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| The UK housing market: a bubble about to burst? |
The UK housing market: a bubble about to burst?
by Geoff Gudgion
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#1000070
of 3278
 14 Jun 2002
03:48 PM |
Like the .com boom and the late 1980's house price explosion, current house prices are defying the laws of gravity. The bubble seems to be inflated more by bullish hysteria than reality - & Sir Edward's warning is well made. The correction is however unlikely to be as severe as the early 1990's since interest rates are likely to stay low while manufacturing business is in such difficulties. But the correction is imminent.
GNG |
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loud popping sound
by newt
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#1000069
of 3278
14 Jun 2002
03:28 PM |
I recall once having to trawl through boxes of old news reports covering the property market, in the late eighties, early nineties period. The first half proclaimed risk free eternal fortune, and the second half attempted to convince us that they had seen the downturn coming, and that we should have listened to what they hadn't said.
Today's headlines look suspiciously like the beginning of the end: not because of the economic fundamentals (whatever they might be this week), but because we are obedient, well-trained shoppers and the tannoy has just reported that buying houses is now so last year.
I just hope this will be the end of all those awful house-market TV shows full of dreary nu-yuppies buying ugly rag and bone period features for their prized investments with mastercard monopoly money.
Alvin Rules. |
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Housing
by Neil Cotter
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#1000068
of 3278
14 Jun 2002
03:22 PM |
| Property prices are far more inflated in London/South than the North - I think a collapse will be restricted to South unless Northern prices keep risisng. As a % take home pay mortgage payments are not that great. You can have very high house prices and an awful economy - just look at Japan - it really is a function of interest rates rather than unemployment/economy. If interest rates double to 8% house prices will collapse in the South - that is a racing certainty. |
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Has Anyone Mentioned Salaries?
by C.Carter Stevens & Carter
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#1000067
of 3278
14 Jun 2002
03:09 PM |
| I own an Estate Agency in the South East. This is one of the most unsettling times in our industry for 20 years. Firstly, we have skipped the usual 7 year economic cycle with continuous house price increases over 10 years and no downturn to give economic breathing space and rationalisation. Most people reading this will be of an age where they have some experience of the last crash in the early nineties. The first time buyers of today, who are the catalyst to the whole market, were about 10 years old at that time, so how can they have learnt from the past? Greed is not a thing of the 1980's, it is manifesting itself in full glory today (just ask many of my buyers who are being held to ransome week by week). For a first time buyer wishing to purchase a two bedroom home in our area, they will need a salary of at least 30k to service a sensible mortgage. My 21 year old negotiator hopes to earn this amount in about 8-10 years! So to solve this problem, in their infinite wisdom banks & building societies suggest 50 year mortgages to complement salary multiples of up to five times earnings! With uncertain pensions and mortgage payments lasting into his seventies, I don't fancy his children's chances of inheritance! Half of the nation are living off their equity not to mention credit cards. Have salaries left the equation completely? Are we all earning three times as much as in 1991, to fall in line with house price increases? If you are, then i'm in the wrong job! |
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Stocks a good buy?
by Brett
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#1000065
of 3278
14 Jun 2002
02:49 PM |
Very few people made any money by being sheep. Don't follow the herd, lead it. Sell up and buy shares.
[This message was edited by Monitor_DB on 14 Jun 2002 at 03:41 PM.] |
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investing in the bubble
by Paul
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#1000064
of 3278
14 Jun 2002
02:46 PM |
Don't. Isn't now a good time to buy shares? (4628). Don't follow the herd.
[This message was edited by Monitor_DB on 14 Jun 2002 at 03:42 PM.] |
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Affordability and margin of error.
by Chaz
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#1000063
of 3278
14 Jun 2002
02:34 PM |
The long term reckoning is
3 times the main income + 2 time the second income
as long as both are under 40 in which case
2.5 times the main income +1.5 times the second
If your borrowings are more that that, and especially if you have other debts ...of a plastic kind for example... then you are overectended and have no margin of error unless you can rent out rooms to help the mortgage along.
The banks don't care. They have been sucessfully chasing those who bailed outta the last bust in the early 90's for the losses the bank incurred as a result of repossession....to this very day people are in court over their debts from that era.
It is most important that one keeps the bank from repossessing because they firesale the properties at low prices and chase you for the difference betwen the sale price and the outstanding mortgage forever and ever.
C |
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the bubble
by Paul
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#1000062
of 3278
14 Jun 2002
02:24 PM |
The bubble has a lot to do with confidence, much like the tech bubble. We are over 2 years on from the height of that mistake so I guess it will take a similar amount of time to feel the full effect of this bubble. Doesn't the housing market normally peak two years after the stock market?? then follow the stocks?
I think we will suffer a 10 % decline, but the real problem will be rates. Rates drop - house prices up and visa versa, i've seen the graphs.
