Jump to content
House Price Crash Forum


  • Posts

  • Joined

  • Last visited

Posts posted by BelfastVI

  1. Normal being 10% deposit and 3x salaries?

    IMO, the banks aren't choosing not to lend, they're being forced not to lend. In the current market it is just too risky for them. It's a bit of a double edged sword though - it they don't lend, their existing LTVs will fall too, increasing their risk. Which is the lesser of two evils? Maybe it's the devil they know, which is why they're not taking on new customers without hefty deposits.

    The banks will start to lend 'normal' mortgages when prices return to normal again too. I think this is inevitable and no amount of hand wringing will change this. The quicker the prices fall, the quicker they're more likely to return to lending - the prices are simply too high and are falling too quickly to warrant mortgages with small deposits. No small deposits, no buyers until they have saved.

    It's all a vicious circle and IMO, won't stop self perpetuating until prices are well below average long term trend. Velocity of falls may decrease, but I have little doubt that prices have a long way to fall yet.

    I new average price was recorded by Nationwide, I think it was in November, of aprox £160k. Obviously a lot of houses, that are still on the market have a long way to fall to meet that new average. Will that average continue to fall? Very likely, but at a much slower rate and may even rise for a quarter and then fall again as the samples are low.

    I have said before - the fact that the banks are now the largest owners of development land and partly developed sites in NI will bring a new factor to proceedings. They can't sit back and just let the dust settle. At some stage, I hope months, you hope years, they will have to call it and move. Thats a big factor that hasn't been discussed.

  2. "Northern Ireland is now the most expensive part of the UK outside London and the South East……

    Northern Ireland has also recorded the biggest price rise in the UK over the past year with an increase of 46.7%, taking the average price to £228,790 in 2007 Q2. The dramatic increase in house prices over the past few years means that only London and the South East now have higher average house prices than Northern Ireland. In early 2005, Scotland was the only part of the UK with lower average house prices than Northern Ireland.


    Where have you been over the last year. NI has recorded the biggest ever correction/fall/crash over the last year of up to 30, perhaps 40%. The average price (Nationwide Oct 2008) was £160k, which is now lower than the average UK price, and rightly so.

  3. The bottom is when the TDGTTS weekly report reads an average drop of 0% or positive territory

    IMHO not before 2010

    Good point. However there will always be people who hold out and out and should have dropped their prices long before. But when the average drop is in the low single figure we will know we are there or there abouts.

    Can any of you clever people post a graph of this average drop.

  4. Good Tread.

    I don't think the bottom will be a point in time like a week or a month like we could say the top was. I think we will (and are having) 2 years of drops and then 2 or 3 years of flat prises (ignoring inflation) and then some sort of a recovery. So that recovery would be up to 5 years from the start of the crash. For me the crash started April 2007 so that would be 2012 before prices started to recover. That follows the 1989 crash's recovery cycle.

    As our bubble was much larger the falls will be greater and faster. I think prices only fell 20% after the 89 crash, and that took 2 years. As BB pointed out we done that in a few months. And apart from all the pain, this has to be a good thing. If you want to get through a crash cycle fast, the first thing you have to do is get to the bottom fast. And boy are we doing that.

    Who controls where the bottom lies - the banks and the valuers. With 60 to 70% mortgages prices will still fall as people don't have large deposits. At some stage the banks are going to have to call it. As I said before they are now the owners of the majority of NI's land bank and probably quite a few partly developed sites. The penny will soon drop that the only way they are going to get out of this is by issuing 'normal' mortgages again.

  5. It is only useful to the economy if you produce goods and services that are needed or wanted.

    I have read this often here. Where the feeling often expressed believes house building doesn't add to the economy as its not 'manufacturing' and 'exporting'. This does annoy me. Since the housebuilding industry has stopped, (almost 2 years now) we have seen the devestation this has caused to the country. Not only the direct loss of over 20,000 jobs but the comming closure of many other related industries. Concrete, bricks, blocks, quarries, fireplaces, windows, roof tiles, etc etc. All these have been brought to their knees. They are all local business employing local people, for generations, manufacturing goods for the industry. Just look at all the business that feed off the sand from Lough Neagh. They are all at a standstill.

    People are only realizing now that construction was the life blood of NI's economy. Was that a good thing - no. I would rather that car manufacturing or tool manufacturing was the backbone of our economy, just like Germany. But Germany has went into recession too. Mr. Brown has given bailout after bailout to the financial industry but if he tried to do anything for the housing industry there would be an outcry -why?

    I would love for him to re-introduce MIRAS. Allowing people to offset the interest on their home mortgage (max £100k) against their personal Tax. This should be only on their main residence.

    I don't agree with this 'do nothing' approach and allowing the market sort itself out. Yes, via repossessions and forced sales this will deliver cut priced houses to the market. But to me this feels akin to buying 'stolen goods'. Whilst I have the means I wouldn't feel morally right buying a house at half price, if a family has just been evicted from it as the bread winner lost his job. A fire sale from a bust developer would be a different story. However, the job loss and business collapse from doing nothing may have a far reaching and long lasting effect, which will feed the depression. Job losses = more repossessions = further collapse = job losses.

