Eager FTB Posted January 7, 2012 Share Posted January 7, 2012 We have the gloomiest economic outlook for years, but yet house prices are still very high, even rising in my area searches on rightmove. Why are house prices seemingly immune from economic circumstances? Most people I know we're expecting prices to plummet following the trend of previous crashes in the past, but yet this hasn't happened. I know a few people who are waiting in the wings (me included) to buy, but are put off by high prices and enormous mortgages! I wonder if we will ever return to sensible affordable price levels? Quote Link to comment Share on other sites More sharing options...
IDN Posted January 7, 2012 Share Posted January 7, 2012 this is it! With all the bad economic data around you would have thought house prices would come down as well...Unfortunately they aren't, thats why i take bad economic news with a pinch of salt cos its having no effect on house prices in my area...i think low interest rates might have something to do with it as we've had low interest rates for a few years now, so there must have been a fair amount of people coming off fixed, going on to low rate variables, so they havent had to sell. I dunno! Quote Link to comment Share on other sites More sharing options...
KingBingo Posted January 7, 2012 Share Posted January 7, 2012 By extremely low volumes of transactions and high employment among people over 30. People don't HAVE to sell because money is stolen from savers via fantasy low interest rates to prop up the feckless. As long as they have a job they can carry on paying the mortgage. Many would like or need to sell, but are simply unwilling to face reality so their properties remain unsold. But it cannot last forever. There is a massive bubble in government debt around the world, when that bubble bursts the shockwaves will take out remain assets prices. When that will be i don't know, i know its overdue, but i have learned the hard way that markets can remain irrational longer than I can remain solvent/willing to rent. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted January 7, 2012 Share Posted January 7, 2012 By extremely low volumes of transactions and high employment among people over 30. People don't HAVE to sell because money is stolen from savers via fantasy low interest rates to prop up the feckless. As long as they have a job they can carry on paying the mortgage. Many would like or need to sell, but are simply unwilling to face reality so their properties remain unsold. But it cannot last forever. There is a massive bubble in government debt around the world, when that bubble bursts the shockwaves will take out remain assets prices. When that will be i don't know, i know its overdue, but i have learned the hard way that markets can remain irrational longer than I can remain solvent/willing to rent. House prices are falling and will continue to fall. In the meantime, I receive more in bank interest on the money that I would have to draw out to buy the house I'm renting than I pay out in rent . Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted January 7, 2012 Share Posted January 7, 2012 The correction will come, the current status quo is impossible to maintain over the long term. However I'd argue one of the reason prices haven't corrected yet is the banking sector can't afford a correction as they'll need another bailout which the govt can't afford. Quote Link to comment Share on other sites More sharing options...
EmpiricalBear Posted January 7, 2012 Share Posted January 7, 2012 Firstly, house prices are still high, but are falling in many areas outside London. Secondly, the list of reasons why is now very long. One big one remains the lack of forced sellers thanks to Buy-ToiLet which now supports a large part of the market. According to recent ARLA figures around 40% of new landlords are 'reluctant' landlords who are entering BTL because they cannot sell a house or want to wait until house prices rise more (ie: they have not accepted falling prices). Interestingly ARLA note that these new landlords include many with semi-detached and detached houses, a historically small part of the BTL market. The fact that the powers on high have lent banks a couple of billion quid so that they don't have to repossess or 'mark to market' their properties is the biggest reason IMHO. I'm probably buying this year, in an area where prices have barely risen since 2004, so the picture isn't uniformly gloomy. OTOH, houses will not seem cheap again in the near future because of falling real wages. This means houses may be about as cheap as they get, even if they fall a little in nominal terms. When you look at building costs and inflation it will be very few years before houses are a reasonable market value... even if they remain unaffordable for many. Wish it wasn't so, but I think it is. Quote Link to comment Share on other sites More sharing options...
R K Posted January 7, 2012 Share Posted January 7, 2012 Down c. 30% so far, 6-7% over the last year and another 20% on top of that currency adjusted. Disguised somewhat due to real falls and global wages being slashed via sterling devaluation. Quote Link to comment Share on other sites More sharing options...
picnic Posted January 7, 2012 Share Posted January 7, 2012 With interest rates at record lows.. A government refusing to let the market find its real level... IMO....don't even think of buying. I have sold several flats since early 2008 and the prices are dropping. I would say about 15% down in LONDON if you actually want to sell. Quote Link to comment Share on other sites More sharing options...
bmf Posted January 7, 2012 Share Posted January 7, 2012 House prices are falling and will continue to fall. In the meantime, I receive more in bank interest on the money that I would have to draw out to buy the house I'm renting than I pay out in rent . This may be true, and is interesting, but hardly anyone is a cash buyer who owns zero homes, especially FTBers. Most have to use a mortgage rather than cash buying. Therefore for the vast majority of would-be buyers this has little relevance. For them house prices remain hopelessly high. Quote Link to comment Share on other sites More sharing options...
trippytinker Posted January 7, 2012 Share Posted January 7, 2012 The asking prices don't seem to drop much but if you look at the houses that do sell, apart from the BTL properties, they do tend to go quite a lot lower that the original asking price. Quote Link to comment Share on other sites More sharing options...
