House prices are over-valued, half of consumers have said – but only a quarter hold out any hope that prices will fall.
Rightmove interviewed over 26,000 people for its latest consumer survey, which finds out what non-professionals think about the property market.
Right across the UK, people felt local house prices were too high. But despite an average of 48% of consumers expressing this sentiment, only 24.9% expect house prices to fall over the next year.
Even those who intend to sell a property in the next year feel local properties are over-valued, a view expressed by 34.6% of those planning to sell.
In London, the proportion of people who feel house prices are over-valued rose to 60.8%, while in the south-east it stood at 51.7% and in the south-west at 52.7%.
Rightmove director Miles Shipside said: “There is a growing sense that many homes coming on to the UK housing market are priced too high, and this is borne out by the views expressed in this survey.
“We now have a situation where half of the UK public feel house prices are too high, yet three-quarters of the same public are expecting prices to either stay the same or increase over the next 12 months.
“This suggests the prospect of a market stand-off and rising unsold stock levels if sellers don’t wise up to the house price views of their target market.”
Comments
House prices in the uk are a complete joke, they are so unaffordable, we will have a generation of 40 and fifty somethings living with mum and dad because they cant afford to buy their own place , expensive mortgages paired with ridiculous council tax costs mean anyone on a low to medium income can forget ever owning a place, this country has become so expensive , its a disgrace.
Lets all hooe the market settles soon!
The price of property is scary- i will never be able to afford my own home!
rant: "I do not pretend to be an economist..." YES YOU DO!! You're always banging on about seasonal adjustments, SMY, FU2 and so on... ;o)
"...and no doubt the following thoughts are going to be torn apart by others wiser than I in this area."
Not so sure about that, buddy. Yes - there are holes that you could drive the occasional Challenger tank through - but rather han do that I would MUCH rather work with you to patch them over. And I am sure that MANY others would also.
We seem to walk in different moccasins, rant. But in reality, we don't. Look at the commonalities -
YOU want to buy a house: I want you to buy one.
YOU don't want to at what you see to be inflated prices: I see no other current viable alternative for you, and believe that waiting COULD prove false economy.
YOU want to do what is best for you and your family: I fully support that and as you know, have two lads in exactly the same situation.
You have no doubt been reading the debate between Mike Wilson and yours truly below. If I were to say that I did not feel for you and all other genuine FTBers like my lads and Mikes, then I would be lying. Or heartless. I had my break, and would love the same break for them. Unfortunately it is not in my sole control.
But, I see some merit in what you propose. Well done - succeeded where Hendry failed despite 30-odd years in the business and should know FAR better!
There will be a million arguments against - but maybe the million and one arguments 'for' will outweigh...
Now - where do we go from here, mon ami? ;o)
Rosalind - I feel an exclusive feature coming on!! ...BREAKING NEWS...BREAKING NEWS...
WE may have to let good old Hendry see this, an idea put forward by a non agent, that isn't ripped apart by Agents!
I fully agree about letting those who lied about self cert mortgages rot, and I'm also cautiously in favour of clawing back commission and bonuses paid to the scum-sucking gutter rats who A) encouraged them to go the and FA who did that, and B) WAS the FA who did that! This is one situation where I don't entirely blame the bankers, yes they should have checked and audited more carefully, but hindsight is a wonderful thing!
I don't know how the idea of a grant would work, if there was no interest then it could be a great plan, but I have very little doubt that as soon as the Government put a think-tank anywhere near it, they would strip a decent sounding plan down, sell it for scraps and the send it out to the nearest corner to try and gain extra taxes!
Pretty good bones of ideas though....
Pee Bee - you've only gone and called my bluff. You know us HPC lot are always pointing out the problems but never offering any solutions ; )
I do not pretend to be an economist and no doubt the following thoughts are going to be torn apart by others wiser than I in this area.
The only folk in n'equity are those who have bought in the not so distant past. For a lot of them, it isn't a problem since they are staying put and in many cases making their repayments courtesy of record low interest rates. So we're not talking about masses of people here whose n'equity is an issue. Anyway, the qualification for assistance should be based around how much prices have fallen in an area (according to an agreed source, eg Land Reg) and include how long the owner has been in the property. This would need reviewing from time to time though.
Priority should be given to those who need to relocate because they have lost their job or whose family through a recent birth has grown to three more people than there are bedrooms, for example. Of course there are grey areas - what about people wanting to move for a promotion / internal transfer at work etc. However, those who are on self-certification mortgages should have their application thoroughly checked to make sure they haven't lied about their income. If they have done so, they can be left to rot as far as I'm concerned (bear in mind that 40% of mortgages between 2005-07 were self-certs, so this could be another big chunk of people who don't qualify).
The government still has some leeway with lenders, as seen by pressuring them not to repo unless absolutely necessary. Get the lenders to accept removing the amount of n'equity from the outstanding mortgage and set aside as a separate inflation-linked loan that can be paid in installments or big chunks without a penalty (very similar to the student loan system).
I'm not saying this is a perfect solution or going to defend it from criticism. However, if the government can find funds for SMI, then I believe it could find funds for this. Lenders also found strategies to cope with n'equity in the early 90s too I believe?
COME ON, RANT! You have me clamouring for more input...
What would your proposals be - and how would they work?
I'm serious - I ain't gonna rip the p***. If it's a workable solution it should be aired.
Chris - if it's unfair to prop up those in negative equity, how is SMI and giving this country's savers a dire rate of return justifiable?
Personally, I think it is much better to have something in place that allows those who have lost their job and are stuck in n'equity to move so they can find work elsewhere. This is better than having them on the dole with government money being used to support their mortgage interest payments.
@PeeBee
I agree with you generally - although given that my son is training in construction management - which is in my experience (and I used to be a project manager on big construction sites) is only averagely paid - it won't matter a fig how hard he works - he'll never be able to afford the house he lives in now (unless I give him a chunk of it - which I hope to, one day)
If a lot of our youngsters do move abroad (and I take the points you made on this) it will serve our generation right if we end up in care homes with sullen kids from Eastern Europe being paid minimum wage to wipe our geriatric bottoms. Our equity will be used up and our kids will be on the beach down under! Perhaps!
@Chris
You said:
" I don't see a problem with this. Until 20-years ago, most people paid rent their whole lives."
Yes. My aunt and uncle rented a flat all their lives in South London from a landlord. But, of course, it wasn't under the wonderful Assured Shorthold Tenancy legislation which, basically, turned renters into serfs.
I rented a while ago for about 6 years. Moved twice at the landlord's whim (son is getting divorced and they want the house for him so we are kicked out of OUR HOME, HIS HOUSE with 2 months notice). And we have to put up with being bloody inspected by a 22 year old every 12 weeks!
Stuff that! That's no way to live. Bring back proper tenancies where people can decorate and improve the property and have security of tenure and I'd say 'fine' - force people to try to raise a family being booted from one Shorthold Tenancy to another and, if I had to endure that, I'd be pretty damn unhappy about it.
If someone owns a property and wants to let it out - fine - but let's not have half the country jumping on a buy to let bandwagon leveraging themselves up to the hilt and getting other people to pay their mortgages. Let's have a bit of fairness and decency in our society.
Mike: When it comes down to the nitty-gritty, I get the impression you are a pretty decent guy. You are also passionate - which you sometimes allow to distort your persona somewhat... hence people (including me...) read you wrongly. I think another problem is that there seems to be another Mike Wilson who posts on here from time to time who really rattles cages - or is that just you displaying your uber-passionate side? ;o)
We have both been lucky, you and me (and countless millions of others...). We bought at the 'right time' - more than our parents did. Meet the other council-house kid. My old man was a copper, so lived in a police house until retirement (the pension for which was then paltry by today's standards...) and then into council.
He instilled into me a work ethic that sometimes I thank him for; sometimes I curse him. Live to work, not work to live. So far, however, it has paid dividends - thanks mainly to a very understanding Mrs PeeBee who knows my nine-to-five is more like a seven-to-whenever, and hardly ever complains!
Okay - to our sons. Mine are a bit older than yours. 28 and 26. Decided - like I did all those millennia ago - to waive the uni route and step straight into employment. Neither wanted to be a brain surgeon or an engineer, and both believed that a good work ethic and willingness to roll up sleeves and get stuck in would get them where they eventually wanted to be. So far, this is working to plan for both of them. Don't get me wrong, education is a wonderful thing and can open doors - but chancers now scrape a 2:2 in History of Ancient Greek Dog Grooming Techniques and then expect to be appointed Financial Director of a major PLc!
Now here's the thing. NEITHER of my lads say they want to leave the country. Yet, on the radio this morning, some numpty survey claims 42% of North-East youngsters want to emigrate due to cost of living. So one must be lying. Or not sure.
Your lad's not wrong in his summing up of the UK. The thing is, you can pretty much apply his terminology to 90% of the world. If you haven't already seen it, type 'mastermind in world economy' into youtube. Hilarious but frighteningly accurate summing up of the situation.
The thing is, Mike - and you know this to be the case - it's a little like a tempting new job. You look over the fence and it all seems green and lush. 80% is simply perception - because you WANT it to look that way. IF this country is so bad, why are so many flocking to it?
The UK needs your lads; my lads - and millions more like them. AND their female counterparts, of course.
You and I will disagree of the hows - but surely we agree on this fundamental. And not just because we don't want to see them go - but because we must believe it would be wrong for them to go.
Without them, the country IS f****d.
Our country is in debt to the tune of 47 trillion pounds!
If we sold every property in the country at today's value (To say the chinese) we would still not clear the debt.
The size of the pile of £50 notes laying on the floor one on top of each other would stretch into outer space and half way between the earth & the moon! It really will.
Our public sector is actually bigger than our private sector, meaning that we cannot get out of debt until the balance swings the other way. It is simply impossible, so jobs in the public sector have to go, period!
Propping up negative equity for some is not a fair way to go, wouldn't be popular and will never happen! Why should some people that dived in to buy a house in 2007 have their mortgage reduced just because they are in negative equity and all those other people who have bought years early continue without help on their mortgages?
Inflation, pay rises and static house prices will increase affordability in the medium term. In 15-years time, people could be looking back to now saying "OMG, in 2011 the average cost of a house was only £160k, now its £210k" or something like that. After all, we say that now about prices in 1997 when a house could be bought in the Midlands for only £30k. I paid that for a Landrover Discovery in the previous year!! How could house prices be that low? They were.
The issue is that there simply aren't enough council homes or rental homes at sensible prices. I don't think I would have ever taken out a mortgage if I could rent a decent council house for £91 a week. Build some more affordable rental properties or 50% shared equity homes (Best of both worlds) and try to keep immigration to a minimum and over the next 10-years this topic will be a none issue.
Mike said: (if I thought my kids - and yours - and everyone else's - would have to rent all their lives moving from one 6 month Assured Shorthold Tenancy to another at the whim of landlords.) I don't see a problem with this. Until 20-years ago, most people paid rent their whole lives. This idea that you are less of a person because you don't have a mortgage on a property you are buying is what has caused house prices to rise in the first place. Chill out, be happy for your kids if they can find a nice rental house to bring their family up in. Over their whole life, it would probably work out cheaper for them anyway.
People want it both ways, they want to buy a house and then moan when they are competing with other people of a similar mind set, which drives prices higher. Then when they are in a house that they own, many of them are happy that the value is rising because it allows them to take equity out on a cheap 5% remortgage loan, instead of a 10% unsecured loan to buy a new car, holiday, conservatory etc.
