I heard on radio last week it was 16% over 4 years. If the above was true it would spark a house buying epidemic. A 16% return in a year where do I sign.

 

16% over 4 years is 4% a year .... inflation is 5% - so, house prices are dropping!

I cannot see any rise at all anyway ........

 

Prices are still holding up in nice areas, despite all the bad news re the economy.

This house below is in my old street, and bought for £269k about 2 years ago. They've updated it and added a horrible rear extension and now look what it's up for....

http://www.rightmove.co.uk/property-...?premiumA=true

They normally sell for about £390k in that street.

 

Whats the thread called ??

 

So the power companys decided to increase gas by 20% and elec by 10%, cant see people in a rush to buy a bigger house with higher running costs aswell as higher coucil tax, food prices etc. So I think prices will hold if not fall.

 

I'm on ScoobyNet - not InvestorNet ... so, my figures stand

Unless the Government steps in to support house prices when an Interest Rate happens - house prices can only fall as far as I can see.

Where else is the new money going to come from? Mortgages are tougher to get than at anytime since the 80's, low payrises, higher bills ..... it's just not the condition for rises.

 

see my earlier post re banks paying 50k as a starting wage again


and before anyone says "how does that relate to the price of an ex council house on an estate in stoke on trent"

I don't give a fvck about the price of an ex council house on an estate in stoke on trent

good quality property will always do well

 

Although I don't like the market conditions generally, I have had an offer accepted for 10% below the "offers over" price. Previously in a healthy market property in Scotland was typically going for 10% above or much more in a competitive bid situation. This seller is not forced but is keen to move for family/personal reasons, and so has been keen to deal.

What will I have achieved through renting for 4 3/4 years? For 20% higher purchase price than the purchase I was making in 2006 I have 10 acres vs 0.3, 5800sqft vs 3700sqft. It has been a slightly odd house price crash experience for me, I hope the next chapter doesn't make me regret it...

 

Sorry John ,what have you got for your money now ,the 10acres and 5800 sqft or the other way round ?

 

It's unbelievable that the BofE isn't raising interest rates given that inflation has been so high for so long.

 

@ NKJMRS If I'm not mistaken, John is saying that it's odd for him to have actually raised the price he was prepared to pay for a house after waiting through a crash to buy one at the other side of it, but that for the 20% higher purchase price he got a hell of a lot more property - 10 acres and 5800sqft against the old 0.3 acres and 3700 sqft. Got a lot more in relative terms for the money.

 

They wouldn't do that. Inflation is part of the plan. Obviously sounds like the accepted conspiracy that everyone talks about, but it is actually reality. There is an IMF document going about somewhere (a recent one) where they actually advise this as a preferable course of action for the developed consumer economies to be taking. 'Repressive monetary policy' I think they call it. Basically like an extra tax to shrink the value of debt, and also with the added bonus of being able to let businesses cut pay without anyone realising it - the price of everything simply mysteriously rises instead. Creditors lose out obviously because it's a bit like a default. The cumulative effects of circa 5% inflation for a few years is a pretty serious loss for any creditor to take.

The lesson should be: don't lend when the purchasing power of that which you loaned can be diluted at will by the borrower. This is classic commonsense and creditors have been through patches of raising their rates because of this in the past. It's just strange this time that the status quo seems to be holding up, no one seems all that bothered in the face of it; just look at bond yields.

 

Ok thanks Glesga.
I understand now .

 

Sure it's a growth monetary policy, but the point is that inflation can be like a Tiger, once out of the cage it can be hard to coax back in as the Weimar Republic found out.

 

It's not growth policy, it's a political policy. You should know that being into realpolitik. Much better for the majority of people (working class debtors) to be kept happy at the expense of the bourgeois and wealthy creditors who mainly keep quiet except for having a good whinge about it from time to time.

Growth... who needs growth except when they want it for themselves. Left to their own devices, people will create growth as and when they want it. But this unhealthy, almost psychotic obsession with 'growth' and careers. What's the point of it all except to be part of some machine? It's almost like a new faith. Religion goes, state capitalism takes its place. Repeat after me: "it will make us all happy, it will make us all happy".

Apart from anything else, this GDP growth we're talking about... how can growth mean shrinking real incomes? You can look at the U.S. middle class for a good example of that. However the basic fundamentals are disguised, there's still a cause and effect explanation: input to output, where the resources have been distributed. Any new economics like stimulus and measures to 'boost growth' can usually be picked apart by logic and seen for what they actually are and what their real effects are likely to be when considered in a historical context.

Have you read "When Money Dies" then? Fascinating read if you haven't. http://www.amazon.co.uk/gp/product/1...5S7NDMW8F5WC0R

 

John B, glad to see the plan worked out for you. I must say that if I had tried that were I live it would have been about quits ie prices are back to near 2006 levels in nominal terms.

As for inflation, whats the point in raising rates now? Much of the inflation is due to commodity prices and vat rise. Raising rates will not help with this, it will only hinder growth.

 

As for inflation, whats the point in raising rates now? Much of the inflation is due to commodity prices and vat rise. Raising rates will not help with this, it will only hinder growth.[/QUOTE]

Well said Dongler !!

