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| The UK housing market: a bubble about to burst? |
Mr Patrick.............I beg to differ
by Shareholder
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#1000295
of 3278
 21 Oct 2002
10:33 AM |
From 1989 house prices went down some 20%, many were in negative equity and many houses were repossessed!
Buying certainly leads to more responsibility....better cared for properties...but also a lot of sacrifice of other pleasures when people take on mortgages that are beyond their means. The worst is when unemployment strikes, mortgages still have to be paid!!
I know I have been there several times and had many sleepless nights! If you rent the benefits pay the rent, see some of my previous posts.
Another side of buying is the time spent on DIY and maintenance. Many people spend many hours of liesure time doing various jobs, some enjoy it , some do not.
It is interesting that many rich people rent property in various prestige locations around the world.
So there are fors and againsts, sometimes renting can be the right choice.
There are also problems to passing on property or releasing the value for use in retirment.
I am considering selling my house, living off the income from the capital and renting an apartment abroad!
What do posters think of that idea? Able to release the money, no maintenance worries, swimming pool complex, no gerdening, the government unable to steal my house to pay for nursing home care in old age!
My mother and mother in law both required nursing home care for a short period at the end of their lives, they had paid NI and tax , together with their husbands all their lives.
The first question the social services asked with a glint in their eyes was "Do they own their own houses"!!!!!!
That was more money for the public services, when many without their own homes get free care of the same quality.
Some give away their homes to their children to try and dodge payment, that can have other problems.
Yep buying your own home is a good idea, except we live in a country where there is a lot of jealousy and no appreciation of the sacrifices others have made in previous years.
We also have a money grabbing Labour governemnt desperate for cash to fund their vote buying spree! If someone gives you money for little efort or no effort, then you will keep voting for them.
Two layabouts votes are worth more than one respectable home owners vote??? |
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Housing
by Mr Patrick
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#1000294
of 3278
21 Oct 2002
12:38 AM |
Re - Rent vs Buy Paul. He is absolutely right. Played properly, and with the necessary sacrifices, you could quite easily finish a mortgage in just 10 years. After that, no more rent ever !! Plus the freedom to decorate, do what you want with the house etc [try doing that as a tenent !!]
Afterwards ? Does it then matter if the bubble bursts ? You will be living rent free anyway whereas all those still renting will, no doubt, still have to find the money to have a roof over their heads. And they will not be getting younger !!
Buying is ALWAYS better, gives individuals a far better quality of life, etc and the ability to hand down the asset to their children / grandchildren etc who in turn can place a nice deposit on their own place [and hence much lower mortgage - not everybody has a gut busting mortgage amount - I know many youngsters who through a combination of inherited deposits and lower mortgages often assisted by parents who themselves have paid their mortgages, own places of their own only after several years] This effect hence maintains the general upsurge in house prices prices. Its been happening for decades and prices have increased and never decreased. This trend will continue - but with the possibilty of the odd period of stagnation for sure.
House bubble to burst ? Tell me how when you have this club of the inner circle of those who can afford to do it this way and those who are trying to get into the club the first time round ? The lack of supply sees to that. |
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no tax rises
by luke neave
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#1000293
of 3278
20 Oct 2002
04:11 PM |
Nigelx and future expat.
Public sector debt was £319.6 billion at the end of September. Public sector net debt, expressed, as a percentage of gross domestic product (GDP), was 30.4 per cent. There has been a steady fall in the level of debt as a share of GDP since 1997 as public sector finances improved. Debt peaked at 44.1 per cent of GDP in 1997, its highest level since the mid 1980s. So when people say spending increases can only be funded by increased taxation that is wrong. For those who say it is investment in the wrong part of the economy, think about it, people in the public sector spend their salaries and that helps the economy. |
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Timing.........
by Shareholder
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#1000292
of 3278
20 Oct 2002
11:38 AM |
As with all investments, shares or whatever.....
If you consider property an investment? Then timing is everything when you enter the market and when you leave!
Of course , as with shares , the longer you are in the market the less the relevance of timing. Now we have to ask what is the rate of increase and what is the rate of decrease. Now that depends on the magnitude of the events causing the correction to prices. Sudden events move prices faster than trends.
