UK House prices: News & Views

[Van]

The 2nd big downleg in the UK housing bear market is now well underway. I don't think we'll get the spectacular YoY figures that we got off the peak in 2008 but from here on in it will be a more shallow and drawn out affair for the next 3 years as the austerity programme bites.

 

Anecdotally I am seeing a big supply of new housing coming onto the market now. I doubt there are enough buyers to match this extra supply, so there will be massive overhang this summer. Reductions are still commonplace - sometimes as soon as 2 or 3 weeks after inital instruction when it's obvious there's no mugs left to buy at a premium or even at the market rate.

[BoldAsBrass]

The 2nd big downleg in the UK housing bear market is now well underway. I don't think we'll get the spectacular YoY figures that we got off the peak in 2008 but from here on in it will be a more shallow and drawn out affair for the next 3 years as the austerity programme bites.

 

Anecdotally I am seeing a big supply of new housing coming onto the market now. I doubt there are enough buyers to match this extra supply, so there will be massive overhang this summer. Reductions are still commonplace - sometimes as soon as 2 or 3 weeks after inital instruction when it's obvious there's no mugs left to buy at a premium or even at the market rate.

 

Be helpful if people could give a hint which bit of the country they are in when commenting on their local market.

 

I'm not too far from Guildford in Surrey and I would describe the market as down 10% from peak in 2007 - but flat for the last year or more. Not that many transations - but not stagnant by any means - and, as always, good houses in good areas are still fetching top prices.

 

I'm not saying things won't change - for my kids' sake I hope they do.

[alexreeve]

Be helpful if people could give a hint which bit of the country they are in when commenting on their local market.

 

I'm not too far from Guildford in Surrey and I would describe the market as down 10% from peak in 2007 - but flat for the last year or more. Not that many transations - but not stagnant by any means - and, as always, good houses in good areas are still fetching top prices.

 

I'm not saying things won't change - for my kids' sake I hope they do.

I'm in Woking (right next to Guildford). I get a similar feel but with more variance by type, so flats are down more like 20%, low end housing 10%, better houses unchanged. But Woking has a huge supply of flats recently built and under development.

[neil324]

North Birmingham, flats down hard, very hard some as much as 40%. Houses some come on at 2007 prices others around 15% off, some nice repo's come up fairly often. I wasn't looking to buy in 2008-2009 but doing research on what's sold since then 2 house's have sold at 2002 prices and 1 even a 50%+ reduction from peak in the most desirable of roads.

 

It's all about being in the right place at the right time, so i'm actively looking and when something comes up i will be buying.

 

Noticed a lot of stuff going SSTC.

[Van]

Nice bearish figure from Halifax today.

 

Nationwide too should begin to go much more YoY negative over the next few months as last year's data falls out of the calculation:

 

Mar-10 0.8 1.4 9.0 164,519

Apr-10 1.0 0.8 10.5 167,802

May-10 0.4 1.3 9.8 169,162

Jun-10 0.0 1.4 8.7 170,111

[stumpjumper]

Hi guys,

 

Sorry for Hi- jacking the thread but didn't think it deserved a new one of its own.

 

Heres the story......been looking to buy for the past 3 years and have held out but want a place to hang my hat after some really crappy rentals (im not getting any younger).

Im lucky enough to have amased a deposit of £50K and think I can secure a house that id want to live in for the next 10 + years with a 100K mortgage.

 

Im in two minds whether to wait longer still for the fall which some of us have been speculating will happen or whether to get in early before rates rise removing the benefits of any falls.

 

I know in my heart that this puppy has to burst but feel Im not moving on with my life (how I want to live it) until I can settle down and just can't see when this will end.

 

Thanks

 

 

[DoctorSolar]

Im in two minds whether to wait longer still for the fall which some of us have been speculating will happen or whether to get in early before rates rise removing the benefits of any falls.

