UK House prices: News & Views

[Bosworth]

Just curious, but what/where exactly are you renting for 4k/month?

That's a heck of a lot of money for accomodation for a family of 4, even in some of the plushest parts of London.

 

N2. £4k is very average for moderate houses round here.

[drbubb]

N2. £4k is very average for moderate houses round here.

So that's £1000 per week, and at 5% yield implies a Property worth £ 1 million.

Have I got that right?

 

 

I have a hard time imagining how the UK can sustain prices that high.

[Bosworth]

So that's £1000 per week, and at 5% yield implies a Property worth £ 1 million.

Have I got that right?

 

 

I have a hard time imagining how the UK can sustain prices that high.

 

Yip. Actually house would ask £1.25m, perhaps more. One a couple of doors down has been on at £1.6m for a dew months but not moved.

 

I agree with you. But when you can get a fixed mortgage for 5 years cheaper than buying it's a funny place to be. Of course I'd be screwed after the fix ended but that feels a lifetime away...

 

Interesting times!

[chazza]

So that's £1000 per week, and at 5% yield implies a Property worth £ 1 million.

Have I got that right?

 

 

I have a hard time imagining how the UK can sustain prices that high.

 

Mine was £2.5k for a 3 bed flat in SW London a year ago, so can imagine $4k quite easily, esp with a family.

 

I have 2 kids now, part of the reason i bought.

 

And because we are in a massive bull market in housing

[John Doe]

Mine was £2.5k for a 3 bed flat in SW London a year ago, so can imagine $4k quite easily, esp with a family.

 

I have 2 kids now, part of the reason i bought.

 

And because we are in a massive bull market in housing

 

 

Know what you mean though. the BiL is paying £1700 per month for a 1 bed down there. Wierd for us up in Glasgow, you can get a mansion for that sort of money here

 

Yip. Actually house would ask £1.25m, perhaps more. One a couple of doors down has been on at £1.6m for a dew months but not moved.

 

I agree with you. But when you can get a fixed mortgage for 5 years cheaper than buying it's a funny place to be. Of course I'd be screwed after the fix ended but that feels a lifetime away...

 

Interesting times!

 

And a 10 year fix is only slightly more at the moment.

 

Put that against rising rents for the next 10 years, and the case for buying becomes stronger still.

[BoldAsBrass]

The main reason I bought about a year ago was rising rent. We were going to have to go from £1100 a month to £1700 a month for a similar house - and, at the same time, our capital was earning feck all interest.

 

In 2003 I was absolutely, utterly convinced we were in for a repeat of the autumn of 1988 - with a severe house price crash about to happen as interest rates returned to normal after their 9/11 emergency lows. (Emergency then was bank base rate of 3.5% - lowest for 50 years - if you had told me then that 5 years later bank base rate would be 0.5% I would have bet my last penny that it wouldn't. Strange times indeed.

 

Now, 8 years after I STRed - I am much more humble. A house price crash is surely not on the cards - but, what is, I have no idea. And I'm pretty sure no-one else does either. So might as will think short term. We bought a house that might, or might not, go up, or down, in price - and we are £1100 a month better off by not paying rent - and no fecker of a landlord can kick us out now.

[Van]

The main reason I bought about a year ago was rising rent. We were going to have to go from £1100 a month to £1700 a month for a similar house - and, at the same time, our capital was earning feck all interest.

 

In 2003 I was absolutely, utterly convinced we were in for a repeat of the autumn of 1988 - with a severe house price crash about to happen as interest rates returned to normal after their 9/11 emergency lows. (Emergency then was bank base rate of 3.5% - lowest for 50 years - if you had told me then that 5 years later bank base rate would be 0.5% I would have bet my last penny that it wouldn't. Strange times indeed.

 

Now, 8 years after I STRed - I am much more humble. A house price crash is surely not on the cards - but, what is, I have no idea. And I'm pretty sure no-one else does either. So might as will think short term. We bought a house that might, or might not, go up, or down, in price - and we are £1100 a month better off by not paying rent - and no fecker of a landlord can kick us out now.

 

 

Agree with you here. I am now 85% sure that we have seen the nominal lows in this HPC. Lending rates and rents are even supportive of slightly higher prices in the next 12-24 months imo - at least in the sub 250k market. If I was an investor I would be looking to buy a properties yielding 7% in this market - they're not common, but they do exist.

 

Of course, this doesn't mean that we'll have another great bull market. Prices will just adjust to earnings slowly over the next 5 years or longer, but even by this measure they are not as overpriced as many think (only about 10%).

