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House Price Crash Forum

Key Worker

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  1. Very interesting. Thanks for your thoughtful replies. I didn't realise the Halifax/Nationwide stats were so sophisticated. I must say in the Land Reg stats I have come across contain many errors, eg. a terraced house recorded as semi-detached when I KNOW it is terraced. On a slightly different note, people may be interested to know that the Land Reg figures EXCLUDE what the solicitors call an ALLOWANCE. eg. seller agrees to a last minute reduction in the price to pay for work that needs to be done, but this is written onto the contract (sometimes just a handwritten note in the margin apparently) and is NOT reported to Land Reg. Don't know about the legality, but I KNOW this happens.
  2. Not much to quibble with here. But forgive me if I do wonder if your intelligence and effort isn't a bit wasted on this.
  3. Fair enough. But there does seem to be quite a LOT of this going on, slow-down or not. For example, 25% rise in price in 6 months on one house; another house developed and smashed the street's ceiling price by around 15% (very nicely done - I looked round it - a 2-bed 'converted' to a 3-bed); and over 10% added on another house in 9 months. When Halifax/Nationwide report this, they are just reflecting the value of the renovation plus the developer's return on his time/labour/risk.
  4. In the area where I live there is still a lot of activity by developers and renovators who appear professional - not just house owners dong 'changin rooms'. A house near me has been gutted and put together again, for example. Skps in other street nearby give testament to activity elsewhere. Land Reg figures show 50% rises in a matter o months, which are quite anomolous. My point is - when sales are achieved (and it appears from LR that there ARE sales at 'good' prices) this must give a false boost to the house price survey averages. Prices have not actually risen as a result of movement in the market. Instead, value has been added to the housing stock through development. Leaving aside the rate of return which developers get, the 'rise' in prices in these cases DO NOT reflect rising house prices (in the sense of price movements depending on sentiment and the wider economy and people's view of housing as an investment). In the case of the houses which are gutted, the value which is added and the local adjustment to average prices can be very significantj (especially when there are low volumes). What do others think?
  5. Totallly agree. Have noticed the same phenomenon in my area. Bottom end is slipping.
  6. Il me parait que vous n'avez pas habite en France pour 7 ans ou vous auriez une comprehension plus nuancee de la situation. Qu'est-ce que vous avez fait en France? En quel departement avez-vous travaille? Comment s'appelle le ministre de l'interieur? En cas que j'ai tort, je vous reponds simplement: Put the money in a good savings account. Go to moneyfacts.co.uk to find one. Or invest in stock market if you understand it and accept the risk. If I were you, I'd rent for a while and watch house prices to see what happens. I think it is never a good idea to dive into such a big undertaking as buying a house unitl you have researched it thoroughly. Everyone seems to agree that whatever happens there is no hurry as house prices are not likely to rise rapidly even if they do.
  7. Homeowner - If, you want a quiet life, don't like taking big risks, and, as you say, you can afford to take a 40% drop and you will not be in negative equity, I wouldn't worry about an hpc. That is, unless you will be wanting to move in the next few years for good reasons of your own, in which case you have the choice of selling and buying another house or selling and rentingj (putting the cash in the bank whiile you see what happens to the market).
  8. Yes, of course. The market has got a floor. The game is to guess where it is. This is not my specialism but I believe that in a slow-moving market like housing it would be quite natural for the crash/decline to occur in 'steps' rather than in one big slide. Trouble is you don't know where the last step is. And of course, everyone is trying to second-guess everyone else, and today's FTB who is jealous of equity-rich homeowners might be tomorrow's home owner happy to safeguard his or her own position. There will be relative winners and relative losers in any market. It only matters if you genuinely believe in any kind of 'social justice' (and not necessarily the kind that TB goes on about).
  9. Homeowner, in answer to your lamentation that people see houses as an investment, not a commodity like others - Well, you could see houses as a commodity. But they are a rather specidal commodity. You can expect to pass them down for generations if that's what your future family wants. You can't really do that with a car, which depreciates much faster. Also, houses sit on land, which is a very special commodity indeed. No human existence or economic activity can take place without it. If you have a freehold, you own a slice of it forever, or more realistically, as long as our society and its laws hold together. (That doesn't of course, mean that it necessarily has a 'high' value, as there is quite a lot of it, and various ways of owning or renting it.) As for people's attitudes in general towards housing, like other social attitudes, they are very much of their time and place. Our grandparents wouldn't have thought of houses in the same way, and people in quite close countries such as Germany have very different views too. Will your house be a good investment over 25 years despite short-term losses? Really, nobody knows, and don't believe anyone who says they do. Think: someone whose mortgage ends this year bought in say 1980 when a Conservative government had just won a landslide victory under the leadership of one Margaret Thatcher. Since then, unions have lost their power, the EU has become much more important, the Berlin Wall has come down, council houses have been sold off, and everyone goes around with their own private walkie-talkies called mobile phones. What will the world be like in 25 years? You tell me. Some people on this site have done calcualations showing that if you bought and sold at the right moments over the last 25 years you would have done much better financially than if you had stayed put.(I have to wonder if any of these people have got children though- moving isn't always so simple.) However, as you have probably heard before, the past is not always a good guide to the future. Perhaps one thing which is overlooked on the site is that you have to look at your own personal circumstances and see what suits you and makes you happy. Only YOU can say this.
