Interest rates drop....so whats the future re housing prices?
04 August 2005, 06:56 PM
#1
Scooby Regular
Thread Starter
Join Date: Jul 2002
Posts: 2,458
Likes: 0
Received 0 Likes
on
0 Posts
Interest rates drop....so whats the future re housing prices?
Right folks...this is one for those who work in the industry or have some proper experience in property...
Basically Im thinking of buying a 2nd property....it is priced pretty high, but I think its a good buy given the good area its in....as things stand, I can comfortably afford to pay both mortgages....but if interest rates were to rise dramtically I may get my fingers burnt...
My basic Q is how long are interest rates likely to stay low, and how high can they get...my dad tels me about times when he was paying 10%+ in the past...
And are property prices likely to actually come down, or merely increase less quickly? If anyone has some good knowledge of thes ematter, Im be most grateful if they could PM me so I can run the figures past them....
Cheers!
Basically Im thinking of buying a 2nd property....it is priced pretty high, but I think its a good buy given the good area its in....as things stand, I can comfortably afford to pay both mortgages....but if interest rates were to rise dramtically I may get my fingers burnt...
My basic Q is how long are interest rates likely to stay low, and how high can they get...my dad tels me about times when he was paying 10%+ in the past...
And are property prices likely to actually come down, or merely increase less quickly? If anyone has some good knowledge of thes ematter, Im be most grateful if they could PM me so I can run the figures past them....
Cheers!
04 August 2005, 07:07 PM
#2
Scooby Regular
Static prices I guess, I predicted big falls but have been proved wrong.
I want 10% rates again .... I want prices to collapse .... I want some cheap property (and there isn't any about anymore!!)
Pete
I want 10% rates again .... I want prices to collapse .... I want some cheap property (and there isn't any about anymore!!)
Pete
04 August 2005, 07:09 PM
#3
Scooby Regular
Join Date: Feb 1999
Location: Cardiff. Wales
Posts: 11,758
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by pslewis
Static prices I guess, I predicted big falls but have been proved wrong.
I want 10% rates again .... I want prices to collapse .... I want some cheap property (and there isn't any about anymore!!)
Pete
I want 10% rates again .... I want prices to collapse .... I want some cheap property (and there isn't any about anymore!!)
Pete
There is if you know where to look.
Chip
04 August 2005, 07:10 PM
#4
Scooby Regular
Join Date: Feb 2001
Posts: 9,307
Likes: 0
Received 0 Likes
on
0 Posts
interest rate drop was expected so no imidiate change is due.
Long term they will plod upwards and rates will reamin around this level.
You wont see 10% and you wont see house price crashes......if you want a laugh do a search on here for house price and see the muppets who were saying (about once every 6 months for the last 5 years) that a crash was on the way so they weren't going to buy!.........the only way they could buy now is if houses crashed 786%
T
ps - warning for any muppets...if you post "crash on the way" you will be laughed at in 3 years just as your negative buddies from 3 years ago are being laughed at now.
Long term they will plod upwards and rates will reamin around this level.
You wont see 10% and you wont see house price crashes......if you want a laugh do a search on here for house price and see the muppets who were saying (about once every 6 months for the last 5 years) that a crash was on the way so they weren't going to buy!.........the only way they could buy now is if houses crashed 786%
T
ps - warning for any muppets...if you post "crash on the way" you will be laughed at in 3 years just as your negative buddies from 3 years ago are being laughed at now.
04 August 2005, 07:11 PM
#5
Scooby Regular
Join Date: Sep 2003
Location: Scoobynet
Posts: 5,387
Likes: 0
Received 0 Likes
on
0 Posts
Why do people assume there is a direct link between interest rates and house prices? Yes theyre a factor, but one of many.
Just look at Japan - last property boom resulted in a huge bust (as they do always - never been a boom without bust), and thats with interest rates a close to 0!!!
