are house prices actually going to fall???
30 July 2003, 03:04 PM
#1
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Been wondering about this for a while now.
All newspapers and property sites ive been to keep saying that house prices are going to settle or slightly fall by the end of the year...but does anybody actually believe this or know this for sure????
we're looking to buy a place at the beginning of next year..and the way things are going at the moment...theres no WAY we can afford to still live in Cambridge if house prices stay the same.
London prices but without being in London.
we found one place...a nice new one bedroom flat near the centre of town....starting at £200,000!!!!!!
Its a rip off!!!!!
*rant over*
All newspapers and property sites ive been to keep saying that house prices are going to settle or slightly fall by the end of the year...but does anybody actually believe this or know this for sure????
we're looking to buy a place at the beginning of next year..and the way things are going at the moment...theres no WAY we can afford to still live in Cambridge if house prices stay the same.
London prices but without being in London.
we found one place...a nice new one bedroom flat near the centre of town....starting at £200,000!!!!!!
Its a rip off!!!!!
*rant over*
30 July 2003, 03:09 PM
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Yep they are actually going to fall, mortgage rates or whatever, have already fallen, so there has been an improvement, although house prices are still way above what they should be!
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30 July 2003, 03:19 PM
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The press coverage of this amuses me as they always miss two obvious factors:
1) you should actually be pleased if your house drops in value. i.e. your current house falling by 10% would actually mean the next one (and therefore the amount you need to borrow) would drop by 10%. the value in your main residence is never 'real' - i.e. you're unlikely to ever crystallize it in any case
e.g. current house £100k, 50% mortgage, you want to buy a £200k house. currently you need to borrow £150k
market drops 20% your current house £80k, £50k mortgage, you only need to borrow £130k to buy the £200k one.
(naturally this doesn't work if you slide into negative equity, if you're a first time buyer or if you're cashing in the value for something else)
2) house prices have shot up due to cheap interest rates (i.e. people can afford to borrow more as the monthly repayments are significantly reduced). if, and probably when, interest rates start to climb again, house prices will therefore drop driven by a) people being able to borrow less and b) people hitting negative equity as they geared themselves to the hilt on cheap loans
this second point is the scarey one IMO for the economy. for me personally I'd be quite glad to see house prices drop significantly as it makes it easier to trade up (assuming you're not overgearing each time).
And then you need to add in both regional differences and different supply and demand curves for different portions of the market .... (again, factors which the press glibly ignore)
So, you ask, what's likely to happen to prices? short to medium term probably not much. In the longer term (as interest rates start to creep back up) expect a slide of some kind. Or, more to the point - who knows, but don't believe the nonsense in the press!
Gordo
1) you should actually be pleased if your house drops in value. i.e. your current house falling by 10% would actually mean the next one (and therefore the amount you need to borrow) would drop by 10%. the value in your main residence is never 'real' - i.e. you're unlikely to ever crystallize it in any case
e.g. current house £100k, 50% mortgage, you want to buy a £200k house. currently you need to borrow £150k
market drops 20% your current house £80k, £50k mortgage, you only need to borrow £130k to buy the £200k one.
(naturally this doesn't work if you slide into negative equity, if you're a first time buyer or if you're cashing in the value for something else)
2) house prices have shot up due to cheap interest rates (i.e. people can afford to borrow more as the monthly repayments are significantly reduced). if, and probably when, interest rates start to climb again, house prices will therefore drop driven by a) people being able to borrow less and b) people hitting negative equity as they geared themselves to the hilt on cheap loans
this second point is the scarey one IMO for the economy. for me personally I'd be quite glad to see house prices drop significantly as it makes it easier to trade up (assuming you're not overgearing each time).
And then you need to add in both regional differences and different supply and demand curves for different portions of the market .... (again, factors which the press glibly ignore)
So, you ask, what's likely to happen to prices? short to medium term probably not much. In the longer term (as interest rates start to creep back up) expect a slide of some kind. Or, more to the point - who knows, but don't believe the nonsense in the press!
Gordo
30 July 2003, 03:21 PM
#12
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The only ones that will show significant movement are the ones that are woefully overpriced in the 1st place.
6 months ago estate agents would put expensive property on the market for whatever the seller wanted. And they were getting close to, if not the asking price.
Most agents I speak to now will only advertise stuff at realistic prices because there is more caution £300k ish and above from the purchaser, and estate agents dont get paid to advertise!!
6 months ago estate agents would put expensive property on the market for whatever the seller wanted. And they were getting close to, if not the asking price.
