stevebt

iTrader: (8)

Yup this new means testing will have prices dropping quite quickly, its the worst thing that could happen for the recovery of the building sector,

http://www.bbc.co.uk/news/business-27128734

zip106

And rents will go up - great time to BTL!

Jamz3k

I hope house prices stay low for another two years as I currently can't get a mortgage yet.

Midlife......

iTrader: (2)

Depends where you want to buy.....house prices haven't gone up here in Carlisle, so they can't really drop again.

Shaun

ReallyReallyGoodMeat

Why not?

Carnut

Estate agents will just help you lie on the form so people will still be able to get a mortgage that they can't afford. Why don't they just ask them what rent they have been paying for the past year or so and give appropriate mortgage. They can just show old bank statements to show whether they have been able to afford said amount. Thank you I am here all week.

Dingdongler

I reckon there will be minimal impact in London for the next 12 months. Nowhere else matters to me personally.

stevebt

iTrader: (8)

This comes in force tomorrow and you stand far far less chance of getting one.

stevebt

iTrader: (8)

London is a huge place and places will drop but wether you want to go there never mind buying there is a different matter

fatscoobfella1

iTrader: (1)

I wouldnt pay £1 to live in London...

Its a scruffy mess of a place....Bloody awful...

Im happy that people are being properly means tested,saves on them getting booted out of there home because they cant afford any difference in the interest rate etc etc..

There is no doubt that interest rates are set to go up,they are at an all time low to engineer a house boom..Its just not working...
House price correction is needed.....Simple..

richs2891

I dont see it as an issue really, most lenders did this anyway, some to a greater extent, ie can you bring previous bank statements in + last 3 pay slips some to a lesser extent, - just bring last 3 pay slips in etc.
I think that it is as usual been overhyped by the press as it sounds great to say hey the lender will be looking how much your sending on alcohol - cigarettes and hair cuts ! And then making a decision based on that.
As the banks wont want to miss out on business they will simply offer mortgages over longer periods, lower monthly cost but over a longer no of years.
Richard

richs2891

I dont see it as an issue really, most lenders did this anyway, some to a greater extent, ie can you bring previous bank statements in + last 3 pay slips some to a lesser extent, - just bring last 3 pay slips in etc.
I think that it is as usual been overhyped by the press as it sounds great to say hey the lender will be looking how much your sending on alcohol - cigarettes and hair cuts ! And then making a decision based on that.
As the banks wont want to miss out on business they will simply offer mortgages over longer periods, lower monthly cost but over a longer no of years.
Richard

pslewis

Lenders have been applying the new rules for months now - and the market has boomed anyway.

Absolutely NOTHING will happen to house prices in a downward direction .... it's one way for at least 10 years now, we are in a new cycle.

chrispy200+

iTrader: (2)

My last two mortgages have been means tested, had to show bank statements and go through outgoings along with payslips. HSBC were good, they wanted 50% of my monthly income left after everything was paid for the month

dpb

They're absurdly ridiculously artificially high allready imo

hodgy0_2

Only losers have to buy their home with a mortgage

Dingdongler

It's probably not your decision to make though is it?. The chances are you can't afford to live in London (like for like) so your statement is just hot air.

So it's a bit like me saying I wouldn't pay £1 for a La Ferrari as it's noisy, only has two seats and I don't like red. It's not realistically a decision for me to make though as I don't have £1 million to spend on a car.

ditchmyster

iTrader: (7)

There is a simple equation with regards to house prices that means prices can not fall below a certain point that people who want a "correction" seem to forget.

First point is location, which is the biggest factor in pricing, London being the perfect example.

Second point is the cost of labour and materials to build the house plus a 25% margin for the builder.

As the cost of labour and materials rise so does house prices, add to that the location and market demand as well as a few other factors like BTL and foreign money and there is no way on gods green earth that there will ever be this "correction" that so many seem to long for.

Sure you will have small dips but people just take their houses off the market and sit tight (as has been shown in the past few years) Until confidence grows and the market grows again.

I don't know the current exact figures so i'll just make them up for the purpose of making my point (after all this is scoobynet).

Just before this most recent dip the UK needed something like a million houses a year for the coming 3yrs to meet the demand of that time which was around 8yrs ago (i've been out of the loop so don't know what it is now) at that point there were something like 300,000 houses being built so something like a 700,000 short fall year on year. Then the crisis hit and house building ground to a halt.

8 ish years on and still nowhere near meeting that target. In the mean time the population has grown significantly and a lot of foreign money has come into the market as well as those with cash moving into the BTL market as interest rates hit an all time low so attractive to borrowers and pointless saving money in the bank.

So my point (even though somewhat crudely made) is there will never be a 'correction' because the market won't allow it there's too much at stake and the cost of building as well as desirable locations will always rise in line with the demand for higher wages for tradesmen and locations with good infrastructure/schools within reasonable traveling distance to places of employment.

So small market fluctuations yes, mass "correction" not a chance in hell, there will always be someone who has money and moves into the housing market and people need somewhere to live, so as the prices fall investors move in, as they rise they capitalise and buy more on the back of what they have and so the cycle continues.

Unless we build on the scale of China and India (there is no chance of that) prices will not fall, over the long term the only way is up, as has always been the case.

Sorry for the long *** post, it always makes me cringe when people talk about house price correction, but it's a supply and demand market so the prices are correct already, rents rise and prices will rise along with everything else.

I remember buying a packet of Walkers crisps for 2p 40 odd years ago on the way to school, they'll never be 2p a packet again, same as my first house won't be £50k again.