Property in the UK is significantly overpriced, and its likely prices will continue to fall for sometime. With worsening economic conditions and rising unemployment a crash is not at all unrealistic.
Just look at Japan - last property boom resulted in a huge bust (as they do always - never been a boom without bust), and thats with interest rates a close to 0!!!
Property in the UK is significantly overpriced, and its likely prices will continue to fall for sometime. With worsening economic conditions and rising unemployment a crash is not at all unrealistic.
04 August 2005, 07:43 PM
#7
Scooby Regular
Join Date: Feb 2005
Location: was he a creature, an alien, or a man wearing some strange costume and a hidden jumping apparatus
Posts: 319
Likes: 0
Received 0 Likes
on
0 Posts
Bad news for the savers among us (not that I expect there are many). Bad news also for the over inflated housing market.
Trending Topics
04 August 2005, 10:14 PM
#9
Scooby Regular
Join Date: May 2005
Posts: 278
Likes: 0
Received 0 Likes
on
0 Posts
Property in the UK is significantly overpriced, and its likely prices will continue to fall for sometime. With worsening economic conditions and rising unemployment a crash is not at all unrealistic.
After that he said there will be a "stock take" on movement and the chances are that house prices will continue to fall in relation to the interest rates falling / remaining constant, therefore creating this more "level playing field" that he mentioned.
04 August 2005, 10:51 PM
#10
Scooby Regular
Join Date: Aug 2003
Location: Epsom
Posts: 5,832
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by Petem95
Property in the UK is significantly overpriced
Anyway prices will go UP next year after A day (the implementation of new SIPP rules, that allow investment of pension in private property).
04 August 2005, 10:56 PM
#11
Scooby Regular
Join Date: May 2005
Posts: 278
Likes: 0
Received 0 Likes
on
0 Posts
the implementation of new SIPP rules, that allow investment of pension in private property).
or somewhere where i can read up on it ?
05 August 2005, 01:01 AM
#13
Scooby Regular
Join Date: Jan 1999
Posts: 5,786
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by turboman786
Right folks...this is one for those who work in the industry or have some proper experience in property...My basic Q is how long are interest rates likely to stay low, and how high can they get...my dad tels me about times when he was paying 10%+ in the past...
Everything is based on past performance. Period. People can base a judgement going forward on historical data, but markets/economies have an unhealthy habit of ignoring data & trends when you least expect it.
It's a fine balance. As someone else mentioned, if the base rate moved towards zero (a la Japan), then it DOES NOT MEAN unlimited housing growth - quite the opposite.
What you seem to be asking can only TRULY be answered by two items that don't exist - one is a crystal ball, and the other is a time machine.
Believe analysts/experts all you like, but why would you place your trust in them? Have you ever met them? Do you know their career history? Do they work for you? Do they have YOUR interest at heart? No.
Show me an analyst's opinion, and I'll show you the counter-argument.
05 August 2005, 09:29 AM
#14
Scooby Regular
Join Date: Oct 2004
Location: essex, then chongqing, china and now essex again
Posts: 2,568
Received 0 Likes
on
0 Posts
Originally Posted by imlach
The true answer to your question is that NO-ONE can tell you anything. Even experts, whether they are in the industry or not, or even if they have, "proper", experience in property as you so put it.
Everything is based on past performance. Period. People can base a judgement going forward on historical data, but markets/economies have an unhealthy habit of ignoring data & trends when you least expect it.
It's a fine balance. As someone else mentioned, if the base rate moved towards zero (a la Japan), then it DOES NOT MEAN unlimited housing growth - quite the opposite.
What you seem to be asking can only TRULY be answered by two items that don't exist - one is a crystal ball, and the other is a time machine.
Believe analysts/experts all you like, but why would you place your trust in them? Have you ever met them? Do you know their career history? Do they work for you? Do they have YOUR interest at heart? No.
Show me an analyst's opinion, and I'll show you the counter-argument.
Everything is based on past performance. Period. People can base a judgement going forward on historical data, but markets/economies have an unhealthy habit of ignoring data & trends when you least expect it.