Anyway, I think we have done this subject to death now. We are where we are. None of us here can change anything so lets just see what happens.
If Michel de Nostredame or Nostradamus as he is known is correct with his prediction that the end of the world will end in 2012 from a war sparked in the Middle East, none of this house price stuff will ever matter anyway. I doubt it will come true though as the Middle East is a sanctuary of love, peace and tranquillity at the moment isn't it? !!!!!
I was just watching the 10 o'clock news with my son (aged 22) and he heard Nick Clegg say something like: "I didn't come into politics to cut spending (which actually is something all politicians should do, in my opinion) but we have to deal with the problems we've been left and the fact that we are borrowing 400 million pounds a day"
My son, who as well as using Facebook on his laptop and answering texts on his phone about once a minute, seemed to actually listening. He turned to me and said - and I quote - "what the f***?".
I gave him a precis of our current fiscal position and the fact that we are borrowing about 150 billion pounds a year - and he asked 'who from' and 'who will pay it back' etc.. - and I explained that we are also currently paying £120 million a day in interest - enough to build 10 primary schools a day - and after due consideration of the matter he said (not for the first time) 'This country's f***ed - I'm moving abroad when I'm qualified'.
And all to keep house prices up.
@PeeBee
You have a good memory (re. discussion some time ago).
You said:
"Trouble is, there are MILLIONS who would need to suffer immeasurable pain in order for this to happen. Repossessions; toxic loans hanging around their necks for the rest of their lives; families put under so much pressure that they fall apart. Depressions; illnesses caused by stress and worry - even deaths, if previous sad stories were to be re-enacted. "
You are right - I don't want to see that - but it strikes me that either people who over extended themselves in (say) the last ten years (a relatively small number) are going to feel the pain - or a whole generation is going to feel the pain and, by definition, if we accept that the market must never be allowed to correct - the generation after that and the one after that. Ad infinitum. (Meanwhile the bankers rub their hands.)
You said youngsters don't NEED to own a house. I disagree - in general terms. I'd be very upset if I thought my kids - and yours - and everyone else's - would have to rent all their lives moving from one 6 month Assured Shorthold Tenancy to another at the whim of landlords. If we had a sane rental market here where people could make a rented property their home and have security of tenure for as long as they wanted it - I'd agree - renting would be fine. I was brought up in a council house that was home - because, as long as we paid the rent - we could live there forever.
I don't want to see anyone repossessed or suffering but, no-one forced them to take on mega mortgages. That said - many people are financially naive and the banks must take responsibility. The directors of Northern Rock who lured gullible youngsters into an over heated property market with 125% loans should be horse whipped. The labour government that stood by while the housing market exploded should, likewise, be horse whipped.
Why don't people ask Gordon Brown why he stood up in parliament in 1997 and said: "I will not allow a house price boom to put at risk the sustainability of the recovery" and then stood by and milked the biggest house price boom in history for all the tax it could generate. What a fool he was! Now we are borrowing 400 MILLION POUNDS every day ... and your kids and mine and everyone else's will be paying the interest on this debt - and repaying the capital - for the next 50 years or more. All so that house prices can be maintained and another banking crisis avoided.
Protect deposits and let the banks go to the wall. Write off the debts and start with a clean sheet - it would be a lot cheaper than the nonsense of borrowing 2.8 billion a week just to keep the balls in the air.
I think you can probably sense that I blame the bankers for this mess - yet still they help themselves to billions in bonuses. Those billions would go a long way to sorting out any problems that would occur if property were able to move down to affordable prices.
I read somewhere today about some moron or other encouraging youngsters to buy now - never been a better time - the usual guff. And mentioning the average house price of a FTB property in the North East as being about 100k. It's your neck of the woods - I'm sure you know lots of jobs up there pay 14k - where does this lieave would be FTBs with
rant: You well and truly have caught my attention, Sir. This is something new from you, is it not?
Go on - I'd like to hear more...
Exactly Pee Bee - that's why the government should focus on those who would be left in negative equity by house prices coming down, rather than propping up prices and trying to come up with 'innovative lending solutions' to help the priced-out generation.
Mike Wilson: You and I had discussions last year, I seem to remember, and we are very much alike. We each have a nice house; have 2 sons each; both want to be the protective father; both know that it is going to be var nigh impossible for our lads to get on the ladder without BIG changes to the current situation. And both of us sensible enough to pretty much rule out EuroMillions as the vehicle... ;o)
SO - here we stand again. BOTH on the same side of the fence - yet with very differing views. How can that be?
I SHOULD be marching shoulder to shoulder with you on this one. My house could quarter in value for all I care - as long as my lads benefitted accordingly. It has no cash value to me - it is simply our home. If properties quartered, then No1 and No2 sons would be able to afford, as would many, a nice semi in a leafy suburb here 'oop north' in which to bring up their own families.
Trouble is, there are MILLIONS who would need to suffer immeasurable pain in order for this to happen. Repossessions; toxic loans hanging around their necks for the rest of their lives; families put under so much pressure that they fall apart. Depressions; illnesses caused by stress and worry - even deaths, if previous sad stories were to be re-enacted.
And I simply can't wish any of that upon anyone. (and I REALLY don't think YOU can, either...)
I am not looking after my OWN interests, Mike - I am putting them (ie the needs of my own family) aside for the bigger picture. My kids don't NEED to own houses - they would simply LIKE to. As I would like them to. One day, they might - one way or another.
In the meantime, I'll do my bit in my way to help them, without wishing problems on others.
So - where's that EuroMillions coupon...?
Mike - I for one do not want to see a situation where this country's hard working bankers have to take a pay cut. When I read about the paltry bonuses they earn, my heart goes out to them.
Open the flood gates of credit to keep house prices high and if the banks lend too much then I will happily see my taxes used to rescue them, again...
A question for all - as the question now seems to be about affordability.
Why shouldn't house prices fall to improve affordability rather than credit be made cheaper by providing lifetime mortgages?
Which is prefereable for the generation that will have to take on these loans?
@PeeBee
Can you explain why my sons should have to take on a lifetime mortgage to buy something I bought (comfortably and easily) over 25 years?
As regards your comment about equity - I'd be quite happy if my house went back down to 100k. If it did - my kids would have an easy life - and the bankers would have a harder life.
As it is I'll be selling up one day and someone else's poor sods of kids will be taking on mega mortgages so someone can buy my house - and I'll be giving their borrowed money to my kids.
Doesn't anyone here get it? The only people who win from this credit fuelled nonsense are the bankers! You don't win - they do. See any bankers going out of business? No - but you'll see estate agents going out of business and people having their homes repossessed and a recession and general misery on a widespread scale. But the bankers - bailed out and still on mega bonuses.
As for the young generation - change always comes from the young. As for the 'best educated generation in history' - that makes me laugh. We (me and my grammar school educated contemporaries) were the best educated generation in history and all we've done is screwed over the next generation.
No, they'll wake up one day. When they realise their high taxes are paying for our pensions and our health care in old age and the debt we took on to keep the banks afloat and that they can't afford to buy a house or save for a pension because they have to pay so much tax and such high rents or mortgages - no, they're goting to get fed up one day. My observation is that when the young riot it is usually led by students .... by well educated people. So, if they are well educated, they'll be rioting soon.
I thing the reason they haven't really got their act together yet is the way we brought them up. Everything too easy - iphones and XBox live keeps them occupied for now.
As I've said in other threads - a lot of young people are desperate to emigrate. Doesn't say much about what we've done with the country.
Mike Wilson: You said "Equity is unearned income provided by the borrowing of others. People should be disgusted at it."
So, Mike, based upon your own words, sitting at home tonight in your half-million pound pad I trust you will be feeling sick as a kipper?
Referring to Chris' suggestion for longer-lerm lending be made available to increase affordability, you said "Yes, people will take that chance. The real question is why they should. Is land and a pile of bricks, timber and roof tiles (that takes about 40 man/weeks of labour to build) that precious that people must spend their whole working lives in debt just to put a roof over their heads?"
Precious? No. NECESSITY? Yes.
In the real world is it necessary that someone should work from age 16-18 to age 65+ simply in order to eat; drink and enjoy themselves? YES! Who otherwise will pay for them - and for those who can't OR WON'T work? It could be viewed that there are those that stiff the system by going to uni until they are 21; therefore depriving themselves of up to five years salary that could be paying toward their living costs (in other words - THEIR CHOICE not to earn; not to start paying their way...) - and five years of contributions to the system.
Those living in rented accommodation must spend their whole working lives putting a roof over their heads; no rent - no roof. The liability doesn't stop when the paychecks stop, either.
You said: "If you accept the argument that cheap and easily available credit drives house prices up then, presumably, you accept that dear and less easily available credit will drive them down." I cannot speak for Chris, although MY reading of his words was that credit fuels market FUNCTIONALITY, not market prices. Demand increases prices when it outstrips supply.
You said: " If we carry on as we are one of these days our young people are going to wake up. Things will get ugly when they do." You clearly have little or no confidence in the moral fabric of an entire generation. A generation that WE have brought up. Is this what they learned at uni, Mike? They certainly didn't learn it off ME!
Such a pity that you envisage that what is hailed as the best-educated generation in history will resort to ugliness for something that is NOT, for 99.9% of the population, a given right.
Land Reg data for March just out shows prices falls in every region of the country. MoM -1.1% across the country and YoY accelerating further downwards to -2.3%.
@Chris
You said:
"Question: If you are stuck in rented accommodation unable to buy something and suddenly someone offers you a loan, which lasts for longer than 25-years (Lets say 35-years or a maximum of 52-years up to the age of 70 for an 18-year old) making the repayments cheaper and more affordable/ less than you are paying in rent, would you jump at the chance because you will have fixed the purchase price, will be living in your own home, paying off your own mortgage (Not the landlords) and if you one day find yourself in a better job able to clear the loan more quickly, would you not take the opportunity?"
Yes, people will take that chance. The real question is why they should. Is land and a pile of bricks, timber and roof tiles (that takes about 40 man/weeks of labour to build) that precious that people must spend their whole working lives in debt just to put a roof over their heads? This is what is wrong - the iron grip of the planning system - the lunatics telling us more housing will cause the countryside to disappear when, in fact, only 8% of this country is built on - the nimbys - and the existing home owners who buy into this system to protect their precious equity. Equity is unearned income provided by the borrowing of others. People should be disgusted at it.
You clearly are happy for the bankers to run the world and for everyone to work all their lives - paying the bankers interest - just so the little people can be graciously allowed to house themselves. Sorry, but I want something better for my children. The same as what I had will do.
You said:
I know millions that would!! The lack of credit killed the housing market, so one could also assume that if credit becomes available again, it would pick up again! Or not?"
Yes, absolutely credit is the driver of house prices, And, as I said above - our ludicrous planning system etc. If you accept the argument that cheap and easily available credit drives house prices up then, presumably, you accept that dear and less easily available credit will drive them down.
Yet, rather than accept that this is the natural order of things - you propose that credit be made cheaper and more easily available by forcing people to take on lifetime mortgages. Would these come with a fixed interest rate? Or should young people take these on when bank base rate is the lowest in history and pray they never go up?
The whole thing is, with due respect, nonsense. Why the hell should the next generation live their whole lives in debt. My sentiments are 'two fingers to the bankers'. If we carry on as we are one of these days our young people are going to wake up. Things will get ugly when they do.
