 to move.

Next door are stuck in negative equity. They need to find about £50k just to pay off the excess they borrowed.

The British obsession with owning a house isn't all gold.

UK PLC is in massive debt and we have to pay it. T A X

My money is still earning interest - AND I am free to move to wherever I chose.

njkmrs

Yield is 5-6% and my mortgages are all on repayment ,not just interest only .
I have always seen it as a long term plan and am in no rush to sell .Although if offered the right money ,which is unlikely at the moment ,I would probably sell and get my place in the sun .

It has not been rocket science ,and it has not been plane sailing either ,but persaverence will pay off .

njkmrs

Post Office to begin " Super Loans " .!!!!!
10 % deposit needed Only !!!


Hows about that then .Should get things moving I would have thought .!!!

john banks

Solution to excessive debt is more debt? Only if you vote labour.

Leslie

You may well find that by the time you have reached that time you mention, that the establishment will not allow you to take your cash out of the country, just like the good old days!

Les

njkmrs

You have a very good point there .And one that needs consideration .If they can get it they will have it !!

But I will make sure there is nowt to be had when i go !!!!!

njkmrs

Just read a report about Interest Rates possibly staying at below 1% up until 2015 !!!!!!!!

So anyone taking out a mortgage at the moment needs to think whether a Tracker is the one to go for at this moment in time .

Also there has been talk of increased interest from First Time buyers in the Estate Agents .Probably tying in with the Stamp Duty waver for first time buyers buying property upto 250 k .

This time of year always see,s an increase in activity in the property market though due to people coming out of winter hibernation and the feel good factor when the sun comes out .!!!

Just thought I would keep you all posted .!!!!

LostUser

I walked past our local estate agents yesterday afternoon, there was 1 estate agent in there and he was looking at the BBC Sports website.

Dingdongler

But how much interest is your money actually earning? I agree its better than owning an asset that's losing value but remember that (especially if you are a higher rate tax payer) your money in the bank is also losing value.
There are no accts/bonds etc paying enough net interest to beat inflation. To some extent I agree with you as my position at the moment is mainly cash (I do own my own home though). I often question the wisdom of my position though because my cash is losing value.

If interest rates stay low for a number of years (which seems like a real possibility) then this will prop up the property sector enough to at least increase property prices in nominal terms though not real terms.
In the same scenario cash in the bank will then buy you/me even less property.

So though I agree with you (and have always agreed with John Banks who talks a lot of sense on this subject) I may jump into property because of this. I hope that makes sense?

john banks

Care to link to the report so I can tear apart its bias or stupidity (probably both) njkmrs? Does it actually matter what the base rate is when no one (except banks) can get new lending at such low rates? Why are fixed rates for savings accounts and mortgages still what they were about 4 years ago?

The only way I can see interest rates staying below 1% for 5 years without trashing the currency further is if we have a deflation of incomes and house prices. If however you could tell me where with sensible LTV I could get new mortgages for 5 years fixed at less than 1% perhaps I would perhaps concede that the bubble might go a bit further yet and I might go and get 10 BTLs.

The FTB stamp duty change will do nothing except result in indebting more young people that could do without buying into an overpriced asset.

njkmrs

Hsbc are doing some good deals ,but nowhere near under 1% Im afraid .
Fixed deals are still coming in at just under 5% for 5 yr fixed .
Slightly better for 2yr fixed ,but you still get hit with the dreaded set up fee on both .!!

Was reading it on the Mail website ,under Money or Property section I think .
Made some interesting reading to be honest .

fatscoobfella1

iTrader: (1)

I was reading that most of the big gun financial advisors were saying that by the end of 2010 that 1.5% is expected,by the end of 2011 that its gonna be 3.5%..

Sounds more realistic ???????