Marina Posted January 5, 2006 Share Posted January 5, 2006 In the light of the relentless spin on mortgage approvals, refusal to acknowledge prices are going down etc. etc. I have some questions for the bulls. Will property prices ever go down? Can property prices rise further from where they are now? Is an above wage inflation rise in property prices able to carry on forever? Can property ever be said to be unaffordable? If you project what has happened in recent years 10 to 15 years into the future, a typical 3 bed semi would be worth a million. Will this happen? If so, how will new entrants to the market ever be able to afford one? If not, at what point does the price stop rising? i.e. What are the factors that you think can stop house prices from rising? If interest rates went up say just 1% - what effect do you think it would have? Quote Link to comment Share on other sites More sharing options...
Mags Posted January 5, 2006 Share Posted January 5, 2006 In the light of the relentless spin on mortgage approvals, refusal to acknowledge prices are going down etc. etc. I have some questions for the bulls. Will property prices ever go down? Can property prices rise further from where they are now? Is an above wage inflation rise in property prices able to carry on forever? Can property ever be said to be unaffordable? If you project what has happened in recent years 10 to 15 years into the future, a typical 3 bed semi would be worth a million. Will this happen? If so, how will new entrants to the market ever be able to afford one? If not, at what point does the price stop rising? i.e. What are the factors that you think can stop house prices from rising? If interest rates went up say just 1% - what effect do you think it would have? I'm intrigued there have been no responses to this yet Marina. I'd love to know the answers too... Quote Link to comment Share on other sites More sharing options...
zorn Posted January 5, 2006 Share Posted January 5, 2006 In the light of the relentless spin on mortgage approvals, refusal to acknowledge prices are going down etc. etc. I have some questions for the bulls. Will property prices ever go down? Yes. Can property prices rise further from where they are now? Yes. Is an above wage inflation rise in property prices able to carry on forever? Yes. Can property ever be said to be unaffordable? Yes -- many properties are unaffordable for many people right now. If you project what has happened in recent years 10 to 15 years into the future, a typical 3 bed semi would be worth a million. Will this happen? Eventually, yes. In the next 10 to 15 years, no. If the current inflation/interest rate climate continues, I'd see prices doubling every fifteen years, so needing around 35 years to take the average semi from £200,000 to £1,000,000. If so, how will new entrants to the market ever be able to afford one? Increasingly, the property market is going to be driven by the recycling of money from inherited properties. It will become increasingly hard to afford a property if you don't have access to inherited money, as you'll be competing with increasing numbers of people who do. (This is also the reason for my answer on whether above-wage-inflation property price increases can continue indefinitely.) If not, at what point does the price stop rising? i.e. What are the factors that you think can stop house prices from rising? Significant increases in nominal interest rates (could happen), removal of some or all of the tax benefits of owning as opposed to renting (unlikely as electoral suicide), wholesale repeal of the planning laws (unlikely due to effective pressure groups), economic recession/depression (could happen), significant increases in inheritance tax (might happen, but I doubt it), legal limits on mortgage-to-income ratios (not going to happen, despite what people here may want). If interest rates went up say just 1% - what effect do you think it would have? Prices would stagnate -- the "spring bounce" would be cancelled. Quote Link to comment Share on other sites More sharing options...
E Powell Posted January 5, 2006 Share Posted January 5, 2006 Zorn Typical bullsh** Quote Link to comment Share on other sites More sharing options...
apom Posted January 5, 2006 Share Posted January 5, 2006 Increasingly, the property market is going to be driven by the recycling of money from inherited properties. It will become increasingly hard to afford a property if you don't have access to inherited money, as you'll be competing with increasing numbers of people who do. (This is also the reason for my answer on whether above-wage-inflation property price increases can continue indefinitely.) Cool, house's rise to huge hights.. again.. but this time they will not drop.. where will people get the money from if sipps and BTL are gone..?? Surely prices will drop.. NO.. foools... ha ha ha.. Quite simply wait until your parents die, sell their property and then buy.. I can't believe I did not think of that.. Well with parents now living until their children are in their fifties thats late to start a family.. Pretend that its not the most ludicrous thing tried by a bull for a while... difficult.. but try.. Okay.. so that pushes back home ownership and family starting until early fifties.. Then you die earlier.. your children inherit quicker.. It might work.. Sorry.. bless you Zorn Quote Link to comment Share on other sites More sharing options...
apom Posted January 5, 2006 Share Posted January 5, 2006 (edited) oops.. posted twice.. There is not enough money left.. he wants inherrited money to do so.. when our parents die we can afford.. damn man.. I hope to be in my late fifties Edited January 5, 2006 by apom Quote Link to comment Share on other sites More sharing options...