  10. You are right that a lot of people (on both sides of the argument for and against a house price crash) interpret data (consciously or unconsciously) so that it will support their own opinions. However, the challenge is to see all sides of the argument and decide objectively which side has got the most conviincing data/arguments. I get the impression that a lot of people on the site are quite technically minded and quite interested in economics and politics generally. They enjoy this challenge. May I challenge you to see 'the other side of the coin' when considering, as you quite rightly say, that there has been an increasing obsession with houses in the UK, largely fuelled by TV programmes: could it not be that this obsession has driven people to buy houses at inflated prices which they wouldn't have entertained if it hadn't been for all this hype? Might not this have caused an unsustainable and irrational acceleration of prices, ie. 'a bubble'? Will the prices stay high if the hype stops? Lastly, I personally find your views on a house being 'a place to live' very creditable and human. However, in strict economic terms, you may live in your house 'rent free' once you have paid off your mortgage, but the 'cost' (which I think economists call the opportunity cost) is how much you could make if you sold the house and put the money in the bank and got a good rate of interest for it. So where would you live? you ask. Well, the point is, you MIGHTj (and this is where another big debate really starts) be able to RENT an equally nice and pleasing and comfortable house for LESS than the interest you are earning on your money in the bank from the house sale. The DIFFERENCE between these sums is what you LOSE if you just treat your house as 'a place to live' (although I agree that you might think your life is much nicer without worrying about such things - and you could be right about that). If you like, the sum you LOSE by not selling as detailed above, is actually the RENT which you ARE paying ot live in your 'rent-free' house. Welcome to hpc!!!!
  11. Yes, this is not a very convincing report from the BBC. I suggest anyone interested shold read the source material at rics.org.uk. The 'rise' in surveyor optimism is mostly down to seasonal adjustment for a start. Secondly, as I understand it this survey only reports the 'balance of opinion' about whether rises or falls (both unquantified) are occurring. So there might be a large percentage of surveyors who think that there is a £1 price rise, which although completely negligible, will look impressive as a headline. Lastly, anyone convinced by the spin should scroll down to the end of the report and read the very PESSIMISTIC comments by real EAs in their own words. They actually seem, dare I say, remarkably honest. The dishonesty, if there is any, probably comes from the Public Relations team steering journalists and/or lazy/busy reporters not bothering to delve into the report and going for the first angle offered to them. On the face of it, there is little evidence of a recovery here.
  12. I think the article you refer to is long on rhetoric and short on analysis. The only thing which does point in the direction of HPI appears to be mortgage approvals. I am personally fairly convinced that apparent rises reported currently is largely due to a rebalancing in the types of property sold. As for people who say TTRTR 'shouldn't bother', I think it would be much less interesing to read only posts which reinforce what people want to hear about a HPC. TTRTR also makes very valid points about leverage which some people don't seem to appreciate in thier rush to make themselves feel better about thier own STR position. It seems to me that if there is ANY HPI at all it is nearly always financially beneficial duinrg that period of time to be an owner, not a renter, all other things being equal, and not forgetting that the house-buying process is expensive in terms of transaction costs. Keep it up TTRTR! (But I do hope you're wrong!)
  13. A quick analysis in one London borough (at the cheaper end of the London market) supports this. Prices of flats are basically UNCHANGED from July-Sept2004 to July-Sept2005, with a variation of 3% over the period. (up down and sideways - I am not sure it means anything on quite low volumes). BUT the ratio of flat sales to terraced sales (the majority of the 'upper' market here, with very few detached properties and semis) shows that the volume of flat sales has fallen by a far greater proportion than that of terraced: In Sept 2004, the volume of terraced sales was 25% above that of flats. In Sept 2005, the volume of terraced sales is 80% higher than that of flats. Maybe this methodology can be applied by others to analyse an area they know.
  14. OK, several people have said, in so many words, that "it is not clear" what house prices will do. But don't get side-tracked by what news stories are saying about national averages. Find out as much as you can about what is happening in the area YOU want to buy. Note down asking prices for a range of properties you have seen or know something about. Use houseprices.co.uk to find actual sold prices around three months after their sale, if there is one. Plus, the holisitc approach: work out what makes you happy and go for it. If you are still of an age and disposition to go travelling, etc., then definitely carry on renting. Maybe you would enjoy more time for leisure interests/socialising rather than DIY (which almost inevitably comes with buying a house, however pristine)? Take this one step further and combine with some international economics. If you have a readily exportable skill, in what part of the world could you earn the most and spend the least? Would you fancy living there for a while? I know people who earn much less than you by workign abroad, but their expenditure is reduced by even more. Result: higher standard of living. If you really want to set up your own home in the UK, keep an eye on things as above.
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