Halifax (uk) Figures Out For May

[BelfastVI]

Surprised this hasn't been posted earlier.

Before you all start jumping on me I think this is too early.

Pound up

FTSE up

DJones up

Nationwide up

Halifax up

Labour down

I am more worried now than I ever was that this could turn bad.

Its too early for a recovery. Prices should have continued down, at a slower rate, apart from new-build which is ahead of the game, until the end of the year.

In my view this is bad news and too soon.

[Malthus]

Surprised this hasn't been posted earlier.

Before you all start jumping on me I think this is too early.

Pound up

FTSE up

DJones up

Nationwide up

Halifax up

Labour down

I am more worried now than I ever was that this could turn bad.

Its too early for a recovery. Prices should have continued down, at a slower rate, apart from new-build which is ahead of the game, until the end of the year.

In my view this is bad news and too soon.

With interest rates are historical lows a spring bounce in the UK is to be expected , in NI imo only houses 50% + off peak are moving .

The next moves i see are political

Brown gone with in a month

General election with in 6 months

New tory government

End to quantative easing

Interest rates 5% with in 18 months

Interest rates 7% with in 3 years

Interesting times my friends

ps anything could happen politically in NI

Edited June 4, 2009 by Malthus

[themezz]

Typical bull trap, this is needed to ruin the sheeple's confidence and get to the bottom of the market.

A few more +ve rises over the next year or so but the trend is down, way down!!

Don't Panic, HPC is going to plan ( just taking longer than I'd like)

[Doctor Dick]

What are the chances the housing market will return by the end of the year? From what I've read on this and other sites I know its a low chance but can any1 guess a rough percentage? I realise that may not be possible but is it closer to 20% or 2% likely?

I'm about to start another 3year course at uni and my mother was thinking about buying a house. The area is a large town in the north of england, a handful of houses around 50-60k mark for 2/3 bed terraced house. Considering my situation it would be good if the market picked up soon after the agreed sale (the end of summer), the end of year would be good. The plan would be most likely to sell the house in 3 years after I leave but if the market is going to drop for another say 2years I'm screwed right? I hate the thought of renting for 3 years, throwing the money away!

[Belfast Boy]

What are the chances the housing market will return by the end of the year? From what I've read on this and other sites I know its a low chance but can any1 guess a rough percentage? I realise that may not be possible but is it closer to 20% or 2% likely?

Ok Dick please define normal?

If by normal you mean 125% no deposit mortgages, self-cert mortgages, 10 times income 50 year mortgages, specuators flipping, buy-to-let investors leveraging, banks securitizing debt and forgeting risk. If you think that a housing bubble is normal and the HPC will be over after only 2 years - then 'in my opinion' the chance of a return to normal is roughly about feck all squared. However, I am not an expert and you should ask the local car sales person - sorry I mean estate agent. (Though come to think it, the advice of the car sales person will likely be more accurate )

However, if you mean that the housing market will return to normal lending criteria, normal levels of affordability, normal income multiples - then we will be near normal by the time you have graduated

I have 1 big question for you - do you think a 0.5% BoE base rate is normal? What direction will interest rates likely go next?

If the UK housing market falls by a further 20% over the next 3 years (as most honest people think it will) how does that effect your rent vs capital losses calculations?

Disclaimer: I am not a financial adviser. This advice is worth exactly what you have paid for it. Do your own research.

Edited June 4, 2009 by Belfast Boy

[shipbuilder]

What are the chances the housing market will return by the end of the year? From what I've read on this and other sites I know its a low chance but can any1 guess a rough percentage? I realise that may not be possible but is it closer to 20% or 2% likely?

I'm about to start another 3year course at uni and my mother was thinking about buying a house. The area is a large town in the north of england, a handful of houses around 50-60k mark for 2/3 bed terraced house. Considering my situation it would be good if the market picked up soon after the agreed sale (the end of summer), the end of year would be good. The plan would be most likely to sell the house in 3 years after I leave but if the market is going to drop for another say 2years I'm screwed right? I hate the thought of renting for 3 years, throwing the money away!

