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| The UK housing market: a bubble about to burst? |
House Prices
by Brian
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#1000205
of 3278
 08 Aug 2002
01:19 PM |
| Property prices will not collapse unless the ineterst rate rises too much. Other than interst rises only the market will adjust itself to supply and demand. |
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Boom & Bust
by David Murray
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#1000204
of 3278
08 Aug 2002
01:05 PM |
| To me the whole economy is out of balance right now. Consumer prices continue to fall as businesses are in fierce competition - all at the expense of business profitability. This in turn is crippling the stock market. Alternative investment opportunities point towards property. The low inflation created by the deeply discounted pricing strategies reduces the need for increases interest rates. Until such time that business leaders wake up and start drive up prices, the overheated housing market and falling stock markets will continue. |
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UK Housing Market.
by Jav Bose
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#1000203
of 3278
08 Aug 2002
12:59 PM |
What we really need is House prices to STABILISE, not boom and bust:
- more stringent lendng criteria set by Lenders, e.g minimum lending should be 85% of property value, they are too greedy for the business.
- Laws to prevent Gazumping or vendors raising prices at last minute.
- As a last resort Higher stamp duty. |
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No Burst - just a re-shift
by Mr Homeowner
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#1000202
of 3278
08 Aug 2002
12:23 PM |
Demand for housing will in my view remain. People do, after all, have to live somewhere. The injection of new homes is not equalling supply therefore demand will continue to have a tendency to outstrip supply.
If the media pursuade those looking to buy to wait bcos of an iminent bubble about to burst there will be a short term increase in the demand for rental property, which should ensure that existing owners with empty property aren't panicked into selling at rediculously low rates.
Yes prices may drop slightly but if you are looking to buy and live in your home long term, I wouldn't let the hype put you off. Finding a good property takes time (up to a year at times!) and now may be an opportunity to pick a nice property by making a reasonable offer before those owners start to ask premiums again when the demand comes back. |
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The UK hosuing market: a bubble about to burst?
by Steve
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#1000201
of 3278
08 Aug 2002
12:15 PM |
Many of the other respondents are right. The bubble will burst because the current boom is completely fuelled by those who have a vested interest in increased house purchase activity, banks, estate agents, IFAs etc.
These organisations always give a lame prediction that although there have been dramatic rises, growth will peter out to a smooth rate of say 7% p.a. I ask the question "When have the steady-state situations ever occurred?" It has always been and always will be boom and bust as people tend to make decisions based on emotion and fear when panic has set in, rather than make rational, sensible decisions.
Many people say that interest rates will only rise to 6% at most but even this will cause a crash as it will lead to a 50% increase in mortgage repayments (4% to 6%), which is exactly what happened in the late 80s (10% to 15%). In any case, if the boom has been founded on such a small decrease from 6% to 4%, then a crash can occur in exactly the same way.
I know people who, in the early 1990s were trying to sell houses and no one would come to visit from one year until the next and this followed a period very similar to the current one with extremely high purchasing activity and confidence. Look at Nationwide's Housing Survey in Jan 1999 (on their website) and you will see that the outlook for house prices was little better than bleak. How hype can change things!
Buyer beware! |
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Boom or Bust ?
by John Adams
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#1000200
of 3278
08 Aug 2002
11:59 AM |
Whilst the housing boom has strengthed during this year, I feel that it has got a little out of hand. First time buyers and people who wish to move on are trapped.
A single person on an average wage can forget it.
I don't see an almighty crash but a slow fall during the end of this year. Then as interest rates increase, repossessions coming in for all those who overstretched themselves not only buying on property but with loans, credit cards etc. |
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Stamp duty impact hypothesis
by Anotherthought
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#1000199
of 3278
08 Aug 2002
11:42 AM |
People able to afford homes in London and SE have got used both to moving for work, and to buying property big enough for now, too small for long term (in the hope of rising wages / knowledge they may have to move to a cheaper area eventually)
Both these factors increase the demand in the market. In the past there was an equal increase in supply as people sold for the same reason.
Now, those owning a home but having to move balk at the thought of the stamp duty. A percentage will rent the current house and buy another. Driven by market distoring stamp duty they will become landlords.
One more buyer, one less seller.
Other home owners may decide to extend rather than pay the stamp duty. One less buyer and one less seller.
But, the person would have bought and sold in different markets (either price range or geographical). If the decision to extend is restricted to particular markets then some markets will become more supply weak.
For example, if there are a set of buyers typically having to move out of unextendable flats(in search of extra space, moving for a job, trading up because of promotion and never having liked the area they live, etc) and they would, typically, have chosen to move to - extendable - houses then the price of extendable houses will rise. The flat owners will raise the price at which they are willing to supply and, because people still want the flats and interest rates are low, etc. they meet the new supply price.
Though potentially small the changes in price and expectations are well communicated through the agents and media and the impact becomes large.
By the way, it would be disastrous if, rather than correcting the market distortion by removing the tax further distortions were added by making it increase with duration of ownership. I think we are all beginning to realise the social (and hence tax) costs of lack of community cause by excessive population movement. |
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Bubble bursts
by stefan
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#1000198
of 3278
08 Aug 2002
11:24 AM |
The so called bubble will bust - it is between a rock and a hard place at the moment - first time buyers struggling at the low end - high priced properties acheiving less due to fewer bonuses by fat cats. A veritable pincer action is in motion.