Mushroom Posted January 5, 2006 Share Posted January 5, 2006 Ah the future. Fwiw, my view is increasingly that the future, near and medium term, contains so many "external factors" that could influence economic conditions that any attempt to present a Bull or Bear argument is, in both cases, pure guesswork tinged with hope. Some will guess some aspects correctly and prosper of course. I suspect many won't. Quote Link to comment Share on other sites More sharing options...
dogbox Posted January 5, 2006 Share Posted January 5, 2006 When I was ultr - bullish (late 2004) I argued that a shocking economic jolt was required to really bring a crash. I think I still subsribe to this view. To remind the reasons for no crash: - Interest only - Mr avearge fears the SM and pensions -Trickle down of wealth (parents giving equity whilst still alive) -low rates -self cert - property love -world growth path is immense, we will benefit Quote Link to comment Share on other sites More sharing options...
Mags Posted January 5, 2006 Share Posted January 5, 2006 Well with parents now living until their children are in their fifties thats late to start a family.. Pretend that its not the most ludicrous thing tried by a bull for a while... difficult.. but try.. Okay.. so that pushes back home ownership and family starting until early fifties.. Then you die earlier.. your children inherit quicker.. It might work.. Sorry.. bless you Zorn I guess we'll all be needing to use those assisted reproductive technologies. I would love to have had children by now. I find I keep as close an eye on IVF developments as I do on house prices! Actually, this is something that really infuriates me... the social costs of excessive house prices seem forever lost on the bulls of this world. And what they forget is that people need to live somewhere. Governments will always need to support the have nots. Whose going to be funding that? It'll be interesting to see... When I was ultr - bullish (late 2004) I argued that a shocking economic jolt was required to really bring a crash. I think I still subsribe to this view. To remind the reasons for no crash: - Interest only Can someone explain to me please why on earth anyone with any clue about money would opt for an interest only mortgage? I think I must be missing the point of them! Quote Link to comment Share on other sites More sharing options...
dogbox Posted January 5, 2006 Share Posted January 5, 2006 Can someone explain to me please why on earth anyone with any clue about money would opt for an interest only mortgage? I think I must be missing the point of them! Who said they have any sense? Many people act in the short term and put - off hard decisions, so interest only is the sticking plaster they want. I have IO as it is far better for me to control the pace at which the capital is repaid rather than relying on the lenders front - end loaded model which only benefits them. IO done properly is THE way to go if you care about minimising interest over the term. I guess Ill be leaving this forum as I cant post new topics despite long loyal service and many topics that have recieved large responses. Quote Link to comment Share on other sites More sharing options...
Mushroom Posted January 5, 2006 Share Posted January 5, 2006 Can someone explain to me please why on earth anyone with any clue about money would opt for an interest only mortgage? I think I must be missing the point of them! I believe that, in theory, a repayment vehicle sufficient to pay the capital at maturity must be in place. I've read that this requirement is not actively followed up. You just say you've started some savings vehicle and that's ok. Doesn't mean you carry on saving. Then, never forget houses only ever go up in value, thus you can't lose can you. In my day it was endowment mortgages. For a time they worked and indeed did for us although our last mortgage was a mix of endowment and repayment. However we had 2 endowments and only needed one for capital repayment. More by luck than design we though never had to pay stupid money for a house. Which is what makes me so angry about the current situation. Who said they have any sense? Many people act in the short term and put - off hard decisions, so interest only is the sticking plaster they want. I have IO as it is far better for me to control the pace at which the capital is repaid rather than relying on the lenders front - end loaded model which only benefits them. IO done properly is THE way to go if you care about minimising interest over the term. I guess Ill be leaving this forum as I cant post new topics despite long loyal service and many topics that have recieved large responses. You should be able to post new topics. You challenge and, from my readings, based on your true experiences and your own opinions. I think you are needed here. Just my opinion from the dark. Quote Link to comment Share on other sites More sharing options...
dogbox Posted January 5, 2006 Share Posted January 5, 2006 You should be able to post new topics. You challenge and, from my readings, based on your true experiences and your own opinions. I think you are needed here. Just my opinion from the dark. Yea, it would be nice to know why I cant post. Quote Link to comment Share on other sites More sharing options...
Bemused Posted January 5, 2006 Share Posted January 5, 2006 Yea, it would be nice to know why I cant post. You have the wrong viewpont - this is a local site for local posters Quote Link to comment Share on other sites More sharing options...
