UK House prices: News & Views

[TrueNorth]

last page of Savills report linked above

 

Market dynamics

Buying vs Renting

To buy or to rent? A simple question,

but a complex answer

O ne of the features of the housing market since the

downturn has been that some households have

chosen to rent, either taking a break from home

ownership or in the case of the lucky first time buyers sitting

on a sizeable deposit, delaying the decision to make their first

move onto the housing ladder.

For both groups the relative costs of buying versus the

costs of renting is critical both at a given entry point and in

the future. Simply comparing mortgage interest costs against

rental costs is a start point. For example, for someone looking

to buy a two bedroom property at £150,000 with a 25%

deposit, interest payments of just under £4,000 per annum

would compare favourably to rent of £9,150, assuming a

rental yield of 6.1%.

This simple analysis suggests that despite high lenders’

margins, the so-called ‘dead money’ of renting is a high price

to pay. But this is before taking account of the additional

costs of ownership, such as repairs and insurance, or the

cost of funding mortgage repayments at a time when interestonly

mortgages are a rare commodity.

Buyers should also take account of the income their

deposits would deliver if invested rather than being tied into a

property. On the basis of the same example that would swing

the balance in favour of renting, with home ownership costing

£1,300 more than renting over the course of a year.

 

Watching the market

At the peak of the market the additional cost of buying was

substantially higher because both mortgage rates and returns

on savings were higher and the relationship between house

prices and rents had become out of kilter.

Scroll back 10 years and the cash comparison was much

more like today’s, though lower house prices meant lower

capital repayments, making it cheaper to buy than to rent both

before and after accounting for the costs of ownership.

What distinguishes then from now are the house price

growth prospects. In 2001, prices rose by 25%. A decision

to delay moving and staying in rented accommodation could

therefore be very costly indeed. By contrast, with further small

house price falls forecast in the short term, there is no rush

to beat price growth – just one among many reasons why

housing transactions remain depressed. (bolding mine)

Prospective buyers should watch the market carefully.

As house price growth returns so the balance will shift again.

This will be seen first in London and the South East where

house price growth is expected to return more quickly and

more strongly. And this is likely to be particularly relevant to

those more mature households who have taken time out of

home ownership. Despite lower rental yields, and therefore

lower relative rental costs, recovery is expected to be stronger

in these equity rich sub-markets, potentially bringing such

households back into the market ahead of first time buyers

lucky enough to be sitting on a deposit.

 

full of NewSpeak

[drbubb]

last page of Savills report linked above

full of NewSpeak

Surprised?

Buyers should also take account of the income their

deposits would deliver if invested rather than being tied into a

property. On the basis of the same example that would swing

the balance in favour of renting, with home ownership costing

£1,300 more than renting over the course of a year.

 

 

Actually, there are many inaccurate ways to do the calculation,

But FINANCIAL REPRESSION has improved the argument for buying.

 

If financial repression ends for any reason, then the Buyer is Trapped.

 

The "you get stuck" possibility is something few consider

[drbubb]

These CHARTS show how the UK Bounceback is an anomoly

 

CHART UPDATES - 2012 - Indices in Freefall Now

 

GREECE

 

PORTUGAL

 

SPAIN

 

U.K.

 

U.S.

 

====

/Chart source: http://www.globalpropertyguide.com/real-estate-house-prices/S

[borassic]

Just back from Chancellors in Chesham.

 

All of them on the phone doing deals, sold 10 already this month, and double figs achieved last month.

 

As Frazier would say, what is a boy to do? I am dead keen to buy but when you get Unity style construction (ie prefab) on at £179,000 and probably not mortgageable...??

[BoldAsBrass]

Just back from Chancellors in Chesham.

 

All of them on the phone doing deals, sold 10 already this month, and double figs achieved last month.

 

As Frazier would say, what is a boy to do? I am dead keen to buy but when you get Unity style construction (ie prefab) on at £179,000 and probably not mortgageable...??

 

Same is true here - near Guildford.

 

And as for the renting/buying argument - renting around here has reached stratospheric levels not seen since the .com days.

[drbubb]

Same is true here - near Guildford.