How do you increase rates without hurting the economy? And is it me, but why do we still have really low unemployment with all these jobs being lost? eg 17000 post office. Most companies have had to restructure ie, cut jobs, so why do they not show in the stats? This may well be a determining factor. Too many job losses or too many low paid jobs, more fuel for the fire.
You all know that BTL will be in trouble, just look at how many properties are advertised, especially Milton keynes where I live. And I have never seen so many new estate agents/ mortgage brokerages! Does this seem like the late 80s/early 90s all over again (but only in some ways).
One more thing before I get off my soap box.
Average wage of FTB est 20k ( hey I know it's high). 3.5* 20k = 70K. where does the other 20 to 30K for the remainder of the house come from? Mum+Dad release equity. Wow we are storing up trouble for ourselves. |
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UK Housing market
by Nagin Chauhan
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#1000061
of 3278
14 Jun 2002
02:24 PM |
It is not a question of if the housing market will collapse but when.It could keep on rising for another couple of years but that does not change the scenario of a major collapse-it will more severe.
And finally the finger will be pointed at the Bank of England ,the MPC not having taken appropriate action at the right time and under estimating the importance of the housing market in the UK economy viz a viz the skilled labour market ,in the South East |
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housing bubble
by jonathan
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#1000060
of 3278
14 Jun 2002
02:23 PM |
| I think we over estimate the public's intelligence. If we have extra money we will spend it, and in this instance the banks have convinced us that we have extra money and given us the money to prove it, but in reality we are borrowing that money. The bankers are acting for their own interests and so are the home owners, but both can't win. And I know who I would put my money on !! |
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Housing Boom
by peter gladwin
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#1000059
of 3278
14 Jun 2002
01:47 PM |
I think it's about time for the housing market to adjust downwards. The Bank of England have allowed the bubble to grow creating a false sense of security for owners and potentially high
inflationary pressures.
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This will result in negative equity for those who have bought over the last two years
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I hope base rate is raised to at least 6% to cut out the greed in the market. |
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Boom or bust/
by Wise wizard
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#1000058
of 3278
14 Jun 2002
01:39 PM |
Like most others I am riding this rise in property prices with a caution smile on my face. I think that given the current situation ie low rates, demand for property, lowest unemployment for a long time, more people choosing to live alone that the prices will continue to rise albeit at a lower rate in @ 3 months when interest rates are sure to be +.5% higher than today. The market will level for a while whilst Johnny consumer takes an intake of breath, then continue to rise steadily @ .5 - .9 % pm after that. Feel free to slate me - but you may find sense in my comment.....
Wizard |
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Reality
by Simon
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#1000057
of 3278
14 Jun 2002
01:23 PM |
The fact is that if you are young, a couple especially on a joint income, and prepared to buy a house/flat that you are not looking to sell in the near you simply have to get on the ladder. The alternative is waiting 3 years or so for the bubble to burst and then get going again and how many 10,000's of pounds of rent could that be.
A friend of mine bought earlier this year after saying he would buy for the last 3 years - finally ! during all that time he has continually been reading about an over inflated market..
... you can't wait for ever
Be sensible, don't over stretch yourselves. |
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Yes and no
by Duncster
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#1000056
of 3278
14 Jun 2002
01:20 PM |
Ms. Home-Owner argues; average earnings rising 3-4%, Ms Still-Renting says average earnings only £24,000 pa. so look at the earnings multiples.
Home-Owner argues; divorce, buy to let, increasing life expectancy, and one person households driving up total requirement.Still-Renting has it that total births topped out in 1964 at over 1m and drift down to 750k so longer term demand will shrink.
Home-Owner says brownfield building regs restrict supply. Still-Renting quotes latest figures showing increased housing starts.
Home-Owner believes low interest rates here to stay worldwide and this is a one off correction in values. Still-Renting counters with; but for liquidity increase post Sept 11 base rates would already have started to go back to a more sustainable level.
Home-Owner says;Fewer people unemployed than for a generation and Still-Renting counters;its really 1.5million and people like me are having to take lower paid jobs in the public sector to be in work. Plus the total will increase, promise.
Home-Owner points at the figures. Still-Renting cries its worse than that; the only accurate figures we have are from Land Registry but they publish only quarterly, 5 or 6 weeks after the end of the quarter. Given the duration of a house purchase the deal may have been struck 6 months prior to it being reported.
Who's right? Dunno, it depends where you are. Was it Cambridge Econometrics who recently said London and SE overvalued by up to 30%, rest of the country 10% ( might be a bit more by now)? Meanwhile most of Scotland goes steadily and sensibly forward at annual 5% growth.
Sell your London house and buy Aberdeenshire. |
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UK Housing market
by nick-jenkins@msn.com
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#1000055
of 3278
14 Jun 2002
01:05 PM |
Yes I would invest in the uk housing market, even today.
There may be a temporay slow down ovfer the next year, at worst there will be a neutral / marginaly negaitive market over the next 2 years. However longer term the demographics, macro economic certainties, and constant undersupply of new housing stock means that longer term money invested in housing is a good bet and almost a certainty. |
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