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House Price Crash Forum


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Posts posted by championmongo1

  1. If wage inflation is about 3% (anyone have figures?) and available credit is tightening, then how on earth can house prices increase at 10% per year? A mortgage amount is based (broadly speaking) on a wage (or two) and a multiple (traditionally, between 2 and 4 times). If the former is increasing at 3% and the latter is contracting towards the traditional value, how is a yearly 10% increase going to be achieved?

    Also, who is going to stretch to get "on the ladder" when houses prices are coming down? Why struggle with a mortgage you can barely afford, when you can rent for half of the price and wait it out?

    Can you give convincing answers to both of the above?

    Wage inflation is currently holding at 3.5%, which looks pretty average.


  2. I wonder whom is it we'll be catching up this time? Moscow? Don't think there's any other place left to catch up with.

    However, I know full well who the new dummyvestors will be - Ukrainians. I've told you they were coming!

    Ha ha ha! Maybe the Russian billionaires will start snapping up Ulster property then my forecast of prices stabilzing by quarter 4 at around 20% lower than peak will be inaccurate as prices would surely rise another 100% if that was the case? :huh:

  3. yeah but with inflation on the up - food, fuel, etc.... 25k in 5 years won't be much more...if any....than what 21k is worth today...imo

    Yeah but with mortgage payments will be a lower percentage of a persons pay than at present thus making houses/mortgages seem cheaper!

  4. Indeed.

    Are you familiar with the term 'negative equity' and what that will mean for you?

    All I know for certain, is prices will fall for several years. I base this certainty on the history of other housing bubbles, the fundamentals of house price affordability and what is currently happening in other countries.

    Evidence shows that repossessions are rising rapidly. Factor in the effects - mortgage resets and genaral price inflation - will have on disposable incomes. In the coming year.

    These repossessions will likely be hitting the housing market next year and will contribute to the downward price spiral.

    I am still some way off negative equity-I completed in May 2006 but had agreed the purchase at the beginning of February. I'm not going into specifics of the purchase price, etc. as that is personal and this is an open forum. However what I can say is that I purchased using a 100% mortgage and in January this year when I re-mortgaged, the bank assumed an LTV of less than 70% and gave me a favourable rate, with no product/arrangement fees & no early repayment charges on a flexible tracker linked to the base rate & my payments are only £4 a month more than when I was on a fixed variable! To change this to buy-to-let mortgage would take 10 days and require no further checks if taken out in the next 12 months and gave me a slighly more favourable interest rate but with an small arrangement fee! So I'm not worrying just yet!

  5. Oooh, a report produced for investors only! Painting a rosy picture I presume? Mmm-hmm.


    I wasn't entirely convinced buy it but who knows...if they can find houses where the achievable rent is in excess of their mortgage, bearing in mind that most BTL's require a 15% deposit, and for the most favourable rates a 25% deposit. They may have this if they bought house before the peak and sold at the peak! Who knows :blink:

  6. Just ask yourself this. Could you afford, as a FTB, to buy your own house at the price you are asking?

    Yes, wages may have gone up 13-fold in 38 years, but a lot of that was a period of very high inflation. Wage inflation is going to be VERY low in the next few years, imho.


    Oooh, a report produced for investors only! Painting a rosy picture I presume? Mmm-hmm.


    Yes I could buy at £150k as a first time buyer now. I'd actually be in a better position now than when I did buy in May 2006 as then the multiple was over 5X my joint income (100% mortgage) whereas now it would be less than 4X (based on current asking price!). I guess that could be described as 'sub prime' but my payments were very comfortable as they would be now had my better half not got a job in England leaving us now paying out for two properties in their entirety! This has made our payments less comfortable but still manageable and we can still afford flights to see each other at weekends. If the house fails to sell it will be let out, leaving my fiancee & I still able to pay for both properties in their entirety but obviously we will be a lot more comfortable when a tenant is in place. Then the house would become part of my retirement plans. Property has always proved a good long term investment, with only specuvestors (i.e. those looking for short term capital aprreciation) getting burned!

    With regards you saying that wage inflation will stay very low, the following article showing that wage inflation is currently holding at 3.5%, which looks pretty average.


    Even so, this means that a person earning say £21k now would be on £25k in five years, £31k in ten, £45k in twenty etc, etc. This could be slightly out depending on exactly what inflation does but does give a rough idea of what we can expect based on average wage inflation!

  7. not a 95% drop (in price) - good heavens!!