@ Mike, You said:
Why on earth should my son have to take on a 100 year mortgage to buy something I bought comfortably with a 25 year mortgage? I'd appreciate an answer to that ... just so that property prices don't fall? Why on earth should he take on debt he will never repay just so that people who already own property can have their 'equity'.
Your son doesn't have to do anything as long as people like him are willing to.
Question: If you are stuck in rented accommodation unable to buy something and suddenly someone offers you a loan, which lasts for longer than 25-years (Lets say 35-years or a maximum of 52-years up to the age of 70 for an 18-year old) making the repayments cheaper and more affordable/ less than you are paying in rent, would you jump at the chance because you will have fixed the purchase price, will be living in your own home, paying off your own mortgage (Not the landlords) and if you one day find yourself in a better job able to clear the loan more quickly, would you not take the opportunity? I know millions that would!! The lack of credit killed the housing market, so one could also assume that if credit becomes available again, it would pick up again! Or not?
@Kirsty
My dear, wear the fox hat
I was going to go to the Royal Wedding .... but I couldn't because I had eaten my only hat ...
Oh no. I was going to post something but then I remembered that my company went bust ...
Ahh, looks like I broke the div based layout of this page so beloved by the css web design brigade.
You said:
"... We did discover that the German's can borrow money over a much longer term than here in the UK! Over 100-years in fact !!!! This makes the monthly payments very small indeed. Okay, you will never own your own home, but when you die, your children inherit the house and the mortgage. They can sell the house, pay off the mortgage and keep any equity or keep the house and keep the mortgage going."
If banks lent 100 year mortgages they would have to have higher capital ratios than they do now - to allow for the risk that the savers might all ask for their money back.
And, no-one in the UK would swallow that. It's a cultural thing.
You have to ask yourself the question: Why on earth should my son have to take on a 100 year mortgage to buy something I bought comfortably with a 25 year mortgage? I'd appreciate an answer to that ... just so that property prices don't fall? Why on earth should he take on debt he will never repay just so that people who already own property can have their 'equity'.
From here ...
Edit: had to take the long link out
... the conclusion is ...
"Through the use of simulation, the conclusion is reached that the 100-year mortgage has failed to increase the affordability of homes"
@Chris
You said:
"... We did discover that the German's can borrow money over a much longer term than here in the UK! Over 100-years in fact !!!! This makes the monthly payments very small indeed. Okay, you will never own your own home, but when you die, your children inherit the house and the mortgage. They can sell the house, pay off the mortgage and keep any equity or keep the house and keep the mortgage going."
If banks lent 100 year mortgages they would have to have higher capital ratios than they do now - to allow for the risk that the savers might all ask for their money back.
And, no-one in the UK would swallow that. It's a cultural thing.
You have to ask yourself the question: Why on earth should my son have to take on a 100 year mortgage to buy something I bought comfortably with a 25 year mortgage? I'd appreciate an answer to that ... just so that property prices don't fall? Why on earth should he take on debt he will never repay just so that people who already own property can have their 'equity'.
From here ...
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W58-45FY1V4-4&_user=10&_coverDate=12%2F31%2F1995&_rdoc=1&_fmt=high&_orig=gateway&_origin=gateway&_sort=d&_docanchor=&view=c&_searchStrId=1739029800&_rerunOrigin=google&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=93b8d3c2480c2d0e90afdbee036c9122&searchtype=a
... the conclusion is ...
"Through the use of simulation, the conclusion is reached that the 100-year mortgage has failed to increase the affordability of homes"
I see the old Jehovah Witnesses have been busy trying to force their unwanted views down everyone throats, just close your door, if you own it or someone else’s if you rent.
House prices too high - but won't fall, unless you live in Scotland.
From the BBC today:
"Big fall in Scottish house sales
House prices have dropped and the number of homes being sold has decreased, according to figures from the Registers of Scotland.
The average cost of a house fell by more than 7% in the first three months of this year compared with the end of 2010.
The number of homes changing hands fell by 35% in the same period.
The total value of the sales across Scotland dropped by 40%, with Stirling seeing the biggest fall of 57%.
The average cost of a property now stands at £146,253 - almost £12,000 less than at the end of 2010.
A total of 12,800 houses changed hands during the first three months of this year - 7,000 fewer than the previous quarter.
Stirling saw one of the biggest falls in the volume of sales, down 52.4%, although Dundee had a 52.7% drop."
Chris - I've corrected your last sentence for you:
Unless salaries rise with inflation or available funding increases, house prices will decline for some time to come.
No need to thank me ; )
Hi Mark, you are right to say that affordibility will prevent prices rising further, but it only takes something like more credit to change this.
Allow me to explain. While working in Germany, we wondered if we could borrow money from Germany to buy a house in England. We were told that we couldn't at that time, though it might one day happen. We did discover that the German's can borrow money over a much longer term than here in the UK! Over 100-years in fact !!!! This makes the monthly payments very small indeed. Okay, you will never own your own home, but when you die, your children inherit the house and the mortgage. They can sell the house, pay off the mortgage and keep any equity or keep the house and keep the mortgage going.
If something like this came to the UK, house prices could rise based on affordability.
Another change could be that money could be borrowed from other parts of the EU to buy property here. Interest rates and amounts available could make affordibility easier. It is prevented by the UK government and is one of the last clauses of being part of Europe being blocked.
Unless salaries rise with inflation or available funding increases, house prices will remain largely static for some time to come.
Chris - I appreciate your views here. Although we are clearly not going to see eye-to-eye, it's great to discuss these issues on a civil level with someone who has clearly thought through them.
A shorter post from me, just a couple of observations; Savings rates aren't that bad - I am getting 2.9% (before tax) instant access with an online saver. According to the latest Hometrack data from yesterday, the accelerating decline in house prices has reached 3.3% year-on-year and that's before inflation is taken into account. I know where I would rather have my money right now.
Linked to the above point, the house price crash is not a fantasy of a bunch of igizmo-buying 20-somethings over on the HPC site. It is already underway, and gathering momentum now the sugar rush of low interest rates is running out. How obvious it is depends on which part of the UK you are in. It's not happening at breakneck speed, but it is happening nevertheless. Going forward, public sector cuts, high inflation, banks' stricter lending criteria etc are also undermining any support for house prices.
BTW - have you compared that graph to one from the main house price surveys, eg Halifax or Nationwide. The correlation is striking!
Got boring and now going under the radar!
Maybe those with such long winded views would like to consider the rest of us who don't have the the time to read through there personal tennis match. May be your corect, maybe your not but no-one came up with an answer to the sollution of the problem.
Rant, I have seen the graph before on HPC. They have been predicting a double dip for the last 2-years now and while it may one day happen, I'm not sure it will.
I am fortunate that my age enabled me to buy a BTL property when they were cheap, but I have always had an eye on investments. While serving in Germany with the forces, I was taking advantage of being able to buy two tax free cars each year, keep each one for the minimum period of 3-months and sell them back in the UK to make a profit. I started with a Fiesta and finished with the top spec Discovery converting my initial £5000 loan into £27,000 of paid of Discovery! I also setup my own business with less than £5k and 6-years on have generated a lot of money, but we have also hired staff, giving them jobs and our fees have always been among the lowest in the area, so it has been a benefit to the local community also. Win, win if you will.
As I mentioned in a previous post, I was buying BTL properties before it was fashionable. In fact I walked into every branch of our high street looking for a bank willing to lend for BTL and ended up talking to commercial lenders, so I am one of the original investors that spotted the idea. That said, I only bought 4-BTL properties, because I was only trying to create a pension plan for myself, not make millions. Because of this, I am not leveraged in anyway and there is less than 30% of loans remaining on each property now.
I am bullish because I know that calculated risks should be worth considering. I also know that over the long term, house prices are the few things that will go up and at the same time, generate an income while you hold onto them, unlike gold etc. BTL is the opposite side of the seesaw. When house prices go up, rents can remain static (Because tenants will leave and buy a place if you increase rents), but when house prices go down, demand for rental increases and rents can rise. A BTL investor can make money both ways!
As for national wealth being created if prices rise, it will if people moving to the UK buy houses from the wealth created elsewhere, plus the industry working off the back of a buoyant housing market which creates jobs. DIY shops, furniture shops, plumbers, builders etc. Okay, much of this is funded by loans, but things are manufactured (Like curtains, blinds) and many of these items are also exported around the world.
Further more, inflation will lower the value of money over time and make investing in property worthwhile for the future. £100 put into the back today earning the best interest rates available, will only be worth £95 at the end of the year! We are seeing a fair few pensioners buying small houses cash and then renting them out as the returns are better! Even now, it still makes more sense to buy property if you can. House prices are also sticky up. Vendors are more likely to hold out for top money than they are letting it go cheap. I have seen vendors waiting until they are almost repossessed before they sell at a cheap price. Right to the bitter end! When prices start rising, the vendors are quick to put up prices!
Yes it is a long thread. With any luck there will be some new topics to discuss now that the bank holiday is over!
My final comment on this thread is to say that I feel that the way to cap house prices is to build millions of rental homes to give people a place to live at sensible money. Not to try and change the law or tax landlords, which will only make the problem worse. The illusion that BTL investors are competing with first time buyers is a myth. While it can be seen to be the problem, it isn't if you look at the figures. First time buyers have been competing against themselves in the main! Right next topic!
@Chris
You said:
"The banks believed that money backed securities were a one way bet, but they were wrong! This is what has killed our housing market. It has chocked available finance, so buyers able to get loans are thin on the ground."
Yes and no. Yes - using MBSs and CDOs to effectively lend the same money over and over again was always going to end in a bust.
No because what is really killing the UK housing market and which, all other things being equal, is going to keep on killing it for the next 30 years or more - is that house prices now bear no relationship with affordability.
Regardless of where you are in the country - it is a reasonably accurate generalisation to say that children will never be able to afford to buy the house they grew up in. I live in a 4 bed detached house 'worth' (at the moment) best part of half a million. I'm just an average joe. If my sons are average joes too - they will never be able to afford to buy this sort of house.
My eldest brother (electronics engineer before he retired - not a particularly well paid profession) lives in a 4 bed detached house. His 35 year old son (works in IT with similar salary level to his father (at the same point in his career)) lives in a 3 bed ex council semi and, with the best will in the world - will never be able to afford the extra 150k on the mortgage he would need to buy his father's house. He already has a 160k mortgage and, even at the lowest interest rates for decades, could not afford a 300k plus mortgage. (His wife works too!)
This applies just as much to the youngster brought up in a 2 up 2 down terrace in Liverpool that his father bought for 20k and which is now 100k. When you're on the average local wage of 13k - the numbers just don't stack up.
To me it is just obvious that, even if there is enough money around to keep the market ticking over at current prices - as time goes by less and less people will be able to afford property and prices will gradually move down. As I say, it may take 30 years or inflation may reduce this. Whatever way it works out - in real terms - house prices must fall so that the carpenters, plumbers, teachers, sales reps, nurses, factory workers etc. who currently own the nation's 3 bed semis will be able to in the future.
Chris - Wow! I haven't read comments from someone so bullish (and by that I mean optimistic, not anything else) about the UK property market for at least three years. There used to be a lot of posters with views like that over on HPC in the past, but they have all disappeared these days (can't imagine why...). It's one reason I post over here as much as I do there these days.
Your comments really do read like we're back in 2006. I assume you are either in London or the South East, the last places in the UK where there are signs of price increases. Once again, correct me if I'm wrong.
