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gruffydd

Upturn In Property Market

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Noticing increase in sales going through in many areas - prices still flat or falling though.

Main factor is fear of increasing mortgage rates.

Second factor is inflation eroding savings. Very much secondary. Much of this money has already found a home.

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People locking in fixed rate mortgage rates. More fool them. Apparently many in media pushing this. Mirror big time apparently. EAs very happy with this.

Edited by gruffydd

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Guest The Relaxation Suite

People locking in fixed rate mortgage rates. More fool them. Apparently many in media pushing this. Mirror big time apparently. EAs very happy with this.

I'm not sure rising rates will have the effect many people are hoping for. They have been going up for months in Australia and all it has done is deliver a small increase in house prices last month. As I have written elsewhere, my view is that rates would have to go up massively and fast to trigger the sort of impact some are hoping for, and obviously those in control of these things simply will not do this - they will set rates with the specific intention of keeping prices stable.

Edited by Tecumseh

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Guest The Relaxation Suite

Big picture analysis of the correlation between IR"s and house price growth show that IR movements s do not directly correlate with house price movements. In fact when IR's are rising it means the economy is doing well which tends to mean that consumer sentiment is strong. The clearest correlation with house price growth is improving buyer sentiment.

I agree. As we discussed on the other thread - I see no reason to suggest that house prices will crash if BOE tweaks rates up a few points over the next 18/24/36 months. Those waiting for this to crash prices are waiting for a bus that is never going to arrive in my opinion. The rate-rises = housing crash hypothesis could be correct, but only if rates were put up very irresponsibly, and I'm not of the opinion that BOE will do this. The longer I contemplate this, the more I reach the conclusion that housing is "as safe as houses" at least when compared to paper.

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I agree. As we discussed on the other thread - I see no reason to suggest that house prices will crash if BOE tweaks rates up a few points over the next 18/24/36 months. Those waiting for this to crash prices are waiting for a bus that is never going to arrive in my opinion. The rate-rises = housing crash hypothesis could be correct, but only if rates were put up very irresponsibly, and I'm not of the opinion that BOE will do this. The longer I contemplate this, the more I reach the conclusion that housing is "as safe as houses" at least when compared to paper.

"Markets can remain irrational a lot longer than you and I can remain solvent..."

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Big picture analysis of the correlation between IR"s and house price growth show that IR movements s do not directly correlate with house price movements. In fact when IR's are rising it means the economy is doing well which tends to mean that consumer sentiment is strong. The clearest correlation with house price growth is improving buyer sentiment.

LoL

1988 people in Uk rushed into taking the biggest mortgage they could to beat the scrapping of double tax relief . Interest rates were falling at the same time so the lower the mortgage rate the more they could afford so houses naturally went up.

Summer 1988 Interest rates started to rise houses started to fall , 1989 and onwards interest rates moved further upwards houses fell more. After the bottom of the market in the mid 90's houses started to rise . The more interest rates dropped the more they rose the only other factor that helped houses rise was higher multiples of earnings taken into account when granting mortgages.

Where Does this

" Big picture analysis " you talk about come form ?

" The clearest correlation with house price growth is improving buyer sentiment "

Right IC so someone goes out and chooses a house applies for a mortgage and is told the repayments . During the mortgage application process the Interest rate they were first quoted rises , so the original figure they had budgeted for has risen .

So by your reckoning due to the increased Interest rate and higher cost they would go back to the seller and offer more money as they felt the economy was doing well thus the increased interest rate and due to this it in turn increased their sentiment .

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Australias price rises is little to do with rates.

LENDING is the driver of the prices.

Borrowing is no problem while Mr Ponzi is free.

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I'm also starting to see people start buying - honestly, if this is going to take 3-5+ years ON TOP OF HOW LONG WE'VE ALREADY WAITED, then what is the point. Some life.. I get the feeling this isn't going to happen.

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I'm also starting to see people start buying - honestly, if this is going to take 3-5+ years ON TOP OF HOW LONG WE'VE ALREADY WAITED, then what is the point. Some life.. I get the feeling this isn't going to happen.

I was talking to an EA this weekend. "Upturn" is probably too strong a word.Houses are selling if they are perceived as being value i.e. the vendor has reduced the price.And most activity sub £125k,around me that includes about 50% of semis. There is some "hope" on their part that the new locality bill will so restrict successful planning applications that a property shortage will result.This possibility was confirmed to me by an MP I know.

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I'm also starting to see people start buying - honestly, if this is going to take 3-5+ years ON TOP OF HOW LONG WE'VE ALREADY WAITED, then what is the point. Some life.. I get the feeling this isn't going to happen.

funny enough, but the interest in Property after January is normally called the "spring bounce".

Odd that it is indeed that time of year and people are thinking of moving.

uncanny.

now we can expect to hear the siren calls of disappointed borrowes moaning they cant get the loan they are entitled to.

