UK House prices: News & Views

[d2thdr]

Which is my point. David Cameron is not stupid enough to tell us how bad the situation is ... in that we, surely, already know. We're in a lot of debt, we're going to be in a lot more before we ever get to the point of paying it back and, I think it is accurate to say, my as yet unborn grandchildren will be repaying the debt taken on to keep our public services going today - for the whole of their lives. A trillion or more is not going to get paid back in 10 years - even at 10 billion a year it will take a 100 years.

 

But the media are stupid enough to tell us, 24/7, how bad the situation is. They told me yesterday - all day - they really don't need to tell me again today. I'm already uncertain enough about the future - do the media want me to completely stop spending money on anything other than essentials and hoard my money in my house. Because, if we all do that, there will be total chaos in a week.

 

 

Cameron or his ilk telling me or not does not make one ounce of difference how I would plan for the future. He and his chums have not got my interest in their heart.#

 

 

You claim -'David Cameron is not stupid enough to tell us how bad the situation is ... in that we, surely, already know'.

 

 

I think you do/do not know how bad it really is. Cameron definitely does not. Up until 2008 I was as clueless as most. The 2008 bailouts gave me a chance to reassess my position. We were perilously close to disaster. I was making shed loads of money then and even now. Then I ued to buy a new Beemer every couple of years and waste my hard earned money. Today I prefer to buy PM. 2008 IS GOING TO HHAPPEN AGAIN- only BIGGER and MESSIER.

 

I wish you the very best for your future.

[Van]

Cameron or his ilk telling me or not does not make one ounce of difference how I would plan for the future. He and his chums have not got my interest in their heart.#

 

 

You claim -'David Cameron is not stupid enough to tell us how bad the situation is ... in that we, surely, already know'.

 

 

I think you do/do not know how bad it really is. Cameron definitely does not. Up until 2008 I was as clueless as most. The 2008 bailouts gave me a chance to reassess my position. We were perilously close to disaster. I was making shed loads of money then and even now. Then I ued to buy a new Beemer every couple of years and waste my hard earned money. Today I prefer to buy PM. 2008 IS GOING TO HHAPPEN AGAIN- only BIGGER and MESSIER.

 

I wish you the very best for your future.

 

When one first becomes interested in financial markets, it opens your eyes and suddenly you learn that the financial world as we know it is on the brink of collapse. Then as the years pass, experience will show you that the world is always on the brink of disaster and lurches from one crisis to the next. It's nothing new.

 

By all means, buy your PMs, but don't expect the world to stop turning just because you've figured a thing or two out about weaknesses in the system.

 

 

There can be nothing new in Wall Street.

 

[d2thdr]

When one first becomes interested in financial markets, it opens your eyes and suddenly you learn that the financial world as we know it is on the brink of collapse. Then as the years pass, experience will show you that the world is always on the brink of disaster and lurches from one crisis to the next. It's nothing new.

 

By all means, buy your PMs, but don't expect the world to stop turning just because you've figured a thing or two out about weaknesses in the system.

 

 

There can be nothing new in Wall Street.

 

 

Sure if you say so. Experience is really a problem you know in Financials. Did you know a group of 12 year olds out performed most big guns from the city last year in a experiment?

 

Also I always look at this statement and think before putting money into anything;

 

Gold is an asset based currency, thus it represents payment in full, where as fiat currency is a debt based currency that represents a claim in the system. In this light, the ‘preservation of wealth’ simply means - he who holds gold has already been paid.

Edited October 27, 2011 by d2thdr

[drbubb]

I have asked this a couple of times - no replies yet. Let's say I don't ignore the warning signs - what should I DO?

 

Get in a stock of baked beans? Buy gold - not much use to anyone when the chaos starts. Take my bit of money out of the bank and bury it?

 

What is the prescribed course of action?

 

Is it 'keep calm and carry on'? Because, to me, that really does seem the most sensible option.

YES.

 

Do each of those things - if they feel right.

Because no one really knows for certain what lies ahead.

(Except for the Buy-and-Hold purists, of course.)

[John Doe]

Talking of house prices.......

 

Land Reg Sept report out*

 

-0.3% MoM -2.6% YoY

 

http://www1.landregistry.gov.uk/upload/documents/HPI_Report_Sep_11_sb5ar16.pdf

 

Looking closer, the "less-nice" areas seem to be down a lot, while nice areas have held up quite well (as expected).

 

 

 

*(Usual 3 to 4 month delay in data)

[LauraB]

 

(Except for the Buy-and-Hold purists, of course.)

 

Did you ever regret rejecting that career in the diplomatic corp Bubb?

[John Doe]

Did you ever regret rejecting that career in the diplomatic corp Bubb?

