With thanks to LittleBro's(Jamie) thread :- http://70.85.40.84/~ferrari/forum/showthread.php?t=58146 From that thread is an interesting article ; http://money.cnn.com/2005/05/03/real_estate/investment_prop/lessons/index.htm What is the concensus on how house prices will respond, now the election is over ? Will the market boom again, rise slowly or bump along at much the same level for a while. Cheers Kevan
Bottom end small gains now with stamp at 120k Top end 10% drop (already happened in my opinion) it's a buyers market That' s my guesstimate
I dont own a house and I dont want a house, that makes my opinion unbiased ...... (er, yeah right)... Its going to crash in London towards the end of this year. Big time - down 30-50% over a 12 months period
I think I'd take that wager too! As much as I'd like to see a massive crash from a purely selfish point of view (I dont own a property), its not going to happen. I think some areas of the UK will see continued growth, and I think London (particularly top end places) will lose some value (and have already done so), but, sadly, although there are now more porperties for sale, I think something would have to happen to interest rates (and for a sustained period do to so many fixed rate mortgages) to hit prices significantly and I dont see it happeneing any time soon. There are guys getting paid mega-bucks to answer questions like this and I dare say they're only guessing, albeit educated guessing. Re the article, interesting stuff, but I am surprised that the UK leads the US in what happens in property - I would have thought it would be the other way around? Jamie
A very similar house to mine (they have a conservatory and 1 less bedroom) has just gone on the market for £110,000 more than i thought mine was worth. Had a chat with the guy and found out the school we live near is the best for miles around and people are moving into the area so their kids are in the catchment. He had it on the market for 1 week and had a really over the top years rental offer from a family and he's off to Portugal for a year. Couldnt believe it. In Leeds we dont have enough properties for the demand, rent is great and prices are stil rising nicely. Some have got to a max but thats after a near 50% increase from when bought. I always read about how this and that's going to happen , but it has never effected us so far. Property is and will remain a great investment if you do your homework and buy in the right places. Kings Cross in London is going to be a goodie, mark my words.
There will be an interest rate rise in the next 6 months. The economy will slow even more and properties will ease off, losing around 20% over the next 18 months. And I will take a wager!
he he he..... OK.. Ill accept wagers (in beer form) for a more moderate prediction of 30% decrease across the board in London ONLY, over a 2 year period starting december 05 - december 07. Thats 15% decrease per year. Any takers? 1 pint (beer or optimax) wager. repossessions on the increase, economic growth slowing, fix-term morgage deals ending (based on lower rates), lowest sales volumes in London of several years. reasonably bubbled prices, I doesn't look good! he he he... seriously I am unbiased, as I dont have a house personally, and I plan to have sordid relationships with several women that do throughout the rest of my 20s and 30s.....
house prices will fall or stay the same for a year or two the only house that might rise is starter homes the 500k plus house will not go up in value the only way to increase the value off your house is to have a 12 cylinder rear engined ferrari in the garage when they view the house they will be so shocked to see a proper ferrari they will just buy the house
For what its worth this is my considered view:- 1. interest rates will rise by about 0.5% (two increases of 0.25%) by the end of the year and will stay like that until April/May 2006. 2. High end property(above £750k) will loose approx 10 - 15% over the next 12 months. 3. Mid value property (£250 - 750k) in the south will loose 5-10% over the next 12 months. In the north this will be flat to -5% (still reasonable growth coming through) 4. Low end property (£120k - 250k) in the south will stay flat over the next 12 months. In the north this will be flat to +5% (still reasonable growth coming through) 5. Starter homes (up to 120k) will increase generally by 5-10% over the next 12 months as the stamp duty benefit is absorbey into the market price Mark
you think they will hike rates in a slowing economy? if you want a wager sell june 06 short sterling futures...
I run a mortgage business so am asked a lot about rates and what will happen to property prices. Whilst I dont have a crystal ball I do think the following. 1. In 2003 the number households outstripped the UK supply of stock, its still the same now 2. Many people who were frightened about pensions have made their own portfolio's of buy to let property, thats slowed down but still a factor 3. In 2004 100's of ex-pats started to buy back home as lender became moer flexible 4. Despite the best efforts of the FSA who govern mortgages, more flexible lending is allowing more finge people to buy (adverse crdit, self cert income etc) 5. The Government has not, for the last ten years, granted enough planning permissions to keep pace. Bottom line. IMO only, there has been a leveling out of prices and in some areas a small down turn. This is probably due to over optimistic vendors and estate agents buying instructions. I do not beleive that we will see the falls that happened in the late 80's, the economics are completely different. Phew................placed an Ad in Exchange & Mart last week, under money 'The Specialist Lender'...swamped! they may say the market is dead, well I don't agree, its just how you place your self in the market.
Indeed. I have NO idea how people can generalise about property... thats just crazy logic. Property is such a diverse market. It comes down to what people will want to pay for something. A similar comparison would be 'all cars will increase in value', when obviously classics will and euroboxes won't for example. Therefore, any kind of generalisation is stupid. An old adage still remains: lock in profit when you BUY, not when you SELL.
Of course the market is not dead. The housing market will stay busy, for many different reasons. Some are selling as they can no longer afford their mortgage payments as they have finished their introductory rate. 70% of buy to let properties are now going under the hammer as that market is slowly collapsing due to interest rate rises. Do not get me wrong, it is not all doom and gloom, as property has risen so much it will just be like stepping back a year or two for most owners. However real evidence of this are the figures for borrowing and re-posessions. More houses have been re-possesed in the last 3 months than anytime in the last 14 years!
And where will these people live.... in rented accommodation, and have the local authorities got enough housing stock....NO, so who do they turn to..... private landlords! My local authority will take on leases for a minimum of 2 years on a fully repairing basis and GUARANTEE the rental income at MARKET rates.The buy to lets who've caught a cold obviously forgot the 3 biggest factors affecting property values..location,location,location.
Over the last 5 years many people bought properties to let, the after buying it refinanced it to the hilt took the money and used as a deposit on another BTL property. then again and again and again. All the mortgages were on low start mortgages. The situstion is now that the loans are off the initial low rates and the interest rates have gone up. There are planty of investors who have to find £2/3000 every month to meet the loan payments as the rental income now falls short on their portfolio of 10 or so properties.
I think its those extreme people/cases that account for the big hike in repossesions in February. For people that highly leveraged it could be like dominos unless they can cash in with one fast (making a profit) to keep them afloat on the others.
I agree that the housing market has definatly slowed down in the north (well Leeds in particular), but there still seems to be a lot of people buying. I have a small number of properties, but am adding to it when a bargin is to be had, and plan to keep doing so. Admintadly I'm in it for the long haul so am not too concerned about short term movements (unless interest rates soar). Frankly a shortfall of 2-3K pm would scare me senseless. Isn't there talk of the gov't imposing CGT on your principle dwelling?
On balance, a soft landing is more likely than a crash. The big negative for the market IMO is all the idiots who followed the herd into loss making buy to lets, hoping for capital appreciation to cover their revenue losses. The positives are that the market has already corrected somewhat, interest rates look like dropping, the bottom of the market has been assisted by the stamp duty threshold shift, and last but not least, the proposed REITS legislation. All IMO of course. Jas
