House Prices

[LGBirmingham]

House prices still seem to be rising? Does anyone else think this?

"Trouble is, those landlords don’t actually exist."

You would need to know all the landlords in the UK to know that. That is an absurd statement to make really.

Well, precisely, given ours is one and very definitely exists! 🤷‍♀️

When was the last time you rented?

Totally agree. There are some people, an increasing number, who are really on the breadline and live pay check to pay check but many just blow their money on unnecessary consumption, and even load up the credit card heavily too. In fairness, this is exactly what has been encouraged by politicians and central banks for many years. These people may come unstuck as things get harder.

Many thousands of them exist, they probably have low or no mortgage on their properties and know that you avoid voids by keeping good tenants, there is no point hiking the rent then ending up with a void (double council tax in many places now?) or a tenant refusing to pay and waiting a year or more to get evicted by the courts.

Exactly. This is what I have been saying on here for a long time now.
It's not only companies being affected though but individuals, those with debt in particular.

I agree with the majority of what you have written above but think that individual families will be far worse affected over time than you but also that house prices will fall far more as a result of the business failures, general affordability squeeze, etc. Business failure will inevitably lead to higher unemployment (already increasing) and reduced wages which will squeeze affordability further. The high interest will also have a negative effect on the stock market and the financial system in general at some point. This will obviously have a negative effect on HP too. It is like falling dominoes, all inter connected.

When I went to view some properties marketed as a high standard, the only thought I had, my gosh they'd be lucky to live in my rental. Sadly, quality just as bad in selling/buying market. It seems to be uk thing overall. Those that have beautiful homes normally stay in them for life, or sell only at retirement, but want top money for the house that’s been updated 30 years ago.

Good to know that some decent LLs exist. They do get negative press because some are shockingly bad.
From the figures that I have seen, renting is a bit cheaper than a FTB mortgage in most places. However, the lack of stability is a huge negative.

'Even people talking about "paying down their mortgages early" on the properties they live jn over the last decade or so was baffling.'

The interest rates are only one factor for many people though.
The security and certainty of being debt free is a huge motivating factor to pay off the mortgage.

My son who lives with me at home rents out his only house - house value aobut £350km rent been kept at £1100 for a few years to keep the tenants in and not have a void period (although that is well under market rent now). However there is a massive shortage of property to rent - 13 couples with children wanted on the house the last time it was available - I have never seen anything like it. Landlords have left the market in droves due to tax and other changes which mean it is not profitable any more. If interest rates keep going up then it will become more and more sensible not to let out a property but just stick the money in the bank instead I suppose.

"Of course you are. People get evicted all the time often through no fault of their own. They then find another property and rent that instead.

Having your home repossessed is a bit more stressful and life changing."

Exactly, the idea that having to find a new rental could be more stressful than being evicted by a court then having the house sold for whatever price they can get and being pursued for the remaining mortgage debt is totally absurd! I suspect many of the people who talk about renting as a "nightmare" etc. have never actually rented.

Hmmmm, they're not decent exactly. They do the bare minimum (fixing leaks / emergency repairs) to repair issues, but they've done no general maintenance on the house. The outhouse bathroom conversion is in a pitiful state due to lack of ventilation and insulation, and poor design (location of shower which is nowhere near the fan or an opening window, for instance) and is damp and gets slugs.

Not long until we move out, thankfully (the lower rent did allow saving to assist with a house purchase, if nothing else)!

"Sadly, quality just as bad in selling/buying market. "

Exactly, there is no law that says just because you rent the money from the bank for your house instead of just renting the house from a landlord the house must be better quality! Imagine being attached by a large mortgage debt to some of the shite that passes for "New-Build" etc. in the UK? At least renting you can just walk away.

Which is fine, because all if these properties that are owned by unsuccessful landlords will increase supply and make it more affordable to purchase. However, I don’t count on this happening, because in UK it is aspirational to invest in property still. In US people with extra cash putting into shares/investment funds, UK they become landlords. Nothing wrong with either path, but until it cultural thing in UK, I don’t see it disappearing soon.

