Wednesday, June 4, 2008

Hometrack – “10% fall in prices will enable a fifth of those currently priced out of the market to buy a two- or three-bedroom home”

Falling prices 'help home buyers'

Falling house prices may mean tens of thousands of young working households are able to buy a home this year for the first time, a report says. The analysts Hometrack say a 10% fall in prices will enable a fifth of those currently priced out of the market to buy a two- or three-bedroom home.Their report says 28% of young people in work in the UK are unable to buy even their cheapest local properties. The situation is worst in London, followed by south-west England. The most affordable part of the country for home buyers is the North East where only 17% of young households are priced out of home ownership.

Posted by jack c @ 08:56 AM (800 views)
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11 thoughts on “Hometrack – “10% fall in prices will enable a fifth of those currently priced out of the market to buy a two- or three-bedroom home”

  • waitingfor hpc says:

    me thinks that they have now got the addiction to falling prices ….. they will wait longer now!

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  • Could have sworn when I heard this on Radio 2 news at 8:0am the spin was Hometrack reports 10% fall and 28% priced out (and the rest), and that this was not seen as positive because they couldn’t get mortgages – i.e., house price falls were of no benefit sort of thing.

    It defies logic… << shouts at radio >>. Thought that some ‘editor’ was putting his/her own spin on it.

    Yet on text and BBC online the ‘benefit’ is reported.

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  • Headline stat says it all really – if a 10% fall will price back in a fifth of those priced out, how far does it have to fall to price back in all of them??

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  • And how to educate those that have been priced out to sit tight a while longer.

    I know of 2 young families that have exchanged in the last 2 weeks – we all have our lives to get on with but I’m frankly surprised. One of them had sold to rent in October, perfect timing you’d think !

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  • montesquieu says:

    There’s a wonderful irony here, that rents (and consequently yields) have effectively reduced in real terms – because BTL has increased supply. The BTL sheeple really did their homework there …

    ‘The main reason for renting becoming cheaper than buying in the past few years has been the rapid growth of the buy-to-let market, which has led to nearly three million homes now being available to rent. ‘

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  • The rental yield the house I rent is 3% at last summer’s valuation. A sensible BTL yield at today’s rates should be around 8% give or take, which means the property was overvalued by 60%.

    The present value of savings through renting verses buying the house stood last year at over £250,000. That’s a pension of over £1,000,000 when I retire. Can anyone who says that their house is their pension explain this to me please?

    It looks to me like NOT buying a house is my pension, as long as I save as I go. Remember that word – “save”?

    Give me strength.

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  • I see your angle montesquie but the fact is 3 million homes are now not available for families to own and the purchase of these homes on interest only platforms by btlers which are used to offset tax, has pushed the price of them out of families reach who should be purchasing them with a repayment mortgage so they are payed off when the occupiers decide to retire.
    I don’t see what’s so wonderful about that irony.

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  • Does anybody else feel that the government needs to put a limit or serious taxes on multi-property owners because if house prices continue to fall, the same guys that drove up the market in the buy to let frenzy will return, often cash buyers so falling prices will probably mean more landlords with big lumps of cash. I hear all the time of investors with hundreds of properties. Is it really acceptable to allow such ownership of propery. Should it be regulated. If not, we are gonna end up down the same road in a few years time except those that have benefitetd will be the rich and the current landlords of which there are many. The first time buyeers coudl end up being priced out again.

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  • Sceneclub68 says:

    “The main reason for renting becoming cheaper than buying in the past few years has been the rapid growth of the buy-to-let market, which has led to nearly three million homes now being available to rent.” (last para of the article)

    What absolute nonsense. The fact is that rents stay more in less in line with earnings: the reason why it has in the last few years become cheaper to rent than to buy with a mortgage is our old friend massive HPI.

    That said, it does seem that in certain localities (Leeds, Manchester) with lots of newbuild flats, rents have indeed been driven down by oversupply, and of course one’s heart bleeds for BTL landlords thus affected.

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  • @ Jackas
    Apologies I didn’t fully understand your statement but essentially there’s nothing wrong with buying a family sized house say in your 30’s paying it off over 25 years, spending the last 5 years of your working life building up some extra cash, then down sizing and pulling another chunk of cash out to help fund your retirement. In addition hopefully you’d of had a couple of hundred pounds a month spare to perhaps purchase equities with over the 25 year period putting them into a SIPP or such like to keep the tax man away. And I’m sure this money can be extracted from your earnings before paying tax on it. (I’m not an IFA).

    Even using this method you’re going to need a pension pot approximately 20 times larger than the amount you want to draw each year. IE £15k PA will need at least £300k savings.

    That’s an awful lot of money to just ‘save.’ In addition if you’ve spent you’re life renting and not paying off your house you’d better make an allowance to save enough extra to pay rent for the rest of you’re life aswell. That’ll be another 12k per annum which is another 2-300k you’ll need to save.
    So providing you can save in excess of 20k per annum you’ll be fine.
    Unfortunately this is the route the 18-40 age group are being pushed down by the government. IT WILL END IN DISASTER.

    Investment funds/banks etc. seem to have been able to get away with massive under performance (endowments etc.) which has discouraged people from investing. (Myself included).

    The property market has then been opened up for unbridled speculation, causing the current situation.

    This country is just not set up for long term renting as an option.

    No-one has planned it out as 20 years down the road is not a vote winner.

    There is going to be an huge problem and it’s approaching faster than you think.

    So when the time is right I suggest you do buy a house – with a repayment mortgage – and keep saving.

    Hope that helps.

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  • @ monkey
    Yes there should be a huge restriction put on property investment.

    My personal view is that we should be investing in British firms that design and manufacture products for the international market. That would surely be the best route for the country and all of us.

    Houses should be homes. And our aim should be for everyone to own their own. Remove speculation from the market and everyone will be able to afford a home and have enough spare to invest in the above for their pension.

    The exception to this would be tourism properties and small developments of rental properties for short term rents (contractors out of area etc.)
    These types of properties should be held by local authority owned investment fund which local people can by shares in the same as other PLC type shares. This would give local people an incentive to make sure the area was kept as good as possible much like home ownership does.
    I don’t see why car parks and sports centres etc. couldn’t be funded much the same way.

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