I think you misread some of my last post - easily done, it was a bit of a rambling epic. I was referring to national wealth not being created during a property boom, rather than say over a 25 year period... pauses... you do realise UK property has been in a bubble for much of the last decade, I hope?
Property values are of course set by supply and demand - the supply and demand of credit. Given that houses take at least some time to build, when more money chases the same number of products, prices go up. And up. And up.
In this country, the extra credit flowed when banks relaxed their lending criteria and allowed people to borrow ever larger multiples of their salary / salaries. When people still couldn't borrow enough to buy their "forever home" (copyright Krusty Alsopp, Location, Liability, Litigation) they made up their income on a self-certification mortgage form. In the period 2005 - 2007, some 40% of all loans approved were self-certification, aka "liars' loans".
This wouldn't be a problem if people could afford to pay back those massive loans. However, many who borrowed in the last decade are now struggling to make those repayments for a whole variety of reasons. Despite the introduction of SMI and interest rates being dropped to a 300 year low, repossessions are on the increase. I wont go on here about how prudent savers and tax payers are being used to drag this unfortunate situation out.
The issue of the UK being a small island etc has been disproved by Japan's bubble experience. A more densely packed island nation than ours, when their property bubble burst in 1989, prices fell and are still falling today, 20 years later. House prices are ultimately set by the amount people can borrow. What would happen to house prices if, hypothetically, it became illegal to borrow money to buy a property?
Your comments also seem to rule out prices ever falling by more than the odd per cent. I don't know how much you keep an eye on property prices elsewhere in the UK. In Northern Ireland they are already down 40% from peak. Northern England is now showing some significant drops too, as is the Midlands.
Can I also suggest that your views have been shaped by your age. I would not consider you to be more of a shrewd investor with a good eye for an opportunity than someone who just happened to be at the right age to buy when prices were at some of the most affordable they have been in a quarter of a century. Had you been born ten years later (and probably in a different part of the country), I think your views and experiences of the UK property market would be very different!
I just copied the graph link and pasted it into my browser and it worked fine. Try this one instead anyway:
http://www.housepricecrash.co.uk/graphs-bubble-lifecycle.php
To finish, I think both of us deserve congratulations for stretching this thread to a hundred comments without it degenerating into a slanging match!
Had to rush off for some food, but also wanted to say something about this.
You said:
(People have more disposable income, as you point out, therefore they should pay more for housing? I'm wondering if you have any relatives in the banking industry who would rub their hands in glee at such an opinion. Why should we pay more for houses if we have more income, why not, say cars or healthcare?)
Supply & demand always accounts for price rises and price falls, period! Demand will fluctuate depending on how the government influences things and other things like the economic situation etc. If demand is high for anything including property and people have the means to fund their desire to buy, prices will rise if it can. They shouldn't have to do anything, as you point out. They just do because they want something that others also want and are willing to pay for it. No one is forcing them to buy a house. They choose to do it. I am not saying that this is good or bad, it's just a fact of life. Moaning about it suggests that you have either paid an arm and a leg for something worth much less today or you have missed the boat because you were unwilling/ unable to pay what others were willing to pay for!
I never said that the subprime issue was an American issue, it effected many banks all over the world.
The Northern Rock, unlike Barclays Bank for example, over extended themselves relying on money backed securities to create further wealth, which in turn could be leant to anyone wanting a mortgage. When the sub prime lending in the USA highlighted the fragility of money backed securities, no one wanted to have them anymore and this killed the Norther Rock's golden goose overnight, plus those of other banks around the globe!
The banks believed that money backed securities were a one way bet, but they were wrong! This is what has killed our housing market. It has chocked available finance, so buyers able to get loans are thin on the ground.
If interest rates go up, it will only make it more expensive for buyers to afford as much and this could make house prices fall again slightly, but if the banks release more mortgage products, enough buyers will be out there to keep things going!
@Rant
You said:
(As a nation, a grand total of ZERO net wealth is created during a house price boom. Sure, certain individuals downsizing do well as do bankers through the money that is transferred. The majority of the British public who own homes think they are wealthier, but this is a case of fool's gold. A house is only worth what it can be sold for, not any nominal value that is attached to it in the mean time, as many who MEW'd their way on world cruises in the last decade are now discovering.)
This is rubbish. My parents bought their house for £8000 and it's is now worth £200k When my parents die, my brother and I will benefit from this wealth.
I also own 5-properties worth in excess of a million pounds, yet my mortgages amount to less than £300k.
My home (Paid off) is worth in excess of half a million and if I have paid more than £100k of my own money in over the years, that is conservative. Property has made me wealthy beyond my wildest dreams and for two decades I have provided many families with decent rental accommodation.
My estate agency business has a huge annual turnover and has never borrowed a penny from the bank. There is nearly £100k in the business account, enough to sustain the business for another 2-years if we never sell another property, yet last month alone, we sold 30% of our stock and sold twice as many properties than we listed, so we need to get more to satisfy demand.
Your graph didn't work by the way.
If prices fall, I will lose nothing as I will have made a paper loss, that's all.
When I bought my first house back in 1992, buy to let mortgages hadn't even been invented. My second house in 1995 was done with one of the first buy to let mortgages on the market (Safron Waldron) and it was another 4-years before buy to let caught on.
I consider myself to be fortunate to spot an idea and made it work. I know that this sort of thing is hard to do these days, but I will not feel guilty doing what I did.
Pray for a crash if you will, but make sure you have the finance available and a job to fund it should the time come, but I somehow doubt that another major crash or double dip will happen in the near future!
Chris - with all due respect, there is much that is incorrect with your post. Interest rates have a much greater impact on a currency's value than quantitative easing (that is less true for the Dolar though since commodities are priced in Dollars). Every time UK inflation figures have shown a rise in recent months, the Pound has gained around 1-2% against other currencies just on the speculation of an interest rate rise.
People have more disposable income, as you point out, therefore they should pay more for housing? I'm wondering if you have any relatives in the banking industry who would rub their hands in glee at such an opinion. Why should we pay more for houses if we have more income, why not, say cars or healthcare?
If the subprime problem was solely a US one, why did Northern Rock in this country go under? Other UK lenders were weeks or even days away from following.
Your post also seems to confuse debt with wealth. Borrowing money does not make people richer!
I'd be very interested to know who you think benefits from high house prices. It isn't first-time buyers, it isn't those wishing to upsize who must find more money to realise their goal and it isn't parents who have to lend / gift their adult children with huge sums of money just so they can afford to move out. It isn't those in employment either, whose jobs, where possible, are outsourced to countries where housing is much cheaper. Add to that list those who have been left in negative equity and now can't move to find a better job or replace one they have lost. Estate agents outside London who have seen their transaction levels plummet aren't rejoicing at high house prices any more as well. Students about to take on 27K of debt aren't excited by high house prices. Taxpayers paying the housing benefit to keep large numbers of people in overpriced property aren't exactly thrilled too.
As a nation, a grand total of ZERO net wealth is created during a house price boom. Sure, certain individuals downsizing do well as do bankers through the money that is transferred. The majority of the British public who own homes think they are wealthier, but this is a case of fool's gold. A house is only worth what it can be sold for, not any nominal value that is attached to it in the mean time, as many who MEW'd their way on world cruises in the last decade are now discovering.
I think this graph (which is incidentally from years gone by, not a recent observation) captures what has happened to UK house prices very well. The words associated to each stage of the cycle are poignant and it even predicts the recent deadcat bounce in prices, which is now coming to an end:
http://s232.photobucket.com/albums/ee211/ellislau/?action=view¤t=bubble-lifecycle.jpg&newest=1
Personally, I think the housing market is somewhere after the 'return to normal' and before the 'fear' stages. An interest rate rise this month or, more likely, August, should bring about the full fear phase.
Would appreciate you looking at that graph and telling me your thoughts on it.
Rant, watch this video about house prices, affordibilty etc.
http://www.youtube.com/watch?v=IySihy9mLLY
Rant, the pound has not devalued because of interest rates, it has devalued because of quantitative easing (The printing of more money without basis) effectively diluting sterling. Lowering interest rates doesn't help matters, but it's not the reason. Interest rates in Europe are also very low (Look at their savings rates compared to ours) yet we have lost value against the Euro.
Also, it was the loss of confidence in bank money backed securities that killed the banks, not house prices or our mortgages. Sure the American lending criteria to sub-prime borrowers highlighted the weaknesses in money backed securities, which ultimately killed them off and the banks balance sheets were not far behind, but don't blame house prices or the people that took them out to be the cause or the cure.
Banks simply do not have the money generating engine that they once had to create more wealth to lend more to us, so they need to raise money the old fashioned way, our mortgage repayments, savings and some speculation on the stock-markets/ currencies.
The old 3-time your salary calculation was killed off years ago as a method of deciding how much a person can borrow. It now comes down to affordibility, which is sensible as it considers a person's income v their outgoings and this makes more sense. Globalisation has made most things cheaper. My son just bought a brand new Nokia phone on Saturday for £48 with touch screen, a 2meg video camera, mp3 player, internet, the works! My first mobile phone 12 to 14-years ago cost the thick end of £250 and it could only call someone!!
People simply have more spare money to spend on mortgages these days, so please stop trying to blame house prices, people's mortgages, bank lending and just accept that the collapse of money backed securities have choked funding, but demand for property is still as strong as before if not worse and if more rental properties were available, the quicker this mess will recover, which ironically will lower house prices/ keep them pegged at today's levels for those wanting to buy instead of rent.
Chris - house prices are not an aside to why we are in an economic mess. As shown by the run on Northern Rock, they are right at the centre.
How can jobs be created when people are having to spend far more on mortgage or rent payments than in the past? The BoE has attempted to get round this by slashing interest rates to a 300-year low. This has devalued the Pound, so we are all paying higher oil prices and experiencing imported inflation.
There cannot be a proper recovery until house prices revert to a level banks can support without requiring bailouts. Given how tight their lending restrictions have become, we are certainly not at that stage yet.
Jonnie - YOU SAID (oops, that's how I reply to Pee Bee). You said the current market is what it is. So what is it in your opinion? I'd call it a propped up Ponzi pyramid, but I doubt you'd agree ; )
We can agree not to call it what it clearly isn't, ie, a market free of government interference. Of course, any 'market' requires buyers and sellers and it seems that in much of the UK, the former are thin on the ground (the exception is London, where the low interest rates supporting current prices has cheapened the pound and attracted foreign buyers - rich Russian oligarchs are unlikely to have the same enthusiasm about buying two-bed apartments in Doncaster though).
@ Rant
Who cares what the BOE and government have done to stop a major crash. That's a good thing isn't it?
Not everyone took out a self-cert mortgage and why should those that have been sensible to save for a deposit, took financial planning advice, completed an affordability study and then bought a home for their family in 2007, have their lives turned upside down, just because some people like yourself feel that the government are wrong to try and steady the ship through a storm. That's what they are elected to do.
You are clearly not an estate agent (So why are you here?) and probably spend most of your time on HPC, so why don't you stop moaning about house prices not crashing, accept that things will probably turn out okay for millions of families already on the property ladder. I for one am pleased that any correction in house prices will be a slower one, rather than the huge shock it has the potential of being and look forward to steady growth in line with inflation.
Rant,
Hi mate - bit of a late one for both of us but the wonder of a Blackberry and all that.
Me and you have done this market conditions / influences thing before on here but.....................