 

And as for the renting/buying argument - renting around here has reached stratospheric levels not seen since the .com days.

See any Greeks... Spaniards, Portugese ?

[chazza]

In a related note, getting quotes/work done to the house. Some of the quotes are unbelievable.

 

It would seem the tradesmen associated with housing are not feeling the pinch yet.

 

If I lose my job (not insignificant odds) i might consider becoming a chippy/painter and decorator to make my fortune...

[drbubb]

In a related note, getting quotes/work done to the house. Some of the quotes are unbelievable.

It would seem the tradesmen associated with housing are not feeling the pinch yet.

If I lose my job (not insignificant odds) i might consider becoming a chippy/painter and decorator to make my fortune...

I think it all will fade away

 

Meantime, the Chippies must be hoping for this

 

http://www.youtube.com/watch?v=juEeau5nHVU

 

I'm a-gonna tell you how it's gonna be

you're gonna give your money to me

I wanna hammer night and day

you know my work a-not fade away

a-well, you know my work a-not fade away

My bill's bigger than a mer-say-DEES !

[harold bishop]

In a related note, getting quotes/work done to the house. Some of the quotes are unbelievable.

 

It would seem the tradesmen associated with housing are not feeling the pinch yet.

 

If I lose my job (not insignificant odds) i might consider becoming a chippy/painter and decorator to make my fortune...

 

Yep, same here. Wild pricing. I always buy the materials as the trade just put it on their account at a merchants and don't bother to shop around for any sort of deal. When you do this bit your self, you can spend a bit of time searching and looking for used or surplus stuff. Also, I only get a fixed price quote for the labour only with a very defined scope. And never, ever get them to design or think out something as that's a cash register for them. Finally, most are real cash hogs which leads too interesting discussions.

 

I'm pretty handy at the building, joinery stuff etc and have most of the tools. So, I know when they are taking the piss.

[chazza]

I'm pretty handy at the building, joinery stuff etc and have most of the tools. So, I know when they are taking the piss.

 

yeah, i think thats the key. I dont mind doing it myself, though i dont have the time (kids & job get in the way). Though i guess the saying "throw enough mud..." carries some weight here as I guess a few people have no idea and just pay up (my wife seems a prime candidate here.. ).

[John Doe]

Yep, same here. Wild pricing. I always buy the materials as the trade just put it on their account at a merchants and don't bother to shop around for any sort of deal. When you do this bit your self, you can spend a bit of time searching and looking for used or surplus stuff. Also, I only get a fixed price quote for the labour only with a very defined scope.

 

That's EXACTLY what we do, but we also have a couple friends in the trade that let us use their accounts at certain merchants (Howdens, Jewsons, CEF etc) so we can get their discounts too (works for them too, as more money being spent through their accounts = more discounts for them).

 

But it's the same re job prices here. I can't believe some of the quotes neighbors and friends at work are getting, shocking doesn't even start to cut it .

 

Some are so crazy that I have even considered changing career (and going back to where I started, in the building trade as a youth).

 

With the tradesmen we have got to know over the years, I could have the jobs done far cheaper, save my friends money and still make a good living. Although, with all the s**t hitting the fan at the moment, I might wait until next year

[drbubb]

(this is an old topic, inflamed again by a recent news article):

 

What does the word "their" mean ??

=========================================

 

 

People Are 'hanging On By The Skin Of Their Teeth'

100,000 people could lose their homes.

 

As the Eurozone crisis deepens more than 100,000 people could lose their homes if mortgage repayments rise by just £20 a month - a leading charity has revealed today.

 

The Bank of England has warned that as UK lenders are hit by higher borrowing costs families should prepare to pay more as the increase is passed down to consumers.

This could lead to thousands losing their homes if the hike results in mortgage rises of £20 a month because people are already struggling with overdue bills and cards.

 

Read more: http://www.dailymail.co.uk/news/article-2146256/Just-20-month-mortgage-force-100-000-hard-pressed-families-homes-charity-warns.html#ixzz1vE7IGmvc

 

Let's be clear on this:

"They" never truly owned "their" homes, if they borrowed more debt than they could afford to service.