So what sudden events could be set to happen??????
I think we all know the answers to that question! |
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Tax relief on interest, MIRAS.........
by Shareholder
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#1000291
of 3278
20 Oct 2002
11:29 AM |
All that has now finished. It was to encourage home ownership...
It was taken away because it was costing to much and to keep house prices down...
That was also the reason given for hiking interest rates.....
Until Osama Bin Laden changed the course of events.
When I was buying my first house, all the older people told me how much they had paid for theirs, a few hundred in many cases!
Now I see my kids having huge mortgages and asking how much we paid for our house, now worth £ hundreds of thousands, when I tell them how much they do not believe me.
So what we are lokking at is inflation,currency and property.
Perhaps all pound notes should have their year of issue on them. Because as we all know 2002 notes are not worth as much as 1960's or 70's notes.
Now the biggest effect on property prices will come from the state of Browns purse. He has no money and is spending at unprecedented rates 14% up on last year I understand.
So now we see why he is desperate for cash. Why he will raise taxes and put up the social costs of employment and drive thousands of jobs abroad. Creating unemployment and more expense, strikes are increasing ,pay demands are increasing and discontent spreading.
So another few terrorist attacks or a war with Iraq and who knows what will happen.
I can see widespread negative equity and misery as millions attempt to keep up the payments on high mortgages.
That is why he tried to steal the shareholders value in RAILTRACK to pay for his mismanagement of the public services and public purse.
The day of reckoning is coming nearer!!!!
House prices will level off, then depending on global events (terrorism now being a major influence) stay static for a number of years or start to drop!! The drop coul be substantial.
An excellent little book ,although now out of date is "The Downwave" Robert Beckman. It details the house price decline othe 90's and it was written in 1983?????? |
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rent vs buy
by Paul
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#1000290
of 3278
20 Oct 2002
01:35 AM |
It is always better to own than to rent a home unless you are certain not to be living there after several years. Fixed mortgages are also better. If taken out for long time periods the required monthly payment is lower than rent often; If there is no penalty for prepayment, then larger amounts can be paid, so the mortgage is paid off in say 30% of the time or 10 years vs 30 years.
Rents can always be raised if values increase, then you have no equity for your money, all the equity goes to the land lord of your rental. And in many cases purchase costs less monthly than does the rent you pay, a large cost for the convenience of renting. |
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Housing Bubble
by Warren
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#1000289
of 3278
19 Oct 2002
11:06 PM |
With low inflation and lower income growth and loss of higly paid city jobs how could house prices at the present levels be sustained.
Yes the interest rates are low but that is not good enough justification for relentless price rise. 'Cause interest rates are not going to be lower through out the life of the mortgage.
The houses in the UK today offer very poor value for the money.
Present level of house prices can not be good for the society. It denies the aspiring young and hard working population a decent place to live. There is no real freedom without there being an economic freedom and sky-high house prices are responsible for denial of the economic freedom. To join the housing ladder people are having to takeup unsustainable level of personal debt which will ensure a continued economic slavery for thousands who will have to pursue jobs and careers that can repay their huge mortgages.
Affordable decent housing is key to our true freedom to live and work.
If housing bubble has not burst yet then it must. One way to ensure that will be consumers refusing to pay the unrealistic prices and locking themselves in years of huge mortgage debt. |
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Comrade X....W Germany etc.
by Shareholder
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#1000288
of 3278
19 Oct 2002
08:10 PM |
Many large towns in Germany are controlled by the dominant company, BMW,Mercedes,Thyssen etc.
They own a lot of the property, so you see how they cope with difficult tenants, no job!!!
Since they rent and do not accumulate value , you are correct , they do not have problems with capital gains and IHT.
Benefits and pensions are also related to job income and contributions. Not like here where we get the same benefits and pensions without regard to the contributions paid and income levels when paying those contributions!
I believe we are living at present in a fool's paradise.
Paying ourselves as a nation far more than we are creating.
The values of the companies and funds are going down, we are not creating more worth!