 

It meant you could get the job, didn't it

[John Doe]

Roll up, roll up.

 

Grab them houses quick, demand at levels "not seen in over four years"!

 

Demand for houses in the UK is at a four year high, as enquiries from house-hunters return to September 2007 levels

 

http://uk.finance.yahoo.com/news/Property-demand-reaches-four-tele-2309634405.html?x=0

[drbubb]

Did you ever regret rejecting that career in the diplomatic corp Bubb?

I thought you might need reminding (haha)

[John Doe]

Talking of house prices.......

 

Land Reg Sept report out*

 

Oh, and the previous months -0.3%MoM drop has been revised up to -0.1%.

 

Not exactly crash cruise speed.

[drbubb]

Oh, and the previous months -0.3%MoM drop has been revised up to -0.1%.

Not exactly crash cruise speed.

Interest rates have fallen some way in the last year or so

[stunlee]

I came to this site from HPC and would dearly love to see a UK HPC, for the good of the country and the young people there if nothing else. I gave up on it a couple of years ago, I just don't think it is going to happen. It seems to me as though there are only 3 things that would cause big falls: i. a sudden rise in interest rates, to around 4 percent base rates and 6 to 7 percent mortgage rates would be enough ii. an ending of the government mortgage support schemes iii. complete economic failure where the government doesn't print more money. Any other issues such as the worsening economic conditions in Britain or the Euro crisis seem to have no effect as shown by the lack of movement in prices in the last two years.

 

I simply cannot see any of these conditions being met. I don't understand why but the gilt holders seem perfectly happy to hold gilts and lose money, at least 2 percent a year even if you were to believe the governemnt statistics, there is no pressure on interest rates there. ii. Can anyone see the feeble government actually stopping these schemes? A couple of pictures in the newspapers of Hard Working Families, their young child with a Teddy Bear being threatened with homelessness and the government would capitulate. I don't think these schemes will ever be cancelled. iii. Again, just not going to happen, the BoE will print for as long as they can get away with it, and there are no signs at the moment of anyone complaining.

 

Now talking real terms. I am sure they will fall over the next decade to 3 times wages, or less than a hundred ounces of gold.

[John Doe]

Interest rates have fallen some way in the last year or so

 

You mean on mortgages?

 

If so, actually nearly all SVR's have gone up, while the best fixed rates (available to the select few with big fat deposits) have only fallen by about 1% at most.

 

Trackers are still about the same.

[Van]

I have been following the mortgage market pretty closely all year.

 

Rates have definitely fallen for both fixed and variable rates. Most importantly they have fallen the most for low deposit mortgages - You can get the same rate on 85% & 90% that 12 months ago you would get only on on 75-80% LTV deals.

 

In practical terms that's makes quite a big difference at the sharp end of the market, whereas before you might need 50k in cash to make buying cheaper, now you would only need k25k.

[John Doe]

I came to this site from HPC and would dearly love to see a UK HPC, for the good of the country and the young people there if nothing else. I gave up on it a couple of years ago, I just don't think it is going to happen. It seems to me as though there are only 3 things that would cause big falls: i. a sudden rise in interest rates, to around 4 percent base rates and 6 to 7 percent mortgage rates would be enough ii. an ending of the government mortgage support schemes iii. complete economic failure where the government doesn't print more money. Any other issues such as the worsening economic conditions in Britain or the Euro crisis seem to have no effect as shown by the lack of movement in prices in the last two years.

 

Now talking real terms. I am sure they will fall over the next decade to 3 times wages, or less than a hundred ounces of gold.

 

I remember the early days on HPC. Some posters saying a shock would be needed for real falls. Everyone ridiculed them, then a few years later (after another 30% rise in prices) the crises hit, and they were proved correct. Of course, they had flattened during 2007, but they only dropped significantly after the world ended up on the edge of the financial abyss.

 

So I think you're right, it needs a major shock (like last time) before (if) any worthwhile falls will be seen in nominal terms across the board. In real terms they are still falling and are actually about 25 to 30% down from peak at the moment (more in some places, less in others).

[stunlee]

Yep, there have been huge falls in real terms, and I wouldn't be surprised if the real term falls ended up at about 70 percent or so, that would be roughly consistent with prices falling from around 8 times salary in 2007 to around 2.5 to 3 times salary at some point in the medium term future. Indeed, if one takes account of say a 20 percent nominal fall in prices and a halving of mortgage interest rates, that is already about 60 percent fall in house prices in terms of monthly repayments which seems to be how the general population think. I know a family member recently remortgaged and saw their monthly repayments fall from 300 pounds a month to a bit over 200 pounds. I would be astonished to see prices fall below the winter 2008/9 low.

