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Q&A » House prices
http://uk.finance.yahoo.com/news/uk-house-prices-to-slump-as-credit-crunch-returns-tele-12b4c6207473.html?x=0
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272Your estate agent is probably right. As is Moody's. Banks and building societies are going to have to pay back their government support and this is going to keep the mortgage market depressed. But then the mortgage market already is depresed - the best deals all require high deposits and mortgage approvals are way down. So yes, it is highly likely that the market will take at least two years to return to its 2007 peak - we're still at least 10% below that peak. However, the market is also unlikely to fall significantly, unless unemployment or interest rates surges. This is because, with mortgage availability low, fewer people will voluntarily sell, hence transaction levels will also remain low. So, in the absence of any major shocks, the housing market is likely to continue as it has done for the whole of 2009 - slow and steady rise in line with inflation, causing it to recover to the 2007 level within two or three years.
But why is it depressing? If you own the property and are living in it, or have rented it for the long term, then you shouldn't care what the value is doing. Over the long term, house prices will always go up in absolute as the value of money is eroded by inflation. Also, in the UK the shortage of houses generally causes them to go up in real terms. So just sit and wait, and your property will be worth more in the long term. If you have to move but can't afford to, consider renting your property out and renting another one. If you bought a property in the hope of making a quick buck, then you were naive and will need to wait to recover your losses and make a profit in the long term. Or are you in a different situation and need more specific advice?
Posted on 16 February 2010 |
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804The only people who suffer when prices are depressed are those who are downsizing. That usually means pensioners.
Anyone else tends to be moving up and that costs less in a depression, so they are gainers.
The other group to suffer are those who have to move, because of job moves but have negative equity or can't raise the higher deposits that are now required. A number of providers have made special arrangements for them.
Your house may be your biggest single asset, but it is also your home and that is what you should be thinking about it. What does it matter if the price falls for a couple of years when you don't need to sell. There is a shortage of housing, especially in the South East, so prices will pick up again.
Sit it out and wait if you can.
Mike
Posted on 16 February 2010 | Love 0 loves
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0thanks swarbs i bought a flat in 2007 99k its not worth 85, me can my girlfriend have bought a house in late 2009,We want to sell the flat because the rent doesnt cover mortgauge and it has become a pain hence why i want market to recover as much as possiable 4 damage limitation
Posted on 16 February 2010 | Love 0 loves
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804Don't forget that part of the mortgage is actually capital repayment. If the rent covers the interest it might be worth hanging on.
Have you got 'consent to let'?
Don't forget that you can claim the interest against the rent for tax purposes.
Mike
Posted on 16 February 2010 | Love 0 loves
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410Who knows what will happen later this year. Apart from the elction in this country there is the whole Europe/Greece mess and a build-up of forces around Iran. Plenty of things could derail the current housing market recovery in addition to the ones in the yahoo article.
You and g/friend have benefited from the recession by buying late last year. At the moment with two properties you are taking a huge bet on property prices. Don't risk your financial future. Crossing your fingers and hoping the market recovers is NOT a sensible
course of action.
It may feel as though the loss isn't real until you
sell, so by postponing the sale it may never happen - that is true, but
you are losing money every month, that is very real and you should focus on it. How much will this cost you if the market takes 2 or 3 years to recover? That is real money that ou are shelling out each month.
And what if interest rates rise? Is the flat on a fixed rate at the moment? When will that end and how will you manage if interest rates are higher?
manzanilla
Posted on 17 February 2010 | Love 1 love
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272Was it a new build flat? If so, you are probably looking at 2013 at the earliest for it to come back up to £99k, and possibly longer. If you'd bought an 'average' house in August 1989, it would have been October 1997 before it was worth what you paid for it again. However, by October 2002 it would be worth double what you paid for it, so it all depends how long term you are willing to look.
If you want to sell asap, then your only real option is to take the £14k hit, and accept that you have likely benefitted by at least the same amount, as the house you bought will have also been much lower that it would have been in 2009. The only way to get your money back is to become a long term property investor. I'm an investor, and agree that it can be a hassle, but it is worth it in the long term for the amount of money you can make. Also, as you have lived in the flat before renting it out, you can make up to £40k on the flat and not have to pay capital gains tax, and any gains in the last 3 years of ownership are also CGT free.