"They" merely bought into a fantasy that a home could be owned for good when interest rates were are ultra-low levels.

 

Of course, the banks and the media participated in this fanatasy, but thinking people should never have fallen for this nonsense, then or now. Put a fork into thsi nonsense !

[Meralti]

Meanwhile Santander scales back leanding

 

Downward pressure on prices will increases due to lack of mortgage lending; fewer buyers leads to less demand. The end game is approaching; in SE England at a glacial pace. Faster up North.

 

BTW. It's rumoured that the reported increase in btl lending is for a large part due to mortgage fraud. People just cannot get residential mortgages so apply for BTL mortgages with no intentionos letting.

[drbubb]

Meanwhile Santander scales back leanding

 

Downward pressure on prices will increases due to lack of mortgage lending...

 

I see money getting tighter and tighter.

 

The UK is an island, but not really cutoff entirely from Europe's troubles

[huntergatherer]

In a related note, getting quotes/work done to the house. Some of the quotes are unbelievable.

 

It would seem the tradesmen associated with housing are not feeling the pinch yet.

 

If I lose my job (not insignificant odds) i might consider becoming a chippy/painter and decorator to make my fortune...

Greedy trades people add to mainly bankers, ratings agencies, governments plus others who created the financial crisis.

[drbubb]

Early end to spring bounce as May draws first-ever blank

 

Average Property

Asking Price May-£243,759 Apr-£243,737

% Change in Month +0.0% +2.9%

% Change in Past Year +2.0% +3.4%

Monthly Index == 198.3 198.3

 

· New seller asking prices fail to rise in May for the first time since the inception of Rightmove’s

House Price Index as spring price bounce hits the buffers with prices at a standstill (+0%)

· Market takes a ‘breather’ as both demand and new supply reduce:

==

1. Demand lessens through combination of end of first-time buyer stamp duty assistance, some

upward mortgage rate movements and renewed Eurozone jitters

2. Spring supply numbers stall too, with properties coming to market down 10% on April

3. Will summer sporting and Jubilee distractions continue to dampen activity like rainy May?

==

 

· Growing market mismatch as two in five sellers state they are looking to trade down, drawn from

the equity-rich baby-boomer generation, outweighing the one in four intending to trade up

- ‘Downtrading’ the main reason to sell in nine regions, London the affluent exception

- Knock-on ‘trader-upper’ volumes dented by end of stamp duty incentives to first-time buyers

 

/report: http://www.rightmove.co.uk/news/files/2012/05/may-2012.pdf

 

 

"Downtrading" : a New term (?) and a big new trend, more than likely.

Will lead to : Sell Now, Buy later - I reckon

 

Mo.: Rt'mov : London : Rest of UK %chg/ Nt'wide H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx

2012

J. : : 224,060 : 438,324 : 146,967 - 0.28% / 162,228 = n/a = 160,907 158,879 : £160,554 : - 0.16% :139.6% :

F. : : 233,252 : 449,252 : 149,658 +1.83% / 162,712 = n/a = 160,118 158,897 : £160,805 :+ 0.16% :145.1% :

M : : 236,939 : 455,159 : 151,853 +1.47% / 163,327 = n/a = 163,803 163,419 : £163,373 :+ 1.60% :145.0% :

A : : 243,737 : 464,944 : = n/a = : = n/a = / 164,134 = n/a = 159,883 161,180 : £162,657 : - 0.44% :149.8% :

M : : 243,759 : 469,314 : = n/a = : = n/a = /

======================================

mom:+0.00% : +0.94 % : -Est.DI : 149.5% / +0.49% = n/a = : -2.39% : -1.37% : -0.44%

[Van]

Mortgage rates creeping up:

 

http://www.thisismoney.co.uk/money/mortgageshome/article-2145665/Mortgage-rates-set-rise-euro-crisis-pushes-banks-borrowing-costs.html?ito=feeds-newsxml

 

Experts said cheap deals are being replaced every day by more expensive options.

 

 

Last Friday, Yorkshire Building Society raised its two-year fixed rate loan from 3.24 per cent to 3.54 per cent. Tomorrow ING Direct will raise its two-year fixed from 3.29 per cent to 3.49 per cent.