[drbubb]

I came to this site from HPC and would dearly love to see a UK HPC, for the good of the country and the young people there if nothing else. I gave up on it a couple of years ago, I just don't think it is going to happen. It seems to me as though there are only 3 things that would cause big falls:

i. a sudden rise in interest rates, to around 4 percent base rates and 6 to 7 percent mortgage rates would be enough

ii. an ending of the government mortgage support schemes

iii. complete economic failure where the government doesn't print more money.

Don't rule out any of those.

But I think the rate rise is the most likely, and maybe sooner than you think.

 

Despite the relief rally this week, I don't think more debt will solve the debt crisis, and the chickens will soon "come home to roost."

[drbubb]

Council tax blow for second-home owners

Owners of second homes are to lose council tax discounts in a major shake-up to be announced by ministers.

 

Local authorities will be told they can abolish the rebate, which can mean council tax on second homes is as much as 50 per cent lower than for main residences.

 

Ministers say the proposal will benefit hard-pressed middle-income families - but it will be unpopular with second-home owners.

 

It will form the centrepiece of a series reforms which ministers say if adopted, would allow a cut in council tax bills for most people.

 

http://www.telegraph.co.uk/news/politics/8857774/Council-tax-blow-for-second-home-owners.html

[John Doe]

Council tax blow for second-home owners

Owners of second homes are to lose council tax discounts in a major shake-up to be announced by ministers.

 

Local authorities will be told they can abolish the rebate, which can mean council tax on second homes is as much as 50 per cent lower than for main residences.

 

Ministers say the proposal will benefit hard-pressed middle-income families - but it will be unpopular with second-home owners.

 

It will form the centrepiece of a series reforms which ministers say if adopted, would allow a cut in council tax bills for most people.

 

http://www.telegraph.co.uk/news/politics/8857774/Council-tax-blow-for-second-home-owners.html

 

Good, they should double or trebble it while they are at it.

 

Second home owners have destroyed many costal areas, they are like ghost towns "out of season".

[BoldAsBrass]

When people say house prices are down by 25% to 30% in real terms ... the house I sold in 2003 would, I am pretty sure, easily fetch the same money. I sold for 400k and, to be honest, if it appeared on the market now I'd be astonished if it went on the market for less than 450k - and would sell at somewhere between 400 and 450. Edit: I'm pretty sure that at no point between 2003 and now would it have sold for more than £425k - maybe in late 2006.

 

Speaking for myself, I am not earning any more now that I was then. Mortgages are cheaper - if you can get one. I can't see how this equates to a 25% fall in real terms.

 

I know of a 3 bed semi in West London that has sold in the last 6 months for £465k - the bloke who bought it paid £310k in 2002. Admittedly he has fitted a new kitchen and bathroom but, even so, no sign of a 'real' fall - certainly in London, the South East and South West. Don't know about the rest of the country.

[John Doe]

When people say house prices are down by 25% to 30% in real terms ... the house I sold in 2003 would, I am pretty sure, easily fetch the same money. I sold for 400k and, to be honest, if it appeared on the market now I'd be astonished if it went on the market for less than 450k - and would sell at somewhere between 400 and 450.

 

Speaking for myself, I am not earning any more now that I was then. Mortgages are cheaper - if you can get one. I can't see how this equates to a 25% fall in real terms.

 

I know of a 3 bed semi in West London that has sold in the last 6 months for £465k - the bloke who bought it paid £310k in 2002. Admittedly he has fitted a new kitchen and bathroom but, even so, no sign of a 'real' fall - certainly in London, the South East and South West. Don't know about the rest of the country.

 

Because, as you know, real includes inflation, nominal doesn't.

 

Wages have risen maybe 5 or 10% over the period, less for many, but real inflation (not fiddled RPI/CPI) for many has been far higher for many years.

 

So taking these figures into account, a house up here that is nominal 10%-15% below peak nominal, is ~ 25% down real, even after accounting for higher wages.

 

Plenty of examples around the country of these falls, but in London, maybe not. London's strange

[Van]

When people say house prices are down by 25% to 30% in real terms ... the house I sold in 2003 would, I am pretty sure, easily fetch the same money. I sold for 400k and, to be honest, if it appeared on the market now I'd be astonished if it went on the market for less than 450k - and would sell at somewhere between 400 and 450. Edit: I'm pretty sure that at no point between 2003 and now would it have sold for more than £425k - maybe in late 2006.

 

Speaking for myself, I am not earning any more now that I was then. Mortgages are cheaper - if you can get one. I can't see how this equates to a 25% fall in real terms.

 

I know of a 3 bed semi in West London that has sold in the last 6 months for £465k - the bloke who bought it paid £310k in 2002. Admittedly he has fitted a new kitchen and bathroom but, even so, no sign of a 'real' fall - certainly in London, the South East and South West. Don't know about the rest of the country.

