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Do you believe house prices will be lower in 2025 than now ?


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10 hours ago, adarmo said:

 

In 7 years you'll have paid off about a quarter of your mortgage instead of handing money to letting agents or landlords. 

 

True, although home ownership has many other costs and expenses.  Unfortunately I don't have the stats to hand, but a large proportion of mortgages are now taken with terms of >25 years in order to meet the MMR affordability constraints. In these cases your statement above will not hold.

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If we change the question to "Will the price of a London flat be lower in 2025 than it is today?" then I'd change my vote to it being as likely as not that prices will be lower in 2025 than they are today.

This is the crux of it, some houses will go up, some will fall, some will never be sold at all and so we will never know.

Imagine if some future govt pushed stamp duty up to 50%, so to buy a 200K house, you would would pay 100K in duty. You would need 120K in savings and you'd then still have to pay off 180K with a mortgage. What would happen is that prices would crater, then you would be able to buy the house for 100K and pay 50 K in tax, when you factor in the savings on interest rates, such an increase in stamp duty would probably save you  money.

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10 hours ago, adarmo said:

In 7 years you'll have paid off about a quarter of your mortgage instead of handing money to letting agents or landlords. 

 

Not quite, taking into account compound interest, I make it about 14% or 15% paid off by the 7 year mark.

What matters is not just the rent vs buy decision but also how much are you saving, either directly into savings accounts (when renting) or indirectly by paying off capital on a repayment mortgage.

The details matter, you can be a "home owner" with a 100% interest only mortgage, no saving vehicle and going nowhere financially, or a renter with a good deal on a small place and socking away hundreds every month until you reach the point where you will be able to just buy something for cash.

How much are you earning?
How much rent do you pay?
Where do you want/need to live?
How much would a mortgage cost with current (or higher) interest rates?
If there is a HPC how many years of payments could you lose? (or save if you havent bought yet)

You can figure out these answers for youself without having to argue with random people on the internet.

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46 minutes ago, InlikeFlynn said:

True, although home ownership has many other costs and expenses.  Unfortunately I don't have the stats to hand, but a large proportion of mortgages are now taken with terms of >25 years in order to meet the MMR affordability constraints. In these cases your statement above will not hold.

The only hair splitting there is mortgage term and ignoring overpayments. 

Ok, in 7 years you might have paid off 20% provided you didn't take it over more than thirty years. 

Who cares really. Houses might be cheaper. They might not be. It's only a really relevant question of you don't intend to use it for shelter. 

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12 minutes ago, Habeas Domus said:

Not quite, taking into account compound interest, I make it about 14% or 15% paid off by the 7 year mark.

What matters is not just the rent vs buy decision but also how much are you saving, either directly into savings accounts (when renting) or indirectly by paying off capital on a repayment mortgage.

The details matter, you can be a "home owner" with a 100% interest only mortgage, no saving vehicle and going nowhere financially, or a renter with a good deal on a small place and socking away hundreds every month until you reach the point where you will be able to just buy something for cash.

How much are you earning?
How much rent do you pay?
Where do you want/need to live?
How much would a mortgage cost with current (or higher) interest rates?
If there is a HPC how many years of payments could you lose? (or save if you havent bought yet)

You can figure out these answers for youself without having to argue with random people on the internet.

 Yeah, without arguing. 

Talk me through your calculations and assumptions. 

Mine are based on a 25 years mortgage at 1.5% (15% deposit). And it's roughly..... 

All you other stuff about saving is not relevant at all in terms of deciding to buy a house. 

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10 hours ago, hayder said:

Can they maintain that for the next 7 years? 

Yes. 

Help to buy at 80% up to £3M 

Include resales in Help to Buy

Load em up.

Not a chance.. 

1) it’s political suicide for the Tories.. social collapse if this continues..

2) our housing benefits bill is £26 billion thanks to rent/housing/imigration.. 

As generation rent retire with NO assets, that bill will spiral.. Remember we cut the police budget by another £750 million recently as we can’t afford it.. But housing benefit will rise by billions as those who have been priced out retire without the means to pay their rent.. if they are forced to move to cheaper rent this could also lead to problems with their care as they are moved away from their support networks..

on top of increasing housing for immigrant families on low pay..