Posted on 17 February 2010 | Love 1 love
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0Ok thanks guys no its not a new build its a one up ,one down affair, its classed as a masionette rather than a flat.The other thing it has going for it is its freehold and the lease on the flat below is down to 74 years,which makes me want to keep hold of it.on the minus side me and my girlfriend are trying to start a family so we were hoping we have made enough on house to apply for additional lending and use that to pay of negative equilty its just seems such a waste!!
Posted on 17 February 2010 | Love 0 loves
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804
28MikeGG1 - you're forgetting that housebuilders suffer when prices are depressed - you probably won't care about the big boys but there are thousands of small builders too who are faced by an increasing gap between the cost of building new houses and the depressed price of second-hand homes. These builders employ people and use many local services, so the whole construction-related economy is flat on its back at the moment.
Posted on 28 April 2010 | Love 0 loves
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3roscopeco2000: "i bought a flat in 2007 99k its not worth 85"
Hiya, if the flat's not worth £85K, are you indicating that it's worth less than £85K?
roscopeco2000: "me can my
girlfriend have bought a house in late 2009"
Are you asking if your girlfriend can buy a house? I'm unsure of the question here.
Thanks.
Posted on 03 May 2010 | Love 0 loves
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0well thanks for picking up on the fine details plc69, i have trouble with spelling, not=now and can= and.
Posted on 03 May 2010 | Love 0 loves
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58The mortgage market will remain depressed for a long, long time for two simple reasons.
First, the type of mortgages that the banks were prepared to give to almost anyone in 2007 are no longer available. The UK's, swept under the carpet sub-prime lending reached it peak at that time with 47% of mortgages being of the "no income" check variety. The banks know that they cannot and will not return to this type of lending as ultimately it means they go bankrupt.
Second, the age of austerity will commence on Friday, May 7th whoever gets elected.
Neither reason means that house prices will fall, as we do not have a free market in house prices in the UK. Those with the power will do everything they can do to keep prices artificially high so as to give home owners the continued impression that they have wealth in their homes. The number of sales however, will remain depressed for a long time as once genuine income levels are taken into account, the difference between asking prices and what banks are prepared to lend is simply too high. This is especially true for FTB's or anyone under 40, who for the most part will find that the debts of the bankers partying will fall on their shoulders. How can they be expected to be able to afford a house as well?
Our leaders are trying to preserve prices at levels achieved by a bubble that had fraud as a key driving force prior to 2007, yet people just don't seem to be able to grasp that we are now in very different times. Prices may stay high, but the market is false. Demand is there, but few buyers at these levels. Normal market under these conditions would mean prices fall to the level at which people can afford to buy. The fixed UK housing market results in desperate VI's trying to hold things up and con us that everything is ok, everything will soon be back to normal. Well, their version of normal.
Good luck to anyone trying to sell at 2007 asking prices under these new conditions.
Posted on 03 May 2010 | Love 0 loves
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66 66 0Yes but price rise is not bad when you are the seller! i hear the market has risen by 10% and surely the election will help this.Ive got to be a bit selfish here the goverment(labour) as i see it caused me to be about 10k out of pocket and i dont care how its done but the closer i get to the asking price for it is only a good thing for me!thats why iam voting lib dem!just for something new!!
Posted on 03 May 2010 | Love 0 loves
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3I seriously hope that you're not a higher-rate taxpayer, roscopeco2000. They may well increase the basic-rate tax level to £10,000 - but to pay for that they're removing 40% tax-relief on pensions.
Which means a person earning £50,000 would gain approximately £700 on income tax whilst losing over £1000 on pension tax relief.
Posted on 04 May 2010 | Love 0 loves
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3Roscopeco2000, I forgot to mention - it's worth you looking at the HousePriceCrash website to determine when property will be back to its 2007 level.
They have all sorts of charts and analysis on the site - along with a forum whereby people discuss this very issue.
Posted on 04 May 2010 | Love 0 loves
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