House Prices?

stickyfiddle · May 2017

The bubble about to burst, finally??

https://www.theguardian.com/business/2017/may/03/buy-a-home-get-a-car-free-offers-galore-as-london-estate-agents-struggle-to-sell

VimFuego · May 2017

be interesting to see, but I suspect nothing but a blip, until you (generic you, not actually expecting you to fix it) fix the fundemntal issue of too much money floating around the housing market, I can't see prices coming down far or for long.

stickyfiddle · May 2017

VimFuego said:

be interesting to see, but I suspect nothing but a blip, until you (generic you, not actually expecting you to fix it) fix the fundemntal issue of too much money floating around the housing market, I can't see prices coming down far or for long.

Fine, I'll sell ALL my houses..!

Bt seriously, I suspect the market is mental enough that a year-long crash would actually encourage more to pile back in again once it bottoms out. The cheap pound must be helping prop it up too. Bleh.

VimFuego · May 2017

I would imagine if the banks saw that they were lending less they'd rig a short term downturn in the market to encourage demand. It's not like they don't have previous for manipulating markets...

quarky · May 2017

I think there are only two things that will fundamentally change the housing market:

A real and significant reason for capital flight. WW2 seemed to do that for a while.
Houses being even less viable as an investment.

I can't see either of those events at the moment unfortunately (well, unfortunately in terms of the last one). Any other rises and falls are just very temporarily blips.

TheMarlin · May 2017

It'll be a blip. I think house prices will follow those in Japan. They'll get so expensive most people will end up having a 40 year mortgage that the kids will have to finish paying off.

I think Sweden still has a 105 year mortgage option!

octatonic · May 2017

TheMarlin said:

It'll be a blip. I think house prices will follow those in Japan. They'll get so expensive most people will end up having a 40 year mortgage that the kids will have to finish paying off.

I think Sweden still has a 105 year mortgage option!

That is essentially how it is in Australia now too.
People getting mortgages now might be borrowing 1 or 2 million dollars or even more.
I have family that have borrowed around 1.5million and will never pay it off.

What happens is people live in the big cities for 10-15 years, watch the property double in price, then they sell up and go to the bush, paying out the mortgage and buying another house for cash.
There is simply no other way to do it.

Axe_meister · May 2017

We still have a problem with supply and demand. I guess that may ease depending on Brexit outcome in regards to European immigration

Fretwired · May 2017

I think it's just a correction in London with the added impact of a general election and Brexit. Prices are still going up where I live.

ICBM · May 2017

I've said this before and I will say it again no doubt to general derision and shouting down…

Houses need to be fully subject to Inheritance and Capital Gains tax, just like everything else. That would firstly stop the idea that house price rises above inflation are inherently a good thing, and secondly raise much-needed cash for the government to help pay back the national debt.

We cannot go on encouraging an asset price bubble which is essentially tax-free, and tying up more and more of our earned income in it, particularly as mostly that's used to service the debt via mortgages.

If something isn't done there will come a point - if it hasn't been reached already - where the amount of debt taken on to service fictitious value in the housing market exceeds the capacity of the workforce to ever pay it back.

VimFuego · May 2017

ICBM said:

I've said this before and I will say it again no doubt to general derision and shouting down…

Houses need to be fully subject to Inheritance and Capital Gains tax, just like everything else. That would firstly stop the idea that house price rises above inflation are inherently a good thing, and secondly raise much-needed cash for the government to help pay back the national debt.

We cannot go on encouraging an asset price bubble which is essentially tax-free, and tying up more and more of our earned income in it, particularly as mostly that's used to service the debt via mortgages.

If something isn't done there will come a point - if it hasn't been reached already - where the amount of debt taken on to service fictitious value in the housing market exceeds the capacity of the workforce to ever pay it back.

the term I've heard is peak debt.

VimFuego · May 2017

Axe_meister said:

We still have a problem with supply and demand. I guess that may ease depending on Brexit outcome in regards to European immigration

200k empty properties in the england. The issue isn't supply and demand, it's too much money/debt in the system.

ESBlonde · May 2017

London I suspect, is begining to see the effects of people/jobs moving on to/back to the continent and as such the demand has fallen from the levels previously expected. If thousands of jobs go to Frankfurt then correspondingly so do the housing needs. Those jobs may not have moved yet but people are less likely to commit to a mortgage and moving costs in the uncertainty.

stickyfiddle · May 2017

I would also assume London is starting to sow down for foreign investors since Osborne's last round of tax changes. They didn't make the news much but have made it significantly less attractive to get BTLs if you're not living in the U.K.