If my Aunt had a willy she would be my Uncle but she hasnt so thats that, same as the BOE & Government fiddling with the market, it is what / how it is so thats that
Jonnie
At least two posters here have suggested that the current prices of UK houses and transaction levels are a result of market forces. This is clearly not the case. Acting together, the government and Bank of England have thrown so many kitchen sinks at preventing UK house prices falling that IKEA has run out of them!
Much of this was in response to the rate that house prices fell in 08 - 09, which incidentally is the fastest they have ever declined in such a period. The housing market is trying to correct itself and get back to affordable levels. If an end were put to rescuing those who overborrowed and / or lied on their mortgage application forms, then UK prices would fall along the same lines as they already have in places like the USA and Ireland.
@ Mike
Hi Mike, clearly you have strong views and nothing wrong with this, so I won't try and change them, suffice to say that while you are correct in housing being a basic human need, as long as someone has access to reasonable accommodation, they are covered. They don't have to have a right to buy a property at a price they want!
If you have a look on Rightmove Lettings, there are plenty of properties available, so accommodation exists. Okay, maybe not in the places people always want and at prices they can afford, but shelter exists.
There are also houses available to buy. Again, maybe not at the prices people want in the area's they would like. Many also have the option of living with family. Again, their basic human need is covered, so where is the problem.
Market forces will always balance things in the end. In the same way nature fills a vacuum, landlords will lower rents, do up their houses to fill an empty property and he/she will let it out to the best tenant for the best price.
Supply & demand.
As I have said below to Rant, if there were plenty of rental houses available to satisfy the demand, then rent prices would need to stay competitively low else rental houses would stand empty and if rental houses remained cheap, people would not care about paying over the odds to buy a house and this would keep house prices low too!
I actually think that if the government is unable/ unwilling to build millions of new council houses around the country, we do actually NEED private investment into providing more affordable rental stock. While you may dislike the idea of more investors buying houses, it would appear to be the only answer going forward. Rather than compete with buyers for existing second hand stock, they should look to commission the building of new properties to satisfy the obvious need of quality rental properties, but here's the problem. Investors will calculate the cost of purchase with an annual return and those calculations will be based on existing rental prices, so if something like this happens, it is unlikely to see rents fall, but it may prevent rents rising in the future if the rental demand is met.
If you increase taxes on property rental profits, the landlords will be forced to increase rents, so the tenant suffers. If you make it difficult to retain that rental stock, more properties will come onto the market and add the huge list of unsold stock. Prices may even fall further, but what use is that when credit is unavailable to buy them. With less rental stock about, rents will increase and more people will be moving back with mum & dad, making the problem worse.
It sounds to me that you are trying to get onto the housing ladder and just want property prices to fall at any cost. You are not thinking it through properly. Increased private investment to provide more rental properties = more available homes with lower rents, which will also bring house prices down. You have just got this opinion that landlords are the problem when in fact they are the solution!
I will actually go one further and prove what I have just said is correct because I have seen it happen first hand in Holland. In the mid 80's house prices there were rising nicely, but unemployment was starting to rise. The Dutch government poured billions into building hundreds of thousands of council properties, which created jobs. It also lowered rental prices and the knock on effect was my uncle (And millions like hime) sold his house at a loss! This is a fact as it happened and is well documented.
If anything I have said, does not make sense, please feel free to point it out and explain why you disagree.
@Chris
You said:
"Governments should not intervene with the free market economy, period. When they do, it upsets the status quo and not always in a good way."
....So, when the banking system started to collapse in 2008 the government should have done nothing? And allowed the whole banking system to collapse as savers rioted to get their money out of the banks? (Incidentally, the FSA compensation fund has not got the funds to bail out all savers - it has been set up to deal with one bank failing - not all of them.
You sais:
Lets say they raise the taxes on landlord's income from their tenants. The landlords simply push up rents to cover the extra taxes."
---- or, the tenants can't afford the rents and have to make other arrangements ... squeeze in with family or friends ... and the landlords have to sell up at lower prices.
You said:
"It is not reasonable to expect that the governement will tax profits from property any different than they tax corporations or other businesses on their profits because many landlords will simply set themselves up as businesses if they are not already."
..... It is reasonable that government tax property differently from business - self-evidently so. In a country with highly restrictive planning laws - where you can't just build yourself a house - where the supply of property is tightly controlled - where a house is something that everyone, quite literally, needs (or they'll die in the winter) - it is essential that property is not allowed to be regarded as a business that a minority of people can control. Personally I'd outlaw all second home ownership and have say 25% of the housing stock publicly owned to allow for 'workplace mobility'.
You said:
Wealth is created all the time by businesses. Why should making money from property be any different."
.... see answer above. Housing is an essential human need - that's why it is different.
You said.
"A second hand car salesman trades cars and can make a living from it and some cars depreciate, while others appreciate. The same thing happens with property and some investors/ landlords have had their fingers burnt!"
..... You can live without a second hand car, you cannot live without somewhere to shelter from the weather. A second hand car salesman has legal responsibilities to the buyer and the buyer has legala redress if there is a problem with the car. Would you like to see buy to let landlords covered by similar legislation? After all, you are arguing they are running a business.
You said:
You seem to want to live in a communist state where the government runs everything including the rights to remove an old lady from her own life long 3-bed home and pass this to the growing family or tell a rich man man that he can't own a holiday cottage!"
.... If the rich man buying a cottage means that local people are priced out of their local property market - just so he can come down once a year for a week - then, too right - he shouldn't be allowed to own a holiday cottage.
You said:
" ....but the fact that the governement owns and provides huge numbers of high quality council accommodation, which it rents out at sensible prices. This keeps a lid of private rental prices and if people have good quality rental accommodation at sensible prices, they are not panic buying a house at any cost, competing with each other and other private landlords, who knows that they can command high rents to fund the ever increasing cost of property! Viscious circle."
.... Now you've said something I can agree with.
You said:
"Rather than trying to tax this and prevent speculation in this or that, simply build a million (Or more) council houses, charge £400 per month and then watch the housing market crash and landlords go out of business! Had Mrs Thatcher not sold off most of this countries council houses back in the 80's, none of this house price boom would have ever started. People need somewhere to live and as long as it's cheap enough for decent quality, they don't mind not buying something."
.... with the caveat that they must have security of tenure. No more 6 month Shorthold Tenancy Agreements.
@ Rant
OMG.... Long reply. I'll try to keep mine short.
Governments should not intervene with the free market economy, period. When they do, it upsets the status quo and not always in a good way.
Lets say they raise the taxes on landlord's income from their tenants. The landlords simply push up rents to cover the extra taxes. The tenants suffer, not the landlords. Capital gains tax already exists and most landlords are in it for the long haul anyway, so your example of a 5-year tax penalty would not impact most landlords. It is not reasonable to expect that the governement will tax profits from property any different than they tax corporations or other businesses on their profits because many landlords will simply set themselves up as businesses if they are not already.
Wealth is created all the time by businesses. Why should making money from property be any different. A second hand car salesman trades cars and can make a living from it and some cars depreciate, while others appreciate. The same thing happens with property and some investors/ landlords have had their fingers burnt!
You seem to want to live in a communist state where the government runs everything including the rights to remove an old lady from her own life long 3-bed home and pass this to the growing family or tell a rich man man that he can't own a holiday cottage! You are curing the symtoms not the disease! Allow me to explain as I am half Dutch and am married to Dutch wife, I will tell you that it is not the rules in Europe that make things different over there, but the fact that the governement owns and provides huge numbers of high quality council accommodation, which it rents out at sensible prices. This keeps a lid of private rental prices and if people have good quality rental accommodation at sensible prices, they are not panic buying a house at any cost, competing with each other and other private landlords, who knows that they can command high rents to fund the ever increasing cost of property! Viscious circle.
Rather than trying to tax this and prevent speculation in this or that, simply build a million (Or more) council houses, charge £400 per month and then watch the housing market crash and landlords go out of business! Had Mrs Thatcher not sold off most of this countries council houses back in the 80's, none of this house price boom would have ever started. People need somewhere to live and as long as it's cheap enough for decent quality, they don't mind not buying something. My brother is an officer rank in the military on a good wage. He could buy a house, but is happy living in military accommodation at sensible rents! When he reaches age 55 and leaves, his payout and pension will allow him to buy something, else he'll find something to rent, so he's not worried.
For your info, my children are students taking on huge amounts of student debt and I am already saving to help them raise a deposit when the time is right
A girl can dream can't she? Doubt that the odious little ...... Individual will answer, but I'm hoping that he realises that sort of language is not acceptable on sites like this.
I daydream too much, I know....
Country Lass your my sort of girl, ever thought of appearing at the Appollo? I see PeeBee bought a gold ring recently, does he know something we should?
Have a great weekend everyone.
Of course you will, I bet you've got a really busy day planned.
Will,
Planning to answer my earlier question?
Will Hicks: 'Something productive'. Does that mean you will be hanging around some internet chat rooms trying to make some friends.
AceOfSpades. Thanks for the lecture. You can wave flags with the rest of the proles tomorrow, but I'll be doing something more productive.
Will Hicks' name is appearing all over this site. Each post just as boring and rude as the last one.
It's funny that you have so much time to spend on this site considering how rich, busy and successful you say you are. Maybe tone it down a bit or people will think that it's all just a lie.
Regardless of who you are and what you do, let's have a bit of decorum and have a tad more respect and manners. You're at a 10 at the moment and for the sake of harmony, we need you to calm down to about a 6.
Enjoy the royal wedding and the long weekend. Maye you'll come back Tuesday as a refreshed man.
Something is certainly up in your life, address that before you vent ALL your anger on here!
GENERALLY NEUTRAL?!?!?!
Which brain cell was working when you thought that?
PeeBee.
WILL HICKS LOVES SILVER, AND SILVER LOVES WILL HICKS. Went very long in NOV08 when it bottomed around 10USD. Never looked back.
My comments on this site started off been generally neutral, slightly bearish, but nobody wanted to engage with a real discussion, instead obsessing in what I do for a living, what my wealth strategies are, mixed in with the general abuse seen from teenagers who are a bit thick & can't form a decent rational debate. Or is it that you're all just staring out of the window wondering when the P45s will be printed when it all goes a bit Pfwil Spwencer.
@Wooden Top - So I wasn't too far out with 200K and 300K. Kudos to others who got 220K right though.
@Chris - your post is so far down now, I'm going to have to have difficulty replying to all the points you raised without wearing down the mouse's scroll wheel... I'll give it a go though.
You mention the rental situation in Germany and Holland. Having rented in Germany and the UK, I can say that there are significant distinctions though. Tenants in Germany have rights that renters in the UK can only dream of - one reason why people over there are much happier to rent than here.
If investors buy up property that FTBs would have bought in the past, this is a problem because then you have two groups of people chasing property - those who want to buy it as an investment and those who want to buy it as a home. This pushes up prices, meaning FTBs have to pay high rents to pay their landlord's mortgage, while trying to save a high deposit to buy a property themselves. Double whammy.
This of course creates a very clear divide between the haves and have-nots in UK property that is continuing today. You say you have 18 years experience in the EA industry. I am not trying to personalise this, but I'm guessing that puts you in the 'fortunate forties'. You bought your first home in the '90s when they were by all measures much more affordable than today, you don't have lots of student debt, any children you might have are too young to be asking you for help to buy a house and your years of experience mean you are unlikely to lose your job in this economic environment. By all means, correct me if I'm wrong.