 

It will be savers to continue to suffer the most.

[Van]

N2. £4k is very average for moderate houses round here.

 

Your definition of "moderate" is not the same as mine!

 

 

I'd rather spend substantially less and put the money I save into other things, but of course, each to their own.

 

[stunlee]

And because we are in a massive bull market in housing

 

Well, I wouldn't go that far. The most probable thing looks for average prices to steadily bumble up and down between 155 and 165 a they have done for the past couple of years. It is there that HPC is most dangerous, the hordes there probably talked a lot of people out of buying, at what looks very much like the market bottom in the winter of 2008/2009.

 

In a move that surprised precisely noone, there was no move in interest rates announced today. That the pound moved slightly upwards on the news and is now continuing upwards half an hour later shows that there is very little pressure on them to increase rates in the foreseeable future. Indeed I would guess that there will be no move upwards in interest rates until the Fed starts raising, and we already know that that will be summer 2013 at the very earliest.

[John Doe]

In a move that surprised precisely noone, there was no move in interest rates announced today. That the pound moved slightly upwards on the news and is now continuing upwards half an hour later shows that there is very little pressure on them to increase rates in the foreseeable future. Indeed I would guess that there will be no move upwards in interest rates until the Fed starts raising, and we already know that that will be summer 2013 at the very earliest.

 

That's right, and there will be more printing before that happens.

[BoldAsBrass]

In a move that surprised precisely noone, there was no move in interest rates announced today. That the pound moved slightly upwards on the news and is now continuing upwards half an hour later shows that there is very little pressure on them to increase rates in the foreseeable future. Indeed I would guess that there will be no move upwards in interest rates until the Fed starts raising, and we already know that that will be summer 2013 at the very earliest.

 

While the States has a debt of gazillions of dollars - why would they put interest rates up - while investors are still prepared to lend them money for, effectively, a negative return.

 

Maybe it will be 2023 before interest rates rise. The whole western world seems to be up to its neck (well, way more than that, in fact) in debt - and, if investors decide at some point to only lend to countries that pay higher rates then they are going to lose their shirts as western economies default.

 

So, as I said, maybe this 0.5% base rate will go on for 10 years or more.

[kkeegan123]

While the States has a debt of gazillions of dollars - why would they put interest rates up - while investors are still prepared to lend them money for, effectively, a negative return.

 

Maybe it will be 2023 before interest rates rise. The whole western world seems to be up to its neck (well, way more than that, in fact) in debt - and, if investors decide at some point to only lend to countries that pay higher rates then they are going to lose their shirts as western economies default.

 

So, as I said, maybe this 0.5% base rate will go on for 10 years or more.

 

Hmmm, food for thought BAB. I'm sure it's HSBC that are offering to track base rate +2.49% for the life of the mortgage or may have been Birmngham BS.

 

On the other hand, the Yorkshire BS are doing a fixed rate until 2021 @ 4.39% and I must admit I'm tempted. I'm sure there are some fixed for five years @ 3.79%ish, but I'm happy to pay an extra 0.6% for the extra five years peace of mind.

 

These are chaotic times and I'll pay a premium to know where I stand.

[warpig]

Congratulations!

 

just became a Dad

 

 

[drbubb]

The main reason I bought about a year ago was rising rent. We were going to have to go from £1100 a month to £1700 a month for a similar house - and, at the same time, our capital was earning feck all interest.

It amazes me that rents have gone on rising while incomes have been rather stagnant.

 

Does anyone want to speculate on why that is happening?

[drbubb]

Yip. Actually house would ask £1.25m, perhaps more. One a couple of doors down has been on at £1.6m for a dew months but not moved.

 

I agree with you. But when you can get a fixed mortgage for 5 years cheaper than buying it's a funny place to be. Of course I'd be screwed after the fix ended but that feels a lifetime away...

 

Interesting times!

At £1.25m is it really cheaper to buy?

Can you take me thru the maths on that? (cf what interest rate do you assume?)

[John Doe]

At £1.25m is it really cheaper to buy?

Can you take me thru the maths on that? (cf what interest rate do you assume?)

 

It's always cheaper to buy, everyone knows that Dr B.

 

(just became a Dad )

 

Oh sorry, missed that in the earlier posty, congratulations!

 

We just found out we have a second on the way! Arghhhhh!

[drbubb]

It's always cheaper to buy, everyone knows that Dr B.