It's a fine balance. As someone else mentioned, if the base rate moved towards zero (a la Japan), then it DOES NOT MEAN unlimited housing growth - quite the opposite.
What you seem to be asking can only TRULY be answered by two items that don't exist - one is a crystal ball, and the other is a time machine.
Believe analysts/experts all you like, but why would you place your trust in them? Have you ever met them? Do you know their career history? Do they work for you? Do they have YOUR interest at heart? No.
Show me an analyst's opinion, and I'll show you the counter-argument.
oh, and my nanna had a crystal ball so they do exist! they don't work for everyone though
05 August 2005, 09:50 AM
#15
Scooby Regular
Join Date: Jan 1999
Posts: 5,786
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by richardg
...the economy is far different from it's condition during the 70's and 90's 'crashes'....
A crash is exactly that. An unexpected event. It can happen at any time.
05 August 2005, 10:02 AM
#16
Scooby Regular
Thread Starter
Join Date: Jul 2002
Posts: 2,458
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by Ted Maul
don't rely on some muppets here telling you whatever to base your investment decision on..go and do some proper research.
05 August 2005, 10:07 AM
#17
Scooby Regular
Join Date: Jul 2000
Posts: 370
Likes: 0
Received 0 Likes
on
0 Posts
Be careful who you listen to on this. There are vested interests (VI) here pushing house prices upwards.
Take a look at people who are trying to sell. This is a good place to start. There's also some interesting comments here. To get a really negative view point take a look at the housepricecrash forum.
Take a look at people who are trying to sell. This is a good place to start. There's also some interesting comments here. To get a really negative view point take a look at the housepricecrash forum.
05 August 2005, 10:27 AM
#18
The key is first time buyers. House prices cannot continue to rise beyond the ability of them (including me) to afford them. You need plenty of them to keep the chain going. Properties at the bottom of the chain value-wise are generally bought by them. If they cant afford them, they wont sell and the chain will collapse.
In recent years, house price % increases have outstripped pay % increases. This is fine in times of decreasing mortgage rates, but buyers always have an eye on the chance of these increasing and may not commit to more than they can afford should rates rise.
In recent years, house price % increases have outstripped pay % increases. This is fine in times of decreasing mortgage rates, but buyers always have an eye on the chance of these increasing and may not commit to more than they can afford should rates rise.
05 August 2005, 10:28 AM
#19
Scooby Regular
Join Date: Jul 2000
Posts: 370
Likes: 0
Received 0 Likes
on
0 Posts
You should also look at http://www.nethouseprices.com/ That will give you an idea about what houses are really selling for. If you're lucky you might even find out what your seller paid when he bought the house you are thinking of buying. At the moment the average selling price is 93% of the asking price.
This comment from the Channel 4 homes forum (see link above) talking about someone who can't sell their house is telling:
This comment from the Channel 4 homes forum (see link above) talking about someone who can't sell their house is telling:
"Would you mind me asking how much money/time you have spent on doing up the house?
You bought it in October 2001 for £190,000 and then put it up for sale 3 years later for £435,000. You must have done an awful lot of work to the house for it to be valued at £245K more than you originally bought it for.
I know that you dropped the price by £35K over a period of months, but that still leaves you with a healthy profit of over £200K!
I'm just wondering what happened to the house or the area in 3 years for this to happen?
Or even better, if you had of rented for the last 3 years would you be able to afford nearly £400K for the house you live in now, even though it's the right house for you?
I know that you say your house (which is beautiful by the way) would be suited to a growing family on Rightmove, but that growing family also needs a salary of over £80,000 p.a. to be able to get a mortgage for your property. What is the average wage in your area for the father of a growing family? £25-£30K p.a. for a professional? Infact if we go back to the question of affordability, has your family income doubled in the past 3 years? That is the amount you would need in order for you to be able to afford your house at your current asking price."