Most agents I speak to now will only advertise stuff at realistic prices because there is more caution £300k ish and above from the purchaser, and estate agents dont get paid to advertise!!
30 July 2003, 03:25 PM
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I remember when I was looking to buy (4 years ago) in Ealing a studio flat would cost £85k to £130k.
I got my two bedroom flat, over looking a canal, near a tube station and three motorways for £130. The trick was to look out of the city.
Look at the amenities and public transport, 45 minutes and I am in Baker Street, hardly a long commute.
Different areas cost different amounts as well my sister and her husband bought a 3 bedroom house and it cost them about £75k.
I live near Watford and they live in Pontefract (just before it became part of the Leeds commutor belt).
In the four years my flat has risen in value (due to the location, the fact it has a loft and was a new build) but no where near the increase my sister's place has. Their increase is almost entirely due to location and buying at the right time.
I don't think house prices will ever do the massive slump the did in the 80s, the market is more protected now.
I got my two bedroom flat, over looking a canal, near a tube station and three motorways for £130. The trick was to look out of the city.
Look at the amenities and public transport, 45 minutes and I am in Baker Street, hardly a long commute.
Different areas cost different amounts as well my sister and her husband bought a 3 bedroom house and it cost them about £75k.
I live near Watford and they live in Pontefract (just before it became part of the Leeds commutor belt).
In the four years my flat has risen in value (due to the location, the fact it has a loft and was a new build) but no where near the increase my sister's place has. Their increase is almost entirely due to location and buying at the right time.
I don't think house prices will ever do the massive slump the did in the 80s, the market is more protected now.
30 July 2003, 03:34 PM
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Isn't it a bit like the stock market? ie you get short term peaks and troughs but if you look over decades, the trend is always up. i bought a house 6 months ago, and i accept that if there is a significant increase in interest rates, the value of my house may go down for a bit. this doesn't particularly bother me as a)I don't want to move and b)I've got a fixed rate mortgage. However, in 10 or 15 years time I expect the value of my place to have increased enough to at least kept place with inflation.
30 July 2003, 03:49 PM
#15
\m/ ^_^ \m/
first time buyers aren't buying? can't understand why 
i need to be earning at least 30k a year before i can buy a house - i'm screwed [img]images/smilies/mad.gif[/img]
kev
i need to be earning at least 30k a year before i can buy a house - i'm screwed [img]images/smilies/mad.gif[/img] kev
30 July 2003, 03:54 PM
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I think most tabloids make things self fulfilling prophesies. They print bull about doom and gloom and huge price drops which just is not happening. People read it, panic and start off making the headline more possible.
The market has not collapsed and is not showing signs of it. It has slowed but not ground to a halt or gone into reverse. It is picking up again in general. Certain areas will be hit worst than others (1 million plus for example ). Up to 400k seems stable but less than 250k is better (stamp duty thresholds probably the cause for that).
As far as I know, house prices in general are not actually falling it is just the rate at which the prices are increasing is falling. Interest rates are ridiculously low and I think they’ll go down again by Xmas to maybe even 3%. The stock markets are still badly performing (although some signs of recovery there) so there is lots and lots of serious money swilling around earning nothing because interest rates are so low and people dare not wade back into equities. If the housing market slows more, fewer people buy, rent demand picks up, buy-to-let becomes attractive again, investors buying to let means houses start selling again, etc, etc..
We put our house in the market in Jan of this year. "Sold" it on the first viewing. Then waited and waited...the woman buying it couldn't shift her place. We then took it off and have just put it back on. Agents are very confident it will sell this year and we’ve put it on at 25k more than before which is about 8% rise this year.
Property is long term and I look at it that you make nothing or lose anything until you sell something. Paper values, 100% increase, etc, etc. So what? It means nothing until you sell it. Whenever we’ve moved the mortgage has always seemed really painful at first. But after a few years it shouldn’t be as your income (hopefully) increases. Make no mistake though, if your mortgage is really stretching you now you will hurt in the future because interest rates will go up eventually.
The market has not collapsed and is not showing signs of it. It has slowed but not ground to a halt or gone into reverse. It is picking up again in general. Certain areas will be hit worst than others (1 million plus for example ). Up to 400k seems stable but less than 250k is better (stamp duty thresholds probably the cause for that).
