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dpg50000

Genuinely Can't Understand Current Market.....

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Friend of mine bought a starter type house (2 bed terraced) in a not-so-nice area of Preston 3 years ago for £54K. He's done a bit of work to it - mainly cosmetic, plus new double glazing.

He put it on the market to trade up 2 weeks ago at £105K (practically double what he paid for it). Having followed all the news on this board, having looked at sold prices in the area etc, I felt confident he would struggle to sell and would have to knock at least 10% off.

It sold inside a week, for asking price! These houses are the sort that typically were around £30K 6 years ago. It seems people have become desensitised to the huge amounts of money involved. £100K now is seen a "small change".

Even worse, my friend and his missus went and put an (accepted) offer of close to asking price in on a house, after looking at only a few. They earn probably £48K combined, are near the peak of their earnings, and will have a ~£145K mortage - nearly 3.5 times joint salary...... They aren't rich - indeed one of them has £3K of credit card debts. How the hell will they ever have afford to have kids?

I'm not sure what I'm expecting people to reply to this post with. I'm just stunned and needed to share how I felt. Have things really moved on so much that owing £145K isn't seen as a worry anymore to the average person?

:unsure::blink::huh::o:(

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Property guru - agreed, but when does it stop? My mates house was my absolute, cast iron, unshakeable belief that it would struggle to sell. Maybe it just proves the lack of rational thinking in the market currently. I find it hard to believe that someone has paid basically double what they paid 3 years ago, yet base rates are 2% higher than early 2004. I thought the prices were mad back then.....

A fool - that's the thing. They don't see it as a get rich quick scheme. They want to live in their next house for a long time. It's just they have this unshakeable belief that property never loses value - I'm starting to come round to that way of thinking.....

Actually, this reminds me of a conversation I had with another friend about 4 years ago. He had seen the prices go up in Fulwood, Preston from approx 2001, and complained that a local estate agents had nothing "under 60K" in Fulwood. He was on about 18k at the time. He's now on about 22K, and houses in the area are circa £150K......

I feel better now anyway. I've looked at Rightmove and it's a lot of the same overpriced crap that's been on for the last year. When we were considering moving we couldn't see value in any of the houses on offer - that's not changed at all. We will extend our current house (paying for it when we have saved - no MEW for us) and end up with something similar to the one's we looked at, without having to take on an oppresive mortgage.

I've also been for a walk - nothing like fresh air to calm the mind... :rolleyes:

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I'm starting to think that people will always - always - borrow the maximum they can. So house prices are simply a reflection of the level of risk the moneylenders are willing to take. Very few people understand the sums of money they are borrowing in any meaningful way.

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I'm starting to think that people will always - always - borrow the maximum they can. So house prices are simply a reflection of the level of risk the moneylenders are willing to take. Very few people understand the sums of money they are borrowing in any meaningful way.

Very true. This is also why the coming credit crunch will be so effective.

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Yes, these prices are here to stay and will probably get higher. The reason is people can afford it, as your observations show.

Yes cos jobs are never lost, and interest rates never rise, and house prices never fall!

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I spoke with a high street lender last week, and they told me that prices are predicted to go up for the next ten years, and that has some from Head Office!!!.

I would usually take this with a pinch of salt, but she actually showed me the internal memo.

Prices are predicted to rise to 10x salary!!!!.

Interest rates will increase this year, however 2008 will be the year of decline with regard to rates.

This is not my prediction, and I have to say if they are right, we might just as well Fck off to warmer pastures as this nation will become the most divided nation on planet earth.

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Yes cos jobs are never lost, and interest rates never rise, and house prices never fall!

If there is a massive increase in unemployment, if interest rates rise significantly, then yes, maybe house prices will fall. We're nowhere near that point yet, in my opinion.

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I'm starting to think that people will always - always - borrow the maximum they can. So house prices are simply a reflection of the level of risk the moneylenders are willing to take. Very few people understand the sums of money they are borrowing in any meaningful way.

They'll borrow as much as the lenders will give them when they feel comfortable borrowing.

Sentiment is key to this, once the market turns people will very quickly become a lot more conservative in their borrowing....

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I'm starting to think that people will always - always - borrow the maximum they can. So house prices are simply a reflection of the level of risk the moneylenders are willing to take. Very few people understand the sums of money they are borrowing in any meaningful way.

People have short memories. Debt has risks attached.

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They'll borrow as much as the lenders will give them when they feel comfortable borrowing.

Sentiment is key to this, once the market turns people will very quickly become a lot more conservative in their borrowing....

This is exactly what I disagree with. I think it's the other way round. Or rather, it's academic - when people don't want to borrow they can't anyway.

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Yes, these prices are here to stay and will probably get higher. The reason is people can afford it, as your observations show.