You're talking about speculating. Housing is not for speculating, which you should know or you wouldn't be here. (Sigh). Please forget about easy money, go to uni, get a worthwhile career and contribute something to the world. A life spent counting money and what you can buy with it is a life truly wasted.

[Belfast Boy]

I am more worried now than I ever was that this could turn bad.

In my view this is bad news and too soon.

It was quite a large rise so soon in the crash.

Yeah, the market has scared the cash rich buyers too rush into the market. After all, money is better making capital losses in a depreciating asset like a house than it is in a risky bank making only 0.5% interest. Oh wait... There will be nobody left to buy at lower price levels to support prices. So the more fools that rush in now the larger the falls to come later.

Apparently dring the last crash in the UK over 72 months (6 years) there were 24 up months.

We are only about 20 months into this crash. So I am not worried. Many more large down months to come before we reach the housing market bottom. The current artifical economic conditions will not last much longer in my opinion. Higher interest rates, higher taxes and higher costs of living by the end of this year or early next year maybe? Then we have HPC part 2. Only 15 months before I consider buying. Not long to wait now. I have already saved a small fortune by not buying and I am certain that house prices will be alot lower by the end of next year.

[Doctor Dick]

shipbuilder - I'm not really talking about speculating, in a way yes technically, but not really.

There's two opinions for me (in an ideal steady housing market world)

1. I pay the interest on a mortgage and eventually sell up, perhaps with money in my pocket or perhaps even a loss (potenitally cheaper than renting - to begin with anyway)

2. I pay 3years worth of rent that I will never see again.

If by speculation you mean I want to know which way will lose me less money then I guess you can call me a big fat speculator. TBH, who wouldn't take my approach? I'm potentially buying a house to live in while at uni, not to flip or for the primary reason to make money - simply to save money.

doccy boy - thanks for your input

Belfast boy - very interesting post - thanks.

In relation to interest rate, I should be able to get a fixed rate for 3 years right? Take at least one risk factor out. You make valid points but surely even if prices dropped a further 20% to bottom out I would still be saving money if I held onto the house for whatever number of years needed for it to breakeven (breakeven can have two meanings; 1. I'll lose as much as I would have with rent, 2. I don't lose any money nor do I make any)

[Belfast Boy]

Belfast boy - very interesting post - thanks.

In relation to interest rate, I should be able to get a fixed rate for 3 years right? Take at least one risk factor out. You make valid points but surely even if prices dropped a further 20% to bottom out I would still be saving money if I held onto the house for whatever number of years needed for it to breakeven (breakeven can have two meanings; 1. I'll lose as much as I would have with rent, 2. I don't lose any money nor do I make any)

Fix for 3 years?... mmmmm.... what will the interest rate be in 3 years time when you are looking someone get a mortgage to buy the house off you?

How much are student rents in the North East of England these days? You are aware that rents are falling due to over supply? Will you be able to sell the property if you need to money back - if as I think, this becomes an economic depression which could last up to 20 years. You may need to hang on to the property for a very long time to breakeven. The idea was good duing the days of capital gains. But those days will not be with us again (hyperinflation excluded) for atleast another 4 years maybe longer. You need to be very aware of the risks.

On the positive side - the only way I see that you will make money at this, is letting out rooms to fellow students. Though as a former student in the North East of England I would not want a student living in my house. I also let rooms in the house I sold in 2007 to 'young prefessionals'. Yes it helped pay the mortgage. However, I also have some horror stories.

I just think that renting a place has no risk. I cannot be sure what is going to happen to the housing market in the future. Though I am fairly certain that taxation will rise to pay for all these bank bailouts, interest rates will rise from there current artificially low levels and the cost of living will increase. That is refered to as a 3-way squeeze on income. There are also rumours on the forum that banks intend to reduce lending to normal criteria i.e. 10% deposit, 3 times income for 25 years. A 20% capital loss will look really optimistic under the circumstances I have described.

Edited June 4, 2009 by Belfast Boy

[shipbuilder]

shipbuilder - I'm not really talking about speculating, in a way yes technically, but not really.