Housing benefit Its a ticking time bomb! It will take more of our taxes than schools and police combined within a couple of years.. just to pay rent! 

3) our Government debt is £2 trillion, plus another £5 trillion for future pensions, our credit cards and loans are back to 2007 levels why cost of living is even higher.. 

4) I see jobs disappearing on a daily basis.. we are near gridlock in London from Uber drivers alone.. There seems to be work, but I think allot of it is 16hours a week with benefits.. There is no real economy just a thin veneer of something that looks like one..

5) Trump/FED 

 

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8 hours ago, Kosmin said:

What do you mean by reset and how could it be done?

Normal economics is 4 years of growth 1 year to cull the trash. If you listen to current media bs... 10 years of continuous growth... through cheap credit allowed businesses to continue to thrive on very little liquidity (actual profits).

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14 hours ago, Beary McBearface said:

TL;DR - An insistence that it's always the right time to buy is bubble mania. The UK residential property market has a storied history of boom-bust cycles and the 'It's always the right time to buy, whatever the price' attitude is a big part of how the mania works. Posting on HPC advocating mania is pretty daft. Part of what draws lots of people here is the question of how to operate in a world where the mania of others weighs so heavily on houses prices. I don't know who you think you're talking to - or talking about - but they exist primarily in your drab and predictable troll imagination.

There's no way that you've actually been reading the forum; the idea that the forum thinks house prices are going down is dubious. Going over this for what feels like the hundredth time:

  • there are vocal posters who are convinced that house prices are going to continue rising
  • there are vocal posters who anticipate prices holding their current level
  • there are vocal posters who think prices will fall
  • there are vocal posters who argue that it's not possible to know which way prices are going to move

It's obviously just plain trolling to rock up and start dishing out nonsense about "you guys" needing to be "convinced you've been wrong". For me it's just an interesting question; when do prices next shift direction and for how long, how fast and how far will they move. Compare these two charts of the Land Registry price data:

London

image.thumb.png.6b6fc83d7f10efcced986f4742e96970.png

North East

image.thumb.png.cae7656baf00f0a011bd5fc4b7cd8673.png

In the North East house prices went nowhere for a decade. In London they stalled for about four years then went up 70% (and then stalled again perhaps - or maybe they've just started a period of sustained falls - who knows?). It's clearly a complicated market.

Many people are drawn to the forum because they are puzzled as to why with good incomes from professional work they can't afford to buy when the record shows that parents, aunts, uncles and grandparents with much more modest jobs were able to buy housing. Your perspective, which is predicated on posters choosing not to buy, may be accurate for some posters but it will be inaccurate for others

People are also drawn to the forum because they know full well that the UK housing market has boom-bust cycles and whilst buying at the 'right time' is a blessing buying at the 'wrong time' can be a curse. You won't need to go far to find an anecdote about a couple or a pair of mates who bought together expecting not to be anchored to the purchase only to find themselves trapped together for five or ten hateful years because their timing was bad and they got stuck in negative equity and thus stuck with each other.

People ought to make informed choices. House purchases should be informed by the reality that over a ten year horizon there's a non-trivial chance that the price of a house in the UK could fall and then fail to recover the loss in value. It's just a daft trolling to conflate people discussing the reality of house price volatility with your own troll fantasy of a bunch of people posting on a forum all convinced that a house price crash is always just around the corner.

Personally, I don't know where London house prices will be in ten years. They might be up, but they might be down. I think anyone who makes their plans on the basis of your insistence that they'll definitely be up is asking for trouble and if they avoid trouble it'll be luck not judgement that saved them. None of this is an academic matter. There are lots of people in the North East with interest-only mortgages who absolutely screwed themselves in 2007 for the next decade and change by stretching to pay 2007 prices they couldn't actually afford. Will the crop of London 2017 buyers fare better? Time will tell.

