[BelfastVI]

Shotoflight, on 05 February 2013 - 03:00 PM, said:

You will need to consider more than the possibility of continuing "further dramatic reductions" in the next 5 years. You should consider job security/availability, interest rates, cost of living/disposable income, quality of life and of course your own specific circumstances. Many people are still buying (but much less than used to), many are renting (more than used to).
There's no doubt however that if you could get a realistically priced house now and have the wherewithall to put down a decent deposit, have secure employment and can afford the repayments, you would be in a much better position than someone that bought 6 yrs ago.

Its not just about house 'prices'. As someone said before - Income, Interest and Inflation allied to Confidence, Sentiment and availability of Debt. Look at the bigger picture.

I think we are largely in agreement here. and I totally agree that the availability of credit outweighs (and the deposit) almost all the other factors.

My own view is that the BOI interest rate will remain low for the next 5 years and then it will increase. It has quite a bit to rise before it catches mortgage rates but it will force them up. I dont think there is any doubt about that. People may differ on the timing.
In the US you can get a 25 year and even a 30 year fix. I would love to see that coming in here (25y fix I mean).

Unemployment rates are a problem. they are around 8%. You could say 10% if you allow for funny counting. There is ofcourse the other 25% economic inactive, but they were there when we were booming.

The unemployment rate was just under 5% during the boom. so since then a further 3 or 4% have become unemployed (the new unemployed). The other 96% have held on to the jobs, and if you can believe the figures they are earning the same or more (which I find strange). How much more is unemployment going to go up 2%, 3%. I don't know.

The difficulty I have is the high proportion of this 'new unemployed' that is under 25y. That is the worrying factor for me.

However if we return to the potential house buyer who is trying to decide whether to buy or rent. he/she will have to do one or the other, unless they stay at home with mammy. So it is either starting to pay down the 20/25y mortgage or pay rent.

[Shotoflight]

BelfastVI, on 05 February 2013 - 05:43 PM, said:

I think we are largely in agreement here. and I totally agree that the availability of credit outweighs (and the deposit) almost all the other factors.

My own view is that the BOI interest rate will remain low for the next 5 years and then it will increase. It has quite a bit to rise before it catches mortgage rates but it will force them up. I dont think there is any doubt about that. People may differ on the timing.
In the US you can get a 25 year and even a 30 year fix. I would love to see that coming in here (25y fix I mean).

However if we return to the potential house buyer who is trying to decide whether to buy or rent. he/she will have to do one or the other, unless they stay at home with mammy. So it is either starting to pay down the 20/25y mortgage or pay rent.

So it is either starting to pay down the 20/25y mortgage or pay rent and ride out the crash.

We have already seen how banks SVRs have decoupled from BOE. Average SVR is something like 4.8%. As for having a view on BOE rates over the next 5 yrs - the question is "would you bet your mortgage on it?"

[BelfastVI]

Shotoflight, on 05 February 2013 - 07:03 PM, said:

So it is either starting to pay down the 20/25y mortgage or pay rent and ride out the crash.

Basically that's it in a nutshell and it comes down to peoples view on where we are in the crash cycle and if they have or substantially rode it out.

[2buyornot2buy]

Or its just not the same this time round.

[yadayada]

You're never supposed to say " this time it's different", because it never is.

However, I"d say it's different this time.

This post has been edited by yadayada: 05 February 2013 - 08:00 PM

[Shotoflight]

How this recovery from recession compares with those of the past

Why it is different this time.

http://www.telegraph...f-the-past.html

The UK economy is suffering its longest decline in generations.

The chart above shows exactly how bad this recovery from recession - or lack of it - has been.

The graph has been updated and republished throughout the financial crisis, since 2008, by the National Institute of Economic and Social Research and today it gives its latest reading and a prediction that the economy will not return to its former size, in real terms, until 2018.

When comparing economic growth for each Briton with inflation factored in - or real per-capita GDP, in the jargon - the NIESR says Britain is only half way to regaining the ground lost in the slump. In fact, it now suggests it has been the "slowest post-recession recovery in output in the past 100 years.”

In contrast, in the so-called "great recession" of 2008 and 2009, the economy shrank by 6.4 per cent. But recovery has been pitiful with the economy going on to register its first double-dip since the 1970s by returning to recession, albeit very shallow, early last year.

The difference, of course is that modern safety nets mean that the effects of recessions are felt less sharply as they were a century ago. However, the size of today's welfare state, some economists argue, is hindering recovery by piling state debts higher and preventing the economy from realising its full potential.

The relatively low level of unemployment, currently 7.7 per cent, has also surprised analysts. This has been put down, in part, to falling productivity and low wage growth - salaries have risen far slower than wider price rises in the economy in recent years.

Employers, it seems, have felt it more appropriate to keep as many people on the books as they can, be it because they want to retain skills. Maybe it's just become less socially acceptable to order mass redundancies that may have been more common less in generations before: companies are certainly more atune to corporate responsibilities and protecting their image.

The measures deployed to fight the crisis have also eased the burden for many, with the UK Bank Rate kept 0.5 per cent for nearly four years keeping borrowing rates lows. But this has merely passed that pain across to those reliant on savings for income and those looking to buy a pension income: the low-rates policy has pushed rates on annuities to a record low.