There's two opinions for me (in an ideal steady housing market world)

1. I pay the interest on a mortgage and eventually sell up, perhaps with money in my pocket or perhaps even a loss (potenitally cheaper than renting - to begin with anyway)

2. I pay 3years worth of rent that I will never see again.

If by speculation you mean I want to know which way will lose me less money then I guess you can call me a big fat speculator. TBH, who wouldn't take my approach? I'm potentially buying a house to live in while at uni, not to flip or for the primary reason to make money - simply to save money.

You're not losing money by renting - renting is paying for a service, like any other. Why is that such a problem? Only in the last decade or so when people lost site of what a house actually is would anyone even have considered buying a house as a way to make money over a few years. Only in the past insane 5 or so years might it have worked, if you timed it well. It's this way of thinking that causes the problem in the first place. How long are you prepared to hold on to the house for? Are you prepared for maintenance etc.? What amount would you anticipate losing by renting? How many years of price appreciation would you expect to get than money back?

I suppose my central question is - what is it about the housing market that you expect to make money just by the simple act of signing a mortgage agreement?

Look, I don't mean this as criticism, just a weary appeal to think, please...

Edited June 4, 2009 by shipbuilder

[Belfast Boy]

just a weary appeal to think, please...

People are so conditioned that bricks and morter makes money. They just cannot see that property will lose them money during a house price crash as big as this one.

One of the houses I viewed in 2007 has dropped in price by £180,000 in less than 2 years. I still know it is over valued even though I could easily afford to buy it now. It was just dumb luck that I sold my house in 2007. The only smart thing I did was not to buy another one. I still think that 'not buying' is the smart thing to do. I have no doubts about that decission at all. Even with the latest economic spin in the papers. The fundamentals are still very bad for house prices.

[Doctor Dick]

ship builder - I appreciate your honesty.

Well renting out at current prices would be £7200 over 3 years, for 1 room and shared bathroom, kitchen, etc. I've been quoted an interest only mortgage for £178 a month = £6408 over 3 years. Now as I see it, it could be possible to sell the house on for the price I paid for it in 3 years (adjusted for inflation). Therefore I would have saved 6408 plus made a modest profit of £792. That also does not factor in the possibility of renting out a room or two and totally covering the modest interest payments.

Now of course there's the little matter of huge increases in the interest rate - but surely that could be offset (to an extent) by increasing the rental income (and the tenant would have to pay as every1 jacks up the rent).

Don't get me wrong - this idea is full of risks but that's why I'm here talking about it. Essentially its my mum that's paying and I don't want this to go tits up!

Your point about paying for a service....why should I line the pockets of some buy to let landlord whenver I could do the same? Why shell out money I don't have to?

[Belfast Boy]

You forgot to include falling house prices in your calculations. Did you include council tax and maintenance in your calculations?

Getting a tenant that pays during a recession may be harder than you think.

You have no chance of 'jacking up' the rent as you put it, during a recession. Your tenant will leave and you will have a void period.

I hope your mum does not lose too much money.

Good luck,

BB

[Doctor Dick]

I value your opinions, I'm trying to better understand this.

So both shipbuilder and belfast boy - rent for the next 3 years without a doubt?

[mr slump]

I value your opinions, I'm trying to better understand this.

So both shipbuilder and belfast boy - rent for the next 3 years without a doubt?

if you rent you can walk way at any time (ish)

a house thats depreciating is a f++king liability

its a trap, and as an investment right now, quite frankly insane

and thats coming from me who's just bought a house

but I'm buying a long term (maybe for life) home with no mortgage at 60% under peak

so I'm covered for falls for a while yet + even in three years if its worth 10-15% less I won't have lost on rent

would I buy the same place for an investment? f++k no

as for increasing rents?

no chance

our landlord increased ours by 5% a couple of months back

the only reason I doidn't tell them to shove it is that I know we'll be gone soon

even the agent we go through thought that was insane

he has nicer rentals on his books for the same price void for months

they'll get a months notice , we'll be gone and this house will sit empty

after 11 years with zero respect.....they can stick it up thier ars3s

if you try and jack up the rents you'l get the same reaction

supply + demand

disregard the lies

[woohoo2]

I value your opinions, I'm trying to better understand this.

