House prices to fall by 5% by 2007

Discussion in 'Finance, Property, Law' started by Vegetius, Jul 25, 2005.

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    I'm going to be controversial and say about bloody time too.

    I'm in a nice position, personally, in that I've always sold at the top of the market over the last nine or ten years and have a nice lump of equity in my drum, thus could easily absorb a 5% decrease. Obviously, there are others who will have the opposite situation. At least it won't be like the late 80's :: crosses fingers ::

    Saying that, it's getting silly for youngsters (and I daresay more than a few people leaving HM forces and buying for the first time) to get their toe on the ladder and that this will, in the long run, suit everyone.

    What do ARRSER's think. Will the equity margin on your place be cut to a thread by this, or are you thinking of buying and see a silver lining in this one?

  2. I think property prices are obscene in this country. Certainly compared to other European countries, I cannot see how the current prices are possibly justifiable, especially shoddily built, miniature-sized "new developments" with such flowery names as "Honey Farm" or "Country Meadow".

    Personally, I say it is about time that the prices will come down and 2007 is perfect timing from an utterly selfish point of view.
  3. If I had a quid for every time someone predicted house prices would fall in the UK since 1990...I'd be able to buy one! They ARE obscene!
    The only way I can see it happening is another stock market crash like in the 80's (that was the reason wasn't it?)
    I know that here in "le Sud" house prices have gone up 40% in 2 years, thanks to those holiday home buyers who leave whole villages empty for most of the year... and everyone says it's got to stop soon 'cos the prices are crazy but I can't see any signs & we've just bought a little house to let at a price which still makes me flinch 'cos we know we can't lose.
    Anyway unless you make a huge mistake in your mortgage calculations buying's got to be better than renting hasn't it? Well as long as you checked out the property well beforehand & don't discover any 'orrible expensive repairs when you've moved in!(we discovered the roof leaked the first time it rained & have just got the money together to have it redone)
    I'd say buy if you like the place, but don't overstretch yourselves then you won't be crying if prices do fall a bit but I'm a beginner, unlike Vegetius, & don't know much.
    Some Frenchman said "buy land, they don't make it anymore" - sound advice I reckon.
  4. Imho, the only way house prices fall is when those that have them cannot afford to keep them (interest rates), or there are far more than is needed, and even then it's not certain. There's been a slight fall because of the current interest rates and some decent deals going, but a £260k (February '05) house going for £240k (June '05) is still a huge amount.

    If they keep the interest rate as it is, eventually the market will rise again. If they hike it up another couple of 1/4 percents, the prices will go down.

    That's my tuppenorth.
  5. Blame the estate agents they pushthe prices up to increase commission and teh home owner allows their greed to overwhelm their common sense, the market needs firsttime buyers to move, witout any the market will stagnate and many up the chain will findthemselves between a rock and hard place, they have brought a house but haven't sold their old one or have sold theirs but not completed on the next one with the new owners wanting to move in asap.
    they basically have shot themselves in the foot.
  6. The housing market (so my broker tells me) works roughly on seven year cycles, which is sort of validated by this news.

    My advice re. property purchase is quite simple:

    1. Although property might be your primary investment vehicle, make sure it's not your only investment vehicle. Ex-HM Forces with pensions are an excellent example of avoiding this dilemma.

    2. From an investment POV, it's ALWAYS better to buy the worst house on the best street that the best house on the worst street.

    3. Don't ever be scared by a grotty house. Women, especially, look at grubby carpet and a dated kitchen and ignore the fact that you might have bags of space, future development potential (etc). Somebody will be charging you about 200% mark-up on a very basic it yourself (I've been both perpetrator and victim on this one).

    4. Look to re-mortgage every twelve months. I'm just gone with Nationwide and to be fair, they've kept me for twice that so they're doing something right.

    5. You will have to compromise on something.

    6. Get your mortgage squared away and ready to rock and roll before you view to avoid disappointment.

    7. Always trade up in a falling market.

    Although my man-norks are nowhere near as big as Sarah Beeney's, I've managed to make a heap of equity buying and selling around London and thereabouts by following these rules.


