[grizzly bear]

sympatex, on Dec 2 2008, 01:55 PM, said:

Yes i used the link on the front page of this website to find they bought it in 1997 at 105k. Using HPI inflation for our area (Surrey Heath) the house at current HPI "should" be around 270, house prices have inflated 155% apparently. This is why i thought getting it at 200-205 would represent good value.

£105k in 1997 using general inflation calculator is £135k today. Doesn't sound like the £205k is that good value as prices could fall further.

Re: tracker: If in a years time you can get a say 2% lifetime tracker, the cost per year of missing out on the 1% BR tracker is £1,800. When IRs go up again in the future there will be 1% BR trackers available again, so say this saving is for 3 years - £5,400.

However if house prices drop by another 25% next year, the same house will be worth £150k - thats a saving of £50k of the purchase price and less risk of NE. And less monthly interest too even with higher IR. Thats why we are waiting!

[sympatex]

Eve, I just put the figures into the nationwide HPI house price calculator. so it said if u paid this for that house in this area in 1997, hpi would mean todays value would be x.

i don't think i can even buy a 1bed flat for 135k in this area so some perspective has to be considered. Your point about the house falling to 150 is of course valid but the reasons behind it falling so low is probably barriers to entry to FTB's, and only cash buyers can profit from it hence why so low as there's not many cash buyers with 150k in their pockets who'd look at this type of house.

they didn't drop 25% this year did they? And i don't know what will happen next year, but i did sa that if house prices on this particular street have historically going back to 1995, have alwaysbeen 50% higher than the nationwide average, then 240 is the price currently, with your 25% drop this will mean it will be 180k by the end of next year., not 150.

[blobby o mr blobby]

Quote

they bought it in 1997 at 105k

Ohh right at the start of the bubble. This means they can afford to take a lot less without losing out. Anything over £150,000 would be too much of a risk against further falls, if you have time, wait it out, things are changing fast at the moment so sit back and enjoy the drama.

4 months ago I was looking at a flat similar in price to this one at 280k fixed price, it has since been reduced to 235,000 and is now looking rather expensive. If the EA had said to me back 4 months ago that they would take 235,000 I would have been very intrested, now im waiting for it to fall to 150k. What will I want it for in another 4 months?

[grizzly bear]

sympatex, on Dec 2 2008, 03:42 PM, said:

Eve, I just put the figures into the nationwide HPI house price calculator. so it said if u paid this for that house in this area in 1997, hpi would mean todays value would be x.

i don't think i can even buy a 1bed flat for 135k in this area so some perspective has to be considered. Your point about the house falling to 150 is of course valid but the reasons behind it falling so low is probably barriers to entry to FTB's, and only cash buyers can profit from it hence why so low as there's not many cash buyers with 150k in their pockets who'd look at this type of house.

they didn't drop 25% this year did they? And i don't know what will happen next year, but i did sa that if house prices on this particular street have historically going back to 1995, have alwaysbeen 50% higher than the nationwide average, then 240 is the price currently, with your 25% drop this will mean it will be 180k by the end of next year., not 150.

thats an adjustment for general inflation, ie an indication of how low it MIGHT go!

no one knows how low it will go. i personally think there will be another 30 - 35% drop although not all in 2009. personally i'd only buy now if i felt i was getting a very very good deal and it doesn't seem like £200k is a very very good deal. i agree with the posters re: stamp duty threshold - ie at £174,995 you'd feel you were getting a good deal. if not well there will be other good deals. we have walked away from our perfect house even though it is now reduced by 35%.

re: the HPI - i just put in the house I just sold (got offer in July 2008, ie Q3 2008) we bought in Q1 2001 and HPI overvalued my house by over 10% to what we managed to sell for so thats just a rough guide. And things look worse now than in July.

[sympatex]

Blobby, exactly, in my previous post we originally looked at a 2bed mid terrace at 207, now wouldn't even look at one for more than 160. Our expectations have equally changed but the thing that led me to post in the first place was the fact we'd been given a very competative mortgage as a FTB and without much competition gave us a pick of the best houses in our price range. I've looked at renting and we might choose that option if nothing materialises before our mrotgage expires. However here it's bloody expensive to rent, for a 1bed flat its 700 minimum which is £200 more than the interest would be on our mortgage. (without the capital loss though!)