 

Tricky one. If rate rises negate any house price falls you will still have less debt if you wait. If your mortgage payments remain the same under both scenarios and you can afford to make over payments they will have erode that smaller sum more quickly.

 

So I'd wait. That's what I am doing. I seem to be a real oddity in that I am British, have a family and yet feel no compulsion that I MUST own property. To each their own I suppose.

[stumpjumper]

For me I have no family or ties but pay more in rent than a mortgage of said amount (100K). Does anyone know if theres an equation which shows what the relationship Vs rate rises would be ie rates rise by x amount what would house price falls have to be to cover that. Im sure ive seen a calculation once showing that but can't remember where..........obviously maths is not my strong point

[frizzers]

LONDON SW still rising from what I can see

[drbubb]

Im in two minds whether to wait longer still for the fall which some of us have been speculating will happen or whether to get in early before rates rise removing the benefits of any falls.

 

I know in my heart that this puppy has to burst but feel Im not moving on with my life (how I want to live it) until I can settle down and just can't see when this will end.

Thanks

Keep you eyes open for bargains.

I think 2011 will be a year of HARD falls, especially after a (disappointing?) spring.

If you are going to buy make sure, you try "low ball" bids.

The way to be successful in that, is make a low ball bid and be prepared to walk away, if the vendor does not respond well.

[drbubb]

LONDON SW still rising from what I can see

Any sense what is happening to Incomes in London?

 

The Halifax data suggests that Gross Earnings have now stopped rising, UK-wide:

http://www.greenenergyinvestors.com/index....showtopic=14353

 

 

[tallim]

Manchester auction, poor quality stock, but some tenanted places with guides giving around 10% gross rental income. Link to catalogue below;

 

http://www.edwardmellor.co.uk/auction/catalogue/

 

The opportunities are going to be at this end of the market aren't they?

 

Some interesting stuff in Sheffield in this one

 

http://www.markjenkinson.co.uk/auctions/tu...-2011/?start=20

[Carlton]

Hi guys,

 

Sorry for Hi- jacking the thread but didn't think it deserved a new one of its own.

 

Heres the story......been looking to buy for the past 3 years and have held out but want a place to hang my hat after some really crappy rentals (im not getting any younger).

Im lucky enough to have amased a deposit of £50K and think I can secure a house that id want to live in for the next 10 + years with a 100K mortgage.

 

Im in two minds whether to wait longer still for the fall which some of us have been speculating will happen or whether to get in early before rates rise removing the benefits of any falls.

 

I know in my heart that this puppy has to burst but feel Im not moving on with my life (how I want to live it) until I can settle down and just can't see when this will end.

 

Thanks

You sound like a British version of myself, an American. Like yourself, I look at lots of attractive properties; my heart wants to buy but my head says to rent.

 

I think a lower purchase price is more important than a lower interest rate. Hence, if rates increase in the future and prices fall I'll be happy with that (especially if we're in position to pay cash or with a large down payment, 50%+). The outstanding mortgage balance is what will matter when you go to sell. It determines what you'll get at closing - or what you have to bring to closing!

 

You can use a mortgage calculator like below to increase the rate and see what size price fall is necessary to produce the same monthly payment.

 

http://www.bankrate.com/calculators/mortga...calculator.aspx

[G0ldfinger]

I think at some stage over the next 2-3 years we will reach a "sweet spot":

 

- houses will be very cheap in gold (have stagnated or fallen nominally),

- interest rates will still be fairly low (thanks to central bankster manipulation),

- inflation won't be catastrophic yet (thanks to the sleepy sheeple).

 

That will be the time to buy a house either outright, or with a good-sized deposit on a fixed interest mortgage.

 

I would almost suggest the latter one, since the money can possibly be put to better use in the markets than just completely sinking it into a house, and worsening inflation will take care of the mortgage given you have a safe job.

[drbubb]

You sound like a British version of myself, an American. Like yourself, I look at lots of attractive properties; my heart wants to buy but my head says to rent.

