House prices, economy, outlook 2008

[Dave Dempsey]

Originally Posted by Kerr

I read that too Dave but can't agree in the slightest. I've been looking to buy a new house and watching the local estate agent windows. They are clearly dropping in price around here and very very few sales.

Agree its certainly not the case for the whole of Scotland some areas are having a down turn in prices. Thankfully though as yet its not hit up here as hard as down South, generally its the opposite way around where we feel it hardest first.

Personally if I was sitting on a 100%+ mortgage then my arse would be making chocolate biscuits at the moment.

[phazer]

Originally Posted by Dave Dempsey

Personally if I was sitting on a 100%+ mortgage then my arse would be making chocolate biscuits at the moment.

Yeah, those 7x salary, 125% deals don't look overly clever right now. Though given the rise in prices I can understand why lots were tempted.

[lethal]

What sorely pisses me off is that those of use who didn't go out and get ludicrous mortgages and managed to keep our wallets in our trousers are now going to be expected to pay for the f*ckwits that didn't.

[Paul Baldwin]

Originally Posted by lethal

What sorely pisses me off is that those of use who didn't go out and get ludicrous mortgages and managed to keep our wallets in our trousers are now going to be expected to pay for the f*ckwits that did.

and the greedy w/bankers that lent it to them when it all goes tits up.

Paul.

[Allvaux]

Originally Posted by lethal

What sorely pisses me off is that those of use who didn't go out and get ludicrous mortgages and managed to keep our wallets in our trousers are now going to be expected to pay for the f*ckwits that didn't.

What un-pisses me off is the fact that maybe, just maybe, the prices will drop to a sensible level and those like me who refused to pay stupid money for houses can get onto the ladder.
I don't possess a great deal of sympathy for the people who borrowed far more than they should have to buy overpriced houses in **** areas.

[Brett]

Originally Posted by Allvaux

What un-pisses me off is the fact that maybe, just maybe, the prices will drop to a sensible level and those like me who refused to pay stupid money for houses can get onto the ladder.
I don't possess a great deal of sympathy for the people who borrowed far more than they should have to buy overpriced houses in **** areas.

yep, thats exactly how I feel!!

[Dave Dempsey]

Problem at the moment is that although house prices are coming down getting a mortgage is getting harder and harder.

[lethal]

Originally Posted by Dave Dempsey

Problem at the moment is that although house prices are coming down getting a mortgage is getting harder and harder.

Eventually the model could self heal as people begin to buy houses outright rather than renting money off a bank at an extortionate rate.

[Dom]

We bought at the peak but also sold at the peak.

I had a house I bought for £38k and sold it for £104k, bought a house that was on the market for £180k for £174k.

Now have a 90k mortgage which is just about manageable on the income we're on. Even if house prices fall to 50% of their current value we'll still break even with it.

[Dave Dempsey]

Originally Posted by lethal

Eventually the model could self heal as people begin to buy houses outright rather than renting money off a bank at an extortionate rate.

That would mean that people would have to save money, how unpopular and idea is that going to be.

[Tom Williams]

How on earth are people going to save £100k that easily??

That will take a very long time and owning a house will again become a luxury like it was 60-70 years ago.

Everyone will rent and when renting who can afford to save to then buy a house.

I personally think the current mortgage system is quite sensible, interest rates are not horrendous like credit cards or overdrafts and like owning a house the mortgage lasts almost for a lifetime.

I would love to see people live in a rented accomodation until they can save £200 or £250 thousand pounds to actually buy a house.

[Jack]

Originally Posted by Dave Dempsey

That would mean that people would have to save money, how unpopular and idea is that going to be.

What, you mean if we want to buy something we actually have to save until we have enough money to buy it?

Originally Posted by Tom Williams

Everyone will rent and when renting who can afford to save to then buy a house.

That's how it works in urban America, AFAIK. However, renting is significantly cheaper over there which makes it a lot more attractive for people like me.

Two guys I work with, both technicians, both on the same wage. Both live with their un-married partners. Both pay about the same for a two bedroom house. Except one has a mortgage and the other rents.

I can see the appeal of renting. There's a certain level of security in knowing that if something goes horribly wrong with your boiler or whatever then you just phone up your landlord, but it is restrictive too.

[Dave Dempsey]

Originally Posted by Jack

What, you mean if we want to buy something we actually have to save until we have enough money to buy it?

Apparently thats the theory, but unless house prices come down to the same price as a Bigmac meal (regular not large), then I cant see it catching on.

[lethal]

Originally Posted by Tom Williams

How on earth are people going to save £100k that easily??

Houses wouldn't cost £100k if there were no mortgages.

[Tom Williams]

Originally Posted by lethal

Houses wouldn't cost £100k if there were no mortgages.

How much would they cost then?

The way I see it is that new house build prices have been rocketing on the strenght of the markets, and are well over priced.

Tom

[lethal]

Originally Posted by Tom Williams

How much would they cost then?

You can put up a fairly huge modern timber dwelling for around £20,000. Their actual cost would be governed by demand and availability of existing properties. Land would have to be purchased for a new build but without credit, the price would be very low.

Originally Posted by Tom Williams

The way I see it is that new house build prices have been rocketing on the strenght of the markets, and are well over priced.

It's not the strength of the market per-se. It's the availability of credit. (Hence the failure of new builds to sell as the credit dries up).