So both shipbuilder and belfast boy - rent for the next 3 years without a doubt?

Hi Dick,

A few points that might help:

1. The rent is dead money argument is the one everyone uses, but it really only stacks up in a rising market. The reason for this is that the capital you use to buy the house also has a cost. If you borrow £60k to buy a house, or use your own money then you must pay several thousand pounds a year in interest. In that sense you 'rent' the money from the bank. That's also 'dead' money, it's just paid to a greedy banker instead of a greedy landlord. The cost of rent over the next few years is relatively predictable. The cost of interest payments is not.

2. In the past 20 years your logic would have been the correct one to use for a student because many students have left university and found themselves in a very difficult position trying to buy their first property. Those who got in early saved themselves a lot of trouble. I bought a house myself shortly after doing my degree and it was good for me that I did it so early. However if you look at the history of housing bubbles and busts (find some info on this site), you would conclude that something major has happened that will not resolve itself for years. That means that the old assumptions of rising property values have gone. For me it means that the risk of another bubble in the next few years causing you to be left on the sidelines is very low.

3. Like shipbuilder, I think (and hope) that the idea of speculating on rising house prices as a way of making your way in life is wrong in principle but also going to be wrong in practice for many years to come. This financial crisis is just too big for everything to go on as normal after the bust. The deleveraging process from the biggest property bubble in modern history is really just beginning. Be careful about finding yourself on the wrong side of this big historical trend.

4. Now this is really a vain hope, but I'm 38 now and when I was at uni, the things that people thought about were having fun, drink, love, study, and (in sober moments) career. We certainly did not spend our time talking about f**king house prices! It was a liberating time, and the freedom to move around each year, live in halls for the first year to get to know people, live with different people in dodgy rented gaffs and not worry too much about staining the carpet was a big part of it all. It's sad now that we've weighed down young people with the burden of future worries about being trapped without a chance to own their own home in the long term. It's my generation's fault and not yours, so don't take anything said on here towards you as hostile. I can't tell what will work out best for you, but really I hope you'll take a step back from it all, stick two fingers up to the property industry, then go to university and have the time of your life.

Good luck!

[Doctor Dick]

woohoo2 - thanks for your take on things.

My story is more complex than your average student - finance is more of an issue for me.

In a nutshell I've just finished a degree (literally today at 10.00am there) and hopefully I've done quite well but what I'm studying this sept will be medicine. I'm already 14K in debt!! Many people think I'm crazy for taking another 5 years of loans (amounting to roughly 25-30K to do medicine). At this very moment in time I'm not sure if I'll do medicine for these financial reasons. If I worked harder at school I wouldn't be at this fork in my life but I can't change that now.

My mum kindly said she'd help by paying for my rent and I stumbled onto the fact interest only would be cheaper than rent, I instantly (naively) though it would be a no brainer to 'own' the house rather than waste money. with the prospect of 1. having a full house to my own and 2. the ability to rent out a room or two to cut down my medicine loans even more would be excellent.

Before I even posted on here I realised some of the stresses and unforseen problems that could and most likely will rear up in the process of buying a house. I had doubts even then and I guess after reading all your comments it seems like the last thing I should do.

When I seen that buying a house was plausible I guess I justed imagined graduating as a registered doctor, selling the house and maybe making enough to cancel all my debts - in my dreams!!! lol

(I know this probably doesn't make a difference but on my long journey toward medicine I spent 2 years in the building trade and I know an awful lot about joinery and bits of pieces of other trades - my idea was to buy a slight wreck and spend my free time doing it up. I though this would increase the value depending on extent of damage etc. slightly free-damaged etc).

[Reraise]

woohoo2 - thanks for your take on things.

My story is more complex than your average student - finance is more of an issue for me.

In a nutshell I've just finished a degree (literally today at 10.00am there) and hopefully I've done quite well but what I'm studying this sept will be medicine. I'm already 14K in debt!! Many people think I'm crazy for taking another 5 years of loans (amounting to roughly 25-30K to do medicine). At this very moment in time I'm not sure if I'll do medicine for these financial reasons. If I worked harder at school I wouldn't be at this fork in my life but I can't change that now.