 

Well from here, prices will likely crash even in nominal terms as I have bought

Or perhaps they will move gradually sideways and down as the government try to inflate away their own debt (and prevent repossessions of heavily indebted voters) whilst holding interest rates artificially low. In that case I think we will see ongoing low volumes of house transactions, stagnation in wages and continuing inflation in commodities with quite a lot of volatility. That will produce a transfer of wealth from Western economies especially with depreciation of GBP against everything except USD, and maybe against that too. I think there will be QE3 and much more government interference yet.

I'll be no less fearful having property than RPI linked cash, but I can't find anything safe otherwise worth buying.

 

The problem is that rising GDP is not necessarily growing wealth. You can have growth with 10% interest rates or more. The only reason for keeping them so low is to subsidise sectors which would shrink in true market conditions. The aim is to 'grow' consumption again rather than going through any pain. Political reasons, not economic.

 

It is incredible the amount of boost to the economy that a normal level of housing market transactions would add.

I can't believe the change in mindset from saving to spending that it causes.

 

as every wealthy person will tell you

the key to getting rich (in the western model of capitalism) is to use someone elses money = debt

very hard to do it with your own money

 

I think your summary above is the most likely outcome, it's pretty much spot on in my opinion. (must have missed the post with the timing of my reply earlier)

RPI linked cash... the dilemma is how much to keep in cash and how much to put elsewhere. The issue you raise about wealth transfer brings up another problem, and that is that UK stocks may not be as good a vehicle for saving as they have been in the past. I wonder if it's worth looking abroad at stocks? Not necessarily just doing what everyone seems to be doing and going to the eastern economies, but just diversifying out of the pound.

I don't understand how anyone is supposed to save to buy a house when every effort is being made to erode the value of savings themselves. The government intervention itself is worrying, but so are the incentives it gives people. As you say, just what is the point in saving.

 

Very true, but the lines have been blurred somewhere along the way! If you want to produce something you need capital - that could mean money or it could mean (what the money is usually used for) economic capital... the means of producing something or providing a service that people want. You can only acquire capital by saving, so if you have an idea and you can convince others to lend you their capital, you can produce a much better return more quickly.

Loans for productive uses have built the western world into what it is today and have taken it out of subsistence agriculture etc. That's why free cross border capital flows are so important. People working together, pooling their efforts (capital) can achieve a lot.

But there is a big difference between debt for productive uses - say, getting the equipment to drill for oil, which once it's out the ground allows for much easier and faster production of other things people want (more stuff for less effort: in other words, economic growth) - and debt for personal consumption. In one case you've used the loan to grow your real income and the debt can be paid off without any problems. In the other you're just sacrificing future consumption for the present - the only thing you'd be using the debt for is to make yourself poorer (owing £150 instead of just buying it outright for £100 after a bit of saving). And of course the more of this debt you have, the poorer you get - the polar opposite of lending money to someone/a company that knows exactly how they're going to use it to expand their production of something useful/required services.

Now bear in mind that this country is drowning in consumer debt (including mortgages, as houses are just consumer goods at the end of the day... they don't produce anything for you) and it's possible to get a hint at the situation we're in.

 

Back to House Prices ...... I read somewhere that the current selling price is 92% of the asking price.

To those who have bought recently, is this the general view - 8% OFF when the sale is agreed?

I assume from this that the buyer starts at around 10 - 15% OFF as an offer? Settling, finally, at 8%?

To those selling .... would an offer of 92% of your asking price tempt you? Especially if the buyer could proceed without a chain.

 

****

 

We have just taken our house off the market as it had been up for 9 months with little interest. The original plan was to sell this house within 5 years and move on so we havent really spent anything on it since we moved in. We are now at a point where we will invest in making this house more as we want it and stay here a few more years. I havent actually been to work for a few weeks now and have two of my lads working with me full time on the house, Mikes currently paint stripping in the hall and Jasons paper stripping the dining room as I type.

Anyway, the point is that assuming the same discount is to be applied to all properties then yes, Id have no problem giving away 8% on the sale value on the basis that Id get 8% off the next property as the new property would be twice the value of the current one.

 

I bought in Dec-09.

First offer was 13% below asking, 23% below 2008 peak. Finally agreed on 10% below asking and 20% off peak.

House aren't moving as the asking prices are too high! Muppet estate agent would never have got a sale if I had not suggested the vendor passes on what they are down by onto the property they are buying.

I could not give a $hit if I lose half the value of the house as I bought it to live in! Any sales will result in me passing the loss onto the next house I buy.

For those who bought as an investment then I have no sympathy for as the old saying goes "Don't put all your eggs in one basket"

 

Pete,

I've just had an offer accepted on a "buy to let", price was £80,000 and I got it for £71,000. So 11% off the asking price.

These houses have not been below £100k for a very long time so a good deal and excellent rental potential.

I've been waiting years for this credit crunch and since December last year have purchased my first home at a juicy 40% below 2007 peak price and now purchasing my first buy to let.

It's a buyers market out there

Every cloud and all that

 

Recently completed a buy to let deal on a flat at 11.5% below the "offers above" asking price.

Will be looking for another when this one is let.

Some of the builders have heads in cloud cookoo land. Wanting full price money for 25% to 50% property share schemes WTF!