 

There is a big North/South divide. Prices in the south have held up very well, while in the North they are down by a big amount. It's not a universally even fall, and some places a few places are even fetching more than peak 2007 prices. London is actually up YoY.

 

 

check page 4:

http://www.communities.gov.uk/documents/statistics/pdf/2005178.pdf

[BoldAsBrass]

Because, as you know, real includes inflation, nominal doesn't.

 

Wages have risen maybe 5 or 10% over the period, less for many, but real inflation (not fiddled RPI/CPI) for many has been far higher for many years.

 

So taking these figures into account, a house up here that is nominal 10%-15% below peak nominal, is ~ 25% down real, even after accounting for higher wages.

 

Plenty of examples around the country of these falls, but in London, maybe not. London's strange

 

I would argue that, unless you work in the public sector, your wages are probably the same now as they were 5 or 6 years ago. I know a number of people who are happy to keep earning the same money as last year - just grateful they still have a job.

 

Taking some hypothetical figures ...

 

Say a house was 100k 6 years ago and someone was earning 20k and a loaf of bread was £1.

 

Now the house is 100k, they're still earning 20k and a loaf of bread is £2

 

Inflation, in terms of bread has been 100% but, in terms of houses it has been 0%. I can't see what RPI or CPI has to do with this.

 

If you think in terms of house prices - inflation wise - as a combination of average house prices / average wages / average mortgage interest rates then, where I live ... going back say 7 or 8 years ...

 

house prices about the same, wages about the same, interest rates a bit lower.

 

I'd say house prices are about as unaffordable now as they were in 2003 / a bit more affordable than they were in 2006/7 and a bit less affordable than they were in 2008/first half 2009 (in my area).

 

Edit ... I just thought 'why am I writing this?' and then remembered - I keep reading various people making statements like 'house prices are already down 30% in real terms (not just on here)' and they base this view on the 5% pa inflation we have had for the last few years. All I'm saying is I can't see what the price of bread and petrol has to do with house prices (apart, of course, from making houses less affordable) but I really can't see how you can kid yourself that house prices have halved if the price of bread doubles.

[John Doe]

Edit ... I just thought 'why am I writing this?'

 

Yes I get that feeling sometimes too.

 

and then remembered - I keep reading various people making statements like 'house prices are already down 30% in real terms (not just on here)' and they base this view on the 5% pa inflation we have had for the last few years. All I'm saying is I can't see what the price of bread and petrol has to do with house prices (apart, of course, from making houses less affordable) but I really can't see how you can kid yourself that house prices have halved if the price of bread doubles.

 

I guess some refer to real, as priced in real money (what they would call gold), but also, even if you put the equivalent cash pile in the bank over those 6 years, you would have got on average about 5% per annum (more it you locked in the long term 7% deals in 2007).

 

On that basis alone, the house (if still the same price nominal) would have decreased by 30% real from your pot of money.

 

(Actually, about 24% if working on £130k in the pot to buy the £100k house as the 100k house is now ~£76k relative to your original pot).

 

A similar calculation can be made assuming the interest you would have paid over the same period had you had a £100k mortgage, instead of £100k cash.

[BoldAsBrass]

Yes I get that feeling sometimes too.

 

 

 

I guess some refer to real, as priced in real money (what they would call gold), but also, even if you put the equivalent cash pile in the bank over those 6 years, you would have got on average about 5% per annum (more it you locked in the long term 7% deals in 2007).

 

On that basis alone, the house (if still the same price nominal) would have decreased by 30% real from your pot of money.

 

(Actually, about 24% if working on £130k in the pot to buy the £100k house as the 100k house is now ~£76k relative to your original pot).

 

A similar calculation can be made assuming the interest you would have paid over the same period had you had a £100k mortgage, instead of £100k cash.

 

But then you have to factor in rent if you don't have a mortgage - unless you own property outright.

 

I sold to rent in 2003 and for a while things were great. The market went down in 2004/5, right up until the idiot government, realising their precious housing market was slowing down, cut interest rates in August 2005 after a year and a half of gradually raising them from their post 9/11 low of 3.5%. The interest on my cash more than paid the rent and, as I said, house prices were slowly going down. Then, in January 2006, it went nuts again and house prices, and borrowing, took off again. Then we had 2007/8 and the credit crunch. Interest rates slashed and suddenly I was earning next to nothing in interest. Which is why I bought again.

 

All in all, how you pick the bones out of that in terms of whether, for me, house prices have gone up, down or sideways is anyone's guess.

 

My best guess is that mortgage and cash wise - I seem to be about 50k better off than I was in 2003.