[drbubb]

"Experts said cheap deals are being replaced every day by more expensive options."

 

No wonder people want to Downsize their homes, and downsize their mortgages !

[Meralti]

Gross mortgage lending plunges 19% in April

 

Gross mortgage lending fell by 19 per cent in April from £12.6bn in March to an estimated £10.2bn according to the Council of Mortgage Lenders’ latest figures.

 

Britons' finances squeezed in May, outlook gloomy

 

Britons' household finances worsened at their fastest rate in four months in May as some mortgage holders grappled with higher repayments, while worries about jobs and rising living costs also increased, a survey showed on Monday.

 

Markit's headline household finance index fell to 36.6 in May from 37.0 in April, well below the 50 level which would mark no change in finances, showing the sharpest deterioration in household finances since January.

 

The squeeze is on.

[BoldAsBrass]

'The end game is in sight' ... 'ftbs are priced out' ... 'market cannot defy gravity forever' ... 'banking crisis threatens housing market' ... 'mortgage rates rising' ...

 

Boy oh boy - it's deja vu every day for the last TEN YEARS. I find it amazing how anyone can keep it up for 10 years. Surely we really are into 'end of the world tomorrow' territory.

[malvern hills]

'The end game is in sight' ... 'ftbs are priced out' ... 'market cannot defy gravity forever' ... 'banking crisis threatens housing market' ... 'mortgage rates rising' ...

 

Boy oh boy - it's deja vu every day for the last TEN YEARS. I find it amazing how anyone can keep it up for 10 years. Surely we really are into 'end of the world tomorrow' territory.

 

I guess the theory is 'there has never been a bubble that has not burst'

 

Housing in uk was definitely a bubble therefore......

[borassic]

I am selling a house in Marlow. Probate sale. Chalet style on at £395 - SL7 3PW if you want to look. Tip top order.

 

Anyway, three viewings in as many weeks ALL DOWNSIZERS. Thing is, feedback reports house is too small!!

[John Doe]

I guess the theory is 'there has never been a bubble that has not burst'

 

Housing in uk was definitely a bubble therefore......

 

Looks like quite a drop already on the HPC graph.

 

http://www.housepricecrash.co.uk/indices-nationwide-national-inflation.php

 

Could go a little lower for sure, but wouldn't expect too much more unless a real crisis hits.

 

There's been a scare, but Greece has had it's bluff called, and looks like they'll vote the austerity parties back in, stay in the Euro, and the charade will go on (until the next wobble).

[drbubb]

I am selling a house in Marlow. Probate sale. Chalet style on at £395 - SL7 3PW if you want to look. Tip top order.

Anyway, three viewings in as many weeks ALL DOWNSIZERS. Thing is, feedback reports house is too small!!

LOL.

"too small" (for some) would have seemed like an advantage to true "downsizers"

 

 

Even before the Olympics:

 

London : First Cracks

 

House prices in London have fallen for the first time in 30 months, figures reveal today.

 

The drop comes after Britain slid into a double dip recession and wipes hundreds of pounds off the average home — now worth just under £370,000.

 

It coincides with a series of warnings that British families face more pain ahead and that things could get far worse if the European single currency breaks up.

 

Finances in the UK will be squeezed for 18 months as incomes rise more slowly than prices in the shops, said the Organisation for Economic Co-operation and Development.

 

/more: http://www.thisislondon.co.uk/news/london/london-property-prices-the-first-cracks-7778000.html

[drbubb]

From the Walkability thread (see below)

 

I made the same point in a Podcast interview with Dom and J.Davis (towards the end):

 

 

WALKABILITY : It matters in London too !

 

London homebuyers pay a significant premium to live close to a tube or train station

 

Our research points to a £27,000 premium for a property 500m from nearest station, compared with a similar property 1,500m from a station

Premiums appear to have increased since 2010

On average, London houses closest to Circle Line stations are the most expensive, those nearest the Metropolitan Line are cheapest

 

/source: http://www.nationwide.co.uk/mediacentre/housepriceindex/default.htm