P.s I agree about London.

fatscoobfella1

iTrader: (1)

I used to live in Tooting Bec...So yes i could live in London if i wanted too... I chose not to as its bloody horrible..

So as you kindly pointed out,your statement is hot air..

fatscoobfella1

iTrader: (1)

I totally agree and understand the point you are making.... But unless a starter home is 3 x the average wage,like they have been historically for years,then the housing market will always be in a mess.

Average wage in the UK is £26,500 so what chance have people got of getting onto the housing ladder ? Many people on less than that,just skimming over the minimum wage..

All the starter homes are bought up by cash rich BTL landlords,they pay over the odds as they see the long term yield is good. But this pushed up the price of starter home stock,in turn this pushes up the price of houses in the next band and so on and so forth...


There should be a limit to how many houses a person can own...

hodgy0_2

A report by the Halifax says that most people will be renting anyway

"Generation rent"

Capitalism and unfettered markets have a tendency to allow real wealth and asset ownership to concentrate in fewer and fewer hands - the housing market simply reflect this

It creates winners and losers

dpb

Yep, thanks Tony Blair

It's all about a fairer society

Dingdongler

Not hot air at all. Many people who left London years ago could probably not afford to move back. That's just the crazy London market compared to many other parts of the UK. It's difficult to find a one bed flat for less than £200k anywhere in London.

I think we've had this conversation before but which part of the country are you from?

ditchmyster

iTrader: (7)

There's no way you can buy land and build a house for £75k unless it's in outer hebrides and there is no work in such locations so not much chance of a mass exodus and even if there were to be then prices would rise accordingly.

BTL is growing because houses are expensive to buy own and maintain there's always something that needs doing, which is why the government sold **** loads in the 80's and let the private sector bare the brunt, what we're seeing now is related to that cost. Decent materials and tradesmen don't come cheap.

I think tenants should think themselves lucky they don't own the house and can just hand the keys back and walk away, god knows i've felt like doing that a few times. Home ownership isn't all it's cracked up to be sometimes, sure you get a big pot of cash back if you sell at the right time, but then you still have to live somewhere.

I don't think things have actually changed that much, houses were £3/5k when my old man was on £7 a week so £364 pa for your idea of 3 x salary they would of had to be £1k for him to be able to afford one, but they were 3 times that figure which is pretty much where they are now.

Just think back to what actually happened in the Housing market. Houses were discounted by the government to long term tenants when this mass house buying malarky started, so as such your average £30k house was in reality a £70k house all that's happened over the last 20yrs is they've settled at their true worth. The rise in house prices that occurred was the "correction" and they are back in line where they were in the 50's /60's. It was a moment in time that will never be repeated.

fatscoobfella1

iTrader: (1)

^^^^^^^^^^^

I think you have your figures mixed up..

The average house has cost around 3/3.5 average earnings since the early 70's... It then escalated in the boom to over 6.5 times around 2002.. And the market hasnt corrected since..
The current rate is just over 5 times the average wage..


I think you will find before that social housing was the way the majority was housed..

Editted to say.... Remember that interest rates are also a low never seen before...This is also pushing prices up.. When we get back to a "normal" 5%-7% then things will change again.



You can build a decent sized 3 bedroom semi with a garage for £100k....Land cost depends where you are i guess..

Henrik

iTrader: (5)

I agree the increase in prices is largely due to interest rates being very, very low, however I'm not sure they'll move significantly, at least not the BOE base rate. Having said that, even a 0.5% absolute rise would be a 100% relative rise.

Japans interest rates have been close to zero for something like 20 years now, and from what the BOE have done so far, I'd think they'd rather trash the currency than raise rates. People say they'll be forced to raise rates, but most countries are in an equally bad or worse mess anyway, so I'm not sure who/what would force rates up.

Also what people forget when they speak about the BOE base rate being historically low, is that it doesn't directly relate to mortgage costs unless you're one of the lucky ones on a life time tracker taken out before the interest rates dropped - this might be a very small minority of people.

As an example, I'm paying 5% for a 5 year fix (FTB back in 2011), so my rate is 10 times the base rate, and most FTB's if they went for a fix would be on similar rates (if you bought around the same time).

I.e. what my point is that, even if BOE raise rates to 1.5% or even higher, it doesn't necessarily mean that mortgage costs will definitely increase by 1% etc - they're slightly uncoupled.

Henrik

iTrader: (5)

I should also add that even though we FTB back in 2011, I do hope that houses crash significantly in price. I want my kids to be able to afford to put a roof over their heads, without having to spend 10 years saving for a deposit (or whatever the average is).

It's a disgrace of epic proportions that house prices have been allowed to get so out of control. It completely screws the younger generations over.

stevebt

iTrader: (8)

Thqt crash is never gonna happen as we have been thru the worst crash for 100 years and it never happened,

Dingdongler

Very well put actually, that's my take on the housing market as well. The chances of a significant correction are small. Therefore those that are 'betting' on this to happen are very likely to lose and lose big.

(I don't agree with you about London btw)

Dingdongler

Yes but if house prices crash significantly your children will be screwed anyway. Prices will have crashed because interest rates are sky high or there has been some other massive shock to the economy. In that situation the banks won't lend so unless you give your kids a pile of cash they won't be able to buy.

Not aimed at you particularly Henrik but this is what I don't understand about people who wish for or are actually 'betting' on a crash. If there is a real crash it won't actually help them because the economic circumstances that triggered the crash will mean that they probably still can't buy (ie mass unemployment, banks not lending, interest rates high etc)