Guest Charlie The Tramp Posted January 5, 2006 Share Posted January 5, 2006 Yea, it would be nice to know why I cant post. You should now be able to post. One question if you say you can`t post how did you post this reply. Quote Link to comment Share on other sites More sharing options...
theChuz Posted January 5, 2006 Share Posted January 5, 2006 I guess Ill be leaving this forum as I cant post new topics despite long loyal service and many topics that have recieved large responses. [removed by someone who should read to the end of the thread before posting ] Quote Link to comment Share on other sites More sharing options...
CrashIsUnderWay Posted January 5, 2006 Share Posted January 5, 2006 I think he means he cant start dogbollox threads. but then again i cant start crash threads either. [ Moderator: We regret there are some problems we are trying to rectify] Quote Link to comment Share on other sites More sharing options...
dogbox Posted January 5, 2006 Share Posted January 5, 2006 You should now be able to post. One question if you say you can`t post how did you post this reply. Couldnt post new topics - thats what I meant. I wondered why this is/was? Quote Link to comment Share on other sites More sharing options...
Guest Posted January 5, 2006 Share Posted January 5, 2006 (edited) When I was ultr - bullish (late 2004) I argued that a shocking economic jolt was required to really bring a crash. I think I still subsribe to this view. To remind the reasons for no crash: - Interest only - Mr avearge fears the SM and pensions -Trickle down of wealth (parents giving equity whilst still alive) -low rates -self cert - property love -world growth path is immense, we will benefit - Interest only I accept as a factor, but may get tightened out of existence. - Mr avearge fears the SM and pensions Not sure. Mr Average who takes a cursory glance at the SM will realise it's done summat since 2003. People will go back to the SM just as they went back to property!! There's a defo element of forgive-and-forget over time. IMO People don't understand markets, when to buy and when to sell. This applies to both property and the Stock Market. I don't know enough to comment on Pensions, OK there were high profile bad things happening BUT there was also a lot of IMO spin "your house can now be your pension" just to inflate property. -Trickle down of wealth (parents giving equity whilst still alive) I accept as a factor in the boom. Parents willingness to do this probably had to do with their own confidence about their own house while prices were still obviously going up. -low rates Please remove this from the list. They aren't "low" it's all relative. What matters is the differential between the rate at which you borrow and the current rate. Maybe with some lag time, usually I see rates becoming priced into property. Rates cut to a third = House Prices Triple. This is exactly what's ended up happening since the last trough. We, IMO, have 3.5% priced in still. Hence stagnation while rates are 4.5%. However, base rates don't say what mortgage lenders will ACTUALLY lend. (see Dr Bubb's ongoing tightening thread). -self cert I don't know a right lot about this, but it gets a lot of slating. When was this introduced? - property love Please remove this from your list. This is not a factor that has changed IMO. Not even during the last crash, people still LOVE their OWNING of property. The 'rent is dead money' mantra well and truly survived 89-95. -world growth path is immense, we will benefit Dont understand this. Basically, it's all the money lenders fault. And Sarah Beeny. And Tony and Gordon. And Kirsty and Phil. Stuff 'em. Edited January 5, 2006 by megaflop Quote Link to comment Share on other sites More sharing options...
dogbox Posted January 5, 2006 Share Posted January 5, 2006 - Interest only I accept as a factor, but may get tightened out of existence. - Mr avearge fears the SM and pensions Not sure. Mr Average who takes a cursory glance at the SM will realise it's done summat since 2003. People will go back to the SM just as they went back to property!! There's a defo element of forgive-and-forget over time. IMO People don't understand markets, when to buy and when to sell. This applies to both property and the Stock Market. I don't know enough to comment on Pensions, OK there were high profile bad things happening BUT there was also a lot of IMO spin "your house can now be your pension" just to inflate property. -Trickle down of wealth (parents giving equity whilst still alive) I accept as a factor in the boom. Parents willingness to do this probably had to do with their own confidence about their own house while prices were still obviously going up. -low rates Please remove this from the list. They aren't "low" it's all relative. What matters is the differential between the rate at which you borrow and the current rate. Maybe with some lag time, usually I see rates becoming priced into property. Rates cut to a third = House Prices Triple. This is exactly what's ended up happening since the last trough. We, IMO, have 3.5% priced in still. Hence stagnation while rates are 4.5%. However, base rates don't say what mortgage lenders will ACTUALLY lend. (see Dr Bubb's ongoing tightening thread). -self cert I don't know a right lot about this, but it gets a lot of slating. When was this introduced? - property love Please remove this from your list. This is not a factor that has changed IMO. Not even during the last crash, people still LOVE their OWNING of property. The 'rent is dead money' mantra well and truly survived 89-95. -world growth path is immense, we will benefit Dont understand this. Basically, it's all the money lenders fault. And Sarah Beeny. And Tony and Gordon. And Kirsty and Phil. Stuff 'em. You've asked me to remove some of my factors from MY list. Errrrr no thanks. This isnt Stallinist Russia me old love. 'World growth = the mass drive for economic development from China, India, Russia, Brazil and the rest to include emmerging Africa. Potentially the biggest growth preiod ever witnessed. UK will massively benefit. Quote Link to comment Share on other sites More sharing options...