Fretwired · May 2017

ICBM said:

I've said this before and I will say it again no doubt to general derision and shouting down…

Houses need to be fully subject to Inheritance and Capital Gains tax, just like everything else. That would firstly stop the idea that house price rises above inflation are inherently a good thing, and secondly raise much-needed cash for the government to help pay back the national debt.

We cannot go on encouraging an asset price bubble which is essentially tax-free, and tying up more and more of our earned income in it, particularly as mostly that's used to service the debt via mortgages.

If something isn't done there will come a point - if it hasn't been reached already - where the amount of debt taken on to service fictitious value in the housing market exceeds the capacity of the workforce to ever pay it back.

Out of interest how would you work it out? I've lived in my house for 29 years and in that time have probably spent just shy of £200K on it - the kitchen has been replaced twice, the two bathrooms three times, house rewired, new roof, trees removed, new garage doors, garage roof .. the list is endless. Add this all up and the amount I've made on my house isn't that great and yet I guess you're looking to simply take the purchase price and the house value and ignore interest and maintenance costs.

I think you'll find people will simply sell up and live off the money before they die or do equity release.

Fretwired · May 2017

VimFuego said:

Axe_meister said:

We still have a problem with supply and demand. I guess that may ease depending on Brexit outcome in regards to European immigration

200k empty properties in the england. The issue isn't supply and demand, it's too much money/debt in the system.

^^
Spot on.

I read there were 7,500 empty council homes in London last year.

http://www.standard.co.uk/news/london/shocking-waste-of-7500-council-homes-lying-empty-in-london-a3256401.html

Axe_meister · May 2017

You have to question why they are lying empty? Are they sub standard but no budget to bring them up to standard, are the councils sitting on them waiting for peak house prices.

Garthy · May 2017

VimFuego said:

Axe_meister said:

We still have a problem with supply and demand. I guess that may ease depending on Brexit outcome in regards to European immigration

200k empty properties in the england. The issue isn't supply and demand, it's too much money/debt in the system.

They might be empty but someone owns them. You can't buy what isn't for sale so yes it's supply and demand.

VimFuego · May 2017

Garthy said:

VimFuego said:

Axe_meister said:

We still have a problem with supply and demand. I guess that may ease depending on Brexit outcome in regards to European immigration

200k empty properties in the england. The issue isn't supply and demand, it's too much money/debt in the system.

They might be empty but someone owns them. You can't buy what isn't for sale so yes it's supply and demand.

I know someone owns them, the issue is that there is too much money in the housing market. If you build more houses without restricting who buys them, then they will also be snapped up by investors. Reduce their attractiveness as investments and you'll see less demand from investors, the price will drop and more of them will become homes. A home is an essential, no one should be denied or excluded from that necessity.

Snap · May 2017

Is it essential to own your own house though? We have an ingrained culture for this here. Many other countries don't have the level of home ownership that we have at all. Most of the people i have known in other countries rent, they wouldn't even consider buying.

We have developed a mentality of feeling compelled to buy a home as it will become a long term investment. That is self propelling, in that this mentality will drive behaviour, compulsion to buy, and consequently prices go up.

Property in London just keeps going, driven by money from Russia and the middle east. Can't see this changin soon tbh.

House prices aren't escalating everywhere: but they are rising strongly in nicer areas, particularly nice suburbs of major towns and cities. That's due to demand, nothing else. People are prepared to pay to live in a nice area, with good schools etc.

@ICBM - houses are subject to IHT, in the same way that other parts of an estate are. Are you saying that they should be separated from an estate and have their own distinct IHT, regardless of anything else?

I understand your motivations, but disagree with IHT full stop. I think IHT is just plain wrong: the tax has been paid whilst an estate is being built up, you should be allowed to gift it without liability IMO. I do understand the argument against this, but still hold to my point.

House prices - tbh, I don't see them reversing. I think they will continue to steadily go up long term. They always have.

VimFuego · May 2017

where did I say own it? You do need security of tenure tho, that is key.

"House prices aren't escalating everywhere: but they are rising strongly in nicer areas, particularly nice suburbs of major towns and cities. That's due to demand, nothing else. People are prepared to pay to live in a nice area, with good schools etc"

not correct, at least not soley, that is too simplistic an answer. It is mostly due to banks being able to print money without restriction. This has been well documented.

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