I think a lower purchase price is more important than a lower interest rate. Hence, if rates increase in the future and prices fall I'll be happy with that (especially if we're in position to pay cash or with a large down payment, 50%+). The outstanding mortgage balance is what will matter when you go to sell. It determines what you'll get at closing - or what you have to bring to closing!

You can use a mortgage calculator like below to increase the rate and see what size price fall is necessary to produce the same monthly payment.

http://www.bankrate.com/calculators/mortga...calculator.aspx

A test I use to use was this:

Compare :

+ RENTING, at a market rent, with:

+ BUYING, where you make some artificial assumptions:

 

1. 100% finance

2. Interest only mortgage, at a "hedge-able" interest rates (ie not a temporary "teaser" rate)

3. Add some minor amount for maintenance, major: if it is an older property.

 

When you make this comparison, if the monthly cost is identical : You get the capital gains for free.

But you have the capital losses too.

 

When buyers are afraid of losing money, which you will normally not see until there have been some months (or years) of capital losses, then the unusual circumstance of BUYING being cheaper than RENTING can arise.

But you need to be careful that the underlying fundamentals are sound. In cities like Detroit, which have been losing jobs and population for decades, the situation of being "cheaper to buy" can last a long time.

[Carlton]

A test I use to use was this:

Compare :

+ RENTING, at a market rent, with:

+ BUYING, where you make some artificial assumptions:

 

1. 100% finance

2. Interest only mortgage, at a "hedge-able" interest rates (ie not a temporary "teaser" rate)

3. Add some minor amount for maintenance, major: if it is an older property.

 

When you make this comparison, if the monthly cost is identical : You get the capital gains for free.

But you have the capital losses too.

 

When buyers are afraid of losing money, which you will normally not see until there have been some months (or years) of capital losses, then the unusual circumstance of BUYING being cheaper than RENTING can arise.

But you need to be careful that the underlying fundamentals are sound. In cities like Detroit, which have been losing jobs and population for decades, the situation of being "cheaper to buy" can last a long time.

Thanks, that's a good exercise.

 

If I buy it will be in, or very close to, Chicago. I think the fundamentals here are at least decent. We have a very diversified economy in the Chicagoland area, with some of the remnants of American industry, agriculture oriented businesses, and finance (shudder).

 

The population of the city has been relatively stable over the past 10 years. The Census says we lost 200k; 2.9 M in 2000 and 2.7 M in 2010. The 200k dropoff was about the same for Cook County, 5.4 M to 5.2 M, but it's more or less stable, having been over 5 M since 1960. The surrounding counties have grown strongly over the past 10-30 years.

 

I also wonder what effects Peak Oil will have on Chicago real estate. I'm generally of the mind that energy costs will drive people from the suburbs (the worst of all worlds, unwalkable medium-density with large homes to heat and cool) back into the city. However, there are some people here who think that families will be driven towards rural areas where they can make use of more land.

[BoldAsBrass]

A test I use to use was this:

Compare :

+ RENTING, at a market rent, with:

+ BUYING, where you make some artificial assumptions:

 

1. 100% finance

2. Interest only mortgage, at a "hedge-able" interest rates (ie not a temporary "teaser" rate)

3. Add some minor amount for maintenance, major: if it is an older property.

 

When you make this comparison, if the monthly cost is identical : You get the capital gains for free.

But you have the capital losses too.

 

When buyers are afraid of losing money, which you will normally not see until there have been some months (or years) of capital losses, then the unusual circumstance of BUYING being cheaper than RENTING can arise.

But you need to be careful that the underlying fundamentals are sound. In cities like Detroit, which have been losing jobs and population for decades, the situation of being "cheaper to buy" can last a long time.

 

I think there is a tendency on here to think that everyone buys houses as an investment.

