A modern conundrum - house prices

[kes]

I am quite interested in where House prices are going, as perhaps are many. I am interested in other peoples views and experiences so have set down my own.
I've been looking for a house now for maybe 3 years. Sold our house maybe 7% under asking price 12 months ago. Since then have been registered on all the sites and looked in many areas.
Whilst its only a feeling, it does seem that house prices are held up artificially at the moment with even land prices in certain areas falling. Many people who are working cannot afford the large amounts to buy, even with Mortgage interest rates at an all time low.
There is seemingly a vested interest in maintaining the house market at a higher than realistic level, as politically, negative equity would bring extreme political negativity.
Bigger (land or house or both ) properties also seem to be moving slightly downward as older people (myself included) trade down. Traditional retirement places (Devon) show a very poor number of houses moving into the market. Some owners of properties which are hung-up, refuse to sell at more realistic prices. The Mail (ok I know) predicts a 25% rise over the next twelve months and if that phrophecy comes true for GB overall, I will eat a VW (to save the planet). Hotspots seem to generate their own heat although some are cooling (SE).
I am almost convinced we are staring a bubble in the face and that prices will fall more sharply. I dont think many openly share this view - what, as they say, is your take on house prices ? I am very interested to see what everyone else thinks.

 

[finnbear270]

Kes , I was at Chester racecourse, sitting in on the auction of mum in laws place,I was taken aback at how furious the bidding was, on all of the domestic properties on offer, mum's place went 10K over best estimate.

 

[kes]

Do you think that prices are being driven in places such as Chester by 'Buy to let' potential - my own house was sold 8 miles from Chester.

 

[finnbear270]

Without doubt, A lot of properties are sucked up straight away by the Uni, mum's place went to a buy to let developer.

 

[Essex stalker]

We live on an island with a set amount of space. There was a report the other day saying population of the country will rise by 10 million over the next 25 years, there is already a shortage of houses in relation to the population so whilst there may be some short term rise and falls surely logic dictates that in a free market, supply and demand will mean prices will rise in the long term

 

[Markfox]

Prices have been rising steadily for the last 12 months in the Midlands and I've also noticed on a lot of sites a few house prices have been put up bit by bit Aswell , I don't see them coming down any time soon

 

[baguio]

The only way is up IMO. Whilst the population continues to rise so quickly the supply and demand stats remain true. I would be looking to buy sooner rather than later if I was the OP. Demand does reduce at this time of year so keep an eye out for for forced sales. baguio

 

[kes]

It seems that in centres of population or Uni areas there is a strong demand but this is perhaps more from 'institutions' like Uni's or even buy to let. If there were some restriction on buy to let mortgages, I feel things would calm quickly.
I agree that supply is a problem but not in riural areas quite so much - less pressure. I cant get over the fact though that we are running up against very high loan/salary ratios - precisiely the same problem which triggered the financial crisis and the large falls a few years ago in the property market.
The 10 million population rise was the Daily Mail again ? Some doubts there but I agree, whats rare is valuable, and they arent making more land. However, most housing now seems to be a fortune when considered against average annual income.
I appreciate that large falls aren't really desirable for anyone since the economy runs to a large extent on House price rises. I still cant escape the fact that it seems like the previous and slight present (selective) rises are unsustainable.

 

[eldon]

For the OP, and others not on the property market, I don't see how you can "win" by not joining asap.
So lets say the house prices drop in six months there then is still the looming chance that interest rates will rise. Your now cheaper house costs more per month although people probably don't look at the overall figure and so just see the instant discount on price...............
Space is at a premium and the island isn't getting bigger so as I see it there is only one answer.

 

[Geordiehillbilly]

Personally I can see us coming into line with other European countries in that renting is the more common option. Renting does make a lot of sense if you can get yourself away from the fact you've had "ownership" drummed into you. If I could do it again, I'd rent. Slightest problem, pick up the phone and the landlord fixes it. Bored with where you live? Put your notice in and move. I don't want to get into the discussion on the morals or lack of, with some landlords but if that was regulated better, renting would be fine. In answer to the original question I think we'll see steady growth over the next two to three years with a dip after that as the market regulates itself again. Upward trend due to the shift in rental in my opinion.

 

[bewsher500]

Personally I can see us coming into line with other European countries in that renting is the more common option. Renting does make a lot of sense if you can get yourself away from the fact you've had "ownership" drummed into you.

^ this

more desirable the area there will always be demand and prices will always be high
I bought for the first time having spent 4 years looking.
We closed at the top of the market in 08 just as the "market collapsed".....

I had my house valued throughout the next 4 years and it didn't budge according to the lying estate agents. it is now worth more...so they say!

 

[lister]

probably find most of our politicians have large property portfolios gained by cheating on their expenses

 

[Chasey]

In 1984 I baught a flat in SE london for £30,000

By 1985 it was valued at 100,000

In 1995 it had crashed back to £50,000

In 2007 it had risen to 165,000

In 2009 it had crashed back to £120,000

In 2015 its worth arround £240,000

Prices go up prices go down

They said they would never go down? They did

Then they said there would never be another property boom like the 80s?

There is now

People are now saying prices can only go up??????

Seriously when will they ever lern

 

[JabaliHunter]

Limited supply, slow growth and faster growing demand mean that the medium term trend is probably only going in one direction... Up.
Short-term volatility is another matter entirely.