My mum kindly said she'd help by paying for my rent and I stumbled onto the fact interest only would be cheaper than rent, I instantly (naively) though it would be a no brainer to 'own' the house rather than waste money. with the prospect of 1. having a full house to my own and 2. the ability to rent out a room or two to cut down my medicine loans even more would be excellent.

Before I even posted on here I realised some of the stresses and unforseen problems that could and most likely will rear up in the process of buying a house. I had doubts even then and I guess after reading all your comments it seems like the last thing I should do.

When I seen that buying a house was plausible I guess I justed imagined graduating as a registered doctor, selling the house and maybe making enough to cancel all my debts - in my dreams!!! lol

(I know this probably doesn't make a difference but on my long journey toward medicine I spent 2 years in the building trade and I know an awful lot about joinery and bits of pieces of other trades - my idea was to buy a slight wreck and spend my free time doing it up. I though this would increase the value depending on extent of damage etc. slightly free-damaged etc).

I think renting is much more sensible. If you buy you'll more than likely be in negative equity in 5 years time. This could turn out to be a bit of a nightmare, especially if you're planning on coming home after your degree, or if you need to move elsewhere for work. You might also need to be mobile during your medical degree, for hospital attachments etc.

Are there no halls you can stay in in first year? And then move in with friends thereafter.

[bearsrus]

woohoo2 - thanks for your take on things.

My story is more complex than your average student - finance is more of an issue for me.

In a nutshell I've just finished a degree (literally today at 10.00am there) and hopefully I've done quite well but what I'm studying this sept will be medicine. I'm already 14K in debt!! Many people think I'm crazy for taking another 5 years of loans (amounting to roughly 25-30K to do medicine). At this very moment in time I'm not sure if I'll do medicine for these financial reasons. If I worked harder at school I wouldn't be at this fork in my life but I can't change that now.

My mum kindly said she'd help by paying for my rent and I stumbled onto the fact interest only would be cheaper than rent, I instantly (naively) though it would be a no brainer to 'own' the house rather than waste money. with the prospect of 1. having a full house to my own and 2. the ability to rent out a room or two to cut down my medicine loans even more would be excellent.

Before I even posted on here I realised some of the stresses and unforseen problems that could and most likely will rear up in the process of buying a house. I had doubts even then and I guess after reading all your comments it seems like the last thing I should do.

When I seen that buying a house was plausible I guess I justed imagined graduating as a registered doctor, selling the house and maybe making enough to cancel all my debts - in my dreams!!! lol

(I know this probably doesn't make a difference but on my long journey toward medicine I spent 2 years in the building trade and I know an awful lot about joinery and bits of pieces of other trades - my idea was to buy a slight wreck and spend my free time doing it up. I though this would increase the value depending on extent of damage etc. slightly free-damaged etc).

hi dr dick

the fact you read this site you,re well aware that buying at the moment would be a very risky investment given that IR are at record lows,you,ll be taxed if you rent out more than one room and you,ve the maintenance hassle.

if your results are good and you,ve a good chance of becoming a doctor in 5 years then whats the problem?

even if you have 50k in student debts IF you qualify as a doctor then you,ll be on 100k per year you,d pay that off in a year or two.

if any of my sons had the brains to be a doctor i,d gladly pay their way through university , you,ve a great chance in life to make money and help the sick .

go for it and to feck with a mortgage ,that,ll all come when you,ve qualified!!!!

i,ve spent 30yrs as a joiner bty

good luck

[Reraise]

even if you have 50k in student debts IF you qualify as a doctor then you,ll be on 100k per year you,d pay that off in a year or two.

Very few drs are making the lind of money most people think they do. The media widely report that GPs earn £100K a year but in reality a salaried GP makes about 60-70 and an average GP partner makes about 80k. There are a few in NI making 100K+ but they tend to be the top GPs in big practices. A junior dr earns about 33k starting out and this gradually increases during training but you have to work a lot of hours and nights throughout your training. This goes on for about 10 years before you're looking at consultant or GP pay.