[delboypass]

How many ex Bt Martlesham workers on here...??

THink we are either seeing a sign:

1/ BT didnt pay us enough
2/ Maybe we are more over-critical or intelligent than the average bear...

I tend towards no.1

Thankfully got out of Ipswich before I ended my own life...it is quite a hole and almost impossible to travel anywhere from.

[Tiger Woods?]

sympatex, on Dec 2 2008, 03:57 PM, said:

Blobby, exactly, in my previous post we originally looked at a 2bed mid terrace at 207, now wouldn't even look at one for more than 160. Our expectations have equally changed but the thing that led me to post in the first place was the fact we'd been given a very competative mortgage as a FTB and without much competition gave us a pick of the best houses in our price range. I've looked at renting and we might choose that option if nothing materialises before our mrotgage expires. However here it's bloody expensive to rent, for a 1bed flat its 700 minimum which is £200 more than the interest would be on our mortgage. (without the capital loss though!)

Given these figures, you are borrowing circa £150k - which means you have £55k deposit? If the price dropped to £175k you would only need a 120K mortgage and you would have a nice equity buffer...certainly your mortgage would be less than the inflation adjusted 1997 price. Having said that, depending on which part of Surrey you are in, I can see why the decision is less than trivial.

[Goat]

Eve, on Dec 2 2008, 03:54 PM, said:

thats an adjustment for general inflation, ie an indication of how low it MIGHT go!

Long term prices tend to track real incomes rather than RPI however it could be argued that real after tax incomes have not increased greatly in the last 10 years so RPI is a good analogue.

Actually in 1997 there'd already been a year or so of pretty steep HPI. perhaps this was 25% up on 1994 prices. My house sold for I think 20% more in late 2007 than it did 18 months earlier.

So RPI adjusted 1997 prices actually are an indication of how low it is likely to go. A plausible case can be made for going lower still, especially if we have a really sharp recession.

Of course the problem is the bubble has been going on for so long now that people have forgotten how cheap they used to be.

[sympatex]

I know it's not an easy one D'oh which was why i asked. GF & I will decide together what our next plan is as we will both have to belive strongly in the direction we choose. For the time being, as we've been rejected the decision is made for us.

In our specific situation it is a close call whether to buy now or wait, yes by waiting "a house" will be cheaper than the one we've been rejected on. However by waiting, we have to speculate probably not accurately about whether we will have the ability to 'afford' the 'cheaper' house, say in 9-12 months time. Yes we 'saved' 25k or whatever on list price but if we can't 'afford' it because of deposit barriers or high mortgage rates it's no use to us and we've saved nothing.

[Goat]

sympatex, on Dec 2 2008, 04:42 PM, said:

I know it's not an easy one D'oh which was why i asked. GF & I will decide together what our next plan is as we will both have to belive strongly in the direction we choose. For the time being, as we've been rejected the decision is made for us.

In our specific situation it is a close call whether to buy now or wait, yes by waiting "a house" will be cheaper than the one we've been rejected on. However by waiting, we have to speculate probably not accurately about whether we will have the ability to 'afford' the 'cheaper' house, say in 9-12 months time. Yes we 'saved' 25k or whatever on list price but if we can't 'afford' it because of deposit barriers or high mortgage rates it's no use to us and we've saved nothing.

Ultimately it's your money and your choice but be aware that falls of 50% or more from peak are likely to be the order of the day. I can't see how anyone can rationally buy at <40% off peak at the moment.

[archers road]

sympatex, on Dec 2 2008, 11:13 AM, said:

I've been looking with my gf for over a year at buying a house, when we first started and prices were at the peak and it didn't sit right that a 2bed mid terrace cost 210k, we put it off buying but kept looking for anything resembling perceived decent "value".

We felt we'd found one about a month ago and we've been gently persuing it. It had originally been on since June at OIEO 270k, came down to £240k in September and then £230k last month. We put in an offer for 205k, which meant we had to borrow 3.5* joint earnings. Still quite a risk but there isn't anything better around here and comparing previous sales with the national average according to nationwide it appears the road has always been 50% above the national average, dating back to 1995. So 155k + 75K ish 240 would be current price, protect ouselves against 25% further falls job done, the rest of the risk we'll take.