Either side of that age group, people's lives are being massively affected by the current level of house prices. In 2009 (I don't have the numbers for 2010) a whopping half a million adult offspring moved back in with their parents because they couldn't afford rising rents or deposits of 30K to buy in a difficult jobs environment. Thus, there are plenty of over 50s who suddenly find the lifestyle they had been used to upended by boomerang kids returning home.
The scale of this problem would have been reduced if changes to the tax system had either not affected people's pension or been put in place to make BTL less attractive. This could all be put down to supply and demand, but I believe a much bigger issue is the allocation of property in this country.
There are parents in the South West who have their adult children living with them because of unaffordable house prices. Those parents would probably be happy to part with the unearned equity their house was gifted over the last decade if it meant their children could afford to move out. At the same time, next door there is a decent sized family house that is vacant for most of the year because it is owned by Londoners as a second home. Posing a greater moral dilemma is the three bedroom house over the road occupied by a widow in her 80s.
The government could look at changes to the tax system that would address this problem. They aren't going to though, because for the most part they are members of the fortunate forties (although one MP in the South West did recently complain that even on his salary he couldn't afford to buy in the region!). In ten to 15 years time, we are likely to have leaders who have very much been affected by the dramatic increase in house prices. They will be much quicker to take action to reduce any signs of rapid gains in the future.
The government in South Korea provide one such example here. Last year, when property prices were heading for annual growth in double digits, a law was quickly passed slapping a hefty tax on profits made from properties sold within five years of purchase. The market quickly came off the boil and house prices stayed put. The government took this action because they realised that incerasing house prices are not a wealth generator, but merely transfer money from the mostly young have-nots to the older haves. Certain individuals and bankers benefit, for sure, but the national economy suffers as people's disposable income is reduced through making higher mortgage or rent payments. Unsurprisingly, South Korea was barely touched by the credit crunch and their economy is motoring along - unlike ours, where house price inflation is almost a national religion.
As a nation, I believe we need to learn this lesson. An economy cannot be a built on a foundation of people taking on ever increasing amounts of debt to buy and sell the same pile of bricks to one another.
You make reference to those who were priced out of the housing market by credit-fuelled high prices who now cannot buy because the same credit has gone. If there is little money to support current house prices, then sellers need to either accept lower prices or not expect to be able to sell their house. Judging by my area, where the number of properties on the market is 15% higher than 12 months ago and many of the asking prices higher, this realisation has yet to hit home ('hit home' - pun intended). I often wonder if having once made the biggest financial purchase of their life, the IQ of people in this country starts dropping.
An a final anecdote to this monstrosity of rambling, I'll share the tale of a fellow HPCer whose recent offer on a property was turned down. The couple couldn't afford to offer more, so the EA tried to interest them in other properties, which were similarly out of reach. "We can't afford any of the properties you have displayed on these walls," the wife said. Seeing no-one else was around, the EA replied: "Neither can my partner and I and I'm worried about being made redundant - we have no idea what we're going to do."
Wardy: My father in Law is a lot like Will Hickey. He hasn't really got any major investments, but he does think hes a bit of a Property Expert.
The stuff that comes out of his mouth is ridiculous, but I just nod along and agree with him for an easy life.
@Chas
The bottom line is a House will either sell or it won't.
At the stage of valuation we will always give an honest valuation, whether it is what the vendor wants to hear or not.
A lot of vendors are enjoying their low interest rates at present, and while these will go up, these are not going to spell good times for those First Timer's.
That 6. something FTB mortgage from Northern Rock probably wont be looking that bad in about a years time
Oh dear, Poor old Will making a complete k**b end of himself again.
So you have been banging on about house prices being to high since 2001? ........2001 Will? Are you sure? Failed to see the next 6 years of growth then or was it that you had a moral issue with all your investing going up at a rate of 10% per year.
The funny thing is every one of us knows a 'Will'. The same blokes who walk into our offices day in day out thinking they know more than the rest of us. Park the Range (up to my eyeballs in finance) Rover so every one can see it. We have a name for it in the office. It starts with a 'w' and ends with a 'R'.
P.S its not what you think.
@AoS
They were mortgage free so mortgaged it up, bought for cash, intend to tidy it up, move in and rent out the original one.
I am aware of many buyers who did not buy 10 years ago and were 'embarrassed' that they missed the housing 'boom' while their friends saw their value increase by the year.
Your opinions appear extrememely one-sided and you have to remember that BOTH buyer and seller make a transaction.
The reality is many people are happy to stick with what they have for the next few years and they are doing this. Others can't afford to sell, so they won't.
In this market, your selection really comes down to those that MUST sell for whatever reason and those that are in a financial position to do so. The rest will stick where they are.
If you are expecting a dirt cheap bargain like your parents got, then repo's are your arena...knock yourself out.
But I can assure you, buyers will not be sniffing YOUR coffee and slashing their price because you want a steal.
Yes, some houses are over-priced, but you are forgetting at the same time that many houses are not.
I wish you every success at your auction.
Out of interest, did your parents sell their previous home when moving into the repo house? Just wondering what price they got and if they took your advice on smelling the coffee...I imagine they drove hard for top whack though - can't blame them.
Will Hicks: "I won't hide my dislike for EAs in England; they are a grubby un-regulated parasitic bunch drawn mostly from those who can't hack car sales and recruitment." You hang around with the wrong people, Mr Hicks, if these are the Agents you deal with.
Still - you goes where you knows best I suppose...
"Thankfully I have a modicum of financial common sense..." Glad you said modicum - SILVER far out-performed GOLD last year. Should keep better control of your 'investments', Mr Hicks.
(by the way - I bought a new gold ring last year as well. I LOVE this 'investing' malarkey... ;o) )
When a BARN is 'worth' 350k ... we have come to the end of the real estate boom. The party is over - send in the cleaners.
@HD
Well the longer they wait, the more embarrased they're gonna feel.
Wooden Top: An all too familar story. Any Potential vendor we are valuing for at the moment (that bought in 2007) is just a nightmare.
I don't think it is even the case vendors are worried about losing a bit of money sometime, a lot of the time I think they are a bit embarrased and feel they would lose face with friends and family if they sell for less than they purchased.
Anybody investing in property today is a mug of the highest order. For the last few years the place to be has been stocks and commodities. Property will just leave you shackled with massive debts, depreciating assets and a whole load of hassle. The bubble has burst.
The answer and should be not a suprise to many who nearly got it right and confirms the lead story, yes prices gone down but not my property attitude.
The couple in question purchased at £250k in 2007 at the correct market value. They replaced the kitchen and bathroom suite for a like for like but new which cost them £11,000. The previous kitchen and bathroom were in good order but not to their taste.
Opening shot by the vendor was were not giving our property away, we know the market is poor and prices have gone down. We don't care how long it takes to sell, you do do no sale = no fee don't you? Your the third agent we've had out. (I wonder why).
My verdict £220,000 max asking and expect nearer the £210k mark. There are comparables selling at £200 - 210k and many unsold at £230 - 240k since 2009.
Vendor: "I told you were not giving it away, your having a laugh" etc etc (rather rude which immediately told me they can take a hike in any event). "You will put it on the market for £299,950, we want our money back and come out with some profit".
I said "we reluctantly (being polite to "sod off") would not be able to help you".
Upon which they said both other agents said they would, if looks could kill and slammed the door behind me.
The other agents, both corporates suprise, suprise
Sound familiar and sums up what agents have to not only put up with but confront at this time?
PS I wondered if they were related to WH!
Will, you've done yourself no favours with that crassness.
@AoS
Rent is not wasted. You are paying for a roof over your head and anyway, inflation alone is probably knocking as much off the value of property as most tennants pay in rent. What's 5% of say £150k? £7500. Sounds about right. Then you add in (wasted?) mortgage interest and renting becomes a no brainer in the current market.
I will be buying at auction. My parents just picked up a place that was previously bought for £280,000 in 2007. Then it was re-possessed. It went up for sale at £240,000 and sat there. They viewed it and nearly believed the Estate Agent when she said that they "Had refused £220,000" Then the mortgage company changed Agents and it went up for sale at £200,000 and sat there. They bought it at £160,000.
Estate Agents dont want buyers to realise that the market has crashed but that is a death wish. Even if interest rates go up by as little as 2%, it'll be carnage, its just a matter of time.
Estate Agent togay, unemployed tomorrow.
I don't know why someone like Will who hates agents quite so much chooses to hang around on this type of site?
Anyway rather than bragging about how canny my investments have been over the years I thought I would share this with you.
http://www.lloydsbankinggroup.com/media/pdfs/bos/2011/SCOTLAND_ten_years_houseprice2.pdf
Basically it is saying that since 2000 prices in many areas increased at a higher level than those in London and I believe that this is one of the reasons that there will be a fall in prices but the reductions will vary from region to region.
I recall going on holiday to Cornwall for a week in 2006 and what a delightful place it was/is. What struck me however is the ludicrous prices that people were asking for their houses in remote spots and miles from any significant centres of employment. The only people who could posibly afford the prices were 2nd homers who were looking for a weekend bolthole. I have friends (shock horror!) who bought in North Yorkshire in 2007 and paid a fortune for a stonking house with land but now realise that if they were to try and sell it on would probably be selling at a loss.
Over the next few years I believe we will see a widening of the gap between the London and most of the rest of the UK although in real terms (inflation adjusted) I do not expect prices even inside the M25 to increase for a good few years to come.
That 20% will have been lost within a few years, considering the amount of time that some potential buyers sit in rented...
I know some in that boat and now they are just bitter that they have wasted £20k - £40k in rent and expect prices to drop to cushion their own loss.
So, while sellers want the highest price possible, buyers want the lowest - the pressure is not ALL on sellers, you know.
With interest rates going up "soon" as you have confirmed to the public, your affordability will be affected too.
This very article suggests that more than half of people DO NOT think that prices are too high. Go to the right agent and you will find apropriately priced property.
Or, as I always say, why don't you buy privately instead if the problem is agents over-pricing?!
From experience, the ones who can't help but flash off how successful and rich they are, are fibbing - especially when they bring it up without being asked! It's like a confidence thing. Quite easy to do on an online forum.
I used to do it in the chat rooms when I was a 12 year old - you know pretend you are a on Man United's books and you are good friends with David Beckham. I can relate to Will, it did make me feel good as a young kid with my friends!
I have just purchased 2 properties in Park Lane. If I can get a bit more cash together, I will purchase some in Mayfair too - with the long term aim being a hotel on each.
Will, why not remove estate agents from your future property dealings if they are so bad? Simples. That would solve the issue for everyone.
PS - Your 'real work'? Just make sure you don't roll 3 double sixes in a row, you go to jail!
There can only be one outcome from the current situation and that is the market falls till buyers are happy to buy. Buyers are under no pressure to buy as compared to sellers who are sitting on a depreciating asset with potentially a huge mortgage and interest rates about to rise. The longer the seller waits, the deeper the hole they are digging for themselves. Wake up and smell the coffee and reduce the asking price by 20% for anybody to be remotely interested
Before you scuttle off Will, was that a genuine typing mistake in my name, or are you actually a coarse and intelligence-challenged mouth-breather looking to insult me?
And I wasn't questioning whst you bought them for, genius, just that you took advantage of the situation to suit yourself, and are now heaping scorn on those who have the audacity to NOT sell their house for pennies.
Will Hicks: I cant imagine many people like you, so you must be starting your daily shift as a traffic warden.
HD, you're right I wouldn't make a good EA; I'm too honest and not stupid. Now I'm going to get on with some real work, this is boring me now. I've had my fun with the class dummies like Jonnie.