    I know on this site there is a strong feeling against anything that could be seen to help the housebuilding industry, but surely you are seeing that the policy of doing nothing is having such a downward effect on the economy that it is destructive.

    Houses are down 30 to 40%. I think this is above most peoples expectations from a few years ago.

  6. I object to the way the tax system favours the investor - interest and all expenses can be written off against tax. Not for the owner occupier, who's at a marked disadvantage.

    Property development is run as a business and operates under the same tax rules as any other business, where expenses are subtracted from income to establish taxable profit. There is no advantage. Most people who are involved in property development or investment own their own homes, I assume. They, like every other home owner cannot deduct any costs such as interest or improvements against personal tax. Therefore there is no advantage.

  7. the more I look at it the more I see co-ownership's place on the list

    I think it started as a symptom but added greatly to the problem

    normal people with normal jobs should be able to buy a house without it

    but they were priced out, so by helping people buy beyond thier means

    it validated the hpi bringing ftb's into the equation at a level that was false

    sustaining and ramping the bottom level rather than forcing a correction

    I think it was 2006 (maybe 2005) when the limit was raisd to £225,000

    before it was something like £160-170,000

    Totally agree. I though raising the limit, at the time was madness and only resulted in further rises in land house/prices.

    but this crap they are encouraging now with the shared equiity (pay75% now 25%in five years) with developers is a ramping scam

    they can sell for 75% and not worry about the 25% for a while because the 75% much more than covers what the builds are actually worth

    then a few years down the line the buyer is pummeled with a huge rise in thier debt


    I don't agree with this. Because of the high land prices any new houses that are selling now are probably at cost and some that I know are even below that. (no tears now). So obtaining 75% of your cost nw and the possibility of a further 25% in 10 years is not very bankable.

  8. 2) Property investors will step into the market to prevent the market falling much further.

    3) FT buyers will step into the market Q2 2009, taking into account the fantastic mortgage bargains to be had then.

    Far be it for me to be bearish but I would be concerned that the 'investors' might be running for the hills by then. They are not normally the first in. They don't buy at the bottom but on the way back up.

    FT Buyers will, I be believe be back in but to take advantage of the fantastic prices. I would be very afraid that the banks would still be holding back on their Mortgage offers.

    This has confused me as they are now, by default the largest holders of development land in NI and the only way they can get out of this is by giving out Mortgages. I am starting to fear that they are holding back the mortgages until they eventually have to sell their own houses. (think I have been on this site too long)

  9. This sounds pretty serious. I wonder if this will end the current calm after the last storm? This may get the roller coaster moving again! ;)

    I love the way they go on about this credit famine though. The banks are clearly worried about getting (what little of) their money back. It isn't like they're just being stroppy and taking their ball home, they just don't believe they can afford the risk. If they're struggle to maintain their capital bases, the last thing they will want to do is give struggling/failing businesses more money after bad.

    I'm sure there are many companies genuinely affected by having to bridge gaps between orders and fulfilment, but I bet many companies are just trying to get their fists on more money, before they are forced into insolvency. There is a difference between the two and I wonder how much the media considers it?

    On a related note, perhaps companies will have to learn to live within their means more as a result of all this? With everyone borrowing left/right/centre, it rewards risk taking and the expense of prudence. Some risk is good, but if you can only succeed by taking excessive risks, something is wrong. There needs to be a balance and it looks like that balance is being redressed. The problem is, many companies who were banking on easy credit may become casualties in the process.

    All business need credit

  10. If you were buying 4 properties from a developer, why not do 4 separate transactions? There's no downside to the developer, and a major upside to the purchaser. The tax man can't complain as they are all separate properties with separate deeds...

    Still linked tranactions, if they are to the same person and you have to pay stamp on the total.

  11. Just heard the chairman of John Lewis interviewed on PM. He said they have just announced their first store outside of the UK is to be opened in Dublin in 2013. Wasn't there some talk about this being in Northern Ireland?!?

    Too true. We managed to mess that up just as we will with the £200m investment at the Maze

  12. There is a problem with coming out with a prediction on what prices will fall to in some point in the future. Even if he was right, which he probably was, the fact is people wont wait for that point in the future, they will adjust now. Therefore, even though his prediction may have been correct before he made it, because he has said it he will now be wrong. It will now, more than likely be more of a drop than that.

    Fair play to him for not trying to look through the rose tinted glasses but still a strange thing to do.

    Good news for all in here. Bad news for all VI's like me and ..er Banks, who now (effectively) own most of the development land in NI. Makes you wonder.

  13. That's rich - the rich get a tax break to help them look after their expensive houses. I wonder how views of "members of the community" were established. Could it have been A) knocking on doors on the Malone Road or B) asking residents of the Donegall Road?


    You have to ask what the rates payments are for-

    Waste collection


    probably other things that I cant think of.

