Dr_Pangloss Posted July 2, 2017 Share Posted July 2, 2017 6 minutes ago, TrentVilla said: Which is what people were saying in 2008 as well but it didn't really happen. Yes a rise in sharp rise in interest rates would likely see an increase in repossessions but there isn't a sharp rise coming. The market might stagnate, growth might slow or even stop but there isn't a nationwide crash looming even if there are regional fluctuations. There was a huge correction in house prices in 2008, it took until 2013 for them to reach 2008 levels. Link to comment Share on other sites More sharing options...
PaulC Posted July 2, 2017 Share Posted July 2, 2017 8 minutes ago, Dr_Pangloss said: Rates are likely to rise and that will be passed on to mortgages and should in principle choke off some demand. The press today are running with doomsday scenarios, doubt that will happen but I'd wager some sort of downward pressure on prices to come. I expect more than just stagnation. I think the base interest rate will go back to 0.5% within the next year or so but we are never going back to 3 or 4 %. I think if Labour got in with the increased spending I do believe the bank of England would have to raise the rates to control mass inflation, but many people are running their credit cards to the limit and I think another financial meltdown could be around the corner. Its hard to understand why a couple who live next door to me who both have good jobs are renting the house but cant afford to buy the house. I believe the deposit is the problem. People don't save now? Is that because of low interest rates or credit card debts. 30 years ago as teenager I was encouraged to save. Link to comment Share on other sites More sharing options...
TrentVilla Posted July 2, 2017 Moderator Share Posted July 2, 2017 The articles I've seen this morning are little more than sensationalist scare mongering largely influenced by the bubble of London prices. The Government surcharge through stamp on buy to let has really impacted on the London market which has slowed significantly but it's a picture not replicated elsewhere in the country. The figures clearly show that house prices are continuing to rise, at a slower rate than previous years but rise nonetheless. The headlines this morning as far as I can see stem largely from the opinions of one economist who is assuming that the situation in London is a indication of a following trend across the country. I agree growth will slow, it may even stall or we may see some fall but talk of crashes, negative equity and 1989 style collapses are ridiculous. 1 Link to comment Share on other sites More sharing options...
Dr_Pangloss Posted July 2, 2017 Share Posted July 2, 2017 (edited) 8 minutes ago, PaulC said: I think the base interest rate will go back to 0.5% within the next year or so but we are never going back to 3 or 4 %. I think if Labour got in with the increased spending I do believe the bank of England would have to raise the rates to control mass inflation, but many people are running their credit cards to the limit and I think another financial meltdown could be around the corner. Its hard to understand why a couple who live next door to me who both have good jobs are renting the house but cant afford to buy the house. I believe the deposit is the problem. People don't save now? Is that because of low interest rates or credit card debts. 30 years ago as teenager I was encouraged to save. Even small changes to interest rates will filter through into mortgage markets, which in principle will impact on demand. People not saving probably has a lot to do with lousy growth in incomes, rising living costs in real terms (due to shitty income growth) and as you point out, low interest rates being a feature of central bank policy - it's understandable why interest rates have been kept low but it of course disincentivises saving. In light of the housing market crash of 2007/2008 banks require higher deposits and many mortgage products targeted at sub-prime borrowers were removed. Edited July 2, 2017 by Dr_Pangloss 1 Link to comment Share on other sites More sharing options...
PaulC Posted July 2, 2017 Share Posted July 2, 2017 1 minute ago, Dr_Pangloss said: Even small changes to interest rates will filter through into mortgage markets, which in principle will impact on demand. People not saving probably has a lot to do with lousy growth in incomes, rising living costs in real terms (due to shitty income growth) and as you point out, low interest rates being a feature of central bank policy - it's understandable why interest rates have been kept low but it of course disincentivises saving. In light of the housing market crash of 2007/2008 banks require higher deposits and many mortgage products targeted at sub-prime borrowers were removed. Yes theres a lot more out there to buy than there was 30 years ago and we all want the latest gadgets. So even with the higher interests rates would young people still have the willpower to save enough to put down a deposit on a house. Link to comment Share on other sites More sharing options...
Popular Post TrentVilla Posted July 2, 2017 Moderator Popular Post Share Posted July 2, 2017 I've said it a hundred times, schools should be teaching kids about personal finance. The amount of people that don't understand the very basics of things like APR is staggering. We should be teaching about financial responsibility, the importance of saving and the dangers of debt. That it is actually possible to save for something rather than have it now. But then I guess that wouldn't sit well with Govenrnments that are almost entirely dependent upon the economics of consumerism and the service industry post Thatcher. I know one thing, my boys will be learning about personal finance. 9 Link to comment Share on other sites More sharing options...
PaulC Posted July 2, 2017 Share Posted July 2, 2017 2 minutes ago, TrentVilla said: I've said it a hundred times, schools should be teaching kids about personal finance. The amount of people that don't understand the very basics of things like APR is staggering. We should be teaching about financial responsibility, the importance of saving and the dangers of debt. That it is actually possible to save for something rather than have it now. But then I guess that wouldn't sit well with Govenrnments that are almost entirely dependent upon the economics of consumerism and the service industry post Thatcher. I know one thing, my boys will be learning about personal finance. Yes thats a very sound approach to raising children the right way Link to comment Share on other sites More sharing options...
