Where do people think the uk property market is up to now?
I think it has bottomed out and now is a good time to buy.
I keep hearing of bargain properties around but as yet finding them is difficult.
Will it go lower or will it start to rise
Personally, I think it is irrelevant whether the market goes down a little bit further now. If a deal comes along and it is very cashlow positive, like £300 pm after all expenses, you'll be hard pressed to get better.
My opinion is that prices will fall a little further in the UK, in some areas. My reasons:
*The UK economy is still shinking, jobs are still being shed, causing a slow down in consumption of goods and services, including buyin property & even the rental market to a lesser extent.
*Many people have kept their properties off the market till now and will be coxed out by all this talk off green shoots. They will start to bring them onto the market after summer...surprise, there will still be quite low demand...estate agents will "groom" them to lower their prices, if they "want a realistic sale". (You know how it works)
The above 2 points will cause a further slowdown - but like I said, I don't it will be too much more, so if the deal is a good one, no point in waiting 6 months.
Remember each purchase is unique and yes there is a "market" which goes up or down, but you really have to look at things on a deal by deal basis.
Did you buy one already? Show me the papers, then I'll believe you are not just another scam artist.
Its hard to tell Danny. Who could have predicted that the interest rates would go so low with people who are not on fixed rate paying half or one third of their Mortgage?
IMO it depends on what happens to unemployment. If it continues to rise there may be distressed selling, which will depress the property market. If it stabalises, then yes, we might be at the bottom.
But the short answer is Nobody Knows! Certainly none of the "experts" predicted the current situation, so I tend to be wary about all their forecasts about the future that you read in the newspapers - you know, that "It's going to be as bad as the Great Depression", or "Green shoots have emerged" or "it's getting worse and better at the same time".
Unemployment will probably be an early indicator of property prices. If people begin to lose their jobs, then less people will be able to pay their mortgages (and property taxes, utility bills, etc). Eventually, more houses will flood the market and the increased supply will drive prices down.
The answer depends on how likely it is that there will be more mortgage defaults in the UK. I don't know how exposed the UK banks are, but I'm pretty sure US bans will be insolvent by the time the Alt-A mortgages reset themselves. That's why banks are hoarding money right now even with the TARP bailout here in the States.
If the UK is anything like the US, housing prices have still further to fall.
I have just finished a BSc (Hons) Property Studies, got a first, and I will tell answer your question. Basically, who knows!
The biggest potential threat to the market is that the government will decide to raise interest rates again, a step that will be necessary at some stage.
Those with variable mortgages who have saved a hell of lot on their mortgages recently, and who could afford to, should have been putting the difference away in an ISA.
If interest rates were to go up by even 1%, this would put £100 a month back onto the variable mortgages.... those that would suffer the most are those already in negative equity, and hey presto... we could see repossessed homes going through auction at 40k again.
With a change in government likely, and with Cameron not really unveiling any kind of manifesto as of yet, I would not like to be the person that has to guess.
The situation in the UK is slightly different to the US. We don't have non-recourse mortgages here. In the UK if you take out a mortgage you are personally liable for the debt. For example, say you had a mortgage of £120,000 and the property is valued at £100,000. If you walked away from the property and it was sold for £100,000, you would still owe £20,000 and have to make payments till that was cleared. So it makes no sense to walk away from your home, especially as you have to find somewhere else to live and pay rent there on top of servicing the debt carried forward.
As a result default rates in the UK are currently 0.7%. Of course the newspapers here scream that they are up by 300%+ compared to 2007 - but that means that in 2007 they were a very low 0.22%.
However I understand that in the USA default rates are running from about 5% to 10%, depending on the state. I think that's entirely down to your state laws allowing non-recourse mortgages which incentivise people to walk away from their mortgages if the home value falls under it. They are then no longer liable for the debt, the lender then takes the loss, and there is a flood of property into the market which depresses prices further.
In the UK the risk is with the homeowner not the lender, so people do everything they can to stay put and keep paying their mortgage regardless of what is happening to house prices. We've actually got contracting supply and contracting number of transactions as homeowners have taken their homes off the market and are waiting the recession out. The lack of supply means that property prices are stabalising. As I said previously, the only thing that will throw a spanner in the works is unemployment - it's the only reason why people would default.
P.S. Unemployment in the UK is 7.5% now. I think it is 9.5% in the US, which might also account for the difference in performance in the two markets.
I didn't know about the non-recourse laws, but the fact remains that if you load people up with too much debt or if people are too underwater on their loans they'll still walk away. Non-recourse loans keep the number of defaults down up to a point. Once you breach that point, people will still walk away.
You can't walk away from your debt in the UK, that's the point, it follows you around because here you are personally liable for your mortgage. Nobody in their right mind would walk away from a house "just" because they were underwater because if you walk away, you still have the debt, but no house and you have to find somewhere else to live and pay rent on top.
The only situation where you would default is if you lost your job - and even then, after 13 weeks, the govt pays the interest on your mortgage for a fixed period of time. So as long as you have the savings to last out those 13 weeks, you survive with your house and you still living in it.
The idea behind our system is that if you have a job you are incentivised to pay your mortgage debts in full and stay in your house even if the property price is lower than the mortgage, but if you are vulnerable through job loss, the state steps in to help you stay in your house.
From what I can tell, in the US, lots of people with jobs are walking away from their debts simply because the system allows them to by merely handing back the keys - but it is creating a vicious spiral downwards in the property market as too much supply comes into the market.
You can if you also declare bankruptcy, though.
The problem here is that artificially low interest rates signaled to the market that more housing was needed. So what happened was that too many houses were built. In a freely fluctuating interest rate market, interest rates would have gone higher in response to more and more houses being built and more and more credit being issued. Since the Fed kept interest rates down, there was no mechanism to signal that too many houses were being built.
Another thing to consider is the bankruptcy laws in this country. One of the reasons our economy is so dynamic is because you are allowed to start business and fail without it destroying your life. Those are the reasons things are falling the way they are here. It'll be interesting to see how things will fall out differently between the US and the UK.
I don't think they are going up much in a hurry - the more likely direction is down.
Hi "Property Invest"
UK prices will fall in line with the falls seen in the USA, and will eventually bottom out at average house price @ 3X average income.
This is the historical value of a home in the UK (and elsewhere) so we will see falls of around another 40%. British property prices have nowhere near bottomed out and I am seeing commercial deals going through at around 25% of peak values.
Admittedly, the amount of money being printed by the BoE may have some effect, but we cannot get away from the fundamentals.
You are making a huge mistake to suggest that 6 months is too long to wait, but I suspect you may have a vested interest.
Judging from your user name.
Sorry i had forgotten I had posted this
been looking at ways of making cashflow online!
Well there is positive input from papers, broadsheets!!, this week again.
I think it has definitely bottomed, the main problem is getting finance from banks.
I have just had nearly 2 months trying to raise mortgages on 2 flats I am buying locally.
Even now still not sure I have got it.
I think it is a good time to buy, as is always a good time to buy.
Andy points that out in his book, (yes I do have a copy Misha!!)
Its not a bad read and has some different perspective. Mainly buy and keep rather than buy and sell!!
I used to buy cheap refurb and sell - make some profit and pay CGT then left with very little profit, as the market got tighter a couple of years ago even harder to come out with profit. So I backed off and just now getting back in.
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