    Proportion of surveyors reporting changes in price over the past three months


    Yorks and Humber -64%

    North West -41%

    East Midlands -70%

    West Midlands -62%

    East Anglia -61%

    South East -53%

    South West -55%

    Wales -49%

    London -40%

    Scotland 25%

    Northern Ireland -95%

    Ah! :huh: I see the error of my ways-that will teach me for trying to read these posts quickly in between 'real work'!

  8. Yeah, but by then you will have seen with your own eyes, what I have been telling you is going to happen ;)

    Maybe, maybe not! We shall see, but if the drops do continue as you think they will it will be even more in my interest to keep and let it out because there would be no capital to withdraw if sold (I bought in May 2006!). Thus keeping it would be the only option and as long as the achievable rent covers the mortgage then fine! Property has always proven to be a sound investment in the long term and in 41 years when I reach 65, I'm positive prices here will have surpassed even their April 2007 peak! However I really don't think prices will continue to drop at 7.8% per quarter for the next 2-3 years as as been suggested on here! I honestly believe prices for decent houses in decent areas will have stabilized by quarter 4 of this year by which time prices will have dropped 20% from their peak! No rises for a few years though-so a drop in real terms due to inflation but then...the ship will sail again, although a lot more slowly!!!

  9. I'm sorry to burst your bubble all of you who are dreaming of property in Belfast falling below 100k next year, it isn't going to happen. I'm new to this forum, I am an Estate Agent but I know better than to say what company. But I will say this, that the branch that I work in, we have about 350 properties on the market and since yesterday morning we have agreed 7 sales. Yes, most were agreed below the asking price but there are signs that the market is beginning to stabilise - you can laugh all you want, but remember I do this for a living. Many of the posts in here are from people who seem to consider themselves experts, but on the ground, in reality I can tell you what is happening.

    Yes welcome to the board and it's good to hear some positive comments from someone 'on the ground' regarding the local property market, Especaially as an OO looking to sell! They may snap but they don't usually bite unless your posts get too long! lol! :wacko:

  10. I'm not a landlord, however I'm sure someone will see If you can get a house cheep on the back of someone elses misfortune and rent that property out for more than the mortage costs its a no brainer for a long term investment. I'm not saying everyone should run out and invest in property but if the figures stack up and the deal stands on its own two feet then go for it. The time to make money in any market is when nobody wants to buy and you can get a bargain.

    That's exactly what I see happening in my area with desperate sellars taking very low offers from investors, who will see the rent cover the mortgage and then when the market does pick up, bang a nice capital profit to boot! This view will probably be hammered here because of the average wage, how we should return to 2.5x multiplier, 1974 prices, blah, blah, blah. People don't usually start off in their dream home but move up the ladder in time, some people here seem to forget that, and I concede that some properties are still overpriced but some have become reasonable so why not take advantage! There have always been private landlords, there always will be and the time to buy is when prices and interst are low as you can grab a bargain or dream home! Then sit back knowing that over the medium to long term, property has always been a sound investment!

  11. Surely you mean Browns budget, ahem yes, sorry..... Darlings budget ;)

    I personally have a lot to thank GB/AD for, I mean in what other country does the Govt take a listed bank and 'give' it to the people <_<

    Yeah that kinda of thing scares me quite a bit as below highlights, and these figures are from before the nationalisation of Northern Rock!

    Budget: revenues: $1.155 trillion

    expenditures: $1.237 trillion (2007 est.)

    Public debt: 43.3% of GDP (2007 est. )



    Time will tell if UK plc can be saved, but I believe we can pull through IF the government takes action NOW! If not the last thing we should worry about are house prices!!!

  12. As this is an auction property I suspect the 'guide-price' has been set to generate interest.

    We will have to re-visit this one in April to see what it went for.

    Still that kinda of guide price is amazingly low and I'm bullish when it comes to property over the medium to long term! Maybe I should MEW and buy as and investment! The actual sale figure will be very interesting as will Darlings budget!

  13. Ok. Because of a persons concerns, I have temporarily updated my signature. But I am sure 99.99999999999999999% of people in Northern Ireland could care less :rolleyes:

    Seriously, there only ever seem to be about 10 people ever reading this forum. So really, who cares?

    Yeah, fair enough, point taken, maybe I should just chill a little! Coming to this site is supposed to be a bit of craic and to see others opinions on property, I will try to remember that.

  14. DYOR championmongo1, but from what I have read and investigated, relying on your house to provide your pension is not a great idea. With all the recent hype and people thinking prices would just go up and up, it looked like a potential solution. Of course, those who study cycles knew this was very unlikely to be the case. Those selling their houses *now* to retire, will probably do fairly well out of it as the housing market is at a spectacular peak. However, those selling in the future may not get the return they hope for.

