House prices

[Ellie]

I've often wondered whether the newspapers and media in general were trying to "talk down" house prices by their gloom and doom forecasts.

This article I read earlier seems, at least in part, to agree with me.

"House price crash fallacy"
http://www.dailymail.co.uk/debate/newsdebate/r/t-9920496/index.html

Where we live they've been knocking down "old" houses and loads and loads of "apartments" (flats) have been put in their place. Also, rows of houses along the main road - I'm sure you can imagine the sort of thing, quite big places with large gardens - have been demolished and small estates put in their place.

I would reckon that in our little town there have been several hundreds of new homes built in the last eighteen months - that's if you include the flats. I can't imagine where they thought they'd get the buyers from because there's virtually no industry here, the main employers are retail, hotels and retirement care.

To me, at least, it seemed only a matter of time before the market was flooded with new properties, leaving those trying to sell a second-hand house out in the cold, especially if the property is quite old and not well insulated, because of the costs of maintaining it and heating it.

Suddenly though, all the new work on these developments has ground to a halt and one development, on the site of a hospital that's been demolished, looks as if half of it has been mothballed. All the machinery has vanished and part of the site has been fenced off.

The only thing that seems to be going ahead is the redevelopment of what was the Infirmary (before that it was the Workhouse) converting the building into social housing - Housing Association flats - where people will have little choice.

Before you ask, yes, we were lucky, once, there was a small hospital that had an A&E department, also maternity care. The Infirmary did physiotherapy and day care. All those have gone.

[Lizzie]

Its the same here Ellie theyve been knocking down houses and building apartments nobody wants tobuy They look horrible

They said theyre going to help first time buyers with special loans for five years and cut stamp duty for a year but I dont think its going to help

http://news.bbc.co.uk/1/hi/uk_politics/7592852.stm
Stamp duty axed below £175,000

[Ali]

I don't think they are. If anything I'd say quite the opposite - that they were still talking house prices up when to anyone who watched the signs in the economy it was quite obvious that the housing boom was coming to an end.

My heart goes out to anyone who's bought in the last few years as being a home owner (or rather mortgage payer ) during the last big housing downturn I know the misery that goes along with it. I can't help thinking that if the newspapers and magazines, along with the countless property shows on TV, hadn't bombarded people with a 'you can't fail to make money from property' message then fewer people would be facing the predicament they are now.

I worry so much about two of my nieces. One bought last autumn and was in negative equity within months of moving in. The other bought two years ago and now wants to move to a different part of the country but can't sell her house. She's reduced it as much as she can so she can still clear the mortgage, but even if she does find a buyer she'll lose all the money she's spent on doing it up. It's a dreadful situation for both of them.

What I don't get is how people are so sure that what's happened before couldn't possibly happen again.

[nightshift]

Very few people appear to remember the increase in mortgage costs at the end of the seventies which led to many repossessions and appear to ignore the time of negative equity in the nineties.

I believe the lenders have a responsibility, they should only have allowed people to borrow what they could realistically afford to repay and also pay other bills and living costs.

I do, to a greater extent, believe that properties are largely overpriced which makes it very difficult for people to afford a first home. We have young relatives who can only afford to rent very small apartments, the rent takes almost all their available income leaving nothing for them to save. This means they are unlikely to ever be able to afford their own home. One couple is considering emigrating solely because of the cost of property.

I also believe the media attempted to talk down house prices. That, coupled with the current economic problems, make the future very uncertain and very worrying.

It would be nice if the lenders who raise their interest rates would make a similar change to their interest paid to investors.

[Ellie]

I go every which way with this to be honest. I couldn't imagine the high prices lasting, not with the wage caps imposed from on high. It was almost as if people were expecting their wages to carry on going up and up so that eventually they'd be able to afford their mortgages, without thinking for a moment that it could all go pear shaped.

I remember horrible times in the past when the mortgage was cripplingly high, but we managed to ride it by being incredibly careful with spending and we got through it.

I do think though, that the media has some responsibility. They kept on saying prices were falling, then seemed surprised that they didn't. There's no real evidence of dropping prices here, but there is certainly a shortage of buyers because there are far too many houses for sale and not enough people wanting to move into the town to buy them. It seems that, perhaps, the government's demands that each area build so many new houses wasn't the best thing after all, you can't make people move into an area if there's nothing that appeals to them - like work!

[Ali]

I think the measures announced yesterday regarding stamp duty and loans to first time buyers are, at the very least, immoral, at worst, well I don't know how those in power sleep at night. How many people who haven't done their own research will buy a house without realising exactly what they are getting into?

I came across this article today that I think sums it up very well. http://www.moneyweek.com/personal-finance/dont-listen-to-hazel-blears-dont-buy-a-house-13546.aspx

It's a very depressing situation.

[Rip Van Winkle]

It is impossible to get an unbiased opinion of what is happening in the housing market by listening to the media, an estate agent or even your mates down the pub.

If any of you want to know the reality of what is happening in your local area then use http://www.houseprices.co.uk/ to see the actual price a property has realised, and when browsing Rightmove use http://www.property-bee.com/ which will enable you see every reduction in price on a property since the beginning of the year.

[Supertrowel]

I think it's very difficult for those who need to sell but haven't had their properties for that long. A friend of ours has had an apartment in a city for the past three years, and has to sell due to redundancy and needing to relocate to find work. She's had to drop the price fifteen thousand in the past couple of months, and that puts her into negative equity. She was in the same position in the 90s, and can't believe it's happening to her again. I dread to think what'll happen if she can't sell it and doesn't get a job for a while either.

A situation like this won't particularly affect me as we've had our house for years (and don't need to sell anyway), so it'll never hit a negative equity situation, thank goodness.

Todays news about the American mortgage market looks quite worrying too
http://www.economist.com/finance/displaystory.cfm?story_id=12078933

-supertrowel

[nightshift]

The whole financial situation seems very worrying, especially with the collapse of Lehman Bros and the closure of branches here in UK. I have also read of the fall in value of HBOS shares, I hope our savings are safe.

I am glad we are not in a position where we need to sell a property at the moment, I feel very sorry for those who do.

A relative was in a negative equity situation in the 90s. They bought a new house, using their existing property as part-exchange. Perhaps your friend could do the same, more especially as some builders are finding it difficult to sell recently constructed properties.

[Supertrowel]

She's looked into that, nightshift, quite widely. But builders want sales for money (and for that there are deals to be done). But certainly part-exchange is out of the window. Why would they want one more property to sell?? it's all quite dismal

-supertrowel

[Rip Van Winkle]

Beware of new builds. There are a growing number of people out there committing to buy one and finding that when the builder mothballs the development due to a low number of sales that no matter whether it takes six months or six years for the property to be completed they can't back out, let alone get their deposit back.

Life goes on no matter what the economic status of the housing market is. Circumstances can mean some of us have little choice but to try to sell, or even buy, but I really would urge people to think long and hard about their options and choices. Do your research and don't discard information that you don't like or want to hear. Think with your head, not your heart.

[Ellie]

[nightshift]

It would appear to be a buyers market, provided the buyer has capital and does not need to sell a property.

I hope your friend is lucky Supertrowel