Kingman Posted July 2, 2017 Share Posted July 2, 2017 (edited) 1 hour ago, TrentVilla said: Which is what people were saying in 2008 as well but it didn't really happen. Yes a rise in sharp rise in interest rates would likely see an increase in repossessions but there isn't a sharp rise coming. The market might stagnate, growth might slow or even stop but there isn't a nationwide crash looming even if there are regional fluctuations. It's worse than regional or even nationwide it's a result of a Global threat. Slow downs are happening in Canada, Australia and parts of the US right now and we know what happens when America sneezes! Take a look at China right now, There economy is rife with crippling debt as credit grew to fast so it won't be long till our markets feel that effect. Lots of Chinese investors in the UK markets are in real estate so watch this space. Edited July 2, 2017 by Kingman Link to comment Share on other sites More sharing options...
Dr_Pangloss Posted July 2, 2017 Share Posted July 2, 2017 18 minutes ago, TrentVilla said: I've said it a hundred times, schools should be teaching kids about personal finance. The amount of people that don't understand the very basics of things like APR is staggering. We should be teaching about financial responsibility, the importance of saving and the dangers of debt. That it is actually possible to save for something rather than have it now. But then I guess that wouldn't sit well with Govenrnments that are almost entirely dependent upon the economics of consumerism and the service industry post Thatcher. I know one thing, my boys will be learning about personal finance. I agree, having a nation of savers will crash the British economy based on how it is currently set up. 1 Link to comment Share on other sites More sharing options...
TrentVilla Posted July 2, 2017 Moderator Share Posted July 2, 2017 13 minutes ago, Dr_Pangloss said: I agree, having a nation of savers will crash the British economy based on how it is currently set up. Indeed. Which is exactly why kids aren't being taught this stuff, because if people became more financially savvy and less inclined to go into debt for the sake of consumerism then our economy would be in trouble. So politicians alloe the issues with personal debt to continue because the awkward truth is the nation is hooked to the drug. Link to comment Share on other sites More sharing options...
Xela Posted July 2, 2017 Share Posted July 2, 2017 2 hours ago, TrentVilla said: That it is actually possible to save for something rather than have it now. Today's culture is 'want want now' and its going to be a huge culture shift to change it Link to comment Share on other sites More sharing options...
Xela Posted July 2, 2017 Share Posted July 2, 2017 I'm coming up to 4 years in my apartment and I paid what I think was at the top end of what is was worth but it has gone up in value close to 40% going by what other ones in the complex are now selling for. Prices may slow down in some areas but around in-demand areas, they don't seem to stop rising (by rail stations, by good schools etc) Link to comment Share on other sites More sharing options...
Rob182 Posted July 4, 2017 Share Posted July 4, 2017 I've found the last few pages of this thread to be a really interesting read I'm looking to move house soon, but I know diddlysquat about all this house market economic hoo haa. I'm going to do a bit of reading up, but can one of you clever chaps give me a pointer? I've got a house right now, which I want to sell and get a new, bigger, better, FASTER house. I'm planning to sell mine next year, probably March/April-ish and then buy my new house shortly after. Is this a bad idea, with prices expected to rise? Or is it basically a gamble whenever you look to move, and no-one knows for certain what will happen? My fiancée's brother has just sold his house, but is now planning to rent it from the buyer for 6 months before they buy their new house. I don't really understand this, and I think they're doing it because they needed to get an Ex-partner off the mortgage quickly, but I feel like I'm fairly clueless as to whether this is a good or bad thing to do, generally. Link to comment Share on other sites More sharing options...
Stevo985 Posted July 4, 2017 VT Supporter Share Posted July 4, 2017 On 01/07/2017 at 22:35, AlwaysAVFC said: Any advice on who to speak to initially look at the finances before actually applying for a mortgage, the bank or someone else? I think I'm seriously going to have to look at doing a help to buy on a new build as house prices by me are pretty steep. It's only been recently I've even been looking at what the market is like round here and what's available, and not really worked out what I might be able to afford. Try "Countrywide". They're a mortgage consultancy. When I bought my first house back in 2010, I went to Dixons Estate Agents and they had a Countrywide person working for them. So my first chat was with that guy and they basically sit you down and talk through all your options. Plus they do a sort of expense analysis where they work out all your expenses and give you an estimate as to the sort of mortgage you can afford and the sort of mortgage you'd get approved for. After that they will go out and find you a mortgage and take you through the application process and everything. They used to be free but they charge a fee now upon completion. I think it's a couple of hundred quid. But that's not really much if they end up finding you a good mortgage which could end up saving you thousands. I'd recommend them. I've used them 3 times now (my first mortgage and two subsequent remortgages). Never had an issue Link to comment Share on other sites More sharing options...