At the expense of virtually everything else ?

Perhaps it won`t take a large increase in unemployment, or a rise in interest rates to bring house prices down. Maybe, just maybe, a large proportion of the population will "see the light" and refuse to pay ever increasing property prices.

Real money is made by working for it. It seems that many people in this country think that they can make money out of property. To a degree, this is true, but when you remove all the VI spin, it`s money earned that actually pays for property, not a 10 x salary mortgage.

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Yes, these prices are here to stay and will probably get higher. The reason is people can afford it, as your observations show.

If people can afford these high prices today, then why couldnt they have afforded them in 1996? Why were prices at a fair level in 1996?

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At the expense of virtually everything else ?

Perhaps it won`t take a large increase in unemployment, or a rise in interest rates to bring house prices down. Maybe, just maybe, a large proportion of the population will "see the light" and refuse to pay ever increasing property prices.

Yes. Why on earth will people refuse if they can afford it? People are desperate for property. That's the reality.

If people can afford these high prices today, then why couldnt they have afforded them in 1996? Why were prices at a fair level in 1996?

The price of property in the past is irrelevant. What matters is that prices are affordable now.

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I'm starting to think that people will always - always - borrow the maximum they can.

It was like that 30 to 40 years ago...the difference is in late '88, '89 and today....if your timing was/is wrong, negative equity will hit borrowers hard and in many cases bankrupt people......it's all about timing....

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I spoke with a high street lender last week, and they told me that prices are predicted to go up for the next ten years, and that has some from Head Office!!!.

I would usually take this with a pinch of salt, but she actually showed me the internal memo.

Prices are predicted to rise to 10x salary!!!!.

Interest rates will increase this year, however 2008 will be the year of decline with regard to rates.

This is not my prediction, and I have to say if they are right, we might just as well Fck off to warmer pastures as this nation will become the most divided nation on planet earth.

Another bear folded.

Man down!!

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I spoke with a high street lender last week, and they told me that prices are predicted to go up for the next ten years, and that has some from Head Office!!!.

I would usually take this with a pinch of salt, but she actually showed me the internal memo.

Prices are predicted to rise to 10x salary!!!!.

Interest rates will increase this year, however 2008 will be the year of decline with regard to rates.

This is not my prediction, and I have to say if they are right, we might just as well Fck off to warmer pastures as this nation will become the most divided nation on planet earth.

......people in Banks need to keep moral up for staff with memos etc etc .....remember the mortgage sales side could soon be over staffed.....and the skills in potential growth areas like credit management are not usually interchangable with sales.......

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I spoke with a high street lender last week, and they told me that prices are predicted to go up for the next ten years, and that has some from Head Office!!!.

I would usually take this with a pinch of salt, but she actually showed me the internal memo.

Prices are predicted to rise to 10x salary!!!!.

Interest rates will increase this year, however 2008 will be the year of decline with regard to rates.

This is not my prediction, and I have to say if they are right, we might just as well Fck off to warmer pastures as this nation will become the most divided nation on planet earth.

There is a difference between predicted and what will actually happen. I recall the same was said in the USA and look what is happening. I have not seen this many For Sale signs since 1989.

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Borrowed money has no value, the true value hits you when you start to repay it, then you then realise how much richer you could have been. Borrowing by over stretching yourself is to gamble your future earnings and a large chunk of your life.

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Friend of mine bought a starter type house (2 bed terraced) in a not-so-nice area of Preston 3 years ago for £54K. He's done a bit of work to it - mainly cosmetic, plus new double glazing.

He put it on the market to trade up 2 weeks ago at £105K (practically double what he paid for it). Having followed all the news on this board, having looked at sold prices in the area etc, I felt confident he would struggle to sell and would have to knock at least 10% off.

It sold inside a week, for asking price! These houses are the sort that typically were around £30K 6 years ago. It seems people have become desensitised to the huge amounts of money involved. £100K now is seen a "small change".

Even worse, my friend and his missus went and put an (accepted) offer of close to asking price in on a house, after looking at only a few. They earn probably £48K combined, are near the peak of their earnings, and will have a ~£145K mortage - nearly 3.5 times joint salary...... They aren't rich - indeed one of them has £3K of credit card debts. How the hell will they ever have afford to have kids?

I'm not sure what I'm expecting people to reply to this post with. I'm just stunned and needed to share how I felt. Have things really moved on so much that owing £145K isn't seen as a worry anymore to the average person?

:unsure::blink::huh::o:(

As a bear i have to say these figure look fairly reasonable , they earn 48k joint and are having a mortgage of 145k , but the big question is what type of mortgage is it , if it's interest only , then it's not so clever .

Trading UP to a 145k property :lol: round here there is jack sh1t for 145k .

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