    Despite the long term trend for house prices rising, you must also view the performance of the stock market as a comparison. There was a recent thread on this in the main forum and the conclusion was that the stock market out performs the housing market over a long term. Why is this important? It's because a pension's performances are linked to the stock market. While pensions may have had a bad press, those who decide to ignore them are likely treading a risky line.

    With these recent years of property obsession, people have likely decided that they can't afford both a house and a pension. After all the reassurances about house prices only going, no more boom/bust etc, people have convinced themselves that property is the solution. This government has a lot to answer for on this and I am certain this will come back to haunt a large portion of the population in a decade or twos time.

    Only my opinion, of course, but just thought I would write it down.

    IF my house sale falls through, I plan to keep the house AND contribute towards a standard pension scheme-I'm aiming to have as good a quality of life in my retirement as I have now. I value your opinion and I will constantly keep re-assessing the situation however I do believe if the achievable rent will cover the mortgage then it's a fairly low risk investment and house prices will be higher in 41 years than they were even at the 'peak'. Inflation and the underlying trend back this up but I forgot you don't count inflation as a factor! :blink:

    Anyway have a nice weekend and we can reconvene on Monday morning-half time in the rugger is over. :D

  15. Then this is a non argument. Why even mention people that have no effect on the housing market? :unsure:

    Tell you what... lets just stick to averages. Average income £21,000. Average house price now £230,000.

    But the average joint income is not 2 times the average single income. It is more likely to be between £30,000 and £35,000.

    You seem to forget that 'real' institutional investors (not specu-vestors) play a (fairly sizeable) part in our local housing market, alongside the 'average Joe', as the achievable rent, either paid for by the tenant or the housing executive, will give them a good yield at above the 'affordable' prices some people on this forum are expecting, thus making sound business sense with possible Capital Gains in the future being an added bonus!

  16. I'm not disputing that, but when their margins were increasing and the quantity was there, they weren't complaining - they were revelling in it! A bit of humble pie will do them and their Audi TTs good!

    I fully agree, because when my EA was seeing that his revenue had dipped and both of us realised that at that time the market was dropping and thus between us (with me gathering part of my info. from this very website-thanks to BB, PP & STR) we decided to reduce my property to below the market value in order to achieve a quick sale. Below this value I would NOT sell but let out as I wouldn't want to sell at the bottom of the market when me and my fiancee can now comfortably afford both our properties, one of which is here and one that is in England (just outside London) even if we couldn't find a tenant! If we do manage to find a tenant, based on local rental incomes, those people will pay off the mortgage on that house for us contributing towards our pension! My EA has worked a lot harder in the past few months than he probably ever has in his life to achieve sales which should be the case cosidering the fees EA's charge, but now I have one EA that I would trust the next time I'm buying or selling a property in Northern Ireland as would two of my familY who are both currently selling and buying!

  17. are you md in disguise :unsure::P

    I am not MD in disguise, and while I may have agreed with some of what he said he did waffle on so much that by the time I finished reading just his post I was ready for a bottle of red, a cigar and some time out! lol! Also I'm not trying to argue with history, all I'm saying is that while history MAY give an indication of future economic cycles, it does not mean that those predicted cycles will actualy occur!?! Predictions from either side are best guesses-they are not fact! They may or may not happen! Time will prove if me and you were either right or wrong! I expect the next HPI quarterly report for Nothern Ireland to report further falls (partly because of inflated asking prices that may not have been achievable even at the peak). In Quarter 3 I expect house prices to stabilize slightly and fully stabilze by Q4, mainly because in some areas prices have already dipped so low that institutional investors have re-entered the market due to the attainable rent exceeding the mortgage outgoings, thus giving a positive yield and a 'real' reason to invest in NI property! Capital gains at this point will just be an added bonus for 'real' investors!

  18. Did you answer my questions about the sale of your house? :blink:

    As for inflation. That's one of those large and irrelevant arguments md used to waffle on about. Inflation may be high or inflation may be low. No point in guessing what inflation will be.

    My opinion is that inflation will have no effect in the short term on the bursting of the housing bubble back to generally affordable price levels.

    My house is sale agreed and due to complete in a few weeks, however if it does fail through I have everything in place to let it out as that will allow me to carry on with my plans. I'm fortunate in that me and my other half earn fairly decent wages & could cover the mortgage even if we were unfortunate enough not to find a tenant ever. With a tenant I could reshuffle my finances so that the rent would cover the mortgage thus cost me nothing but the 18% CGT if I were to sell. The house would then become my part of my pension-I'm only 24 and by the time I reach retirement age I should be sitting on a nice nest egg!

    Also how can you say that inflation is irrelevant??? Is that because it may affect your predictions???

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