    You get your bin collected once a week, no matter if you live alone or have seven children. One could ask why you have to pay a different price for the same service?

    If it is about the ability to pay, then it is just another tax and should go through the normal tax system.

    One could have the view that this is a payment for the use of local public services and should be paid for equally by everybody.

    Everybody pays the same for the loaf of bread.

    9time to hide)

  14. Perhaps hoarding of land was the wrong expression - speculating on land would probably be more appropriate. A land tax is the same irrespective of what you do with the land, so it encourages land to be put to good use and goes some way to preventing the boom and bust cycle in property. I'm not an expert on it (see Fred Harrison), but to me it seems by far a fairer tax for all concerned, developers and buyers, which is what we all want.

    Perhaps the building industry body currently lobbying our government should be promoting it in the long term interest of the economy, which no doubt is the utmost of their concerns?

    Reading Fred's book at the moment, so perhaps I will be more informed soon. As for a tax on speculating, I understood there was as they pay 30% tax on any profits they make as well as a 5% stamp on the way in.

    If Fred or anyone else can come up with a way to preventing this speculating on land every housebuilder would welcome it as it was these 'land Gypsies' (Apology to anyone from the travelling community) who seemed to make the money out of the boom.

  15. Ooh, sarky! ;)

    Are you saying that absolutely no land was sold on for profit without development, that all developers ended up building on the land they owned? I'll take your word for it.

    As for a land tax, look up land value tax on Wikipedia - it's widely recognised as being a much fairer tax than rates - in fact it would replace rates, corporation tax and a number of other taxes and would apply to everyone, not just developers, unless you believe developers are a special case. ;)

    Who claimed that. I was commenting on 'Hording' the holding back of land.

  16. A land tax would be better surely - this would force property and land owners to put the land to good use and would have stopped the hoarding of land that contributed to the boom here.

    This seems to be a common misconception. I can't think of any 'zoned land' been held back, except that owned by the government. I really can't think of any. I know developers who have land in the planning system for 4, 5 and 6 years and over the last three years, in particular they have been tearing their hair out trying to get a move on it.

    But of course you are right. Yet another tax on developers will help to bring prices down.

  17. Back to topic on this one , anyone picking up any signs of capitulation ?

    imo there could be a last blast at christmas , when the credit card bills hit in Jan 09 with no 0% or mew avalible the phoney war could be over ;)

    The Jan sales have begun

  18. Just 6 years ago in 2002, my brother bought a new 3 bedroom semi-detached house for £72,000.

    Just 6 years ago in 2002, a friend bought a new 3 bedroom detached house for £90,000.

    I really doubt that the builders were selling those houses at a loss.

    The problem is that people accept the current silly high prices as the norm. People do not understand, the ONLY reason house prices got so high was due to a credit bubble. The costs of land, labour and materials all expanded in cost, with the credit bubble. The credit bubble is now burst. All we are seeing now is an attempt to clear existing stock at last years high prices. The problem is - due to the credit collapse - banks won't lend to buy at those high prices. They are currently trying to suck in anyone who can afford these high prices.

    Because of the house price crash many building sites have closed down. Because there is no work for many tradesmen - I'm hearing that it is now possible to get tradesmen to work for £10 an hour. There will be little demand for development land now - prices will be driven down. There is no demand for building supplies - margins will be squeezed and costs will come down. In short - the cost of building new houses will come down considerably in the near furure.

    In a few years - when the dust has settled - builders will build new houses that people can afford to buy again with the banks help. These price of new houses will be determined by mortgage availability in the future. My guess is mortgage lending will eventually return to the traditional 3 times single income plus 10%.

    At todays average income of £21,000 - the average new 3 bedroom semi should cost around £70,000. Do you see why I think that house prices will fall back to 2002 levels?

    The only thing which can prevent this happening is wage inflation. Though I think there is little chance of this happening.

    We have discussed this a few times before. Wages have come down, but materials have risen (energy). Builders can't factor in what they paid for the land. What I do is factor in what it will cost to replace the land, which will be less than the current land cost. Technically i am selling at a loss (no tax :rolleyes: ) But its cash in and I will be able to replace the land.

    The big change from 2002, ignoring the land is the government charges and red tape. The 20% open space requirement (An excellent rule) took a 20% slice of the cost of your land bank at the time. The planning process forced the employment of landscape consultants and Archaeologists (£80k per acre). We also had to start to pay BT and the Water Service instead of the other way around. The CEF produced a booklet which listed all the new costs and they came to £30k per plot. All this had to be passed onto the purchaser. The problem with the boom was - this wasn't really noticed. So in 2002 build costs were 45 to 50k they are probably now 80k.

    The big problem for me is they are about to jump again with upgrades to Building control (good thing in my view) and the handing over of 20% of our land, free of charge to Margaret Ritchie for Social housing (which I have great concerns about, apart from the obvious) We should perhaps have a seperate debate on that, although I guess I will get trampled on, in here on that one.

  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.