As an aside, it has been said (probably by Farage) that the current rate of immigration means that a new house is required every seven minutes. I can't see that need being met any time soon either...

 

[McKenzie]

^ this

more desirable the area there will always be demand and prices will always be high
I bought for the first time having spent 4 years looking.
We closed at the top of the market in 08 just as the "market collapsed".....

I had my house valued throughout the next 4 years and it didn't budge according to the lying estate agents. it is now worth more...so they say!

You & me both. If we'd rented for the last 7 years instead of stretching ourselves to buy a bigger house at what we discovered was the top of the market we'd be about £150,000 better off than we are now. The SNP effect is most unhelpful too.

 

[Heym SR20]

Several things are messing up the market:

1) Interest rates are still low (for those who can get a mortgage) so those that can buy are able to pay over the odds.
2) And they pay over the odds in the belief that even if the pay over the odds, somebody else will pay even more very soon
3) There are lots of overseas buyers coming into the market changing rapidly devalueing currencies (Roubles, Rand, Syrian whatever and the Chinese currency) into the £sterling to get it away from their home territory. UK property is an appreciating asset in a stable jurisdiction, and even if it goes down its still better value than keeping your cash in Roubles etc.
4) And the desire for property to be an asset and for it to be there to provide a pension, and property for investment is frequently in the hands of those who haven't a clue - (e.g. a friend who is with Citizens Advice frequently has buy to let landlords coming to her claiming that rent doesn't cover mortgages and that they are not getting benefits to cover the shortfall - enough said)

The residential rental market is messed up as well, in that there is no or very little security of tenure - fixed short term tenancies seem to be the norm and if the landlord wants to realise the property then it is sold with vacant possession.

On the continent in the residential market when you rent a property you have a degree of certainty as the tenant - its your home. The landlord can realise the value of the asset, but you remain the tenant and the tenancy agreement remains in force - very much the car as we have in the UK with commercial tenancies where a lot of the value is the length of the lease and the convenient thereof.

In many areas property is unaffordable, and unaffordable even to well paid professionals - by unaffordable both a rental as well as a buying perspective. That can only go on for so long, and sooner or later people will wake up and take the real price. In Scotland farms are selling for about half their advertised price, but not a lot of transactions happening.

 

[bewsher500]

In 1984 I baught a flat in SE london for £30,000

By 1985 it was valued at 100,000

In 1995 it had crashed back to £50,000

In 2007 it had risen to 165,000

In 2009 it had crashed back to £120,000

In 2015 its worth arround £240,000

Prices go up prices go down

They said they would never go down? They did

Then they said there would never be another property boom like the 80s?

There is now

People are now saying prices can only go up??????

Seriously when will they ever lern

There is a house in London worth less than a Quarter of a million?!?!?!

 

[bewsher500]

You & me both. If we'd rented for the last 7 years instead of stretching ourselves to buy a bigger house at what we discovered was the top of the market we'd be about £150,000 better off than we are now. The SNP effect is most unhelpful too.

actually my mortgage is less than my rent was!!

we bought at a 5% base rate in 08, god knows how but the mortgage product was a 0.18% above base rate tracker fixed for two years!!
Product was on the market for about a day..I suspect a typo!
IFA may have been a complete dick but I can't fault his ability to get a deal!

When the base rate swiftly dropped to 0.5% shortly after we bought..(I only remember panicking for about 6 months as my mortgage premium was 3x what the rent was!) our effective rate dropped to 0.68% for the next two years!!

at one point my electricity bill was more than the mortgage!

BUT getting a decent rate mortgage now is a joke

my brother in law was offered a 9% mortgage not that long ago!

 

[jonathankent]

The definition of House values is what a willing seller is prepared or happy to accept from a willing purchaser after suitable marketing. That's paraphrased from the RICS (Royal Institution of Chartered Surveyors) accepted definition.

As has been stated they are a function of the supply and demand market. Few properties with lots of potential buyers means high prices.

with regards to the suggestion that the housing market will become more like European markets with greater proportions renting, the problem here is the number of private sector landlords. With more and more of us investing in property as buy to lets reliant on rent, rental prices will stay high. All the time rents are high house prices will be high as one is a function of the other. Put simply if your looking for a 5% return a purchaser will pay up to 20 times the annual rental income for a property.

House prices and rental income are inseparable linked.

until we start building A lot (and I really mean A LOT!) more houses nothing is going to change. Unless the government builds a huge number of council housing which would add competition to the rental market, but again the government would have to maximise income and would not want to undermine the voting community who have invested, so again this is unlikely to happen.

In the medium to long term house prices will always go up.

 

[willyroe]

Where do i start..... Supply and demand? Resticted development, poor variety of new build stock?

i don't really mind increased prices or inflation (free market/capitalism), think of it this way, in 20 years time £100k of debt will look cheap!

I am also of the view that a rental market is healthy, foolish to think of your house as your best investment. Proving you have the discipline to put savings away (and invested) renting is fine.

I also have a theory following the recession. I am mid 30's and i see a load of 60-70 year olds who have made £100k's of equity over the last 20 years on rural(ish) family homes with little or no debt. All these homes are now worth say £500k plus and the younger generation aint there to buy them and many people are going to get a bit of a shock when they want to cash in their chips.

..... Then again ride the wave.... If prices keep going its leveraged profit on an appreciating asset - easy way to make £50k in 12 months.... New rifles!