Is it always the right time to buy? If you can afford it, then probably, yes, it is always the right time to buy, but nobody can know the future; if you want a house today then you have to pay today's prices. By the same token it's always the right time not to buy - because, again, you don't know the future. There are people who've poured two massive BOMAD deposits and a 40% London Help to Buy equity loan trying to get onto the 'housing ladder' in London over the last couple of years. Past experiences of things like Barratt Dreamstart (link) show that doesn't always work out.

People need to take the resources they have and find a way to secure a lifetime's supply of shelter. It's a challenging issue for many households and this forum is a place where we can discuss that issue. Trolls can't subtract from the forum's content and they certainly aren't a reliable witness on what the forum is for or what its posters think.

 

Man said TLDR then posted a 200 page case study in nonsense. lol.

Bro,

 

Your at the roulette table with all your money on zero.

Its landed on black and your sitting there talking about the dynamics of the wheel and the amount of force the wheel was spun with and the dimensions of the ball and bringing out graphs and charts and tables and the guy who span it is like:

 

You lost mate. You predicted wrong. Do you want to play again or are you gunna sit here justifying your loss for 10 years?

 

lol.

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9 hours ago, macca13 said:

Not a chance.. 

1) it’s political suicide for the Tories.. social collapse if this continues..

2) our housing benefits bill is £26 billion thanks to rent/housing/imigration.. 

As generation rent retire with NO assets, that bill will spiral.. Remember we cut the police budget by another £750 million recently as we can’t afford it.. But housing benefit will rise by billions as those who have been priced out retire without the means to pay their rent.. if they are forced to move to cheaper rent this could also lead to problems with their care as they are moved away from their support networks..

on top of increasing housing for immigrant families on low pay..

Housing benefit Its a ticking time bomb! It will take more of our taxes than schools and police combined within a couple of years.. just to pay rent! 

3) our Government debt is £2 trillion, plus another £5 trillion for future pensions, our credit cards and loans are back to 2007 levels why cost of living is even higher.. 

4) I see jobs disappearing on a daily basis.. we are near gridlock in London from Uber drivers alone.. There seems to be work, but I think allot of it is 16hours a week with benefits.. There is no real economy just a thin veneer of something that looks like one..

5) Trump/FED 

 

help to buy doesn't go on the government's debt pile as far as I know. 

what better way to get rid of housing benefit, boost builders shares and maintain house prices? 

get all the benefit claimants into a help to buy even they can afford!

 

is it insane? idiotic? Yes. But that never ever stopped them in the past.

Edited by hayder
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27 minutes ago, TryingToWin said:

Many people are drawn to the forum because they are puzzled as to why with good incomes from professional work they can't afford to buy when the record shows that parents, aunts, uncles and grandparents with much more modest jobs were able to buy housing. Your perspective, which is predicated on posters choosing not to buy, may be accurate for some posters but it will be inaccurate for others

@Beary McBearface is right on the money with this for me. I have since bought and been fully branded a troll by many on here. I'm sure it's just good humour for the most part (there are some cantankerous folks like the CountofNowhere who might have suffocated when his bubble ran out of air), but I still think it's wrong that I had to be on a decent salary, with a partner on a decent salary, and wait til my mid thirties to be able to buy something fairly run down (but it a lovely town). 

22 minutes ago, TryingToWin said:

Man said TLDR then posted a 200 page case study in nonsense. lol.

Bro,

 

Your at the roulette table with all your money on zero.

Its landed on black and your sitting there talking about the dynamics of the wheel and the amount of force the wheel was spun with and the dimensions of the ball and bringing out graphs and charts and tables and the guy who span it is like:

 

You lost mate. You predicted wrong. Do you want to play again or are you gunna sit here justifying your loss for 10 years?

 

lol.

And in defence of Beary, do we know he doesn't own? How has he lost? How much has he lost? What if he stuck his deposit on bitcoin in 2008 and posts from his Island McIsland?

His analysis is pretty cutting and he leaves most of it to the reader to extract a conclusion. I hold the view that he/she adds immense value to this forum and the debate. 

It is interesting you choose a casino's roulette wheel as an approximation of playing the property market. Was this subliminal?

