To think house price madness will have to end somewhere?

[Moomoomango]

House prices in my area ( and I understand most areas) have gone mad. My neighbour has just sold her bungalow with loft conversion for £415,000 - and it's not in great condition needs new flooring & a tidy up. We live in a nice area but nothing amazing like sea views etc , just a normal town with normal houses and normal people. I have many friends who cannot afford to get on the ladder at all so cannot start families etc. Aibu to think this has to end or is the shortage a sure sign prices will stay high?

My area of Yorkshire has only just got back up to 2007 levels in last year or two.

YANBU. And hang in there.

Whilst I'd happily throttle George Osborne, most days, for simply continuing to breathe, he's got Buy To Let firmly in his sights and this is what will bring sanity back to the market.

I can't lay my hands on the link right now, but IIRC in the last 10 years 80% of all newbuild housing was bought by BTL "investors." Most of them massively over-borrowed and over-leveraged spivs on the "Inside Track" "Borrow your way to oblivion" route. You all almost certainly know a few, and I bet most of them drive those ghastly spivmobile Range Rover Evoques on the never-never!!

But the short version is that because they've had access to virtually unlimited, unregulated, interest-only finance, they've been able to outbid MMR-constrained owner occupiers (especially first time buyers) and drive prices up to out and out bubble levels. That's why prices are currently so high - it has absolutely f* all to do with "not building enough houses" or "they're not making any more land you know..."

Now GO has made the tax changes on interest relief and stamp duty, BTL through borrowing is dead in the water. It no longer makes sense, and leveraged landlords will have to sell off - when that starts, there will be the mother and father of all stampedes for the exits, and prices in the First Time Buyer market will plummet. Add to that what is already happening at the top end of the market in London (even the Daily Express is reporting carnage) and what do you think will happen in the middle?

It will take a little while, as a fair few of the BTL crowd are still in denial and trying a laughable Judicial Review of the Clause 24 legislation. But don't lose hope - the long-awaited correction will be with us before we know it. While you're waiting, there's a really funny website (Google "Alice in Wonderland Tax Grab" or "Tenant Tax" and you'll find it in among the press releases,) where you can go and have a good laugh at some future Darwin Award winners - economically and mathematically illiterate buffoons, who write rambling letters and talk endless bollocks in a completely circular and self-referential fashion....

Maybe someday we''ll all be able to afford somewhere to live, without two partners each working 72 hours a week as debt slaves to the banks.

B

House prices will fall when demand eases.

So never, then.

Unless we have a medieval-style black death event (which is what the smart money is on) to reduce the population by 30-50% ...

Just idly put in our postcode to see what's on sale (village, home counties), and there are 5 houses on the market. Most expensive £3.5m, cheapest (2 bed end of terrace) £800k

The only way DS is going to be able to buy in this area is if we sell him our shed.

@LurkingHusband....

Demand has already fallen off a cliff; Prime Central London (esp SW9 / Nine Elms / Battersea Power Station etc,); leveraged BTL is no longer a play since 1 April (actually, never was since the last budget, at least for anyone who could count,) and with MMR (not a vaccination in this case....) in play virtually nothing is selling to OO's at current prices.

One thing you are totally correct on - supply and demand. There's already massive supply and very little demand; when the forced BTL sales start, and PCL developers realise they aren't going to chase Chinese investors - who are happy to lose their £2K deposit on over-supplied PCL luxury flats - for the balance on completion, then the market has no option but to tank.

Unless GO brings in something like 60% HTB nationwide - but we really shouldn't go putting ideas into his head.... :-(

On y va....

Landlord hate was inevitable here. What is actually happening in many cases is that due to savings rates being below inflation, those who have savings for retirement are buying properties for cash. They don't need mortgages so shrieking about that don't help and it can't be controlled.

Raise interest rates and those annoying people with more money than you will sell up. I would, who needs the risk of rental?

With demand outstripping demand, they're not going to go down. A modest 3 bedroom in Harpenden tends to go for £575k+ these days. Guess a house (like anything) is truly worth what someone else, is prepared to pay for it

A 2 bed here starts at 250k :(

Lol harpenden is well common :o

You're right there Owl Do you know some of the current proprietors, don't even employ butlers these days. What is the world coming too.....?

:o

Our 3 bed semi in SE London went from 365k to 590k in 2.5 yrs - we cashed out of London and bought a 4 bed detached in the Midlands for 348k. My in-laws 3 bed detached nearby is going on the market for 280-300 soon.

