Reply to: House prices

[scooterscot]

I'm selling my BTL in Glasgow at the minute. HIPS is not scrapped here still had to spend £500 on that. Interest is nil despite being a desirable location in town.

[AtW]

I'm working for the Illuminati

You are anything but enlightened

[DimPrawn]

You must be working for moneyweek then - in all fairness they could not have picked a better expert

I'm working for the Illuminati

[AtW]

Except you'll notice from the time I posted it, it was before the moneyweek email was sent.

You must be working for moneyweek then - in all fairness they could not have picked a better expert

[DimPrawn]

Thanks for summarising todays MoneyWeek email. No need for me to read it now.

No wonder you never publicise your sources.

Except you'll notice from the time I posted it, it was before the moneyweek email was sent.

Sources.

[sasguru]

Transaction levels are still low though. With the BTL brigade about to get whacked I expect more properties to come on the market. More properties = less competition from buyers = lower prices. Even in London. Also consider that banks aren't lending unless you have a 10% deposit. Even relatively well paid young people cannot afford a starter home or have to stretch themselves to the limit to get a poxy flat. The housing market is a pyramid and if no-one can join the bottom then the middle can't move up so prices fall. As for foreign investors, well it may make a little difference in London but not enough to support quite possibly the biggest bubble this economy has ever seen. With stats out that wages are falling in our country there is no way that current house prices can be supported as far as I can see. We need massive wage inflation to sustain these prices and from what I can see this is not happening.

But this London micro-market I'm talking about is not fuelled or dependent on BTLs, mortgages etc.
Mostly its paid for by cash transactions or people with massive deposits.
We are constantly being solicited by estate agents who promise "cash buyers" looking on our road. Basically there is a limit to park-facing detached houses and there's always an influx of money from one part of the world or another as the UK is still seen, rightly or wrongly as a safe haven.
The latest influx is Greeks moving money out before they are stung.

[Moscow Mule]

A good house here is £500k+. Really nice are £750k. So, with 25% deposit one would need to pay upfront £125k and £187k in cash.

Don't forget your Stamp Duty - another 3-5% you need to find in upfront cash.

[Coalman]

Thanks for summarising todays MoneyWeek email. No need for me to read it now.

No wonder you never publicise your sources.

[AtW]

Zero supply.

Only because of negative rates (when inflation taken into account) - rates should have been at 7-10% right now, and this would have resulted in plenty of supply.

Sure good detached house in a good location will always cost more than carp terrace house in a carp location, that's normal and acceptable, what's not acceptable is that even carp house costs so much that one needs to be a millionaire to buy a proper sized house in Birmingham

A good house here is £500k+. Really nice are £750k. So, with 25% deposit one would need to pay upfront £125k and £187k in cash. Then you'd need to have salary of like £150k to get normal x3 mortgage: under these normal lending conditions such houses won't sell and their price will inevitably go down.

I am looking to move into a house of that level that I'll rent - £900-1000 per month, but say if I bought it for the ridiculous amount it is priced then interest only at 5% on mortgage would be 3 times more that number.

[DimPrawn]

In the "international executive" market in London, i.e 3-4 bed detached in good areas, with an easy City commute, house inflation is in the double figures and will continue to be so.
There is increasingly a dichotomy between top-level London property where demand is international and the rest of the British property market.
Simply put there are not enough good houses in London to satisfy international demand.

Boomed!

Actually I agree with you for once.

I read that although 1000's of flats have been built in London over the last few years, something like 10 detached houses have been built in Central London over the same period.

If you own a detached house in Central London, you ain't ever going to lose money on it. Zero supply.

[administrator]

Common sense has nothing to do with it.
What part of supply and demand does your puny Soviet brain not understand?

Transaction levels are still low though. With the BTL brigade about to get whacked I expect more properties to come on the market. More properties = less competition from buyers = lower prices. Even in London. Also consider that banks aren't lending unless you have a 10% deposit. Even relatively well paid young people cannot afford a starter home or have to stretch themselves to the limit to get a poxy flat. The housing market is a pyramid and if no-one can join the bottom then the middle can't move up so prices fall. As for foreign investors, well it may make a little difference in London but not enough to support quite possibly the biggest bubble this economy has ever seen. With stats out that wages are falling in our country there is no way that current house prices can be supported as far as I can see. We need massive wage inflation to sustain these prices and from what I can see this is not happening.

[sasguru]

common sense

Common sense has nothing to do with it.
What part of supply and demand does your puny Soviet brain not understand?

[Gonzo]

Well they can't bring interests rates much lower than the current 0.5% to keep house prices high.

I wouldn't have put it past the last government to deliberately inflate the debt problem away but I would hope the current one don't see that as an option.

[MarillionFan]

Dim is the new DCJ.

[AtW]

Could you buy a similar property for less?

Not this year...