 

 

 

Oh sorry, missed that in the earlier posty, congratulations!

 

We just found out we have a second on the way! Arghhhhh!

Let me ask my question another way:

At what interest rate would the "cheaper to buy" look like "no cheaper to buy"?

 

I think that might help to identify a possible trigger point.

 

BTW: Congrats on the new addition, and expected new addition.

[John Doe]

Let me ask my question another way:

At what interest rate would the "cheaper to buy" look like "no cheaper to buy"?

 

I think that might help to identify a possible trigger point.

 

BTW: Congrats on the new addition, and expected new addition.

 

Off the top of my head, I would say about 6 to 7% (but of course you can fix for 10 years for much less than that).

 

Thanks, all going well, new-un should be here by May

[tinecu]

We are living in the East Riding of Yorkshire, nr Driffield. Our current rent is £450 for a 3 bed detached with driveway & integral garage. Property of this type is now at about £600+.

 

http://www.rightmove.co.uk/property-for-sale/property-18804549.html This is similar to our current rented property.

 

I see there is not alot of volume in rental accomodation near you.

 

http://www.home.co.uk/for_rent/driffield/current_rents?location=driffield

[BoldAsBrass]

It amazes me that rents have gone on rising while incomes have been rather stagnant.

 

Does anyone want to speculate on why that is happening?

 

Following the post dot.com nonsense and then 9/11 - the corporate lets completely dried up around here - and rents crashed. It appears a fair number of people sold to rent some years ago and that money has been floating about keeping the rented sector buoyant.

 

We looked at rented a year ago when we were getting kicked out - before we decided to buy. Looked at one on the estate opposite us - smaller than the one we were renting - typical 1400 sq.ft 4 bed box - landlady wanted £1700. We explained we were in a much bigger house currently paying £1150 - and offered £1200. The agent said she used rude words in response to our offer and said she'd rather leave it empty than rent it for that.

 

World is full of nutters. That's the only way I can explain rents - and desperate kids who club together to rent flats for £800 a month which puts a floor under the market.

 

I do wish youngsters would all move home and camp out on their parents. My eldest moved out a while ago and has come back. We feel that we have to share the house with him - rather than regarding it as 'our' house. So he has his friends over sometimes and they take over the downstairs and we get out of the way and let them get on with it. It's not his fault he earns about 15k and will never be able to afford anywhere of his own to live - at least not without sharing with mates forever.

[Van]

It amazes me that rents have gone on rising while incomes have been rather stagnant.

 

Does anyone want to speculate on why that is happening?

 

I really do think that it is a demand/supply thing. Housing construction is not keeping up with population growth in the SE - we are getting migration from both Europe AND from other UK regions.

 

The hard time are falling disproportionately on the young stay-at-home English generation, whom don't have much housing demand anyway.

 

[50sQuiff]

I really do think that it is a demand/supply thing. Housing construction is not keeping up with population growth in the SE - we are getting migration from both Europe AND from other UK regions.

 

The hard time are falling disproportionately on the young stay-at-home English generation, whom don't have much housing demand anyway.

 

A combination of a resilient international economy, HNW BTL investors, obscene housing benefit and HUGE numbers of house-sharing Eastern Europeans (so many 'family homes' sliced and diced into flats and shared houses) all combine to ensure rents in London are numbingly high. I'm thankful I negotiated a 12% reduction in 2009 and I've kept at that level since.

[kkeegan123]

I see there is not alot of volume in rental accomodation near you.

 

http://www.home.co.uk/for_rent/driffield/current_rents?location=driffield

 

That's true, we have a good crcle of friends in the town and it would be a nice area for my son to grow up in.

 

If our Landlord served notice it would put us in a really awkward position, so we have decided to be proactive and buy for the longterm. Needless to say my wife is delighted.

 

Selling some of the PM's for a deposit hurts, but it's amazing how having a child puts things in perspective, it's like my lifespan has suddenly doubled and I now have to plan for his future and wellbeing. He will inherit the family home, so at least he won't have to be a debt slave like me. A small sacrifice really.

 

BTW, thanks for all your kind regards and congrats JD

[drbubb]

PETRI DISHES ... and Second Homes

 

HOW BIG: THE PETRI DISH ?

 

This sounds like sad news for many - but truly: Is it bad news for our planet?