SE prices are just crazy, we are glad to be out of it.

buckinbronco I don't understand what you mean by a BTL crash. Surely BTL are just ordinary houses or flats just like other occupied so aren't going to be worth any more or less than other similar places.

It is crazy, i agree. The money you would have paid for 4 bed detached house around here some 3 years ago now will get you a 3 bed semi. I am gobsmacked when i check our area on rightmove. Crazy.

I'm 25, bought our 2 bed end terrace in staffordshire when I was 23 for £93k and it's now worth £107 Property is very very stable here and our house particularly doesn't shift much in price because it's on the outskirts of a town and pretty rural!

We managed it because my parents encouraged me to start saving money from the age of 10. It became more fun to watch money grow than to spend it. I got my first job when I was 16 and when I finished Uni at 22 I had £20k squirreled away

It is possible to get on the property ladder but you absolutely have to be realistic! It's a trade off: I could never afford to buy a house in the city at 23 years old, but owning a home was way more important to me than living in a city. So I now commute 1 hour a day to my job but own a lovely little house in the country, which I'm very happy with :) You just have to work out what your priority is and if you'd rather live in an expensive area than own a house, then there's your decision

I still squirrel away money now, anything that's left at the end of the month gets banked and it's set me up for life really :) I also view our house as a savings account with walls instead of paying someone elses mortgage!

If you start saving young, have a clear plan and good parental direction it's totally doable in the right area :)

It's my opinion that the only solution to the current situation of house prices is to build more houses. Because that is the only viable way to to balance supply and demand.

All the fudging of the past 5 years has done, is rearrange the deckchairs on the Titanic (a more apt expression than people might realise. The current situation in the UK is like the situation on the Titanic viz. lifeboat spaces versus passengers).

If you have fewer houses than you need, it's immaterial who owns them. whether homeowners, landlords or Russian oligarchs.

Bear in mind, for all this talk of a housing crisis, we are still allowing housebuilders to "phase" developments in the interests of keeping prices high. So it may be a crisis for our childrens generation. But it's good times for Wimpey/Barret/Redrow et al.

Buzzardo
What if all those "spivs" move their property holdings into a company structure? Then they can continue to offset interest against tax, the restriction is only on private individuals offsetting interest.

I do worry for the next generation. We've just bought a small 3 bed with work to do and postage stamp garden for 540, though already valued at 560 so I think it was priced to sell... I don't know how my children will ever manage this. I hope we will be in a position to help them, but if I didn't have DH I wouldn't have had a hope in hell of even getting a studio by myself.

SW9? That's Stockwell! I know it's expensive but it's not central really. Did you mean SW1?

We bought our 3 bed terrace with garden for £75k 2 years ago, have spent approx £10k on new double glazing, bathroom, kitchen and decor and have just installed decking, going with valuation on zoopla we are now looking at it being valued at £104k. our neighbour bought their house for £114k in 2009 a house just along the street (end terrace 3 bed now work needing done) has just sold for £130k and another (terrace 2 bed needing gutted) for £75k market in our area just seems so varied x

I think that the only way that young people can afford to get on the housing ladder is through inheritances.

As long as the rich and powerful benefit from house price madness, I doubt that things will change.

I think that the best case scenario is for house prices to stagnate and wages to rise as the cost of living is crazy now.

House prices will fall when demand eases.

So never, then.

I've read a newspaper article in the past week that said demand is not the problem. They had statistics that it has actually gone done 5% in the last 10 years. (Amount of housing has increased faster than number of people.) The reason for crazy prices is low interest rates following the financial crisis.

(I am aware it is not everywhere, large parts of the country static while London goes mad.)

Have read many reference over the past year or so that government, treasury, Bank of England etc. are all on the case. Lending is being restricted behind the scenes, George Osborne has attacked buy-to-let on multiple fronts (stamp duty and tax relief.) I think/hope that government is trying to keep London prices static. (I have "benefited" from the rise and not likely to want to buy again for myself, but I still want the madness to stop. )

There are a massive number of tower block developments under construction in London. (1800 new flats next door to me, spread across several buildings up to 25 stories tall.) The asking prices are ridiculous though. I say build a lot more: the area immediately east of the City (along Commercial Road, Whitechapel) is pretty ugly and I reckon government should step in, compulsory purchase whole blocks, and sell the land to be demolished and redeveloped as nice towers. This is one part of London where a lot of new towers would be an improvement to the area.

Would be a very good location for very high density housing, walking distance or one or two tubes stops from zone 1/ the city.