 

That phrase 'When buyers are afraid of losing money' is really a bit of a giveaway. I would venture to suggest that 90% or more of buyers do not even consider whether they will or won't lose money. I'm thinking back to when I bought my first property - my thoughts were all about the excitement (yes, excitement! seems an eternity ago) of owning for the first time, what I was going to do to the place, who had offered me second hand furniture, what else did I need straightaway?, could I afford the mortgage? (which, obviously I had checked out before even considering offering) etc. etc. I didn't even consider whether I would lose the £4,600 I put in as a deposit.

 

Later, when I moved in good times and bad, I still never considered losing money - the house was a place where I and my wife and kids lived. Sure, I used to do the houses up in the hope it would add a bit of value - but the thinking was always about where and what the house was (and a bit later on) and school catchment areas etc.

 

I think many people on here, and on HPC, fail to understand the housing market. It is viewed as though it were a stock market and that the people who buy and sell are investors. Which might explain why, despite all the strongly held beliefs that, based on fundamentals, the market must crash (views held since 2003 by some people) it still hasn't really gone down much yet (those last 5 words must be seen in a regional context - I know in some places in the North, Midlands and Wales prices have come down a good bit but, as they had gone up by a factor of 5 to 6 over about 5 years, this is to be expected).

 

A word that is often used on here is 'panic' and phrases like 'when the panic sets in' ... I have to say it's not a word that really applies to the housing market. I used to work in the building industry and, for a few years, for big housing developers. Even in the bust in the late 1980s (which was a real bust) there was no panic - just prices trimmed gradually until a buyer was found and then, in many cases, developments abandoned for a few years. No panic though.

[drbubb]

I think many people on here, and on HPC, fail to understand the housing market. It is viewed as though it were a stock market and that the people who buy and sell are investors. Which might explain why, despite all the strongly held beliefs that, based on fundamentals, the market must crash (views held since 2003 by some people) it still hasn't really gone down much yet (those last 5 words must be seen in a regional context - I know in some places in the North, Midlands and Wales prices have come down a good bit but, as they had gone up by a factor of 5 to 6 over about 5 years, this is to be expected).

You don't get it do you?

 

The UK saved its property market from a crash by moving to a "Zero Interest Rate Policy" (ZIRP) in late 2008/ early 2009.

 

The crash underway then came over a year LATER than the one in the US, and the slide was picking up steam, when sharp interest rate cuts were implemented. (This was part of Gordon Brown's machivellian plan to "save the world.") Suddenly, many people who had Tracker mortgages linked to Base rates or Libor found they were paying almost nothing in interest on their mortgages. For these lucky folk, it was cheaper to stay put in owned accommodation, rather than selling out and renting, or moving somewhere else. SO THEY STOPPED SELLING. And the supply of homes for sale quickly dried up.

 

At the same time, the government started ramping up its generous housing benefits, matching market rents. This made it easy for BTL landlords to hold onto their property investments. And many began to bid for new properties, think the ZIRP might last for years.

[Delboy]

I viewed my first house in seven years today. The road is a mixture of mainly 3 Bed with some 4 Bed. It is a 4 bed with a large garden (even compared to the others in the road that are large for surburian London outshirts). Also has a garage, en-suite, cloakroom and out house. Nothing has sold in the road for six months although there appears more movement now with 3 Bed on for 380K. The highest every price was 430K July 2007 peak from a reasonable selection of sample data. Asking price? 560K! I am thinking 400-430K Max however its a lot of house. The house sign says SOLD and it was under offer but came back on as the agent says the third party is having trouble selling their property. It is selling with no chain and the owner brought it at least as long ago as 1994 as no original sale price exists. The story from the agent is that the owner lives in the area and has been renting it for a long while and now wants to sell. I have been tracking it since Oct and it was advertised and I believe rented from about then onwards but it was also up for sale for the same time. I dont fully believe the long term rent bit as the condition of the kitchen etc is too well maintained, the original internal pictures show very homely furniture and family photos of typically the type of person I would have thought lived there. Also and this is the clincher in the garage is a beautifully restored/original 1950's Austin! I would not leave that in a rented accomodation especially if I had a house with a garage somewhere else. I am a FTB with good deposit and I rent so an ideal buyer. The agent says the original offer was 530K and there is someone else considering an offer around that and said the owner wont accept less than that. Obviously there are other non financial considerations but is my estimate a fair price or maybe lower?

