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Dave Beans

House Prices Drop As Demand 'hit By Interest Fear'

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http://www.independent.co.uk/life-style/house-and-home/property/house-prices-drop-as-demand-hit-by-interest-fear-2207711.html

House prices continued to drop in January, according to a key industry survey, as demand was dampened by fears that an interest rate hike was looking more imminent.

A balance of 7% of surveyors reported a decline in new buyer inquiries last month, the Royal Institution of Chartered Surveyors (RICS) said, as speculation mounted over when the Bank of England would opt to lift historically low interest rates from 0.5%.

RICS said potential purchasers were cautious about "the outlook for the economy and the possibility of mortgage rate increases later in the year".

Economists suggested a rate hike was looking more likely after official figures earlier in January revealed a surge in the rate of inflation. However, weaker than expected growth figures, revealing a contraction in the economy in the final three months of last year, dampened those expectations. The Bank of England will set interest rates at its monthly meeting this week and will reveal their decision on Thursday.

Elsewhere, the RICS survey revealed a balance of 31% of surveyors reported a fall in housing prices in the month, however this has now improved for three months in succession and stands at its best level since July.

The survey follows two conflicting reports from mortgage providers Nationwide and Halifax, with the former reporting a drop in January house prices and the latter suggesting a rise. RICS spokesman Ian Perry said: "The key indicators of market activity remained in negative territory in January, albeit a little less so than in December.

"Uncertainty over the prospects for employment, alongside the shortage of mortgage finance particularly for first-time buyers, continues to weigh heavily on transactions levels."

RICS also said there was a clear regional pattern emerging with London seeing a greater level of price resilience than the north of England and Midlands, where the market remains under greater pressure.

A balance of 59% of surveyors reported price falls in the East Midlands, compared to just 4% in London. New instructions, which indicate supply levels to the market, were also moderately negative, with 3% more surveyors reporting instructions fell rather than rose - although this is an improvement from 14% in December. But on a brighter note, surveyors remain cautiously optimistic about future prospects, with the balance of sales expectations edging up from 8% to 10%.

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I think that potential interest rate increases are causes a slight pick up in demand as they try to secure a deal now before the rates rise. But this will only be people who were planning to buy soon anyway bringing forward purchases. Not new or increased demand. I think this is why the RICS demand measure improved in January although it is still negative.

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I think that potential interest rate increases are causes a slight pick up in demand as they try to secure a deal now before the rates rise. But this will only be people who were planning to buy soon anyway bringing forward purchases. Not new or increased demand. I think this is why the RICS demand measure improved in January although it is still negative.

This is the only reason my family bought (completed last week). I expect mortgage lending to get even tighter, mortgage rates to go higher irrespective of what the BoE do. House prices will remain sticky so long as the bailouts continue, that isn't to say I don't expect house prices to fall 20-30% in nominal terms.

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This is the only reason my family bought (completed last week). I expect mortgage lending to get even tighter, mortgage rates to go higher irrespective of what the BoE do. House prices will remain sticky so long as the bailouts continue, that isn't to say I don't expect house prices to fall 20-30% in nominal terms.

You bought a house after being made unemployed? :unsure:

I feel this maybe more appropriately aired on MSE

For ten years I have earned a reasonable salary and will be officially unemployed in a few days. I will remain so until my youngest begins school so 3-4years at a push. I am reflecting on the big ticket 'discretionary' purchases I have made in those years and the VAT benefit made to our exchequer.

All brandnew or VAT applicable

PPL and upkeep = £30,000

Motorcycles x 4 = £23,000

Cars x 2 = £20,000

Sports Equipment = £30,000

Overseas hols = £25,000 (last five years, 3 per year)

Wedding+Honeymoon = £25,000 (once in a life time)

Electronic Crap = £15,000 (guess but I can easily add up at least that amount in my head)

The grand total is £168,000 so VAT will be a very healthy £25k VAT and £5k fuel duty for (wet) hours in the cockpit.

My projected discretionary spend for the next ten years is significantly less at todays prices

PPL £0

Motorbikes/Cars £0

Sports Equipment £0

Overseas hols ? the family have taken to UK staycations maybe a few overseas trips

Everything else I will make do and mend or buy off eBay.

I have also reduced the family food budget from £800 a month to £300, not sure how long i'll be able to keep it down this low with all this deflation!

The point is that I have drastically altered my lifestyle and this will be detrimental to the UK economy but my own personally 'happiness index' has not dropped one iota. How many others out there are doing the same, especially with the VAT rise/change of circumstances. Forced or otherwise. I can't be the only one.

