House prices set to fall 7% - and rise 3%

i agree to raviayer..

It's more than just speculation, it's a survey of various opinions with some background reasoning.  The mess wasn't made by just speculation anyway, it was made by bankers fuelling speculation.  Perhaps Jane's article could have been slightly improved by a bit more background on how the market has performed over the last couple of years in terms of volume, high end, low end or regional performance but as a buy to let property owner I found it an interesting read.

These forecasts provide a view in as much as none of them predict a boom, so no real change from the recent past and current conditions - well, terrific not even as useful a comment as time2go. I'm afraid that journalists need to work a bit harder in providing insight to an article rather than just straight forward reportage of what somebody else said - that's not good enough. So, my suggestion is that you go over the last 5 years or so of forecasts for each of these organisations (that all have an angle to promote) and then compare that forecast to the actual annual result (from Land Registry actual sales). That way you will gain a view as to the degree of credence that can be attached to the forecast now being generated. But, of course how each individual then decides to act will depend on their current conditions.

My main beef is that without a context anybody can (and usually does) say anything - and that's just noise, not insight.

One thing for sure. Prices don't even begin to reflect building costs. FTBs have no chance and they fuel the maket. Macroeconomics completely stuffed and huge stimuli to make things look normal.

When the fake economy engineered by this government eventually fails, engineered as there is a GE coming, house prices will be toast. It;'s just a question of when.

Prices were crashing at their fastest rates ever when normal market forces were allowed to exercise. What I did not foresee was 0.5% IR and 200 billion printed. These unsustainable stimuli have to eventually suside and market forces will reactivate.

As a small housebuilder I will be perfectly happy if house prices show no growth or just match regular inflation for ten years or more. All I want is a degree of predictability, so if I buy a site and take it through the tortuous agony of getting planning permission, I can have some confidence that I will still be able to get development finance and house prices won't collapse by the time I finish the new buildings in another year's time. My main fear after that is that I won't be able to sell my houses in future because they appear relatively expensive: the Government keeps piling ever more energy-efficiency requirements onto the cost of building a new house - requirements it does not impose on old houses - so new houses will look more and more expensive relative to old ones and customers will vote with their feet as they're not prepared to pay extra for "green" measures.

BeckyMarg - I'm sorry you're finding housebuying a struggle - it always is when you're starting out, and merely being a graduate doesn't guarantee you anything. I've a PhD from Cambridge and I bought my first house at the age of 30 by scraping together a deposit from every penny I had, taking out some cash on a credit card, and selling some of my possessions. I then renting out two of the rooms to lodgers for five years to help pay the mortgage. You need to think flexibly and be prepared to make sacrifices like still living in a houseshare even after you buy somewhere.

I'm still a landlord and I don't swan around in a BMW. I have a 1994 VW Passat estate. From my perspective tenants generally get a very good deal in financial terms. Their rent is nothing close to the real cost of house ownership, and for many years rents barely covered the mortgage interest. Even now with super-low interest rates landlords barely make 5-6% gross return, which is pathetic compared with the profit margins of most lines of business.

matchmade - I'm glad that you seem to treat your tenants reasonably well. I'm nearly 30 and the flats and houses I've rented are little better than squats: damp walls, poor ventilation, windows that don't close... and the landlords constantly try to blame this on us (the collapsing mouldy walls are due to us not wiping down the shower, and are nothing to do with the fact that the house flooded and was never properly repaired before we moved in!) I can't vote with my feet because all the landlords in my town are the same!

Being a graduate may not mean anything. But two DINKYs with full-time professional graduate salaries SHOULD be able to get onto the housing ladder. If we can't, what hope does anyone else have? I feel that our situation highlights a major problem with the economy that home-owners don't like to recognise.

I disagree that I should be flexible. Do you find it acceptable to live in a houseshare in your 30s? I would like to get married: in fact, my last employer had a real problem with the fact that I wasn't married. I would like to have children before my fertility disappears down the toilet. My mother has been pressuring me for several years now to buy a house with enough room to look after her "when the time comes."

How did you raise a child in your shared house? Or do you think it is appropriate for young women to be forced to delay having children until they risk complications and infertility?

Young people today quite literally have a choice between buying a house and living life. You can't have both. It is clear that there will be increasingly dreadful social repercussions because of this.

Just for clarity, by 90% I mean 90% loan-to-value of current property.

BeckyMarg - I'm sorry you feel all landlords in your town are the same, but it doesn't match my experience. In Reading, Oxford and London, where I operate, the choice of property and the quality has improved immeasurably compared to, say, the 1980s. I've also just moved to rent a property in Thame and although a fair proportion of the property was average - 1980s decor, cheap furniture, useless layouts, tiny and depressing flats built in the 1990s - nowhere was damp and every house had double-glazing and central heating. Poor ventilation is an endemic problem in British housing, whether you rent or own, and mould and "stuffiness" are usually the result of user-behaviour, as people don't open windows enough to circulate and exchange the warm, moist air generated by modern lifestyles.

On present mortgage figures, you could borrow £216K on a 5% interest (fixed for 5 years for security against interest rates rising) and the interest-only mortgage would be £900pcm. In most of the south-east that compares favourably with the cost of renting a flat for a couple. If you have two graduates in ther mid- to late-20s each earning, say, £30K a year, your net income should be about £1600 pcm each, or £3200 in total. £900 a month represents 28% of your takehome pay - a little high compared to the postwar average of 20-25% but not disastrous.

Of course I appreciate you may earn less than this, and £216K may not be enough to buy in your area or an acceptable salary multiple for lenders, and the figures change if you only have one person earning full-time if you have children. I'm just using a not unrealistic example.

As regards having lodgers in a family house with children, what, really, is the problem? Loads of people do it, especially in town with a college or university. My wife and I never had any problems. The lodgers were hardly ever there, or stayed in their rooms studying, only venturing down to cook their meals. There was no need to share the family rooms with them, and everyone largely stuck to their own spaces. It could even be a positive pleasure to have another adult around the house if you got on with them, and the largely tax-free rent was a real help with the mortgage. You just have to live in the right area, pick the right people for lodgers and accept a few minor inconveniences.