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I'm also starting to see people start buying - honestly, if this is going to take 3-5+ years ON TOP OF HOW LONG WE'VE ALREADY WAITED, then what is the point. Some life.. I get the feeling this isn't going to happen.

I think you are going to have to accept that the massive falls that you want are just not going to happen. huh.gif

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I agree. As we discussed on the other thread - I see no reason to suggest that house prices will crash if BOE tweaks rates up a few points over the next 18/24/36 months. Those waiting for this to crash prices are waiting for a bus that is never going to arrive in my opinion. The rate-rises = housing crash hypothesis could be correct, but only if rates were put up very irresponsibly, and I'm not of the opinion that BOE will do this. The longer I contemplate this, the more I reach the conclusion that housing is "as safe as houses" at least when compared to paper.

But the Halifax say that the average house is down £37,000 from peak?

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I'm sticking to my theory that house prices will go exactly nowhere during 2011. Some months will see slight rises, others slight falls, but this time next year I think prices will be about where they are now.

I'm still confident of 10% down by the end of this year.

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Big picture analysis of the correlation between IR"s and house price growth show that IR movements s do not directly correlate with house price movements. In fact when IR's are rising it means the economy is doing well which tends to mean that consumer sentiment is strong. The clearest correlation with house price growth is improving buyer sentiment.

Does anyone have a graph of UK interest rates vs house prices. The I have seen (from memory) ticks down as rates tick up. Or more precisely in a strong bull Market it flattens/slows before resuming trend.

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Big picture analysis of the correlation between IR"s and house price growth show that IR movements s do not directly correlate with house price movements. In fact when IR's are rising it means the economy is doing well which tends to mean that consumer sentiment is strong. The clearest correlation with house price growth is improving buyer sentiment.

When IR's are rising it usually means the economy is doing well. This time it might be different. If imported inflation stays high the BoE might be forced to raise them early (i.e. when the economy stops doing sh1t rather than when it starts doing well). So rather than any recovery in sentiment (and therefore house price inflation) we might just get more stagnation as interest rate rises work against the recovery.

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Does anyone have a graph of UK interest rates vs house prices. The I have seen (from memory) ticks down as rates tick up. Or more precisely in a strong bull Market it flattens/slows before resuming trend.

rates are a function of affordabilty.

the higher the rates, the more people are knocked out of the HPI arms race...until one day, there is not enough left for sellers to acheive their own goals....this is the peak and it hit in 2007/8.

rates fall as the bankers try to keep sales up....affordability returns and we have the "suckers rally" or Bull trap.

We have just had this stage.

rates are minimal, but cash is scarce and about to become scarcer...ie, the lenders find it hard to lend profitably and need to find cash from sources other than there recent sources. real world rates are rising and criteria getting back to normal, so the bubble will deflate, rising rates or not.

The time NOT to buy a product priced on leverage is when the leverage is at MAX....it can only go down from their.

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rates are a function of affordabilty.

the higher the rates, the more people are knocked out of the HPI arms race...until one day, there is not enough left for sellers to acheive their own goals....this is the peak and it hit in 2007/8.

rates fall as the bankers try to keep sales up....affordability returns and we have the "suckers rally" or Bull trap.

We have just had this stage.

rates are minimal, but cash is scarce and about to become scarcer...ie, the lenders find it hard to lend profitably and need to find cash from sources other than there recent sources. real world rates are rising and criteria getting back to normal, so the bubble will deflate, rising rates or not.

The time NOT to buy a product priced on leverage is when the leverage is at MAX....it can only go down from their.

I concur.

I'd rather buy at 15% base rates than 0.5%

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I concur.

I'd rather buy at 15% base rates than 0.5%

well, that depends on the cycle of the price curve.

sure, if rates went to 15% now, at the top of the curve, that would be foolish to buy now....in a years time if rates are still at 15% and prices have dropped...which they inevitably would, maybe that would be a better time.

even at 15%, 100% whatever, affordability is what drives current banking...not income rations or first and second earner formulae, and it is the reason the boom was so big.

huge multiples on liar incomes, share with a friend and 125% loans....the signs of the peak.

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Be very careful out there, Germany has massive controls on rental markets and tenants can virtually stay for life and treat the property as if it was their own, is it any wonder they have minimal capital gains.

Yes, good job the British economy isn't run as stupidly! The Germans must really struggle without massive HPI.

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When IR's are rising it usually means the economy is doing well. This time it might be different. If imported inflation stays high the BoE might be forced to raise them early (i.e. when the economy stops doing sh1t rather than when it starts doing well). So rather than any recovery in sentiment (and therefore house price inflation) we might just get more stagnation as interest rate rises work against the recovery.

+ 1

Usually it means an economy is overheating. But with a recession + falling currency we have imported inflation - stagflation. Now higher IRates should bring prices down.

Unless the gov+banks increase lending. Though they will just try to cushion falls, not reverse them.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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