[drbubb]

I viewed my first house in seven years today...

The agent says the original offer was 530K and there is someone else considering an offer around that and said the owner wont accept less than that. Obviously there are other non financial considerations but is my estimate a fair price or maybe lower?

The first scent of victory, and people want to buy?

Why not wait for the battle to go a bit further, and for the bulls to get warn out, nervous and panicky?

 

That is when the real bargains will be had. What is your hurry?

[drbubb]

I also wonder what effects Peak Oil will have on Chicago real estate. I'm generally of the mind that energy costs will drive people from the suburbs (the worst of all worlds, unwalkable medium-density with large homes to heat and cool) back into the city. However, there are some people here who think that families will be driven towards rural areas where they can make use of more land.

It will, so long as the jobs are there.

If no jobs, they will want to live wherever they can do so cheaply, and get fed. We cannot be sure that will be the city. Some think it may be in farming areas or small towns

[Delboy]

The first scent of victory, and people want to buy?

Why not wait for the battle to go a bit further, and for the bulls to get warn out, nervous and panicky?

 

That is when the real bargains will be had. What is your hurry?

Property ticks many boxes and could be the forever home. Also if I can fix on mortgage now it will be better than fixing later if(and when) rates rise. I rent which is fine but if I can get in there with this one it would also help as the missus is having the first baby and needs to nest. It's not rushing as I was thinking more Spring 2013 however, if I can get what I want now at the right price then near term peace of mind is greater than long term gain and the unknowns of the future. Its a bit like NPV but non financial if that makes sense. If it works out with deposit and price, I can keep some PM's which I can use to pay off mortgage over time.

[Kurtz]

Property ticks many boxes and could be the forever home. Also if I can fix on mortgage now it will be better than fixing later if(and when) rates rise. I rent which is fine but if I can get in there with this one it would also help as the missus is having the first baby and needs to nest. It's not rushing as I was thinking more Spring 2013 however, if I can get what I want now at the right price then near term peace of mind is greater than long term gain and the unknowns of the future. Its a bit like NPV but non financial if that makes sense. If it works out with deposit and price, I can keep some PM's which I can use to pay off mortgage over time.

 

Does the UK government still pay peoples mortgages when they are out of work?

 

I seem to remember this a lot on HPC, the poor sods being rightfully mortified that they were not only paying landlords but their taxes were paying for other peoples mortgages.

 

If so, it appears buying a house via a mortgage is zero risk in the UK.

[drbubb]

... it would also help as the missus is having the first baby and needs to nest.

It's not rushing as I was thinking more Spring 2013 however, if I can get what I want now at the right price then near term peace of mind is greater than long term gain and the unknowns of the future. Its a bit like NPV but non financial if that makes sense. If it works out with deposit and price, I can keep some PM's which I can use to pay off mortgage over time.

I see. It certainly makes sense to me that you would want to buy at a time like this.

 

But please accept that you may find prices 10%, 15%-20% or even lower in 2013-14*.

 

If you can live with that, you are probably making the right decision.

 

*(they may be higher too. there's always a chance my bearish scenario will not happen. Look at my track record on the Property Diary and you can see I don't always get it right.)

[drbubb]

Does the UK government still pay peoples mortgages when they are out of work?

 

I seem to remember this a lot on HPC, the poor sods being rightfully mortified that they were not only paying landlords but their taxes were paying for other peoples mortgages.

 

If so, it appears buying a house via a mortgage is zero risk in the UK.

If the government is bust and enough people lose their jobs, I wonder how long this practice will last.