And the govenrnment - what can they do? Increase IR and the market falls. Lower interest rates and the bubble maybe expands a little more before it bursts harder(that is assuming that people are daft enough to want a greater burden of debt). Maintain IR at the current level and wait for the next 'shock' to undermine consumer confidence - this maybe the only and best of a bad bet.
The whole episode is engineered by the government to take the bump out of the current global slowdown - who will pay? You and me for a long time. |
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UK Housing Market
by Ann Egan
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#1000197
of 3278
08 Aug 2002
11:03 AM |
| As a house owner and also working in the field of property transactions, I can only wonder at how normal families will be able to afford housing in the "hot-spot" areas of the country. In the central south, an average semi det. house in a normal suburb is now around £200,000. It doesn't matter how low mortgage rates are, you still have to qualify for the mortgage. No wonder so many people are flocking to the west country or further north. My question is how the support workers that every city needs will be able to afford even basic accommodation. At present, they can't. Councils have sold off most of their stock, builders don't want to start schemes that involve social housing provision, and not many people want to share a home with two other families. So I can foresee the major property-boom cities experiencing high prices and a total lack of public services. I wonder how sustainable the demand for housing will be then? It's already happening here. |
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E.B.A - Exporting Bubbles Agent
by Greekman
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#1000196
of 3278
08 Aug 2002
10:48 AM |
A particular house in a Greek coastal town which was on the LOCAL market for c. £30,000
The very same house was marketed to viewers of an English TV channel, through an AGENT for £105,000
Normally, no Greek house owner would seriously consider asking for 3.5 times the ongoing rate.
Normally, no English house buyer would consider offering a price 3.5 times the ongoing rate.
Abnormally, it takes an AGENT to convince both folks that the price should be 3.5 times the ongoing rate.
Any one wonders what the 3.5 multiple would be if the agent's takings were fixed rather than proportional?
Hint: learning very basic Greek or even Spanish, Croatian, Albanian and so on, can be a starting point to sound housing investments (near fantastic beaches), or to a lucrative agent career. Your choice.
null |
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It's definitely a bubble about to burst
by Mr. Sensible
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#1000195
of 3278
08 Aug 2002
10:24 AM |
| To the borrower it's simply about how much you can afford to repay. If you have already borrowed to your absolute limit at a base rate of 4%, just imagine how much it will hurt at 6%? Back in '88 new buyers were coming into the market with base rates at 10%. These were the same people who bailed out at 15%, which is the same percentage increase as 6 is to 4. So, if base lending rates increase by just 2 percentage points over the next year or two (or if unemployment rises, or if inflation takes off) then a re-run of the property crash of the early 90's would seem almost inevitable. |
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Look at consumer confidence
by Mike Burton
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#1000194
of 3278
08 Aug 2002
10:14 AM |
The future of house prices will, in my view, be driven 3 main factors. The first is consumer confidence - if consumers are worried that their job today is less secure, they may postpone their decision to buy and may even consider downsizing. Second, recent equity falls furthermore undermines confidence inasmuch that most feel less wealthy than they did 1 year ago and therefore feel as if they have less money to put into the preoperty market than before. Third, the buy-to-let market that was so strong a year ago is now running out of steam; rental incomes are lower, the amount of rental property on the market that is not let is increasing and so many will be looking to cash in on their investment before any potential fall. Demand is slowing, supply will increase therby causing a drop in prices.
True, interest rates are low, but you stil need to pay back 20% more on a property if you buy today than you did a year ago. With falling job security, it would take a brave person to expect house prices will continue to rise forever. |
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Does it matter if you are sensible?
by Stewart
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#1000193
of 3278
08 Aug 2002
09:54 AM |
| Provided you do not re-mortgage your house realise the cash increase and fritter the money away on luxuries, you can ride out rises and falls in the housing market. People who overstretch themselves will get hurt when the crunch comes. |
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Look long term
by Erik
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#1000192
of 3278
08 Aug 2002
09:30 AM |
We're buying our first property now in London and hence this debate has been raging in my head now for some months. I have asked almost everybody I meet for thoughts and the three most interesting insights have been :
1) Prices for property in the U.K have doubled on average every 7 years since the second world war (so if you look long term then a 20% drop is neither here nor there)
2) The interest rates are so low that despite the awesome rises in values it's the same monthly outgoings from a person's pay packet as 12 years ago
3) 250,000 people are moving to the U.K. every year. OK some are also moving out but there is a net migration fuelling demand.
The risk is that as interest rates rise people simply cannot afford the monthly outgoings and hence prices need to readjust. However this is offset by rising incomes and net migration.
Hence my view is we will buy now. prices will settle however growth will be sustained over the mid-long term at 3-4%. Fine by me. |
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Fools
by Dan
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#1000191
of 3278
08 Aug 2002
09:25 AM |
The following seems to be a much over used argument at the momment.
"Equities do not provide returns comparable with property so more demand"
So because equities are now cheap and property is overpriced, some people think that property is a better investment!
I do wonder if the people who think like this also drive there car by only looking in the rear view mirror? |
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