That better have been a typo.....
Top 10 most hated porfessions that was meant to say
Cuntry lass, which bit of
"They had been on the market for 2 years & nobody wanted to touch them with a barge pole, not even FTBs."
didn't you understand ?
Will Hicks: wow, you should be running the country, you sound shrewder than Alan Sugar.
I think you will find in the last poll that was done, estate agents were not even in the Top 10.
I can tell from your posts as well that you wouldn't make a good estate agent, you dont seem to have the people skills
Sooooo, you bought them cheap, correct? For £30kish. and you made 615%? I thinkmy maths is fairly cr*p, but to my way of calculating it, you sold them for c£185k, yes?
So you bought and the ebb, sold at the peak, at a price few first time buyers can afford. Ergo, shafting FTB's.
Brian1949. I won't hide my dislike for EAs in England; they are a grubby un-regulated parasitic bunch drawn mostly from those who can't hack car sales and recruitment. I think you'll find the rest of the UK is with me on this one, with EAs on the popularity index maybe edging past traffic wardens. Maybe we're all wrong ?
FYI I don't put all my eggs in one basket, so no, I haven't generated too much of my net wealth from property. Thankfully I have a modicum of financial common sense, unlike 98% of the rest of the UK who strike me as totally financially illiterate.
Country Lass. Your assumptions are, as usual, wrong.
I purchased assets in Scotland at the bottom of the last crash. Bought them for under 30k. They had been on the market for 2 years & nobody wanted to touch them with a barge pole, not even FTBs. I renovated them to a high standard using LOCAL labour [unlike developer scum in London who now take advantage of cheap foreign labour].
I've been going on about how property has been over-priced since 2001ish. See http://www.housepricecrash.co.uk/graphs-average-house-price.php
My experience with Estate Agents was the opposite.
When I put my house up for sale in 2009 they all wanted me to market it for less than I wanted. Despite the fact that my house had a large two storey extension and was fully renovated meaning it was by far the best property in the street , no EA wanted to breach the "area price".
It went on the market for the price I wanted (10% down from peak) and was sold within days to the first viewer for asking price! I am sure it could have sold for more.
I am convinced that the EA's percentage based commission does not incentivise the EA to get the best price. For example if a property sells for £200k instead of £220k, the commission (1% in my case) only drops from £2200 to £2000 - the seller loses £20,000 but the EA only loses £200! As a seller, I would quite happily give the EA an extra £2000 if they achieved an extra £20,000 on the selling price.
I'm guessing you hit them with a nice round £220k which caused the vendor to turn green, sling you out and then run off to the biggest over-pricer in the area.
Not a SEQUENCE or REEDS RAINS around is there lol
@SBC
If they've one all out and put fairy lights on the twigs, you can stick on another 5%
Wooden Top: You said £180 - 185k. Seller wants £295 grand. No - make that £325 - bet they've also laid a section of decking... ;o)
Will Hicks: Whatever. Your opinion really counts, I am sure.
@ Rant
The property market in places like Germany and Holland are driven by large property companies that build thousands of homes and then rent them out to the population. Privately run housing associations if you will. For them it is a long term investment and people tend to be happy with this. They look at property as shelter to keep them warm & safe, rather than an investment.
This country used to be like that once until Mrs Thatcher allowed people to buy their own council houses and sparked the housing market we know today.
If investors buy up most of the available property around and then offer this property to tenants, why is this a problem? As long as people have somewhere to live, be it in a house they rent or a house they are repaying a mortgage on, I don't see any injustice and any reason to tax/ legislate against. If government starts to legislate/ tax people for investing in property, should they also legislate against investing in gold, oil, tin, grain etc.?
Each of these investments will drive the prices up and while you may not consider investing in tin, grain or oil to be repugnant, think of the families that struggle to feed their children of the cost of petrol when they need to take the kids to school etc. The first time buyers can rent somewhere can't they?
You know what makes me mad. When people believe that they have some god given right to something. They feel that they should have the rights of a job, the right to have a house, the right to benefits and so on.
Here in the East Midlands, I see the dole queues outside the job centre on one side of the street and the buses offering to take people to the farms to work the land (For more than the minimum wage) on the other side of the road and the only people going off to work the fields are East European migrants! The English would rather sign on and do nothing! This is what this country has become. A bunch of moaning dossers that demand this that and the other and expect the government to step in and tilt life in their favour. They should get off their backsides, get working, get some money behind them and buy a house if they want one bad enough. You know that saying "Cream always floats to the top", well if you want something bad enough, make it happen, but if not, get renting.
Oh and anyone that says there are no jobs, no opportunities, then I say “Rubbish”. A friend of mine bought a second hand ladder, a bucket and a sponge and started washing people's windows. That was 4-years ago. He now employs 8-cleaners and lives in a nice house!
One final point worth noting. Over the last 18-years I have worked in estate agency and I have seen first time buyers gazumping other first time buyers far more times than I have seen investors gazumping other first time buyers. Investors only account for a small number of house purchases as a percentage of the overall picture. A limitless supply of cheap credit coupled by a myth that owning your own home is somehow the only way to go fuelled high house prices! It is ironic that HPC have been wanting a crash for several years so that first time buyers could access property easily again and when it eventually came, they realised that it was the cheap credit that was behind the rise in the first place and now that this money has gone, they are still stuck where they are!
Woodentop
I'm guessing you hit them with a nice round £220k which caused the vendor to turn green, sling you out and then run off to the biggest over-pricer in the area.
Not a Connells around is there lol
WT, I would say 10% off the 2007 price would be a reasonable starting point; say, £225,000.
Unless, of course, the canny vendors have stuck some twigs in vases through the hallway, in which case you can chuck on 10% to the 2007 price.
MW err NO, but you'll have to wait a little longer.
WillH ha ha ha 615% if it were true (I doubt it) is at odds with all your posts on EAT. I reckon your only claim to fame is surfing the net as a self imposed expert on other peoples business's and your not making a very good job at it. Shot yourself in the foot matey (Oh I wish you would).
Come on the brave, what value would you sensibly put on a 2007 valued £250,000 property, today? Location really has no bearing unless your area has climbed or fallen more than mine, shall we see?
I will tell all Thursday.
@Will Hicks.
Sir, You are, based on what you state here are not ‘in a mess’ as your investments such as Gold would not be at such levels if they were not seen as ‘safe havens’ now property is no longer regarded as one.
If what you tell us is true then you are benefitting from the current position, you have sold your property at considerable profit made throughout the boom years you appear to despise so much and presumably used the profits to invest elsewhere where you are enjoying significant gains based on your own comments and posts.
If property had not have ‘boomed’ and then ‘bust’ then I suspect you would be in a very different position and one not as profitable as you are in now.
Of course if ‘Jonnies’ lightly veiled suggestion that you are in fact lying is true it would explain your confused position and opinions on the market, not to mention your truly remarkable attitude towards your fellow posters on this site.
Will Hicks: 615% is impressive, i think you should let us all know your investment, because if it was only a tenner, then you aint exactly a millionaire are you.
Will, so you made 615%? Well Done? You have successfully managed to wrest hard earned money from poor first time buyers, desperately seeking a property of their own!
And I bet you weren't complaining about the massive rise in house prices then were you, pet?
PeeBee: "The BANK then lends them the money, based upon risk assessment."
LOL, that illustrates to me you know sh1t all, as the reason we're in this mess is that most "banks" ignored their risk teams, chasing market share and unrealised profit. Fact.
Peter Hendry ? More like Hugh Hendry.
Whayhey………………..Will ‘Mad Dog’ Mc Hicks is back in the chat and as snarly and cross as ever.
615%! Crickey mate, that’s brilliant! – doesn’t do any more to explain why you are such an odd little thing though……….clever man, got his money in Gold (good move) made a bomb in the market (good move) got cash to buy when he’s ready (good move)………………….in fact with every post you reveal more facts about your savvy investments so why are you such a hate filled soul Will??
…………….of course if you are telling porkies and you haven’t got / achieved any of the marvellous things you frequently tell us about then that would be sad, very sad indeed.
Jonnie
P.s – who linked Gold prices to repos? – wasn’t me but then again there is a really ‘deluded muppett’ here isn’t there Will my old son, eh?
Jonnie; increasing Gold prices doesn't result in people losing their homes you deluded muppet.
Anna, you are SOOOOOOOO wrong. Made 615% over 10 years on my Scottish portfolio. You'd be hard pushed to find a place in Eaton Square with that sort of return.
Jonnie - you crossed over to the dark side! Stay there long?
That reference was to another thread a week or so back. An EA was chiding others here for not working hard enough to get sales and harping on about how many he (she?) was selling and how quickly. Given the current climate, I thought that was harsh, so I enquired whether they were posting from the place where most sales still seem to be going through quickly - London. They never replied.
Rant,
Just seen your post on this article on HPC but im not a member there so I have to reply here………………..yes mate, one of my guys listed a place yesterday morning sale agreed last night – happy vendor (had found another place with my guys they want), delighted buyer (wanted one like it for a while) two deals for Jonnie & Co yesterday and you know im not in Central London
Jonnie
@Wooden Top,
Did you tell him £200,000 and he said you’re joking I must help Will Hicks buy at a price he’s happy with, and threw you out then put it on Tepilo for £99,950?
Jonnie
@Wooden Top
You valued it at 400k and the vendor said: 'You're having a laugh, you're just saying that to try and get the instruction. Get out of my house!"
@James
You said:
"Some Agents and some sellers are the profits of their own doom and misery."
That sentence sounds like English and looks like English - but what does it mean? Do you mean that some agents and sellers are the cause of their own doom and misery?
You said:
"House prices have to reflect market conditions, and at present by and large they do not."
So ... house prices, apparently, do not have to reflect market conditions.
You said:
"They do not have to collapse, just be about 10% below the peak. However, more and more sellers, and more and more agents believe that because fewer houses are coming on sale, or being built, there must be upward pressure on prices."
If there were only one house on the market in your area, would its price be higher or lower than if there were a 100 similar houses on the market?
You said:
"It is a much smaller market, with far too few buyers to satisfy only too many estate agents, who seem hell bent on putting themselves out of business by not charging sensible fees on low volumes."
In very general terms, house prices now are between 2 and 5 times higher than they were say 14 years ago. So, all other things being equal - a market with half the number of transactions is still generating more revenue than 13 years ago. Why should that put estate agents (who have not overstretched themselves) out of business. If you got used to selling 30 properties a month at 5 grand commission - you are going to have to get used to selling 15 properties a month at 5 grand commission - and be earning the same as you did 13 years ago when you were selling 30 properties a month for 2.5 grand commission.
"The lead story says it all. Most (the market) agree that property prices are now to high BUT too many then shoot themselves in the foot by "not my property"!"
That's pretty much the long and short of it. Not too similar to the piece in the Telegraph recently; similar poll found that most people expected prices to fall; just not in their area.
Both sets of polls are equally dismissable; the results are simply subjective projections of people's wants/desires. I mean, if the impartial 'professionals' couldn't forecast if it bit them on the arse i'd pay even less attention to the public's assumptions.
Depends where it is WT. I'll take the plunge - you valued it at 200K, they wanted 300K.
Sound familiar......
I've valued a property today that the vendor purchased in 2007 for £250,000 at market value. He put in an average new kitchen and bathroom when he moved in. What value would you give him today?
I'll give you his and my value later, but I was thrown out the property.
Will Hicks clear off, your an idiot and don't know what your talking about you Troll.
