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| The UK housing market: a bubble about to burst? |
Rising interest rates..............
by Shareholder
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#1000280
of 3278
 19 Oct 2002
12:48 AM |
Scream is correct......
Rising interest rates will trigger a drop in house prices and repossessions as many have taken mortgages far beyond their means.
I remember the last time when interest rates shot up to 15%, the mortgage repayments were enormous and the market slumped.
The answer is buy a house to live in not as an investment!
From someone who has been letting a property for some years! A word of advice, those who recommend buying property to let it out have never done it . The problems with tenants can be horrendous, no rent, damage, and many are on housing benefit and claiming what they are not entitled to. In which case the landlord can be made to repay it!!!!!!!!!
If you are thinking of buying property to let it as an investment DO NOT DO IT!
There is also the problem of capital gains tax when you sell it. Also IHT if you leave it to your children. Business is exempt in many cases, property isn't!!
Mr Puresh....
Property is an excellent buy in the long term.....but speculators should be careful.
Again houses are for living in first and foremost, if they appreciate, so much the better.
Believe me Brown will be after a way to get his sticky fingers on the gains???? |
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Heads you lose, Tails you also lose.
by The Scream
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#1000279
of 3278
18 Oct 2002
10:24 PM |
Martin H:
Shareholder tends to know his bananas. You cannot blame the Conservatives when you don't know whether or not the Labour party would have done the same in the same circumstances.
The Conservatives do not penalise savers, rather they encouraged share ownership and gave us TESSAs to encourage saving. An average overall 2% lower in tax also encourages saving, wheras the higher taxes of Labour mean you're better off spending the stuff before the government seizes it in "redistribution".
SL:
No! Of course the current levels are not reasonable. If inflation stays low, the debt will not be eroded by inflation and eventually you will hit a weak point in your career and lose the house.
If inflation rises, then so will interest rates and not only will there be a FALL in prices, some will lose their houses because they can't afford the payments anymore. Heads they lose, tails they also lose.
Nigel X.:
You're right. The economy is stuffed! As soon as Europe goes under (any day now), the UK will be badly affected and may even go under before the US. |
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the new bubble
by siddiqui samm
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#1000278
of 3278
18 Oct 2002
08:31 PM |
there are all the symptoms of a classic bubble in the uk housing market. while prices have increased by more than 20 % during the last year the Bank is incapable of doing anything because of weakness in the manufacturing sector. there is not one possible scenario that incudes a possible escape route from the imminent implosion. then there is the "pump and dump" crowd fabricating justifications for the unsustainable prices - reminiscent of the rock and roll vocabulary in vogue preceeding the optical bubble.
what we need now is caution and a wait and see attitude.
email:
siddhot@hotmail.com |
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Housing
by Mr Puresh
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#1000277
of 3278
18 Oct 2002
05:42 PM |
To sl guest. You miss the point. Sure, the housing cost can go down - but the intention is that I do not profit, but live in the place. But can you honestly see the price having to go down by almost 50 % [ie 120,000 less 12,000 = £108,000]before negative equity is even a consideration ?
I think not - even the last housing crash did not see those type of figures generally. I believe there is room for even more of an increase, before it has to drop by even a larger % before negative equity is realised. By that time, more of the mortgage will have paid off and the impact will be less. |
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Only so much to borrow
by Nigel X.
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#1000276
of 3278
18 Oct 2002
05:12 PM |
The government until recently was repaying debt. Now its finances are swinging heavily into the red.
It will have to increase taxes heavily or borrow huge amounts.
Either way there will less money in the economy available for people to spend on houses.
Also buy to let returns have been falling steadily, and if unemployment does rise then people with sky-high buy to let mortgages are going to be left without tenants. That is a recipe for forced sales.
Add to that the fact that London and the South East have been losing large numbers of highly-paid professional jobs, such as in the City. The economy is now being driven by state spending and personal borrowing, not by investment in the wealth-generating parts of the economy.
As for huge house prices being good: if you deny young people the right to have family houses you won't have any young families. No babies means no future. The old are 'crowding out' the young as they live longer, using up the housing stock while preventing new houses from being built.