[Malthus]

Very few drs are making the lind of money most people think they do. The media widely report that GPs earn £100K a year but in reality a salaried GP makes about 60-70 and an average GP partner makes about 80k. There are a few in NI making 100K+ but they tend to be the top GPs in big practices. A junior dr earns about 33k starting out and this gradually increases during training but you have to work a lot of hours and nights throughout your training. This goes on for about 10 years before you're looking at consultant or GP pay.

I'll take your word on the figures reraise , the interesting thing to me is that on these figures at the peak of the house price bubble a doctor could have afforded to buy a three bed semi with a sensible 3x income loan.

Never forget just how mad things got

[Ride_on]

I too am in my 40s and certainly didn't even consider buying when I was at uni, even shortly after when rents were the same as mortgages. You had to have 2 years in the same job before they would give you one. There are many fees you have to pay in buying that may not have been mentioned yet, solicitor fees, and big mortgage arrangement fees are popular now. Also popular are big deposits to protect the bank from negative equity. Even when we bought 18 years ago the additional fees and moving expenses tended to mean it wasn't worth your while moving by buying for anything less than about 5 years, yet nowadays people are talking about buying for 3 years, and don't forget you have to pay fees when you sell aswell, maybe even a big early settlement fee for the mortgage. This is still boom mentality.

Regarding renting out the property, you either have to pay an agent 10% to do the job for you or spend alot of your time doing it, nevermind expenses and increasing mandatory compliance costs (will soon have to register with a regulatory body as a LL). And as BB says, you cannot jack up the rent, that market works separately to buying and follows much more closely affordability criteria for the area. Rents do not fluctuate anywhere near as much as house prices, because you can't generally take out big loans to pay rent so its independent of banks/gov't trying to jack up the economy by increasing credit. The renting market does not work to just make it profitable to be a LL, you really have had to own for some time to have a really good LTV and have a stable business, it will always be risky that you paid too much in the first few years, and the rents drop a little and stay there fore 3 years, there is nothing you can do about it.

Anyway if you have counted in all that, the situation is that you are speculating whether you intend it or not. Buying to save money is a risk as you know, so unless you understand the market a whole lot better than we do you should not try to make or save money by doing this. Stick to your day job, you will make much more money being good at that, and feel good about yourself.

basic rules of thumb:

Short term - rent for low risk, maximum flexibility

Long Term - buy for security of tenure and quality (ie making it the way you want), assuming you do not have to be flexible in your location.

Never buy as an investment unless it is your day job to do so.

And that only applies to the UK, because we don't have much protection for long term renting for tenants. We should really and it may change as our workforce tends to be inflexible in location.

[shipbuilder]

Dr Dick, hope my posts didn't come across as too hostile. In your position I would rent and forget about the extra hassle - getting a medical degree will put more than enough on your plate, I would have thought - it should have 100% of your focus. Of course, it is your decision. I hope you keep at medicine - doing what you want with your life should always outweigh financial considerations. Better to be a Doctor in debt than have a few quid and lots of regrets. Good luck.

[bearsrus]

Better to be a Doctor in debt than have a few quid and lots of regrets. Good luck.

this sums up my position at the moment after bursting my **** on building sites , much better to use your brains sitting in a warm office /hospital getting an ever increasing salary with all the holidays and pensions and being able to work into your 60s or 70s as a hobby if needed.

people admire and respect doctors and just think of all those nurses before you eventually marry another doc

[Doctor Dick]

bearsrus - my longterm gf is training to be a nurse lol

In relation to medics and their wage....I may be biased but I think doctors are under paid for what they do. Like mentioned above very few get paid over 100K and those guys (in general) more than deserve it. Junior docs start on 23K, not 33K. They can currently make up to 36K if they work 56 hrs a week in a busy ward but that will change nationwide from Aug. Money is certainly not a reason to go into medicine, there are many more professions that pay an awful lot more! A little off topic though.

reraise - halls are hugely expensive! £108 a week!! There's no chance I could pay for them. And yea I have to move in my 4th and 5th years, hence why I said 3 years at uni initially.

This thread has been hugely helpful and I really think I've been saved an awful lot of headache and stress by just deciding to rent - thanks guys.