You bought it in October 2001 for £190,000 and then put it up for sale 3 years later for £435,000. You must have done an awful lot of work to the house for it to be valued at £245K more than you originally bought it for.
I know that you dropped the price by £35K over a period of months, but that still leaves you with a healthy profit of over £200K!
I'm just wondering what happened to the house or the area in 3 years for this to happen?
Or even better, if you had of rented for the last 3 years would you be able to afford nearly £400K for the house you live in now, even though it's the right house for you?
I know that you say your house (which is beautiful by the way) would be suited to a growing family on Rightmove, but that growing family also needs a salary of over £80,000 p.a. to be able to get a mortgage for your property. What is the average wage in your area for the father of a growing family? £25-£30K p.a. for a professional? Infact if we go back to the question of affordability, has your family income doubled in the past 3 years? That is the amount you would need in order for you to be able to afford your house at your current asking price."
05 August 2005, 10:59 AM
#20
Scooby Regular
Join Date: Feb 2004
Posts: 8,425
Likes: 0
Received 0 Likes
on
0 Posts
Property price trends are always upward. Back in the late 80's when the crash happened you just had to sit tight for 5 years and prices rose again. No matter what happens prices will rise and thats that IMHO
Gary
Gary
05 August 2005, 11:17 AM
#21
Scooby Regular
Join Date: Sep 1999
Location: £1.785m reasons not to be here :)
Posts: 6,095
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by Gutmann pug
Property price trends are always upward. Back in the late 80's when the crash happened you just had to sit tight for 5 years and prices rose again. No matter what happens prices will rise and thats that IMHO
Gary
Gary
Property prices have risen since the war. Sure there have been some dips, but the overall trend is upwards.
Barring another war, that trend will, most likely continue long beyond our time.
05 August 2005, 11:57 AM
#22
Scooby Regular
Join Date: Jul 2000
Posts: 370
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by Gutmann pug
Property price trends are always upward. Back in the late 80's when the crash happened you just had to sit tight for 5 years and prices rose again. No matter what happens prices will rise and thats that IMHO
Gary
Gary
05 August 2005, 12:13 PM
#23
Scooby Regular
Join Date: Feb 2004
Posts: 8,425
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by merlin
Agreed - but try buying at the market peak and selling when the market is in the doldrums a few times and you will be a significantly poorer person when you retire. Much better to sell at the peak and get back into the market when the bubble has burst.
There is no such thing as a peak in the housing market, it keeps rising but with small downturns every few years.
Gary
05 August 2005, 12:29 PM
#24
Scooby Regular
Join Date: Jan 2005
Posts: 278
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by warrenm2
I wish people would stop making comments like this. Overpriced compared to what? Whats the "right" price then? How do you know what the "right" price is? The exchange price is what people are prepared to pay. End of. Prices rise and fall depending on sentiment and affordability.
Anyway prices will go UP next year after A day (the implementation of new SIPP rules, that allow investment of pension in private property).
Anyway prices will go UP next year after A day (the implementation of new SIPP rules, that allow investment of pension in private property).
If house prices were at the price they were at 5 years ago I could buy a house, today, I have no chance. Yes, my wages have increased over that time but nowhere near in proportion to the rise in house prices.
05 August 2005, 12:48 PM
#25
Scooby Regular
Join Date: Mar 1999
Posts: 4,518
Likes: 0
Received 0 Likes
on
0 Posts
1st time buyers always have been the key, and the hope for many must have been that the problems selling at the high end would filter down and steady prices (not crash!) lower down the scale to enable 1st time buyers to start buying again.
But when the new pension stuff comes int it may generate enough demand from non-1st time buyers for lower cost housing that prices do not steady whilst wage infaltion catches up and instead continue to rise. That will only increase the perception that property is by far the best investment which will envourage more people to take advantage of the pension change....which will create more rises etc.
I'm very glad I'm not a 1st time buyer is all I can say!