P.S. it's 'You're at the roulette table' (contraction of you are, not the possessive 'your').

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43 minutes ago, TryingToWin said:

Man said TLDR then posted a 200 page case study in nonsense. lol.

Bro,

 

Your at the roulette table with all your money on zero.

Its landed on black and your sitting there talking about the dynamics of the wheel and the amount of force the wheel was spun with and the dimensions of the ball and bringing out graphs and charts and tables and the guy who span it is like:

 

You lost mate. You predicted wrong. Do you want to play again or are you gunna sit here justifying your loss for 10 years?

 

lol.

 

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21 hours ago, TryingToWin said:

Reality doesn't care about the shallowness of my logic or morality or reason at all.

I could have rolled a bunch of chicken bones in my front room in 2009 that told me to buy a house.
Reality simply does not care about my skills of logical deduction. House prices went up astronomically.

There's people on here spouting off the same stuff for 10 years.
If a guy is wrong for 10 years, your not a sceptic or a troll if you question him, your exercising some bloody common sense.

 

Except house prices didn't go up astronomically after 2009. They continued to fall nationally for three years until FLS and HtB arrived in 2012/13.

real-house-prices-91--600x470.png

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5 hours ago, maverick73 said:

Normal economics is 4 years of growth 1 year to cull the trash. If you listen to current media bs... 10 years of continuous growth... through cheap credit allowed businesses to continue to thrive on very little liquidity (actual profits).

Yes, but what exactly do you mean by reset and how could it be done? Raising rates would cull trash, but would do nothing about the many who have crystallised their HPI gains. A reset would have to do something about this as well.

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On 01/05/2018 at 15:08, SurreyVisitor said:

But this is very unlikely to happen, like a junkie addicted to heroin, the government cannot turn off the money taps.  They will do everything they can to keep rates near zero and keep printing the money.  They have discovered the secret to the miracle economy, virtually zero interest rates and can never go back.

I don't think it will happen voluntarily. Interest rates can only be controlled for so long.

Besides, do you want to live in a place where all the houses are owned by cryptkeeper vampires? At some point, its time to move.

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3 hours ago, Kosmin said:

Raising rates [...] would do nothing about the many who have crystallised their HPI gains.

Unless you mean "have sold up" (which is a very small number of the total), their gains are on paper. Rising rates should drop house prices.

7 hours ago, TryingToWin said:

You lost mate. You predicted wrong.

Not if you live outside of the South East.

It's like on the Big Short. Being wrong on the timing is the same as being wrong...but shortly after that comment, the bloke made obscene returns on his bet. 

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7 hours ago, TryingToWin said:

Man said TLDR then posted a 200 page case study in nonsense. lol.

Bro,

 

Your at the roulette table with all your money on zero.

Its landed on black and your sitting there talking about the dynamics of the wheel and the amount of force the wheel was spun with and the dimensions of the ball and bringing out graphs and charts and tables and the guy who span it is like:

 

You lost mate. You predicted wrong. Do you want to play again or are you gunna sit here justifying your loss for 10 years?

 

lol.

It's a long time since I've seen quite such an illiterate, antagonistic, troll post.

Keep it up sonny, you're doing a fine job of making a fool of yourself.

 

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19 minutes ago, Locke said:

It's like on the Big Short. Being wrong on the timing is the same as being wrong...but shortly after that comment, the bloke made obscene returns on his bet. 

Agree. It's very much like The Big Short (great film and book).

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23 hours ago, SurreyVisitor said:

It is, interest rates are near zero this time and the BoE will never put rates up due to Heroin like addiction people have to credit.

 

Government got your back eh? Well yes they have distorted the market to enrich favoured groups at the expense of other groups but if you think they are in control and distorted markets are stable you are in for a surprise. 

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10 hours ago, TryingToWin said:

You lost mate. You predicted wrong. Do you want to play again or are you gunna sit here justifying your loss for 10 years?

The analogy fundamentally doesn't work.

If you gamble on roulette, then if you lose your stake is not returned. If you win, your stake is returned and your winnings are added to it.