But you already have a mortgage too? so you're downsizing? :unsure:

mountain bikes, gliders and kayaks!

Like Guitarman001 a friend of mine has a thing for guitars, has twenty of them (antfoote on YouTube) unlike me though he has not lost any money selling on guitars and amps. Most of my stuff has depreciated and this wasn't unexpected (the fire in the garage was though and that wiped out a few assets lol).

Council Dweller, this is a spiritual awakening for me and the video links ring true. My wife earns considerably more than I do and loves her job so it's a no brainer for us and if we have any money spare it will come off our mortgage and not be blown on stuff we can live without.

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I can't help thinking WTF when i read this.

I'll be getting a mortgage for 25 years, maybe 5 of which will be fixed, and people alter their buying plans month by month based on their perception of when the rise will happen? I see it as pretty irrelevant - whether it happens sooner or later, it WILL happen.

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I can't help thinking WTF when i read this.

I'll be getting a mortgage for 25 years, maybe 5 of which will be fixed, and people alter their buying plans month by month based on their perception of when the rise will happen? I see it as pretty irrelevant - whether it happens sooner or later, it WILL happen.

But when you have the mind set of prices only ever rise it makes this your last opportunity to get a cheap (temporarily) mortgage.

But if you think that as rates rise prices falls will increase then you're better off waiting.

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I can't help thinking WTF when i read this.

I'll be getting a mortgage for 25 years, maybe 5 of which will be fixed, and people alter their buying plans month by month based on their perception of when the rise will happen? I see it as pretty irrelevant - whether it happens sooner or later, it WILL happen.

Exactly (assuming that I don't end up waiting until I'm too old to get a 25 year mortgage). That's why I'm not even the slightest bit interested about mortgage availability or interest rates, other than in what they seem to be making others think, until the absolute price gets to a sensible level.

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You bought a house after being made unemployed? :unsure:

But you already have a mortgage too? so you're downsizing? :unsure:

The house has been completing over Christmas so yes 'we now have a mortgage'. We have downsized from our last home (sold in 2009) but we have moved to a much better area.

My wifes salary is knocking on the door of £100k (normally £60k but CHF fx has worked in our favour) and she has just signed a 3year contract and we intend to pay our mortgage down to £60-75k (from £125k) in that time.

I am taking time out of employment to look after our soon to be two young children (1 here, 1 on the way in May). That saves us on childcare which is costly anyway and even harder to arrange around the wifes job as it invvolves extensive EMEA travel- I tried a part time evening job (not for the financial aspect BTW) in a call centre but they were less than sympathetic when my wife got stuck in Atlanta because of the Icelandic ashcloud, snowed in while in Switzerland etc etc and I couldn't make work as I had no one to look after my child lol

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Exactly (assuming that I don't end up waiting until I'm too old to get a 25 year mortgage). That's why I'm not even the slightest bit interested about mortgage availability or interest rates, other than in what they seem to be making others think, until the absolute price gets to a sensible level.

I personally wouldn't want a 25 year mortgage...If I couldn't pay it off in 10, then I'm not interested. 25 year mortgages were fine 30 or 40 years ago when job security was abundant, but that simply isn't the case any more...

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The house has been completing over Christmas so yes 'we now have a mortgage'. We have downsized from our last home (sold in 2009) but we have moved to a much better area.

My wifes salary is knocking on the door of £100k (normally £60k but CHF fx has worked in our favour) and she has just signed a 3year contract and we intend to pay our mortgage down to £60-75k (from £125k) in that time.

I am taking time out of employment to look after our soon to be two young children (1 here, 1 on the way in May). That saves us on childcare which is costly anyway and even harder to arrange around the wifes job as it invvolves extensive EMEA travel- I tried a part time evening job (not for the financial aspect BTW) in a call centre but they were less than sympathetic when my wife got stuck in Atlanta because of the Icelandic ashcloud, snowed in while in Switzerland etc etc and I couldn't make work as I had no one to look after my child lol

That's the beauty of Swiss pharma jobs!

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That's the beauty of Swiss pharma jobs!

It was a pharma job she was doing until about 3 years ago however switched to a company in another industry so she could remain in the UK. She was in hospital on a drip a few weeks ago (pregnant) excitedly telling me what all those numbers on the bags of saline meant - you can take the girl out of pharms but not the pharmaceuticals out the girl, it's in her blood it seems and she's chomping at the bit to get back into it :blink:

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  • 277 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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