Also if it were not for the state of the housing market interest rates would be much lower, and businesses much healthier as a result. As things are we are very susceptible to a global slump. With persoanl debt so high we are badly exposed should sentiment change. |
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Mr Puresh - What goes up..
by sl
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#1000275
of 3278
18 Oct 2002
05:02 PM |
To take issue: Sure, Long-term the housing market increases. However, if you don't believe that your house can lose the value it has gained over the last 4 years, speak to someone who lost money in the last housing crash. You'll get it back and then some if you wait long enough.
The main problem arises if you can't afford to buy a house that will be suitable for the next 10 years or so. If this is the case, you can't rely on the asset that you purchase appreciating over the period of ownership - negative equity can and will occur. This is the situation encountered by most first time buyers and it is this that will lead to difficulties in the future. |
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..and the Bubble?
by SL
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#1000274
of 3278
18 Oct 2002
04:48 PM |
| Any chance that this can get back to a discussion about whether the current housing boom will lead to a bust or not? The way people spend their money is not the issue - they are free to choose. The question is whether the current house price levels are realistic. People are spending greater multiples of their income than they can afford on houses, due to current low interest rates creating an illusion of long-term affordability. To make matters worse, many people are remortgaging in order to take advantage of "cheap money" and buy luxury items, counting on the increase in value of their home to cover the excesses. At the same time, manufacturing is poor, businesses are suffering and the unemployment figures are about to go through the roof. Looks like an unstable bubble situation to me... |
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Housing
by Mr Puresh
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#1000273
of 3278
18 Oct 2002
04:41 PM |
To response 271. Yes of course the cheating government will try with their claws to grab whatever they can from the lambs who have sacrificed their "pleasures" for housing. Largely, this is an excuse. For a start, there are still many ways in which for a few hundred pounds one can protedct their interests vis a viz property eg trust arrangements etc in order to protect their assets. In the meantime once you have substituted your pleasures for housing, paid for it then there is no reason not to downsize, enjoy the capital like everyone else. The kids are still entitled to a share and if given several years before death, still attract no inheritance tax. The key is to think across the board - get your affairs sorted out properly, and the advantages of home ownership are still apparent beyond anything else.
By the way, those who say they would never have a mortgage for fear of a crash - in my experience have been saying it for years. In the meantime property has increased by just 20% in the last year. Those that should have got a mortgage and did'nt will effectively lose out. My own example - think about it - a house £120,000 4 years ago now worth £200,000 ? Those same people would have to see their properties drop by 40% to bring themselves back into the same position they were in 4 years ago when they talked about no mortgage !!
That will never happen as we all know as the sheer immensity of the drop is too great. Add the fact that the £120,000 originally taken out is now £12,000 less, the overall risk to my asset is very low indeed.
Its the best thing I ever did.
Anyone care to dispute that ? |
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sacrifices to get into market
by david
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#1000272
of 3278
18 Oct 2002
03:55 PM |
i thought i couldnt get into the london market 12 months ago then i looked at how much money i was spending on my car/entertainment and the discussed cigarettes and alchohol.
i sold my car and gave up smoking and realised how much I was spending on these! (i reckon perhaps £4-5,000 pa. I then took advantage of low rates to buy a property in east london. there were reports of the market crashing but i took the risk and house prices in my borough have risen 30% according to hometrack and are predicted to rise 15% next year.
i am very glad i did and i still manage to enjoy myself at the weekend. it is good to know im not spending £350 per month to a landlord which i will never see again.
David |
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Shareholder - blame the previous lot
by Martin H
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#1000271
of 3278
18 Oct 2002
03:27 PM |
Shareholder,
Blame the Conservative governments for penalising the old who saved. They introduced the policy of apportioning first claim on houses to the local authority for nursing care. If you went private there was little option but to sell and use the capital to pay for care.
We used to have a neighbour when we lived down south whose mother had lived in the Hampton Court area. The mother was in a home for over 10 years. Result - a small pittance after the council had taken its cut for unpaid nursing care. And she died before we moved north and before Labour even had a sniff of power.
