House Prices

[LGBirmingham]

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

I won’t tell Crashy you said that 😉

'From what I understand, the market has been propped up in the last 20 years firstly by lax lending and then by extremely low interest rates and then tax breaks. The lax lending has now been regulated away, and the low interest rates can't happen because of inflation. If interest rates go right down again it will be because of a recession which will also hit house prices. The tax breaks can't happen because the government can't afford it any more.

I am not saying that there definitely will be a crash - it's obviously very hard to predict - but I am yet to hear a compelling argument that there won't. For example I keep seeing people claim that house prices only go up (in the longer term). This is clearly false. They went down consistently from the late 19th century to the mid 20th, for 70 years. The argument that there can't be a crash because "supply and demand" is also wrong. This should be obvious really - the housing market is very volatile whilst housing stock and population size changes very slowly. And demand does not equal the number of people who want houses, it's (also) determined by real wage growth and the availability of credit. Credit is now greatly reduced, and if we have a recession (quite plausible) then wages will inevitably be hit too.'

Exactly.
Good luck with finding a home and also to the other posters who are viewing/ monitoring and waiting for something which makes financial sense.

This should be obvious really - the housing market is very volatile whilst housing stock and population size changes very slowly

Population is some areas, especially London & SE have risen significantly in a short space of time so this is a factor. There is still high demand for houses in some areas although there is definitely a slow down and reduction in prices which is to be welcomed. Sensible levels of multiples of income should be restored.

@ChickenChickenHen , sounds like for you, waiting is definitely the right decision. We are more like @hannahcolobus , and have been looking to move into secondsry school catchment area for the past 2 years (need to move by 2027, so not urgent).

Not many houses come up there (it’s a small catchment), and a lot of those that did come up were going to sealed bids/way out of our price range in 2021-2. We weren’t willing to pay silly money when we weren’t in any rush to move, but we did put offers on a couple (and were outbid).

A house we liked came up, needed some renovation work but mostly cosmetic, and priced low enough that purchase price plus renovation costs would still be less than asking prices of “finished” houses. So we put an offer in (due to exchange Monday). We might have got a similar one cheaper next year, but we might not have done, and I don’t think prices will continue to fall in our area for long (we’re in London, lots of cash buyers locally, and prices seem to be stagnant rather than actively falling).

So I’m happy we went for it. We don’t want to move for another 15-20 years, and I don’t think we’ll lose money over that time period. Might lose it on paper over the next 2 years, but that doesn’t bother me particularly, we won’t be in negative equity as our LTV isn’t high.

We sold last year and moved into a rental early this year. The interest on the equity (we are cash buyers) is now more than the cost of rent - even in easy access accounts - so financially it would have made sense in the short term to rent for longer. However we found the ideal property for us and managed to secure it for possibly 5-7% less than it would have been at peak so we went ahead.
The value of the property may well drop over the next year, I can accept that as we plan to stay at least 10 years and absolutely love it. I would be regretting it if we had gone for something with too many compromises.
It’s also good to be settled. The landlord put the flat we were renting up for sale as soon as we moved out (6 month contract) so we may well have had to find another rental if we had not bought and that’s not easy where we are.

Just don't forget to save the tax due on all those interest payments. HMRC will want their cut next year.

Yes, I’ve taken the tax into account - it wasn’t for very long in the end….

I suppose we're sort of in the category of waiting for a crash. We want more space at some point but we're also in the catchment for an oustanding primary so have no desperate need to move. We bought our house in 2013 when prices were way lower so all the mortgage payments on the houses we would like sound horrendous at the moment. Maybe we will have to suck it up at some point and buy a bigger place, but equally we could extend our house. We have no fixed plans at the moment. I would like prices to drop back to where they we're before Covid at the very least.

But we're not there yet?

This thread is proof that not everyone is saying it's a bad time to buy 🤷‍♀️

Exactly. You can ignore me, Crashy, Raining, etc. Just wait until Twiggers tells someone not to buy then go all in! Joking @Twiglets1

😂
I think when unemployment rises rapidly, it's likely that house prices will fall more.

Ha.ha.

yes we’re just one big happy family @hannahcolobus

Me, sarcastic? Never! 😂

https://uk.finance.yahoo.com/news/6-000-wiped-off-average-000100367.html

Well that silenced everyone nicely

Asking prices aren't as newsworthy as agreed prices.

You are renting the money from the bank not the house, and the bond market tells the bank how much your debt payments (on the money) are going to cost.

Renting means you never own @CrashyTime. The whole point of a mortgage is that over time the owner's interest in the property grows. That is useful if you start paying one off early enough in your lifetime to see the benefit. Waiting until middle to later age is much less useful. Bit like a pension in that respect. No point refusing to start one because the returns aren't high enough as the alternative is worse. But we can agree to disagree as this thread is starting to repeat itself a bit and not really getting anywhere.

Most of the basic (and not so basic) property sold in the UK over the last number of years is in no way worth the mortgage debt secured on it, people were conned and many are waking up to this fact now, but I suspect you know this already? What use is a mortgage if you are bankrupting yourself to pay it?

But you have to live somewhere and if you don’t own your own home then you are paying rent (basically paying the mortgage for the landlord).

You either rent the money from the bank or the house from the landlord, renting is cheaper than a mortgage now and you can get really caught out with mortgage debt if interest rates rise.

But once the house is paid off you have options , eg downsize , equity realise , no monthly outgoings on mortgage/rent. I can’t see how renting is ever better