[lukeykookey]

Originally Posted by lethal

You can put up a fairly huge modern timber dwelling for around £20,000. Their actual cost would be governed by demand and availability of existing properties. Land would have to be purchased for a new build but without credit, the price would be very low.




It's not the strength of the market per-se. It's the availability of credit. (Hence the failure of new builds to sell as the credit dries up).

Agree, supply/demand etc....

when I first bought a house for 13,000 I was toying with the idea of a then £6000 plot of land and a £16,000 4 bed house with detatched garage from switzerland, supplied and built with electrics etc...

[alistairolsen]

Originally Posted by lethal

You can put up a fairly huge modern timber dwelling for around £20,000. Their actual cost would be governed by demand and availability of existing properties. Land would have to be purchased for a new build but without credit, the price would be very low.

Id love to see your idea of fairly huge! You can build a mediochre sized 2 bedroom 1.5 storey house for that in materials and labour, just. if you want anything of a semi decent size youre talking 35-40k in build cost.

You also have to bear in mind the price of land. The price will fall, but IMO its not going to go back to being pennies, ever.

I really cannot see you ever buying a newbuild 3 bedroom 2 storey house with a wee patch of garden for less than 60k, and to most folk thats still 2 years income or more to save.

mortgages exist for a reason!

[lethal]

Originally Posted by alistairolsen

Id love to see your idea of fairly huge! You can build a mediochre sized 2 bedroom 1.5 storey house for that in materials and labour, just.

That is positively gargantuan by the modern british 'standard' of a rabbit-hutch sized 'luxury apartment' which isn't big enough to swing your dick in.

It will also have a considerably better build quality than the 'quick n easy' concrete and plasterboard constructions that dominate the current new build landscape.

Originally Posted by alistairolsen

mortgages exist for a reason!

Borrowing can indeed be useful but not in the form that the banks currently provide which is designed to maximise their profit and that of their shareholders by forcing the borrower to take on ridiculous debt.

[cambridge]

Its all too easy to say those kinds of things when your mortgage is next to non eixstent hey mr googlebot

[alistairolsen]

Originally Posted by lethal

Borrowing can indeed be useful but not in the form that the banks currently provide which is designed to maximise their profit and that of their shareholders by forcing the borrower to take on ridiculous debt.

i dont agree, they havent forced anyone to do anything, they offer the opportunity.

the British govenment provides everyone with an education IME sufficient to be able to evaluate their responsibilities, calculate basic APr loan repayments and total payable over time. I see no reason why they should remove anyones right to decide what they should do.

[lethal]

Originally Posted by alistairolsen

i dont agree, they havent forced anyone to do anything, they offer the opportunity.

I believe they have. Here's briefly how:

The banks loosen their criterior on lending, avoiding proper diligence checking actual incomes etc, provide insane products like 125% loans and ratchet up the maximum multiplier from sane levels like 3.5x salary to 7-10x salary.

The net effect that as the banks write more money into existence, the price of houses increases to fit. The supply/demand rhetoric was, for the majority of areas, false and is plainly illustrated to me how in local 'affluent' areas, there are many derelict houses along with a sizeable number of long-term voids.

[alistairolsen]

Originally Posted by lethal

I believe they have. Here's briefly how:

The banks loosen their criterior on lending, avoiding proper diligence checking actual incomes etc, provide insane products like 125% loans and ratchet up the maximum multiplier from sane levels like 3.5x salary to 7-10x salary.

The net effect that as the banks write more money into existence, the price of houses increases to fit. The supply/demand rhetoric was, for the majority of areas, false and is plainly illustrated to me how in local 'affluent' areas, there are many derelict houses along with a sizeable number of long-term voids.

you have just demonstrated how banks drove up house prices, and how one might mistake hih slaes prices for high demand. You still havent told m how the banks forced anyone to take out a mortgage they couldnt afford? even with what you have said, you cannot deny that these people went into a bank, asked for money and signed forms agreeing to reply in full knowledge of what the repayments were, what they might increase to, their monthly income etc.

Anyone who doesnt have those figures to hand is ****ing stupid frankly, and deserves everything they get. As you said in your post above however, we will all get it in equal measure now, regardless of blame.

[Trevor]

Originally Posted by lethal

per-se

You should not hyphenate 'per se' it is two separate Latin words.

[lethal]

Originally Posted by alistairolsen

you have just demonstrated how banks drove up house prices, and how one might mistake hih slaes prices for high demand. You still havent told m how the banks forced anyone to take out a mortgage they couldnt afford? even with what you have said, you cannot deny that these people went into a bank, asked for money and signed forms agreeing to reply in full knowledge of what the repayments were, what they might increase to, their monthly income etc.

Anyone who doesnt have those figures to hand is ****ing stupid frankly, and deserves everything they get. As you said in your post above however, we will all get it in equal measure now, regardless of blame.

I agree that they've got to be pretty stupid but the average person who just wants a roof over their head is pretty shafted if they dont want to/cannot rent. To add to the problem, young people do not seem to receive education as to how credit systems work these days. It didn't help that the media constantly spouted the s**t that you must get on the 'ladder' now or you'll never be able to get on*

The buy-to-let wannabe investors who bought the bank/builder/media tagline that house-prices only ever go up and helped to inflate this bubble deserve everything that is coming to them. Borrowing money to play a very high-risk position is not for investment amateurs as it is the most dangerous position available.


*any sane person should see this as an indicator of impending market collapse as the intake has already been excluded from buying in.