I do not object to people making sacrifices, but the figures quoted earlier (15k per year) are not realistic for the majority of people. |
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Buble about to burst
by JC Uirbe
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#1000270
of 3278
18 Oct 2002
03:24 PM |
| The boom will gently peter out given that all the fundamentals backing it are strong and because frankly there is nowhere elso to put your money |
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Non-smoking guest.........Yes but?
by Shareholder
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#1000269
of 3278
18 Oct 2002
02:52 PM |
I do not smoke or drink either and own my own house.
So did my parents and then had to pay for nursing care in old age ,while the smokers and drinkers got it for nothing!!!
IF you have savings in excess of a sum you are also excluded from all benefits. While the smokers and drinkers get the lot if they have no savings.
Believe me , it will not be long before the thieving cheating Labour government find a way to get at the funds in owner occupiers houses to fund their vote buying spree amongst the drinkers,smokers and layabouts, single teenage mums and subsidised created jobs. It already happens in old age, more than £16000 in savings and property and they take it to pay care home fees!
Have you noticed how those who do not make the sacrifices and buy are always jealous of those that do.
The governemnet are interested in buying votes from anyone who will vote for them and they are doing it with handouts of our money!!! |
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Housing
by Non Smoking Guest
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#1000268
of 3278
18 Oct 2002
02:22 PM |
Re Mr Patrick vs Mr Martin
I agree with Mr Patrick. As a non smoker I see all too often people complaining about the cost of housing. I earn little [am a public sector worker] but made the necessary sacrifices a few years ago to be able to get into the market. Many of my co-workers complained then about the cost of housing and these were the very people earning no more than me - but chose the cigs, the booze, the betting shops routine etc and often portrayed it as an excuse that they were trapped.May I add that the comment about the presumption by Mr Martin that all were smokers etc is true, but I think the example shown by Mr Patrick indicated that there are quite a few that are. In fact, these figures could very easily be much greater if you see the way some people carry on !!
I do agree that workers cannot afford the sums talked about here £1275 per month for a mortgage [on a £200,000 mortgage]But remember that there are still many places in the UK with housing well under that figure so that even with a £100,000 mortgage would cost half that much ie approx £625 per month or approx £7500 per annum. The cost of fags, booze etc still remains at nearly £6,000 per year. The real cost of housing is then £1500 per year - far less then the booze brigade have to spend on rented accomodation as the difference [£125 per month].
I am not saying ALL are smokers and drinkers etc, but you see the Northern clubs packed with these people and they often complain.
If I made the sacrifices then others can do it. Remember that you DO have a choice and I only earn as much as my co-workers do. Its all a question of priorities at the end of the day. The reason it won't work for some people is that they do not consider the importance of it in relation to other activities.
I wanted a mortgage and now benefit from the knowledge that in 10 years time I will own outright with NO mortgage to pay for the rest of my life - and a tidy sum to pass down to my children for a deposit on their own places.
Remember, the supply of housing is far less than what we would like - and its up to you to find a way round it - CHOICE !!!!!! |
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Mr Patrick's arithmetic
by Martin H
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#1000267
of 3278
18 Oct 2002
12:33 PM |
Nothing wrong with the maths in post #265.
But to say:
>>Furthermore, my example shows that £6,048 is spent by a couple on costs which could otherwise be spent on housing nearly 40 % !!<<
There is a presumption that everyone smokes that quantity of cigarettes per day etc. What happens if you don't? Then the 'savings' disappear into thin air.
If you live in a high cost area, then there could be some disadvantageous effects. How many public sector workers can afford to pay 15k out of their net pay? How many associated with manufacturing and distribution?
The service companies that can and do pay staff sufficient so that they do not miss 15k are dependent upon the rest of the economy. Many foreign banks and companies have the option to relocate to other financial areas without such high costs.
What cutbacks are the staff going to accept in order to keep their jobs and homes? When they do, you will see the first signs of an end to the bubble. |
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Housing
by Mr Craig
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#1000266
of 3278
18 Oct 2002
11:50 AM |
| Reply to posting 264 - regrettably, it is the rented sector that tend to have "neighbours from hell" eg take rented council estate houses, flats, etc. If comrade X's idea of being part of the community is to live in large areas of "cheap" digs and enjoying the noise, the drugs etc then he is totally deluding himself. To live decently you buy in good areas to avoid all that. |
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