If you are unable to buy a house and house prices inflate then you do not lose your stake (any deposit you managed to save) and you can't really be said to have 'lost' any capital gain made by houses - you were in no position to capture the capital gain as you couldn't afford to buy; where there was no opportunity there can be no lost opportunity.

I think even in the case of people who could have bought but chose not to, the analogy still doesn't work. Again, they don't lose their stake. They may feel that with the benefit of hindsight they allowed a potential capital gain to go uncaptured but analysis with the benefit of hindsight is not analysis, it's storytelling.

I buy a lot of the ideas set out by Ian Mulheirn, for example here; housing hasn't actually got a great deal more expensive, rents have not inflated madly - it's just house prices that have shot up. What one needs from the housing market is shelter. Shelter isn't getting any more expensive because there isn't a dramatic shortage of housing. If you looked at rents, looked at your income, looked at your pension prospects and decided that you didn't like the look of house prices then you may have made a perfectly reasonable choice not to buy. It already looks as if the sheer volume of sharp-elbowed middle class households getting stuck in the private rented sector is going to improve the balance of power between tenants and landlords over the coming years, so what you get may turn out to be better than what you signed up for.

I realise that there are some delusional numpties like your good self who believe that houses can be magical piggy banks for everyone forever and that all you need to do is wish upon a star and buy a house and all shall be well (and that anyone who sees things differently is "wrong") but that's just extrapolating from the particular circumstances of the recent past, and the extrapolation is problematic given that the future looks likely to be different to the past (boomers dying off, the multi-decade secular decline of interest rates reaching the zero lower bound). (In fact, it's probably worth reposting the Neal Hudson research for the CML on that for those who've not seen it.)

You're small-minded and your ability to rightly conceive of others is frustrated by your limitations. You can repeat your fantasy about me being somebody who ten years ago bet against house prices until you get banned, but it's just a fantasy (making it pretty ineffective trolling BTW). The truth, which I've posted already, is that I'm someone who came to this forum in 2011 to learn about why historical links between house prices and earnings were so out of whack. There was no gambling, only curiosity about something that had already happened; how did houses get so expensive and how did they stay expensive even after the financial crisis? For some of us knowledge is its own reward and no time spent pursuing knowledge is ever truly wasted. (Also, y'know - arguing on the internet is more distracting that the dishes, obvs.)

duty_calls.png

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3 hours ago, Bruce Banner said:

It's a long time since I've seen quite such an illiterate, antagonistic, troll post.

Keep it up sonny, you're doing a fine job of making a fool of yourself.

I welcome all properly crap trolls. Accomplished trolls are a problem; old school morons are entertainment.

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10 hours ago, zugzwang said:

Except house prices didn't go up astronomically after 2009. They continued to fall nationally for three years until FLS and HtB arrived in 2012/13.

real-house-prices-91--600x470.png

 

This is graph is adjusted for inflation, the actual cost of houses nationally didn't fall between 2009 and 2012.  They bounced back a bit after 2009, then plateaued until 2012/2013, where as you say FLS & HTB arrived.

224582578_Figure2_AverageUKhousepriceJanuary2005toFebruary2018.png.940a57d0f544f4d078a457598ccfdcfc.png

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Just now, Just_Do_It said:

This is graph is adjusted for inflation, the actual cost of houses nationally didn't fall between 2009 and 2012.  They bounced back a bit after 2009, then plateaued until 2012/2013, where as you say FLS & HTB arrived.

It's a bit wild to redefine nominal as actual. Real prices are important because there really is inflation. If house prices are flat and wages aren't (not what we've tended to see, obviously) then houses really are getting cheaper and delaying a purchase is a reasonable thing to do. Likewise the otherwise ostensibly bonkers appetite Venezuelans have for credit is actually totally reasonable as it is predicated on the fact that interest rates on private borrowing are regulated and don't reflect the inflation in the economy; in real terms it makes a lot of sense for Venezuelans to load up on debt as inflation will crush the real value of their nominal debts far faster than the interest rate can compound them. Nominal is not actual.

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