Wednesday, January 26, 2011

Well Worth a Listen

Homes but no Loans

Gone to Columbia posted this last night, I've just listened to it and it's worth listening to. So I've posted it again.

Posted by str 2007 @ 08:29 PM (2395 views)
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16 thoughts on “Well Worth a Listen

  • I know I shouldn’t start a comment on my own post, but I wasn’t expecting the system to allow me to duplicate a post, so I kept it brief above.

    There are some very serious drops being reported by estate agents eg Bristol waterfront apartments down from £280k to £150k and by the sounds of things further to fall.

    If you need cheering up (I did having viewed two heaps of rubbish today valued at over double what they were when new 10 years ago but now needing a total refurb) then put the kettle on, get a cup of tea and have a listen to this.

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  • gone-to-colombia says:

    Agreed, well worth a listen.
    For the BBC lots of bear meat here!
    Thanks for re posting str 2007

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  • gone-to-colombia – great find – str 2007 thanks for the re-post as this is well worth the half hour listen, genuinely one of the best posts (IMO) on here this year.

    Of course you will now be reprimanded by smugdog for serving up day old bear food !

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  • In listening to this article they imply that oversupply of properties for sale will push down prices at the lower end of the market, they then go onto say most of these properties were bought by first time buyers.

    My thoughts on this if you got a 90%+ mortgage from 2005% onwards then you would not be able to drop your price much because you would not be able to repay your mortgage, hence prices not being lowered and staying on the market for months.

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  • Every government has a big fat lie

    no more boom and bust watch
    we are all in this together watch

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  • If Nolan’s Radio 5 show last August marked the start of the fear phase, I reckon this fascinating show could herald the capitulation stage. BRING IT ON!

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  • Have posted this on the forum too (hope you don’t mind!) for the guys there to salivate over.

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  • Cheers, hope you all enjoyed it.

    Definately seems to be a game of two halves and alot of people genuinely stuck where they are, which is what happened in the last recession.

    The banks are happy lending if you’ve got 40% deposit as their money I’d very safe. But likely falls of 20% particularly to the FTB type properties naturally means they’ll be very cautious.

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  • For those with less than 20% deposits, I meant to finish saying.

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  • little professor says:

    Yeah, was going to post this myself. A must-listen, great stuff

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  • Executive summary / key points:

    A junior doctor in Bristol, first time buyer, wants to buy a £210,000 house with a £25,000 deposit. “The repayments would have been too much – £1,100 – £1,200 a month, when my take-home pay is £2,500 a month.” – That’s equivalent to an interest rate of 5.5% over 25 years. What’s most revealing is the next line: “I don’t really want to put myself in that situation where I can’t actually afford to do anything else with my life.” It’s a buyers’ strike: this FTB could actually afford it; but is choosing not to.

    The next couple in Blackpool bought a house in 2007 and want to sell and move to somewhere bigger already. They can’t sell for the price they want. There’s no point in lowering the price because then they wouldn’t have enough for a 10% deposit on their desired next house. (Not sure what happened to housing being a long-term thing….)

    The high-end of the mortgage market (£750,000+) is holding up well. The middle and lower ends have plummeted.

    In areas with higher-than-average unemployment, there will be repossessions and forced sales, as we’ve seen in America. People in their 50s+ who still have a mortgage and who lose their job will be particularly badly affected, since they’re least likely to be able to find a new job at the same salary level as before.

    The government’s Support for Mortgage Interest (housing benefit for mortgage-holders) was cut from 6% to 3% in September/October 2010. This is starting to affect people now. Unless the government backtracks on that change, it will have a significant effect on the market soon.

    Any rise in interest rates will also sink the housing market.

    Shiny new overpriced waterfront “luxury” apartments in Bristol have plummeted in value (as they have in Manchester, Sheffield, Liverpool, Birmingham, and everywhere else.) The buy-to-let mortgage market has died.

    Bear food…. nom nom nom.

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  • general congreve says:

    nom nom nom indeed. If the Doctor with 25k deposit and 2.5k monthly take home pay feels she can’t afford to buy then the only way is down at the end of the day. Hopefully the sun will start setting soon.

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  • We’re told that a moribund housing market is bad for the economy (less wealth effect, less consumption) but the Bristol doctor has £300 a month more to spend by renting rather than buying.

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  • sibley's b'stard child says:

    Thanks for the synopsis Drew.

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  • there almost seems to be an unwritten rule that so long as buyers can save the deposit then they will buy a house. But IMO a deposit is hard earned (and given low interest rates it is even harder for that deposit to have kept up with house prices) and after saving for years you would not buy a house if you even suspected that the value of the house would fall. i.e. if you got a 100% mortgage, and the house value subsequently fell, it is the banks money that is being lost. So long as mortgage payment is less than rent, you’re a winner who can afford to wait long term. But if you are stumping up the hard earned deposit, and you think that the price will fall, well… you don’t buy, do you.

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