winkie Posted January 7, 2012 Share Posted January 7, 2012 House prices are falling and will continue to fall. In the meantime, I receive more in bank interest on the money that I would have to draw out to buy the house I'm renting than I pay out in rent . ....all well and good if you have enough money where the interest/investment covers the rent, most people who have never owned a home before or have not been bequeathed money are unable to do that. ....where the higher paying jobs are the rents are far higher to reflect that, if you are in the fortunate position where you don't have to work or don't have to work to pay the rent and transport costs, the quality of housing, the quality of life and the rents are low to reflect that.....so stuck between a rock and a hard place, dammed if you do dammed if you don't. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted January 7, 2012 Share Posted January 7, 2012 This may be true, and is interesting, but hardly anyone is a cash buyer who owns zero homes, especially FTBers. Most have to use a mortgage rather than cash buying. Therefore for the vast majority of would-be buyers this has little relevance. For them house prices remain hopelessly high. Which is why the the main thrust of housing propaganda, recently, has been aimed at convincing people, with sufficient cash to buy, that they should trade their liquid cash for an illiquid, depreciating, asset. Those with a vested interest in high house prices will stop at nothing to keep the bubble from bursting, but they will ultimately fail. Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted January 7, 2012 Share Posted January 7, 2012 Very little drops in Swansea. One EA listed a whole bunch of about 20 to 30 houses this week and the asking prices, IMPO, were just ludicrous. Certainly above 2007 or 2009. Above last year. A combination of jobs for life in the public sector still being dominant in my area combined with ultra low IRs is propping all of this up. If/When IRs revert to normal it will be interesting what happens to the housing market. Alas, short of some kind of sterling/bond crisis that looks years away. Quote Link to comment Share on other sites More sharing options...
winkie Posted January 7, 2012 Share Posted January 7, 2012 Very little drops in Swansea. One EA listed a whole bunch of about 20 to 30 houses this week and the asking prices, IMPO, were just ludicrous. Certainly above 2007 or 2009. Above last year. A combination of jobs for life in the public sector still being dominant in my area combined with ultra low IRs is propping all of this up. If/When IRs revert to normal it will be interesting what happens to the housing market. Alas, short of some kind of sterling/bond crisis that looks years away. ...out of interest to make any property you may eventually buy affordable or the price you are prepared to pay not including any cash deposit you may have to put down, what percentage of your net monthly pay are you prepared to spend on the repayment mortgage payment? Quote Link to comment Share on other sites More sharing options...
talkinpeace Posted January 7, 2012 Share Posted January 7, 2012 inertia and vested interests Quote Link to comment Share on other sites More sharing options...
KingBingo Posted January 7, 2012 Share Posted January 7, 2012 House prices are falling and will continue to fall. In the meantime, I receive more in bank interest on the money that I would have to draw out to buy the house I'm renting than I pay out in rent . Could you say what rate you are getting and with whom? Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted January 7, 2012 Share Posted January 7, 2012 Could you say what rate you are getting and with whom? Various, but NS&I 3.9% guaranteed growth bond is one. Quote Link to comment Share on other sites More sharing options...
tricksters Posted January 7, 2012 Share Posted January 7, 2012 Various, but NS&I 3.9% guaranteed growth bond is one. I stand to be corrected, but to get even a modest rate like that, do you not have to lock the money within the bond for a couple of years or more such that it can be difficult to access if needed for immediate purchase (i.e. not particularly liquid). Quote Link to comment Share on other sites More sharing options...
exiges Posted January 7, 2012 Share Posted January 7, 2012 Why are house prices seemingly immune from economic circumstances? ZIRP SMI HB Quote Link to comment Share on other sites More sharing options...
exiges Posted January 7, 2012 Share Posted January 7, 2012 I stand to be corrected, but to get even a modest rate like that, do you not have to lock the money within the bond for a couple of years or more such that it can be difficult to access if needed for immediate purchase (i.e. not particularly liquid). You lose some interest but it can be cashed in any time. Quote Link to comment Share on other sites More sharing options...
AC44 Posted January 7, 2012 Share Posted January 7, 2012 Since the prices are going down, it is just a case of keeping employed, cutting down costs and increasing the deposit. The more deposit the better it is and you never know... If the market crashes (which it will do) you ll have more money and you ll buy cheaper.. People forget for example for a mortgage of 200K of 20% deposit, the best mortgage on the market has a cost of 330K. Therefore the actual price of the house is not 250K but 380K for me. Thus, thank you very much but i will save as much as i can. As long as I am saving i do not care about anything else. I see no reason to buy a house and put my self under debt for the sake of the bankers and stupid people.. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted January 7, 2012 Share Posted January 7, 2012 Since the prices are going down, it is just a case of keeping employed, cutting down costs and increasing the deposit. The more deposit the better it is and you never know... If the market crashes (which it will do) you ll have more money and you ll buy cheaper.. People forget for example for a mortgage of 200K of 20% deposit, the best mortgage on the market has a cost of 330K. Therefore the actual price of the house is not 250K but 380K for me. Thus, thank you very much but i will save as much as i can. As long as I am saving i do not care about anything else. I see no reason to buy a house and put my self under debt for the sake of the bankers and stupid people.. Exactly, with prices falling and set to fall further, now is a bad time to buy a house however you pay for it. Even Ray Boulger admits that prices are likely to fall a further 4% this year . Quote Link to comment Share on other sites More sharing options...
FrozenOut Posted January 7, 2012 Share Posted January 7, 2012 What I don't get is the US has low interest rates, just like we do - but they got their house price crash! I used to earn in interest enough each month to cover my rent, sadly not anymore - Rent = £750 - Interest on savings = £200 Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted January 7, 2012 Share Posted January 7, 2012 I might have to put you on ignore. EDIT: Either that or I may have to kill myself. I only labour the point to make it quite clear to those who are trying to scare potential cash buyers out of cash and into the housing market, with dire warnings of hyper-inflation, currency destruction etc, that it just doesn't make sense to buy at the moment even without a mortgage. Cash is king in a falling market. Quote Link to comment Share on other sites More sharing options...
trevor_1977 Posted January 7, 2012 Share Posted January 7, 2012 You lose some interest but it can be cashed in any time. Do you have to pay tax on this . Quote Link to comment Share on other sites More sharing options...
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