Stevo985 Posted July 4, 2017 VT Supporter Share Posted July 4, 2017 On 02/07/2017 at 10:51, TrentVilla said: I've said it a hundred times, schools should be teaching kids about personal finance. The amount of people that don't understand the very basics of things like APR is staggering. We should be teaching about financial responsibility, the importance of saving and the dangers of debt. That it is actually possible to save for something rather than have it now. But then I guess that wouldn't sit well with Govenrnments that are almost entirely dependent upon the economics of consumerism and the service industry post Thatcher. I know one thing, my boys will be learning about personal finance. It's crazy that I left secondary school knowing things like how to solve quadratic equations and formulae for thermal physics, but I didn't have a clue about how mortgages worked or how to write a cheque. Definitely a huge opportunity to teach kids "life skills" or whatever you want to call it. Link to comment Share on other sites More sharing options...
markavfc40 Posted July 4, 2017 Share Posted July 4, 2017 (edited) On 02/07/2017 at 13:01, Xela said: I'm coming up to 4 years in my apartment and I paid what I think was at the top end of what is was worth but it has gone up in value close to 40% going by what other ones in the complex are now selling for. Prices may slow down in some areas but around in-demand areas, they don't seem to stop rising (by rail stations, by good schools etc) The housing market is crazy and has been for years. In 1998 I paid 30k for my first house and sold it for 55k 2 years later after in fairness doing a fair bit of work on it but a 90% increase in value in 2 years was still a lot. I then purchased my second house for 60k and sold it 11 years later for 130k so the value more than doubled. The house I currently live in I paid 160k for and recently had it valued at 240k so a 50% increase in value in 6 years. That first house I bought in 1998 would now be worth approx 160k so has gone up over 500% in 19 years. Average earnings haven’t gone up anywhere near that much. In fact average earnings haven’t even doubled over that time. I wouldn’t want to be a first time buyer now. In fact based on the criteria you had to meet when I got my first mortgage which was 2 x my earnings and 1 x your partner I wouldn’t now be able to afford that first house unless I had a really heft deposit. It isn’t sustainable that house prices can continue to rise way above wage increases. The bottom will fall out of it eventually as simply there will be no first time buyers as they won’t be able to afford it. There is a shit storm down the road as interest rates will eventually rise which will mean people will not be able to borrow as much and will leave a lot of people with big mortgages currently in big trouble. Edited July 4, 2017 by markavfc40 1 Link to comment Share on other sites More sharing options...
zak Posted July 4, 2017 Share Posted July 4, 2017 On 2017-7-2 at 09:40, TrentVilla said: Prices might stop going up but they are pretty unlikely to go down. This, People have talked about the bubble bursting for decades. The way i see it, is back to basic economics. Demand for housing grows faster than supply in housing. This makes prices go up. When i say prices thats the combination of rental prices and house prices. People need places to live and are either buying houses (house price increase) or renting houses (rental prices increase) or a mixture of both. Untill supply matches demand overall prices are likely to keep rising. My viewpoint is mainly from greater London though where the disparity between demand and supply is large Link to comment Share on other sites More sharing options...
itdoesntmatterwhatthissay Posted July 4, 2017 Share Posted July 4, 2017 5 hours ago, zak said: This, People have talked about the bubble bursting for decades. The way i see it, is back to basic economics. Demand for housing grows faster than supply in housing. This makes prices go up. When i say prices thats the combination of rental prices and house prices. People need places to live and are either buying houses (house price increase) or renting houses (rental prices increase) or a mixture of both. Untill supply matches demand overall prices are likely to keep rising. My viewpoint is mainly from greater London though where the disparity between demand and supply is large It's very confusing. House prices are rising everywhere but I have seen some regional prices slow as homes get released into the market. There's also a false perception about what's out there, perfectly exampled by the tiny sample of homes that rightmove carries. I'm quite intrigued to see what happens to investors like homewise, who for example, have over 3,000 'retirement' properties in London and the South East. I'm sure SLDT stalled their investment programme but there are perhaps other mechanisms that can pressure those homes to be put back into circulation and not remain empty. If local authorities can keep building and more importantly, publicise what they are building then price increases will soften. Also if there is a push on small sites and infill in existing communities it will help stabilise local prices instead of keeping them higher, as large developments setting new minimum prices do in the fabled 'urban extension' or 'garden city'. I believe snowychap has previously brought up empty homes. It's a big problem for sure and in many ways it twins with the investment portfolio of not just individual owners and companies, but investment portfolio which I would guess show many more homes being owned by foreign investors than is typically reported. Link to comment Share on other sites More sharing options...
ender4 Posted July 4, 2017 Share Posted July 4, 2017 In South Birmingham (Solihull to be exact), the housing market is crazy over the past couple of months. Pretty much every decent house is going for above asking price, and houses selling in the first week on the market. Surely has to end with a crash? Though i've been saying that for 10 years now! Link to comment Share on other sites More sharing options...
Rodders Posted July 4, 2017 Share Posted July 4, 2017 The price I paid for my house was 3.5 times what the seller had bought for it in 1997. Cannot see the prices going up much higher, I just cannot see the property justifying a similar rise given its size. At a certain point I assume it's just not worth it. And with stagnant wages, it's surely harder to get the mortgages to cover the increases - unless the lenders go back to minimal deposit levels again 1 Link to comment Share on other sites More sharing options...
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