Do not get me wrong about tenants. We did have some very good ones, they were excellent and it suited them to be in rented accomadation for that period of time. We became good friends and helped each other in many ways. The tenants who were a problem eventualy sorted themselves out, with my help, he got a job and later I gave them a reference for a mortgage. I don't know where they are now but I hope they are doing OK.
Believe me being a landlord is not easy, although a lot depends on the area where the property is.
Now I do believe unemployment must increase, many firms are in deep trouble and share prices and dividends are diving. That can not continue, the public sector can only mop up a certain amount and Brown is in deep trouble. Taxes will have to increases to pay for his extravagance in the public sector. The Government are desperate to produce visable evidence to the electorate of some improvment, they are throwing money(our money) at poorly managed public services.
The railways are the Great Pyramid of the decade, they are showering them with cash, so as not to be seen to have failed. A lot of it is off the government accounts and hidden!! PFI (PPI) is just to keep the governments books looking good.
Now how will all that affect house prices?
Well when the money aint there the prices will slow stop and drop. Negative equity will crucify many. If interest rates rise, there will be untold misery for many.
Mr Osama Bin Laden could never ever have realised the impact of his attack on the WTC!!!!! |
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Conspiracy Theory!
by Comrade X
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#1000287
of 3278
19 Oct 2002
05:17 PM |
Comrade Shareholder,
Yes I did read your last post. Thank you for sharing your experiences with us, as you know I always enjoy reading them.
I had read the posts before yours and was in the process of writing mine, presumably while you were writing #282. If you look at the posting times we must have been busy simultaneously – Great minds….?
I did read #282 immediately after posting #283 and it occurs to me that you are a true comrade going through life attempting to help your fellow man whenever you are able. If you are able to help yourself at the same time without too much inconvenience, good luck to you. It sounds like you have unfortunately been thwarted in your endeavours by slum-scum who hate seeing people with nice things and derive great pleasure from fecking things up for others. You have my sympathy. Rachmann was right!
The difficulties I had with landlords were maintenance issues. They were resolved because we were able to reach a mutual agreement. On one occasion a drain had been blocked by fallen aggregate from pebble-dashing and the waste pipe was incorrectly fitted. The washing machine backed up and flooded the kitchen, there was some minor damage to fittings. The landlord initially pointed the finger at me but once I’d explained the problem he was OK about it. Basic stuff rally, but I did tell him that I wasn’t happy about staying in the place as it was. We reached an agreement. I cleared the drain and did some internal remedial work for him. He knocked quite a bit off a month’s rent for me – I had to give him a Duplicate Book receipt for the cash. Also, he didn’t take anything off my deposit.
A true comrade.
The part about Germans renting is interesting but from whom do they rent?
Presumably the money they don’t spend on buying and maintaining their properties is spent on consumables like BMWs and other products of their own country’s labour. They probably don’t have any difficulties with IHT and the like.
How do German landlords resolve the problem of difficult tenants?
I don’t believe we are on the verge of a crash that would imply total loss of value in the property market. This is clearly not going to happen. I am concerned about how HMG will obtain the funds for all their great schemes. Some kind of windfall tax from inflated property prices does look favourite. It’s interesting how large numbers of companies have suddenly found themselves unprofitable after years of growth. This presumably reduces or even eradicates their tax burden as well as justifying no dividends to shareholders so where is the money coming from?
Have we identified a conspiracy?
Presumably, if a homeowner could show a ‘loss’ on the property then it would be exempt from tax? Perhaps negative equity is not such a bad thing after all!
Comrade X |
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get real
by a future expat
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#1000286
of 3278
19 Oct 2002
04:09 PM |
There are seven converging factors in the house price issue
On the positive side (assuming you want your property to increase in value):
1.)There are too few homes due to immigration and the trend towards living alone
2.)pensions are no longer a viable option (so demand for investment property is increasing)
On the negative side:
3.) Taxes are rising so people will be reluctant to fork out more for property
4.) They will need to rise even further to fund government spending
5.) Personal debt is going through the roof.
6.)Anyone with the ability and the sense -i.e higher earners, are planning to leave this overregulated and wasteful environment
7.) The ability to live abroad and work in the UK becomes ever easier - or to just work abroad come to that.