The effect, then, has been that the pain of recession has been spread more broadly than in recessions before, hitting those who may have thought they would escape its worst effects.

This post has been edited by Shotoflight: 05 February 2013 - 09:05 PM

[BelfastVI]

yadayada, on 05 February 2013 - 07:59 PM, said:

You're never supposed to say " this time it's different", because it never is.

However, I"d say it's different this time.

I take the view you can look to what happened previously for a guide but it can never be the same each time. Others here have argured both ways on this one.

[Sour Mash]

Shotoflight, on 05 February 2013 - 09:05 PM, said:

The effect, then, has been that the pain of recession has been spread more broadly than in recessions before, hitting those who may have thought they would escape its worst effects.

A fair point - TPTB have chosen to shove as much of the burden as possible onto the prudent making things a lot more bearable for the fools.

However the full effects of money printing have yet to show on the wider economy. Lots of people predicting major problems with Sterling once the bond bubble bursts (it has already had a crash in the last five years and we've already seen stubborn inflation in a recession) - let's see if it comes to pass.

[Shotoflight]

Commercial property - similarities with residential?


Premises can be turned around by local operators

http://www.belfastte...s-29051819.html

Although the process of bank deleveraging started in the Northern Ireland market last year there were fewer properties offered for sale during 2012 than had been anticipated.

Against a relatively benign economic forecast for the region, the reality is that another challenging year is in prospect for the property market in Northern Ireland in 2013.

However, we expect to see more property assets being traded this year as the process of deleveraging picks up pace and owners become resigned to current values and the likelihood that there will be no recovery in values in the short term.

Due to pressure on some locals who may have over-borrowed, we expect to see a notable increase in the volume of Northern Ireland hotels, pubs, off-licences and leisure properties coming to the market over the course of the next 12 months as banks focus on deleveraging in this sector. Once sufficient write-downs have been factored in and the pricing for these assets is realistic, in our experience there are plenty of buyers for viable businesses, with local cash and bank-supported purchasers being most active.

Pricing will need to be realistic for transactions to materialise, particularly for secondary properties for which demand is thinner, but there are successful local business operators well able to turn around the fortunes of licenced premises.

[willie]

BT at it again
http://www.belfastte...r-29053756.html

House prices rise 1.9% this quarter -- well actually this is from the UK not NI.

[Shotoflight]

Home ownership falls to lowest level since 1987 UK

Official figures reflect a large increase in renting has Britons locked out of home ownership amid the tough economy.

http://www.telegraph...since-1987.html

Shelter recently produced a report which argued that the private rental sector has outgrown its role in primarily providing accommodation for students and young professionals.

The charity said that families have become stuck in the "rent trap" as rents have soared due to strong demand, which has left tenants with little cash to be able to save for a mortgage deposit.

[Shotoflight]

How house prices have risen 43-fold since 1971

A carton of milk would cost £10 and a roast chicken would be a £51 price tag if food costs had risen in line with house prices.

http://www.telegraph...since-1971.html

Shelter's chief executive Campbell Robb said: "The high cost of food is already a real concern for people, so if prices reached these levels there's no way we'd accept it.

"Yet when it comes to the huge rise in the cost of buying a home over the past few decades, somehow this is seen as normal - even welcome - despite the impact it's having on a generation desperate for a home of their own.

Shelter said that it had also recently found that 59% of adults who did not own a home believed they would never be able to afford to buy in their local area.

[Shotoflight]

Light at the end of the tunnel?

http://www.belfastte...l-29055917.html

While the 2013 outlook for the economy in Northern Ireland "does not look overly optimistic", Mr Mallon said things were going in the right direction for Danske Bank.

"By 2015 I would be comfortable that we will see higher profitability than impairments," he said. He added he believed land and property values – the collapse of which accounts for the majority impairments of Danske and other banks – had bottomed out. "We are closer to the upturn than we are to further downturn," Mr Mallon said.

[BelfastVI]

Shotoflight, on 07 February 2013 - 07:36 PM, said:

How house prices have risen 43-fold since 1971

A carton of milk would cost £10 and a roast chicken would be a £51 price tag if food costs had risen in line with house prices.

http://www.telegraph...since-1971.html

Shelter's chief executive Campbell Robb said: "The high cost of food is already a real concern for people, so if prices reached these levels there's no way we'd accept it.

"Yet when it comes to the huge rise in the cost of buying a home over the past few decades, somehow this is seen as normal - even welcome - despite the impact it's having on a generation desperate for a home of their own.

Shelter said that it had also recently found that 59% of adults who did not own a home believed they would never be able to afford to buy in their local area.

Here in NI they have risen 12 fold from 1973, which compares rather well.

[BelfastVI]

Shotoflight, on 07 February 2013 - 07:34 PM, said:

Home ownership falls to lowest level since 1987 UK

Official figures reflect a large increase in renting has Britons locked out of home ownership amid the tough economy.

http://www.telegraph...since-1987.html

Shelter recently produced a report which argued that the private rental sector has outgrown its role in primarily providing accommodation for students and young professionals.

The charity said that families have become stuck in the "rent trap" as rents have soared due to strong demand, which has left tenants with little cash to be able to save for a mortgage deposit.

It is an interesting point this. My view is there is a time to rent and a time not to.