The lead story says it all. Most (the market) agree that property prices are now to high BUT too many then shoot themselves in the foot by "not my property"! Thats not estate agents controlling values and the market.
So for now everyone is lilely to be treading water until affordability grows over the years to catch up to the markets bottom values. 5 years certainly isn't over optomistic, but who has a crystal ball?
As for todays values, we are now valuing at 2002/3 prices and still the buyers are in hiding.
James - good post. I hope no-one comes along to mention 'innovative lending solutions' as the way forward...
leave Will Hicks alone he lost money buying in Scotland at the Home Report price and has now be Repo'd
Some Agents and some sellers are the profits of their own doom and misery.
House prices have to reflect market conditions, and at present by and large they do not.
They do not have to collapse, just be about 10% below the peak. However, more and more sellers, and more and more agents believe that because fewer houses are coming on sale, or being built, there must be upward pressure on prices.
The truth is that there are even fewer buyers, and until this element balances there is no point being speculative with your price!!!!
It is a much smaller market, with far too few buyers to satisfy only too many estate agents, who seem hell bent on putting themselves out of business by not charging sensible fees on low volumes.
Rant over - has been a very quiet Easter........
PeeBee - isn't that where the government should intervene, through tax (dis)incentives re speculative behaviour that has wider implications which could be detrimental to significant chunks of society?
rantnrave: Hello, matey. I read what you say - but I can't agree.
'Investment', regardless of what one invests in, has the effect of pushing up prices to new levels. Whatever the commodity is, whether gold, property, pork bellies..., then it has a knock-on effect whole-of-market. The fact that 'investors' (in the loosest possible use of the term...) like Mr Hicks chops and changes to wherever the fast buck is to be made in fact causes the erratic trends that we know as boom:bust.
Using Mr Hicks as an example of these 'hobby investors', it is pretty much guaranteed that, as soon as he thinks the market is topping out returns-wise, his money will be whipped away to go to the next shiny toy - which may well at that point be property once more.
He simply dabbles. In joining the call for property values to drop, he is looking to free up his next investment opportunity.
Mark my words - HE will be looking to buy one or more property that one or more FTBs would dearly love to own.
But don't worry; I'm sure he will rent it to them for a modest return on his investment - until such time that he thinks "Sell, sell, sell - fine wines is where the REAL money is..."
@Mark Wadsworth
Why do you think we had a bank run in 2007? Why did people queue around the block to wait to withdraw their money?
Why did the government put pressure on Lloyds to buy Halifax and, then, bail them out? Why didn't they swap debt for equity then? Answer - because no-one would touch their debt with a bargepole. Which is why the government had to inject capital by buying shares.
If house prices fell 50% and the banks have to mark to market the assets against which their (housing) loans are secured - they would be insolvent - and the bank runs would begin.
Savers are not fools - loads of them moved money around to get under the compensation scheme limits - and they'll move money out of the banking system like lightning at the first sign of trouble.
Debt for equity will not be an option. Only more money printing.
Forgot to add - banks that would have gone under being bailed out by the taxpayer...
Jonnie - Yip, the same free market that would have seen house prices come down much quicker if it weren't for SMI, ZIRP, QE etc.
Rant,
There we are again, that old monster the free market rearing its ugly head on us
Jonnie
Jonnie - I think what people speculate in makes a huge difference to society. If someone wants to invest in gold, fine art or vintage cars, then let them do it. Their actions do not influence the lives of ordinary folk.
If someone however wishes to speculate in areas such as property, wheat prices, oil etc then this inevitably affects the lives of others who do not want to speculate or don't have the resources to speculate in anything but still need food to eat and a roof over their heads.
One of these choices I have little opinion on. The other I find morally repugnant.
Rant,
…………………dunno mate. Some people seem to want the price of assets they own to keep rising in price but at the same time want the price of the type of asset they want to buy to fall, and fall a lot until the point they own it, after that I think they will want it to go up again, not sure but that’s the impression I get, funny old world.
Jonnie
Jonnie - where are you heading with that comment about speculators pushing up the price of assets at the expense of others?
Programmes like Location, Location, Location also have a lot to answer for. Much of this country's population has bought into the idea that house prices only ever go up and overstretched to borrow more than they could afford to pay back in the event of a period of unemployment, starting a family etc.
No wonder prices are proving so sticky on the way down, when repeats of these programmes still fill the airwaves. Certain elements of this country's media also continue to hype up any sign of house prices increasing while giving far less coverage to reports of them falling (I'll single out the Daily Express here in particular).
Banks provided the funding to support such a fallacy, to the extent that they needed bailing out by the taxpayer. If fingers are to be pointed at EAs for repos, they need to be pointed at several other sources too.
Blimey Will,
Now, ive been pretty horrid to you on here and you just vanished off for a while so I wont do that, its childish on my part and no fun when you don’t rise to it, plus im in a serious mood today.
Now, I don’t know where you get you views from and who the hell you have dealt with EA wise but you very unlucky like one of those women that always pick toe-rags as boyfriends and end up hating all men…………….sorry, im doing it again, ill stop here.
…..so, to go again on this, agents (as much as you hate them) don’t control prices, if we did mate we wouldn’t have booms and bust, we’d keep it nice and steady in pursuit of turnover / volume, but, we do have a duty to our client and that is to get the best price for them, that means if we can get £300k when they thinks its only worth £280k then we tell them / do it, they are paying us a lot of money for a service and they deserve the best price the MARKET will stand
Anyway, that’s the point for now, still don’t know whey you are so cross, you were telling us how much you Gold investment was worth last week, chin up, give us all a smile and sit back feeling warm and nice that you don’t have to worry about house prices with what you’ve got……………..in fact you greedy so and so, you have helped push the price of Gold up, you and the other speculators, the bloody dealers those parasites that have sprung up buying it to make a quick quid, outraged I am, you should be ashamed.
Jonnie
Mike Wilson says: "If we had a correction such as the one that started on 1st August 1988 - that quite simply saw house prices collapse by 30% to 40%... the banking system would collapse."
Well, that's what they want us to think but if you know about bank balance sheets and reserve ratios and loan-to-value ratioes, then you will quickly realise that it is completely untrue, I'm tempted to say "A deliberate and outright lie".
Truth is, even if house prices fell by half, and every borrower in neuqity lost his job and declared himself bankrupt, the total hit to bank assets would only be 15% to 20% of their total assets, an amount which can easily be mopped up with "debt for equity swaps", so it won't even cost the taxpayer anything at all.
Will Hicks: You are a real piece, aren't you?
Estate Agents DO NOT SET PROPERTY PRICES! They advise their clients, who then make the decision to market. NO-ONE is forced to market at a particular price; NO-ONE is forced to buy at a given figure. The BUYER decides the actual price of the property. The BANK then lends them the money, based upon risk assessment.
Unfortunately, sometimes the wheel comes off. But this happens in good times as well as bad. According to CML, there were 69800 properties repossessed between 2000 and 2005. Repossessions are OBVIOUSLY NOT caused by overpricing, as you insinuate. Get real.
You should also understand that NO RESPECTABLE AGENT relishes a property repossession. Jonnie is bang on.
If you actually believe what you say, then you should apply to Peter Hendry for a job. He would welcome attitudes like yours...
@ Will Hicks - It is an estate agents job to achieve the best price possible for a property which is what happened throughout 2006 and 2007. We are not employed by the buyer, we are employed by the vendor.
It is not the fault of estate agents that people payed high prices and are now in financial trouble. It is our job to get as high a price as possible. It is their own fault for not researching their finances properly, being greedy and not thinking about the future. It is not the job of the estate agent to wrap buyers up in cotton.
I presume that if somebody offered you an attractive price for your property, you would turn them away because it may be above the current market value??
Jonnie.
How very moral of you. You're a real latter day Mother Teresa aren't you. Just for a minute, maybe you could take off your EA welders goggles and maybe see that somehow EAs up & down the country may have been complicit in this mess of a housing "market" by constantly over-valuing properties
over the last 15 years, knowing suckers could get easy money. It's not just the "bankers" to blame, you've all had your snouts in this trough, so please don't pull
out the repo sob story card now things are going South.
@Anonymous Coward,
Im definitely going to get sneered at here by some and I must add I don’t feel myself today but I remember the 90’s repos levels.
We made a living off divorce, probate and repos and frankly repos and the personal stories that come with them are a nasty effect of the sudden collapse that some here wish for and one I’d swap for a slow correction any day
Although from what I see some HPCers (not you Rant) see the misery of reposition as a reason to be cheerful but when you stand on the door step with the bailiff and see the people you would think very differently
…………………..enough of that from me, I shall now revert to my hubristic self with all the tosspottery I enjoy so much………………
Jonnie
@Dom
There is too much money invested in the housing market for a 'short, sharp shock' to be allowed to happen.
If we had a correction such as the one that started on 1st August 1988 - that quite simply saw house prices collapse by 30% to 40% in affected parts of the country (in that crash it was largely only London and the South East that took part) - the banking system would collapse.
And, as we have seen in 2008, anything and everything - including printing money - will be done to avoid that.
In the parts of the UK that had the biggest booms (West Country, Wales. Scotland, Northern Ireland and the North West and North East of England) there will be property corrections. But in the parts of the country that already had relatively highly valued property - London, South East, East Anglia and some of the Midlands - because that is where the work and wealth is concentrated - there will not, unfortunately, be a significant correction.
This article seems to suggest that prices are high now and most people expect them to stay that way.
A quick search around my area (West Mids) on Rightmove however shows many properties last bought circa 2006 are on offer for at least 10% below that price. Even then they are not selling.
Once inflation is factored in, prices of sold properties are already falling and have been for a while. According to Halifax's data, the price of the mythical average house in real terms is down 21% from its peak at the end of 07 / start of 08. This of course is subject to regional variation, but if prices in London are holding up, in the indices this is masking falls greater than 20% elsewhere.
The house price crash is real and happening in much of the country. However, it's moving at such a slow glacial pace that, as this article shows, many can't see it. An interest rate hike or two would bring things much more into the open though.
For you, and the greater good of all, definitely.
But Mr & Mrs Average would almost certainly disagree.
@Anonymous Coward
Short sharp shock every time.
I think that the current government (without admitting to it because the just can't) will allow the affects of inflation at 4 point something percent coupled with a modest fall in house prices of a couple of percent per year to "sort out" the housing market.
It will take 5-7 years as Mark suggests.
It's a bit like ripping a plaster off a particularly hairy leg one hair at a time.
The alternative is a return to the early 90's where in one, three week period I presided over the repossession of at least one house per day.
Which is better...?
88.6% of statistics are made up, anyway !
Seriously though, the issue is that sellers want prices high, buyers want prices low, and the people who are buyers AND sellers let their greed outweigh their realism. Add to this poor estate agents willing to over value in order to gain an instruction, and you have a damaged system that has to heal over a very long period of time, rather than in a matter of months.
My personal estimate (and by that I mean a bet where I would be genuinely prepared to put a large sum of my own money on) is that the housing market will take in at least 5-7 years to recover, all thanks to greed, but that all the greedy people will be looking to blame everyone else (as usual), haha
Hmm nice bit of reporting reminds me of the old USSR vs USA basket ball match which the USA won.
Tass reported in USSR
'The glorious Soviet Republic performed fantastically and came second where the Imperialist dogs USA came second to last!'
These headlines are like drop the dead donkey!
The headline could quite easily have been 52% of consumers think prices are correct or even under-priced.