We got rejected, so we looked at some other houses.

They came back last week and said "we will now accept 205", we were looking at another house by this time which we were told would accept 200k. So we countered with an offer of 200 to the original house. They rejected that saying they had a 200k cash offer!? who'd turn down 200k cash when they were considering 205 with a mortgage attached (FTB but still).

Phoned back today suggesting 204 would be our final offer and got rebuffed again, apparently they aren't going to "give it away" and want in excess of 210 now. DOH!

They must be watching a whole set of different news to me, i didn't think i'd hear the words "they've raised the asking price and don't want to give it away".

Do not shoot till you can see the whites of their eyes,you have a growing deposit, a falling interest rate, and a falling house market, see who blinks first!

[Zanu Bob]

sympatex, on Dec 2 2008, 11:13 AM, said:

I've been looking with my gf for over a year at buying a house, when we first started and prices were at the peak and it didn't sit right that a 2bed mid terrace cost 210k, we put it off buying but kept looking for anything resembling perceived decent "value".

We felt we'd found one about a month ago and we've been gently persuing it. It had originally been on since June at OIEO 270k, came down to £240k in September and then £230k last month. We put in an offer for 205k, which meant we had to borrow 3.5* joint earnings. Still quite a risk but there isn't anything better around here and comparing previous sales with the national average according to nationwide it appears the road has always been 50% above the national average, dating back to 1995. So 155k + 75K ish 240 would be current price, protect ouselves against 25% further falls job done, the rest of the risk we'll take.

We got rejected, so we looked at some other houses.

They came back last week and said "we will now accept 205", we were looking at another house by this time which we were told would accept 200k. So we countered with an offer of 200 to the original house. They rejected that saying they had a 200k cash offer!? who'd turn down 200k cash when they were considering 205 with a mortgage attached (FTB but still).

Phoned back today suggesting 204 would be our final offer and got rebuffed again, apparently they aren't going to "give it away" and want in excess of 210 now. DOH!

They must be watching a whole set of different news to me, i didn't think i'd hear the words "they've raised the asking price and don't want to give it away".

dont lose your job.

I can't believe any FTB who read and know of this site are buying at the mo,and I can't believe there are vendors who turn suckers away.

[grizzly bear]

Young Goat, on Dec 2 2008, 04:37 PM, said:

Of course the problem is the bubble has been going on for so long now that people have forgotten how cheap they used to be.

this is the main problem, esp for FTBs in the last few years. they have just come to expect FTB property to stretch them to the limit...

[heatonfan]

Young Goat, on Dec 2 2008, 04:37 PM, said:

Of course the problem is the bubble has been going on for so long now that people have forgotten how cheap they used to be.

Your last line really hits the nail on the head and sums up everything that is wrong with analysis in the maintstream media.

HPI has destroyed base line expectations of what housing ordinarily costs.

A piece of outdated rubbish on what is otherwise a pleasant road near me has just sold for what I expect will be over £500,000. It was on at offers over £590k (previously at £650k). 4 small bedrooms, whole house needs stripped, new bathrooms and new kitchens needed before it would even be liveable (vendor was old man carted off to nursing home by his children), moderately sized garden for the area. Garage and storage areas are rubbish. It wouldn't have sold for more than £350k five years ago, but suddenly people think they are getting "value".

If I were selling in the current market, the obvious tactic would be to retail it like a DFS sofa: put in an impossible starting price of £150k over what it would ever have achieved in 2006/7, followed by 2 quick cuts of £50k and then have the estate agent tell buyers that we were desparate to sell and would accept any reasonable offer that could go through quickly. Some mug would think they were getting the world's best bargain at 2007 price minus £50k.

[Laughing Gnome]

sympatex, on Dec 2 2008, 11:42 AM, said:

Perhaps D'oh but in 6months we'll have to get a new mortgage approved which with the deposits now being asked forwe probably won't be able to even get one. Got in on the Tuesday before the rate cut last month with a tracker and 90% LTV, it would be a shame not to be able to use it!

Understand the dilema. Was in a similar position in 1990; mortgage approved then moved to a lower paid safer job in between and had to act or chance it. I should have chanced it, big time.

As you say, if you will not be able to get such a good mortgage offer in future, neither will anyone else. Where's the risk, stay cool!