Weigh up the odds!!! |
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Comrade X.....did you read my last posts...
by Shareholder
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#1000285
of 3278
19 Oct 2002
11:04 AM |
That was the view from a landlords perspective.
Your post confirms the problems of rented accomodation from a tennants perspective.
I lost tennants because someone bought the house next to the one I let out and started renting to all sorts, some very undesirables. My tennants just left! Just like that, not honouring the rent agreement!
Then the other landlord tried to buy our property, but his tennants did a bunk owing him a load of rent and his house was repossessed and sold to a very nice couple who have worked hard and made very significant improvments.
I have now sold my property, i have decided being a landlord is just nothing but trouble!!!! |
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NO DSS.......
by Shareholder
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#1000284
of 3278
19 Oct 2002
10:52 AM |
Many adverts for rented property clearly state....
NO DSS.
If you read my previous post you will realise why.
However, it is interesting that many can be working when they rent a property and then lose their jobs. In the Midlands many are in and out of work all the time, working in low paid agency jobs and job creation schemes. Now I agree it is better to be in work than out but many jobs are subsidised and the employers receive payments for taking workers on.
Now those people do not have to worry about a few months out of work since everything is paid for them. If you have a huge mortgage then life is more difficult!!!! |
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Rub out the blemishes
by Comrade X
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#1000283
of 3278
19 Oct 2002
10:48 AM |
Comrade Mr Craig,
Mmm, I can see that I didn’t explain that too well. I sympathise with anyone who has to put up with neighbours from hell – I’ve had several, always after I’d bought my place!
I’ve had limited experience with the rental sector but I’ve been lucky in that most of the people I’ve rented near have either been neighbourly or have kept themselves to themselves. I know I’ve been lucky. On the odd occasions where I’ve rented and the accommodation has displayed problems, I’ve approached the landlord and always made it clear that if the problem isn’t solved, he’s lost a tenant. Remember, every time a tenant vacates, the property is turned from asset into liability, albeit just for a short time.
What I was attempting to explain was that house buyers do not always want to be aware of the disadvantages of home ownership, one of which is, conflicts with neighbours. I know a few people who bought thirties style semis in good areas without taking a good look at next door only to find that the adjoining properties were in fact flats, and yes you guessed it, the tenants were on benefit! So far they’ve been lucky – no problems but there’s time yet. The Buy To Let market has had an influence on this in that rental ‘blemishes’ can appear almost at random in nice areas and then ‘whoops, there goes the neighbourhood’!
The reason that there are areas of slum-scum is because previous occupiers of the space haven’t cared enough to be bothered to maintain the place in good order. I’m not sure why that happens. It’s possibly because there is no one strong enough in the vicinity to say, ‘sort it out, or I’ll sort you!’ I know we’re all supposed to be tolerant of other’s life-styles, but some times the imposition really is too much and I take your point about drug abuse and loud music – I posted some views on the ‘Criminal Justice Reform’ forum so I am reluctant to repeat myself.
If we look at say, Moss Side in Manchester, there are some magnificent buildings around the Victoria Park area and at one time they would have been owned by merchants and businessmen who carried out their business in that magnificent city. For reasons best known to them, perhaps business failure, the properties were sold and thus began the downward spiral that took those properties into the rental sector. Houses that were once occupied by a family and their servants are now divided into six or more flats.
If properties aren’t maintained in good order they deteriorate and lose value, tenants generally do not give a feck about the place because they don’t intend to stay long term. Some tenants, certain immigrants for example, do not know how to maintain houses because it’s not a skill that they have learnt. So, just when you thought it had got as bad as it could – it gets worse!
You can walk away from any property at any time, the difference between buying and renting is that to do it with the former is significantly more expensive than with the latter. It was interesting that the Tories encouraged home ownership, especially council houses, while at the same time attempted to introduce greater mobility of the labour force. I personally thought the two ideologies were at odds with each other but it did get Her a lot of votes!
As for the matter of a crash, viewed from today’s position, the question that one might ask is, ‘early nineties crash’, what crash?
It is easy to try and draw parallels between the housing market and the stock market. Many people will have you believe that the stock market over a twenty-five year period is a winner. That may have been the case but the past is no guide to future performance! However, the difference between the two is that companies can and do disappear and share certificates do not offer much protection from the elements.