But when the new pension stuff comes int it may generate enough demand from non-1st time buyers for lower cost housing that prices do not steady whilst wage infaltion catches up and instead continue to rise. That will only increase the perception that property is by far the best investment which will envourage more people to take advantage of the pension change....which will create more rises etc.
I'm very glad I'm not a 1st time buyer is all I can say!
05 August 2005, 02:40 PM
#26
Scooby Regular
Join Date: Mar 2000
Posts: 1,764
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by warrenm2
I wish people would stop making comments like this. Overpriced compared to what? Whats the "right" price then? How do you know what the "right" price is? The exchange price is what people are prepared to pay. End of. Prices rise and fall depending on sentiment and affordability.
Anyway prices will go UP next year after A day (the implementation of new SIPP rules, that allow investment of pension in private property).
Anyway prices will go UP next year after A day (the implementation of new SIPP rules, that allow investment of pension in private property).
Overpriced historically versus ratio of average incomes to average house price. There is a real bubble between house prices and earnings. Its being sustained by low interest rates and reasonable economic sitiation at the moment.
The market requires buyers and sellers, from the small flat right up to the mansion requires a chain of buyers and sellers. Any single missing link in the chain disrupts the whole cycle. This forces people to drop their price to encourage buyers, its the market
The big risk is that First time buyers cannot get into the market, without them then prices need to dip till they get in....its not just interest rates.
Anyone who believes blindly there is no bubble is deluding themselves, how it works itself out I don't know, it will either be through time allowing prices to glide down to meet earnings or earnings go up to meet prices. The lternative is the PSL market, where yo get a good old fashioned crash....unless we see some 'event' I'm not sure we'll get a crash. However prices will need to fall some or earning rise to level it out.
05 August 2005, 02:56 PM
#27
Scooby Regular
Join Date: Jan 2001
Posts: 9,781
Likes: 0
Received 0 Likes
on
0 Posts
05 August 2005, 03:28 PM
#28
Scooby Regular
Join Date: Jan 2001
Posts: 5,582
Likes: 0
Received 0 Likes
on
0 Posts
camk, I'm not saying that there will not be a correction but there is another option to the two which you outlined ie prices fall or wages increase. The third option (which has already happened to some degree) is people move onto the property ladder later in life or borrow money from parents who release it from equity in their houses.
If people decide to buy later, they will rent for longer, this means more demand for rental property and so the buy to let market is also sustained and so prices rise/steady.
If you are 'into' property and an optimist this represents a win/win situation. I'm at an age where I remember my father looking quite stressed when interest rates were 13%. So I do see the other view.
imho
If people decide to buy later, they will rent for longer, this means more demand for rental property and so the buy to let market is also sustained and so prices rise/steady.
If you are 'into' property and an optimist this represents a win/win situation. I'm at an age where I remember my father looking quite stressed when interest rates were 13%. So I do see the other view.
imho
!!!!!!!!!!
05 August 2005, 05:42 PM
#30
Scooby Regular
Join Date: Nov 2004
Location: www.tiovicente.com
Posts: 2,006
Likes: 0
Received 0 Likes
on
0 Posts
Whether you want to call it a crash or a correction, there is certainly a trend for more vendors to accept more realistic offers, particularly in the South East which is creating a downward pressure on the market and there are bargains out there. Flats in the £120k to £130k range have dipped as a result of the Stamp Duty threshold being introduced at £120k with many sellers being forced to accept offers just below that figure.
I've just finished a property that was on the market for just over £300k twelve months ago which I completed on a few months ago for considerably less than that, which although it has required a fair amount of work doing will now go back on the market for a similar price. There is a blip occurring which will gradually filter out to the rest of the UK as vendors who have to move start accepting lower offers.
I've just finished a property that was on the market for just over £300k twelve months ago which I completed on a few months ago for considerably less than that, which although it has required a fair amount of work doing will now go back on the market for a similar price. There is a blip occurring which will gradually filter out to the rest of the UK as vendors who have to move start accepting lower offers.