Just like someone listed everything that homeowners have to pay for, they hardly come out with the profit, but they only know basic maths and think they are winning. Unless they just so happen to be in very poor area which gets gentrified, in most circumstances there’s no actual money being made. Simply they have equity instead of savings, which looks big, but couldn’t really afford them bigger house in the same area.

Yeah I do. Prices have been basically flat for a year. Even with 4% / 5% rates.

Time for the house price crash crew to accept it, high IRs have not had the effect you were all salivating over.

The nature of the market is unrecognisable now compared to the last crash, as you can see from the 40% of purchasers who don’t even need a mortgage.

And if you pay off your mortgage early, you pay much less interest over the lifetime of the mortgage than if you pay it off over 25 years. So of course it makes sense to pay it off as quickly as you can.

Not at the expense of having any kind of savings buffer, obviously, but there’s a happy medium.

Yes. But they could have invested that money at a higher rate than their mortgage interest, then paid off their mortgage and kept the difference (which would have been ver significant in many cases) so ended up with a debt-free home and a chunk of extra cash.

And if you pay off your mortgage early, you pay much less interest over the lifetime of the mortgage than if you pay it off over 25 years. So of course it makes sense to pay it off as quickly as you can.

Not if your mortgage interest was 2% and you could invest the money elsewhere with reliable 8% returns!

Savers were not getting 8% interest rates back when mortgages were 2%!

@rainingsnoring yes, it is all interconnected. I think that the effects on the economy of the deliberately-induced recession/ stagnation that's coming though are not fully appreciated yet by most outside finance/ economics, particularly given the unstable geopoliticial situation and the UK being in such a dire state now going into this, with flatlining productivity for 15 years already, a devalued currency, massively reliant on imports of essential goods, crumbling infrastructure, an irrational tax system that holds back productivity, a huge trade deficit and nothing to attract investment while the US and EU are making huge investments in the tens and hundreds of billions to grow their economies and invest in growth industries. Meanwhile we've cut off our trade relationships!

House prices are the last of our worries, and ironically when things become even more unstable that is when money usually pours into fixed assets like housing so prices are unlikely to collapse (except commercial property). But its ownership may become ever less equally distributed. None of this is good for average people, living standards for everybody who isn't very wealthy will continue to fall until the UK does something about its productivity problem.

Savers were not getting 8% interest rates back when mortgages were 2%!

People who put money in a savings account with a bank of course were not. People who put money in a basic global tracker fund were, consistently, for the last decade.

The last time I rented @CrashyTime was over 6 years ago. But I have rented for many years before that and not just UK. And while it's great when you want flexibility and are not fussy a about standards, it's awful when you want stability and peace (in UK anyway).

I also listened to plenty horror stories from my friend who rents and who last year spent 4 frantic months trying to find somewhere to live in school catchment so they don't either end up with kids at different schools or having to move again in 2 years. We're in Edinburgh and renting is bad.

I understand what you are saying. I'm just explaining why many people choose to not take risks on the stock market and prefer the certainty of paying off debt because you said you were 'baffled'. In addition to this point, and perhaps it is the point that you were making, there is very little education in finance/ the economy at school so most people are unable to understand relatively basic concepts.

Again, I agree with most of this and certainly the description of the dire state of the UK economy. I think the EU is already in serious trouble though due to the energy situation and America is heading for recession, it would be in recession but for the massive stimulus of the last few years. Crazy levels of debt there too!
I also agree that house prices are the least of our worries due to all the above. I disagree that the wealthy en masse will pour their money into property. I think a lot of wealth will just 'evaporate' as companies are re-valued to realistic levels. At this stage, I think large falls in residential property are inevitable, as wages fall, interest rates remain far higher than they have been and financial conditions generally deteriorate. Unfortunately, I can't see how the UK can dig itself out of the large hole politicians have created, at least not for a very long time.

I take your point about it being a little foolish to pay off a mortgage when the money could be better invested elsewhere. Especially now when you can get a great rate on savings.

We’ve paid off part of a mortgage in the past after an inheritance and while savings rates weren’t as high as they are now, neither were mortgage rates. You’re right that financially it wasn’t the best thing we could have done with our money. I guess it’s more of an emotional than logical decision. Paying our mortgage has been a real burden to us over the years , so psychologically it felt good to reduce it. I’m guessing that’s the same for many other people too.