    MODERATOR'S COMMENT: Please remember that ARRSE takes no responsibility for financial suggestions given by members. If you act on Veg's advice and it doesn't work out for you then see him, not us!
  7. I'd be quite content with a 5% drop (frankly I think 20% would be fairer for those poor bu99ers trying to get on the ladder). It's simple supply and demand economics. We're living longer, more of us are staying single and house builders can't keep up. Like you, V, I've done very well out of house price inflation. I built my own gaff (by my own fair hand) and I've worked out I'll be mortgage-free, by the time my 22 year point comes up. I might just retire at 42 and tick-over on my modest pension!
  8. cpunk

    cpunk LE Moderator

    Top advice from the Vegmeister. I bought what was a fairly grotty house in one of the nicest parts of London just after the property market nosedived in 93-94. It had been on the market for 18 months and had attracted no offers closer than £80K to the asking price. A significant part of the issue was that it was owned by an Indian millionaire who used it as overspill accomodation for his extended family when they visiting London, so it looked ghastly inside. On the plus side, it was big-ish (4 bedrooms) and had planning permission to put another storey on top. We offered £60k below the asking price and got it. Since then, we built the extra storey and added a couple of other bits as well, and we've ended up with a spiffy 7 bedroom house which is now valued at at least five times what we paid. Result! :D
  9. Nah, best advice: just get the hell out of here and buy something (or inherit :twisted: ) in a country where you get value for money.

    Annoyed? Moi? No... :D
  10. This topic always gets me worked up.

    Prices round mine have gotten so silly that it's starting to affect the rental market as well. My Lease runs out in novemember And I've got no chance of a new house, I can afofrd about 1/3rd of a house round here. Even the cheapest shite hole right next to a pikey camp is out of my price range, by about £25,000

    I can't afford a house in my home town, I can't afford to rent one and I can't drive. What Am I to do?

    The council basicly is saying you've got no chance, we've got a long list of Homeless Ilegal junkies on the Dole to put up first. So I can only hope I'll get lucky and find something. either that or move back with my parents while my other half goes back to hers and flog our furniture.
  11. Money is just another commodity to use for ones gain. I spent nearly the whole of my 27 years service on rum, fanny and cigarettes [my singing was awful but I could smoke 40 Capstan full strength a day with the best of them!] Having said that, we are all responsible for our individual needs and apart from water and food, a shelter [house] is the next on the list. Am continuously looking for ever cheaper places to live and buy property and am looking at a nice detached 4 bed property with swimming pool in the Buenos Aries Northern suburbs for around £75k. cost of living in cheap and if it gets too much then I'll move on. You only get one life......get on and live it.
  12. From the RICS (who apparently understand the property market)

    The number of would-be homebuyers in Britain rose this month for the first time in six months, showing the largest increase since January 2004 according to the Royal Institution of Chartered Surveyors’ (RICS) monthly housing market survey released today (Tuesday, 19 July).

    The turnaround in new buyer enquiries, after four months of falls, suggests that confidence has been boosted by increasing speculation that interest rates will fall. However, the rise in activity is from a low base, with overall market conditions still subdued.

    House prices continue to decline in June, though at a slightly slower pace, with 42% of chartered surveyors reporting falls, down from last month’s high of 46%. Completed sales levels remain unchanged but are up by almost 5% from February’s low. However, they remain 25% lower than this time last year, reflecting the sharp fall in activity at the end of 2004.

    This month also sees a rise in property on the market, though at the slowest pace of increase since January. Selling instructions are still rising, ensuring buyers maintain their strong bargaining position. This has led surveyors to predict further price falls in the coming months, though their overall outlook is at its most optimistic in seven months.

    Prices are falling across the country, with the exception of Scotland which is still seeing very slight price rises. The rate of price falls has abated in half of all regions, most notably in Northern England. Price falls steepened in much of Southern England, including London and the South East.
    According to RICS national housing market spokesperson, Ian Perry: ‘A revival in buyer interest has been recorded across the country in June, but has come against a background of still quite subdued market conditions. The clear signs of a broad base economic slowdown will mean that housing demand will remain low for the rest of the year. RICS believes a modest interest rate cut is now warranted to prevent any further deterioration of the economy.’

    Anyone remember interest rates at 13+% in the early nineties.....not nice.

  13. I remember in early 90 when i was looking to purchase a house, i was quoted for a 30K mortgage, (that was all i could get in them days), 300 pound per month, and i think that was the start of the house price crash. Luckily now for the first time buyers the intrest rates are not the same coupled with the high house price, now that would be painful.

  14. I for one would love to see house prices drop by a considerable percentage. Like many other in HM Forces, I have been on some of Tony's holidays and have got a bit of a nest egg. Big hike in interest rate and watch those greedy people, who kept buying because the housing market couldn't fail, start to squirm. Bring back negative equity and sensible priced houses.
  15. Am moving this to the Finance Board guys but please carry on. Do bear in mind that there may be lots of suggestions/advice flying around about property and money from ARRSE members but we take no responsibility for individual comments. If you act on a member's recommendation and it doesn't work out for you then take it up with them, not us! If it does work out, don't forget to buy them a drink!

    I thank you.