(I hope people don't think badly of me for asking these sort of questions)

 

The trapped generation: 360,000 young buyers stuck with starter homes bought at property peak - with NO chance of moving up

 

Around £11,000 wiped off the value of their first home

Worst-hit have been plunged into negative equity

Report warns getting on second rung of ladder will be an 'impossible task'

 

Around 360,000 young people are ‘trapped’ in homes they bought when property prices peaked four years ago, an alarming report has warned. Over the last four years, they have seen an average of £11,000 wiped off the value of the home, amid fears that house prices will continue to fall.

 

The report, from the banking giant HSBC, warns young people face ‘a near impossible’ task to move from their first home on to the second rung of the property ladder. Even those who have avoided this situation will find it difficult to buy a bigger property because of the crippling cost of moving, according to the report.

 

Experts fear Britain's housing crisis is forcing the young to delay important milestones, such as getting married and having children. Many worry about having children when they are squeezed into a flat with no spare bedroom and no garden, but with too little money to make the move into a house.

 

In 2007, the year that the credit crunch struck and property prices peaked, a typical first-time buyer bought a home for £162,423. But today this property is worth only £151,061, a fall of £11,362.

 

To make matters worse, it estimates a typical young person would have to spend £208,675 to buy a home on the ‘second’ rung of the ladder.

 

Read more: http://www.dailymail.co.uk/news/article-2061552/Young-buyers-trapped-homes-Bought-property-peak-years-ago.html#ixzz1dp9sMvTW

 

No one is torturing them.

Except that some may be torturing themselves with their hopes and expectations.

Should we be thinking differently about our futures, which may include a "Long Emergency"?

 

Then there's this:

Second Homes

To make matters worse, it estimates a typical young person would have to spend £208,675 to buy a home on the ‘second’ rung of the ladder.

And this is not the end of the financial torture of home buying in this country.

The cost of moving is £27,410 – more than the average annual salary.

This bill includes a 10 per cent deposit, legal and estate agency fees, removals and a survey.

Pete Dockar, head of mortgages at HSBC, said: ‘First-time buyers can no longer rely on rising house prices to provide them with the deposit needed for their second purchase'.

 

So if they don't buy - Who Will? Martians?

 

(Ah, it will be those pesky BTLers, dragging the equity out of their existing portfolios.)

 

So what will happen when rates rise eventually, and property prices slide??

 

The BTLers, and the foreigners who have been buying expensive new homes will "take the hit."

 

The long run result: Young people are saved from "the hit" be being unable to buy now.

 

What a relief ?!

[drbubb]

If they don't buy - Who Will? Martians?

 

(Ah, it will be those pesky BTLers, dragging the equity out of their existing portfolios.)

 

So what will happen when rates rise eventually, and property prices slide??

 

The BTLers, and the foreigners who have been buying expensive new homes will "take the hit."

 

The long run result: Young people are saved from "the hit" be being unable to buy now.

What a relief ?!

PROFILE OF "A SHEEPLE" who bought into the dream - now she's trapped (but wiser for it)

 

= = =

Gemma Watkins is now ensnared by negative equity. The 27-year-old nurse bought her home in Coleford, Glos, for £92,500 at the top of the market in 2007.

 

She borrowed £100,500 from Northern Rock on one of its now notorious Together mortgages, at 6.9 per cent. This loan allowed you to borrow up to 125 per cent of the value of the house.

Miss Watkins used some cash to pay off a £12,500 personal loan and the rest to buy her flat. But her fixed-rate deal comes to an end in May, and she is struggling to find another lender.

Miss Watkins believes this is because the value of her home has fallen by more than £7,000, and due to the structure of the mortgage, which combines a personal and home loan.

She admits: ‘I was naive when I took on the mortgage.’

 

Ray Boulger, senior technical adviser with mortgage broker John Charcol, says she has little option but to stay with Northern Rock.

But her rate should drop to 4.79 per cent when she switches to the bank’s standard variable rate.

 

Read more: http://www.dailymail.co.uk/news/article-2061552/Young-buyers-trapped-homes-Bought-property-peak-years-ago.html#ixzz1dq9ikrNs

 

REACTION:

Stop looking at the small details see if you are in negative equity in 10 - 15 years time. Property especially in London today cost pennys compared to what it will cost in 20, 30, 40 years time marathon not a sprint ask Warren Buffett his favourite investment holding time "forever".

- DAVID POTTS, LIVERPOOL, 15/11/2011 23:26

 

Yes, Mr Bozo.

And you can be trapped for a lifetime too, because:

"Anything can happen."

"Together" Mortgage? = "Together Forever"?