As far as I know, house prices in general are not actually falling it is just the rate at which the prices are increasing is falling. Interest rates are ridiculously low and I think they’ll go down again by Xmas to maybe even 3%. The stock markets are still badly performing (although some signs of recovery there) so there is lots and lots of serious money swilling around earning nothing because interest rates are so low and people dare not wade back into equities. If the housing market slows more, fewer people buy, rent demand picks up, buy-to-let becomes attractive again, investors buying to let means houses start selling again, etc, etc..
We put our house in the market in Jan of this year. "Sold" it on the first viewing. Then waited and waited...the woman buying it couldn't shift her place. We then took it off and have just put it back on. Agents are very confident it will sell this year and we’ve put it on at 25k more than before which is about 8% rise this year.
Property is long term and I look at it that you make nothing or lose anything until you sell something. Paper values, 100% increase, etc, etc. So what? It means nothing until you sell it. Whenever we’ve moved the mortgage has always seemed really painful at first. But after a few years it shouldn’t be as your income (hopefully) increases. Make no mistake though, if your mortgage is really stretching you now you will hurt in the future because interest rates will go up eventually.
30 July 2003, 03:56 PM
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thats the problem tho.
we're first time buyers and looking for a property that will make us money in the short term as we are looking at immigrating to Canada in the next 3 years or so.
we are prepared to move anywhere in britain but we have no idea where the up-coming areas are....if any!!?!!
oh well. something will turn up i guess.
if not...it'll be a cardboard box for us.
we're first time buyers and looking for a property that will make us money in the short term as we are looking at immigrating to Canada in the next 3 years or so.
we are prepared to move anywhere in britain but we have no idea where the up-coming areas are....if any!!?!!
oh well. something will turn up i guess.
if not...it'll be a cardboard box for us.
30 July 2003, 04:08 PM
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first time buyers aren't buying? can't understand why i need to be earning at least 30k a year before i can buy a house
Have to say it is kinda daunting trying to find a decent place for the money you want to spend. For me, most the properties in my area for the price I wanted to spend were terraced houses in need of some work! Eventually I have found the perfect property but with the cost and headache in it all, it doesnt suprise me there are fewever first time buyers.
If your buying on your own like me then its defo a up hill struggle.
30 July 2003, 04:12 PM
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If I were you..... well I'm not but if I was....
and I was planning to move in 3 years, I would not go to my maximum. I'd buy something at the cheaper end of my budget. If prices go up you still make cash and cheaper houses are quicker to shift in my opinion when you do come to sell up. Also, if you go to the maxmimum mortgage, yes you'll most likely make more if the prices continue to rise but if they do go into reverse you could be knackered.
3 years isnt long to make a killing as the best boom time is now probably well and truely over. You've got to factor in stamp duty when you buy now, solicitors fees for buying now then selling, estate agents fees for selling, any repairs you might have to do, etc.
Say you bought at 100k now. The solicitor for buying and selling would be say 800 total, stamp duty 1000, say 2000 in repairs, and 1500 in estate agent fees to sell it. That means you need it to go up 5.5% in 3 years to break even. If you are getting a mortgage they'll only be a stone chip dent in the capital after 3 years.
Just something to consider.
and I was planning to move in 3 years, I would not go to my maximum. I'd buy something at the cheaper end of my budget. If prices go up you still make cash and cheaper houses are quicker to shift in my opinion when you do come to sell up. Also, if you go to the maxmimum mortgage, yes you'll most likely make more if the prices continue to rise but if they do go into reverse you could be knackered.
3 years isnt long to make a killing as the best boom time is now probably well and truely over. You've got to factor in stamp duty when you buy now, solicitors fees for buying now then selling, estate agents fees for selling, any repairs you might have to do, etc.
Say you bought at 100k now. The solicitor for buying and selling would be say 800 total, stamp duty 1000, say 2000 in repairs, and 1500 in estate agent fees to sell it. That means you need it to go up 5.5% in 3 years to break even. If you are getting a mortgage they'll only be a stone chip dent in the capital after 3 years.
Just something to consider.
30 July 2003, 04:12 PM
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we are prepared to move anywhere in britain but we have no idea where the up-coming areas are....if any!!?!!
30 July 2003, 04:13 PM
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Long term the trend is up but so is wages so the ratio of wages to house price is similar over time. HOWEVER, at the moment, the wages aren't going up as quick as house prices.
More and more 1st time buyers are not buying and just waiting. So for the £100k seller wanting to buy a £150k place, they need someone to buy their £100k place. These buyers are gradually dying out and the market will eventually have to readjust itself otherwise the lower ranks of the market will eventually have no-one to sell to (so the price falls).