A house, barring calamity, does offer tangible shelter even when it is worth less than you paid for it. Similarly, a family car will always depreciate in value but that doesn’t stop you driving it.
Comrade X |
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Rent v Mortgage............
by Shareholder
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#1000282
of 3278
19 Oct 2002
10:39 AM |
x tells us rent is dead money.
So is interest,agents fees on buying and selling,solicitors fees,VAT on the fees,stamp duty.
So renting can be a an alternstive in the right circumstances.
Many years ago I used to go to W Germany and was surprised how many rented their homes,even very well paid people.
Their standard of living was far higher than mine when I was struggling to pay a huge mortgage with high interest rates. They were buying cars,eating out and going on foreign holidays ( as we all know with loads of spending money).
If you rent; the benefits will pay your rent etc. if you are unemployed or unable to work. If you own your own house and are paying a mortgage, then hard luck! In old age they take the value of your property , that you have struggeled to buy on a mortgage through good and bad times, to pay for care in nursing homes.
I have seen it from both sides, I own my own house but have also rented a property to tennants. They have no buying and selling costs, no maintenance work, no worries. When they are out of work they simply claim their rent,council tax,water rates etc. As I said before it was obvious to me that many people applying to rent our property were not entiteled to the benefits that were claiming. Some were working,living with parteners who were working or up to other scams. If the tennant has been claiming illegaly then the the housing benefit people can ask the "landlord" to repay the rent that has been paid. If the landlord refuses, they can make a claim on the landlords property, the tennants in many cases have no assets, so they can get nothing back from them!!! I know of at least two cases where the landlord had to repay the rent, in one case £6/7,000. I know where someone let a furnished property and the tennant run off with some of the furniture and paying no rent.
The landlord has to honour rent agreements, the tennants just walk away, legally the landlord could take action but it is expensive and the tennants very often have no money anyway.
In the midlands there are whole streets full of tennants on benefits, teenage mums, and layabouts. All getting the rent paid,council tax paid, water rates,electric,gas. If my property was empty for more than 6 mths I have to pay half council tax, if I let it to someone on benefit they pay none. They do nothing all day and sit in the house with the heating full on in short sleeved shirts watching the tele, and me keeping the garden tidy and doing repairs.
When I ask about late payments of rent from the housing benefit, they tell me it is my problem, that I will have to go and sort it out!!!!
I asked one tennant for some disinfectant to put in the entry, where he had droped rubbish from the bin. He said he couldn't spare any and showed me a bottle that they were allowed from the chemist, FREE , because they had a baby. He told me he hadn't got time to go and sort his housing benefit, that was 6 months behind the due date!!!!!!
I had to go and sort it out to get the rent I was due.
So the moral of the story is that many of us are keeping the other layabouts and wasters.
We have also had , I may add , some very responsible and careful tennants who wanted to rent somewhere for a short period of time, also some very responsible tennants who were in receipt of benefits.
It is ironic that the person responsible for low interest rates in the states and the UK was Osama Bin Laden. Before 9/11 the interest rates in the states were going up and the UK government were keeping rates high in the UK to stop the house prices rising and inflation in check.
Now looking at the number of strikes on the railways and elsewhere, I think wages will increase at a faster rate, so more money chasing goods.
We all know what that means. |
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Housing
by X Reply Guest
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#1000281
of 3278
19 Oct 2002
01:23 AM |
Reply to the last posting - interest rates - explain how interst rates will rise excessively in the long term !! First - the Govt wants us in Europe with the consequentials of a low {AND COMPETIITIVE !!!!!!!] interest rate. Bang goes that arguement !! Secondly, the Cheshire Building Society has a 5.89 % fixed for 25 years - quite a statement and a huge faith of confidence in the low rates to be sustainaned in the coming future.
Come on people, lets not make excuses by the [jealous !?!?] housing gloom brigade who would want to see those predictions go belly up.
Property growth WILL slow down but overall those buying will own an asset worth far more than those not. Rent is DEAD MONEY [it goes nowhere - mortgages are a means to an end that will finish] Rent ? There for life. |
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