Guest Posted January 5, 2006 Share Posted January 5, 2006 You've asked me to remove some of my factors from MY list. Errrrr no thanks. This isnt Stallinist Russia me old love. 'World growth = the mass drive for economic development from China, India, Russia, Brazil and the rest to include emmerging Africa. Potentially the biggest growth preiod ever witnessed. UK will massively benefit. Go on, remove them. I dare ya! I'm just a bit cheesed about people not understanding the interest rates business, and banging on about them being low. No they're not. They've increased 28% since the lowest point 3.5 -> 4.5. In the same way that an increase from 10% -> 15% is a 50% increase. I've touched upon the PRICE business in my above post, and again, I'm surprised people don't spot this. Yeah, 4.5% for a 45K terrace is great. 4.5% for a 125K terrace is not so great (North West). OK, UK will massively benefit. Well, I can't really comment. Benefit when? Individual home sellers / buyers will benefit? Salaries will benefit or deflate? PS. Not your love. I intended no offence. Appreciate you may get a waisting from time to time on here. Quote Link to comment Share on other sites More sharing options...
Marina Posted January 5, 2006 Author Share Posted January 5, 2006 Who said they have any sense? Many people act in the short term and put - off hard decisions, so interest only is the sticking plaster they want. I have IO as it is far better for me to control the pace at which the capital is repaid rather than relying on the lenders front - end loaded model which only benefits them. IO done properly is THE way to go if you care about minimising interest over the term. I guess Ill be leaving this forum as I cant post new topics despite long loyal service and many topics that have recieved large responses. Dogbox - can you explain why you can't post new topics. Have you have been banned from posting new topics? If so I too will be leaving this forum. What's the point of a forum if people with different viewpoints from your own cannot express their opinion? Quote Link to comment Share on other sites More sharing options...
since the beginning Posted January 5, 2006 Share Posted January 5, 2006 Dogbox - can you explain why you can't post new topics. Have you have been banned from posting new topics? If so I too will be leaving this forum. What's the point of a forum if people with different viewpoints from your own cannot express their opinion? To join the Dogbox love in - agreed he should be able to post new topics. And I agree with the IO point, Mr Average doesn't have a brain so will go for the IO option and it will / does have a huge effect. It could take 5 - 10 years for the masses to 'get' IO in a low inflation environment and then panic!! Quote Link to comment Share on other sites More sharing options...
CrashIsUnderWay Posted January 5, 2006 Share Posted January 5, 2006 agree - dear ol' doggiebreath is one of the few reasons to come here anymore, now the crash is upon us.. Quote Link to comment Share on other sites More sharing options...
johnnyw Posted January 5, 2006 Share Posted January 5, 2006 (edited) Is an above wage inflation rise in property prices able to carry on forever? If people borrow a multiplier of their wages eg 3x then does it not follow that if their wages go up 10% they can borrow 30% more? So if you find a house at £100000 and you are earning £33,333 you can buy the house on a 100% mortgage. If your wages go up 10% to £36666 ypu can buy at £110,000 Wages up 10%, house prices up 3x the wage increase. Its the same percentage but the numbers are bigger. Try it at home with a multiplier of 6x In order to break this cycle either people have to choose not to borrow just because they can borrow or lenders have to drop the multiplier. Edited January 5, 2006 by johnnyw Quote Link to comment Share on other sites More sharing options...
Johnney Posted January 5, 2006 Share Posted January 5, 2006 'World growth = the mass drive for economic development from China, India, Russia, Brazil and the rest to include emmerging Africa. Potentially the biggest growth preiod ever witnessed. UK will massively benefit. First post so please don't be too harsh?!? Why will world growth be so good for UK, surely all current western countries will feel considerable pain from world growth? My thoughts are: 3rd world develops industry, taking jobs from 1st world. 1st world economys shrink - as currently unstainable as manufacturing/invention is surely first run of GDP. Current 3rd world become 1 st world. Current 1st world become 3rd world supply new 1st world with manufacturing as labour rates SO cheap. Please relieve my fears - I am 27, engineer and quite like England. Love the site by the way, been reading for a year, saving to buy, but not in the very near future. Cheers Johnney Quote Link to comment Share on other sites More sharing options...
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