Not sure if there'll be a 'crash' as such like the 80's/90's as there is a key difference. The number of properties out there. Not much has been built over the last few years & the population is growing. However this is also slowly changing.
Interest rates will only have to rise a few % (very feasible in a relatively short time-span) for a lot of people to be screwed (especially in this day and age of debt. How many people have savings for a rainy day??? very few.)
[Edited by Dracoro - 30/07/2003 16:16:20]
More and more 1st time buyers are not buying and just waiting. So for the £100k seller wanting to buy a £150k place, they need someone to buy their £100k place. These buyers are gradually dying out and the market will eventually have to readjust itself otherwise the lower ranks of the market will eventually have no-one to sell to (so the price falls).
Not sure if there'll be a 'crash' as such like the 80's/90's as there is a key difference. The number of properties out there. Not much has been built over the last few years & the population is growing. However this is also slowly changing.
Interest rates will only have to rise a few % (very feasible in a relatively short time-span) for a lot of people to be screwed (especially in this day and age of debt. How many people have savings for a rainy day??? very few.)
[Edited by Dracoro - 30/07/2003 16:16:20]
30 July 2003, 04:24 PM
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thanks chinnybloke. Very useful.
we realise we wont make a huge ammount of money...but the fact that we'd already been on the property ladder when we move to Canada will be a big advantage i think.
we're probably going to look for a cheap flat near the centre of town and then do it up ourselves so the price will instantly go up.
its just trying to find somewhere cheap thats livable in this city!!!
Stoke ay ChrisB??? we'd have to look for somewhere where there were jobs for both of us tho. thats yet another problem with all this house/moving malarky.
why cant life be easy for once????
we realise we wont make a huge ammount of money...but the fact that we'd already been on the property ladder when we move to Canada will be a big advantage i think.
we're probably going to look for a cheap flat near the centre of town and then do it up ourselves so the price will instantly go up.
its just trying to find somewhere cheap thats livable in this city!!!
Stoke ay ChrisB??? we'd have to look for somewhere where there were jobs for both of us tho. thats yet another problem with all this house/moving malarky.
why cant life be easy for once????
30 July 2003, 04:57 PM
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Prices will have to fall as you are like many in being unable to afford them at entry level. They will fall until they become affordable again but it shouldn't be by much.
People who just about bought at £100k last year expecting to be worth £120k now are in for a shock.
Property has always been cyclical but the rise has been more gradual this time. Either way we are still at the very peak of the cycle.
I was a home owner in the days of BIG interest rates. God forbid if they went up just 1% in this market.
People who just about bought at £100k last year expecting to be worth £120k now are in for a shock.
Property has always been cyclical but the rise has been more gradual this time. Either way we are still at the very peak of the cycle.
I was a home owner in the days of BIG interest rates. God forbid if they went up just 1% in this market.
30 July 2003, 04:57 PM
#26
\m/ ^_^ \m/
what you want is a canal barge - i've looked into this (desperate i know) 50k gets you a nice one and you can move if you don't like the neighbours 
kev
kev
30 July 2003, 05:06 PM
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Our experience
Just got offered full asking price on our 3 bed detached in Northampton. Took two months or so to get it, had several offers of up to 5k less but stuck to our guns. House on for 179K.
Having said that we have decided to stay put for the forseeable future.
Just got offered full asking price on our 3 bed detached in Northampton. Took two months or so to get it, had several offers of up to 5k less but stuck to our guns. House on for 179K.
Having said that we have decided to stay put for the forseeable future.
30 July 2003, 06:25 PM
#29
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yeterday's Nationwide report was house prices up by 7% since the beginning of the year.
But, the people that messed us about last November by pulling out last minute have now put their house back on the market for the same price as we offered so evidently no rise
Plus a flat in the same block as we sold, with no chain has been reduced too - looks like we still hold the record for the most expensive
But, the people that messed us about last November by pulling out last minute have now put their house back on the market for the same price as we offered so evidently no rise
Plus a flat in the same block as we sold, with no chain has been reduced too - looks like we still hold the record for the most expensive
30 July 2003, 08:09 PM
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we're probably going to look for a cheap flat near the centre of town and then do it up ourselves so the price will instantly go up
?) earlier this year and in the end had to accept a big chunk less than her asking price. If she had been in a position where she could sit tight for as long as she wanted, then no problem, just wait and see. Of course, lots of people have bought and sold within a few years and made killings (me included
), but it does not seem like a particularly good risk in the current market.just my tuppence.