Housing Market... THe Future?

[jarvo]

poitics is all lies anyway.

bust's and boom's have happend quite regualrly over the last 100 years... all govenrments have had them and most are caused by many many things.
not just the high interest rates.
outside infuences such as usa and asia have huge affects on the economy.

i agree thatcher wasnt the best leader but none that weve had in my life time are..
basically they all promise the earth then tax the hell out of you once they get in power, fail to deliver and change the way figures are counted to "prove" they are right.

now labour/boe are doing exactly the same thing.. they probably wont reach the 17% the did under thatcher, but it disaterous consquences then and may well do again.


anyway the house prices where i live wernt to bad until very recently... my g/f and i bought a 3bed semi in october for £88,000 its now valued at £118,000.

£30,000 rise in 10 months is stupid, the prices have to slow soon, but the only way to do that is if people dont panic buy for fear of prices going up, like they have been.

theres never really a good time to buy a house, only when you can afford to.

who could afford the 17% interest rate on a mortgage in the early 90's?
people were struggling with a 50% mortgage on their house.

now interest rates are low it a good time to get a fixed rate for a few years, if i could i would have got it fixed at 4% or 10 years when i bought my house.

[jwr]

I will kind of stand up for the developers comments , im a year older and in the same game of developing . I have had no help and develop property on the side of running a seperate business which i started with no experience . The oppertunities are out there for all to take advantage of you just have to really want to be in on it . If you sit on the fence and listern to all the hype about the property market , it will continue to rise and become even further out of reach . Do your sums ,be realistic about what you get for your money and be prepared to take on a property that most people would turn the noses up at . After all if you can get on the ladder for the sake of a years weekends of diy , it still beats paying someone elses mortgage .On the point of a crash , IF it happens (not when) watch it spiral up and beyond the current prices in a matter of minutes (so to speak), prices crash and so supply becomes vast , which results in alot more buyers , that equates to everyone trying to jump on a cheap house because its now affordable , this creates alot of interest in the housing market which means lots of offers , and that means a price war , which will push it up and fast . Its happened before in the nineties and in a matter of years the market had not only returned to its previous state , it has gone on to triple in some areas and then some . The buy to letters arent to blame , once you own one house , the banks make it rediculously easy to buy another and another and another - and the reason for this ? Because they know there money is in a safe place , bricks and mortar . Go into a bank and ask to borrow £150k to invest in their own banks shares and they will escort you out , go in asking to borrow £150k to invest in the property market and they will ask how you would like it to be paid to you ....speaks for itself

[arbitor]

So complicated...

Im in property as a job, all i do all day long is tell people how the sales market is nervous..less buy to lets = less places to rent..... so rent one today.. fook me it works..

Glad im in letting tbh.

But SURELEY you dont need to be on 50k to buy a 160k house which may get you a 1 bedroom here if that.

I work with a guy who is 21 I think and him and his mate own a 300k flat and they probably are on that combined...

My manager owns a 500k flat in chiswick and is probably on around 80-90...

Doesnt add up...


As said by nick, you can never get any value from a bargain if you need another of what you have acquired cheap in the first place....

Ebay being a good example... you pick up a SILLY cheap GFX card sell on for profit, find you need one and then pay all the cash to get one at the current rate...


My dad did the right thing, like ZAK although hes probably a fair bit older, bought when he could afford it, 90k it was back in 85 and then sold in 02 for 1.1 million....

[Saracen]

.......

now labour/boe are doing exactly the same thing.. they probably wont reach the 17% the did under thatcher, but it disaterous consquences then and may well do again.

.....

who could afford the 17% interest rate on a mortgage in the early 90's?
......

When did they reach 17% under Thatcher?

The base (repo) rate peaked at 15% in the late '80s and has never again reached that high in the UK. It was announced that it was going to hit 15% again on the eve of Black Wednesday, but the rate rise was never implemented, and the hike from 10% to 12% lasted just a couple of days before the UK dropped out of the ERM (at a huge cost because of currency speculation) and the rate dropped back to 10% again.

Umm, cos in her drive to line the pockets of those who were already rich, at the expense of those who weren't, she hoiked interest rates through the roof. The rises were powered by a misguided belief in keeping inflation down by using intrest rates to curb spending, but also to benefit people with savings... who just happened to be the wealthy as most people had blown savings trying to make outrageously high mortgage payments.

Sorry Nick, but that so isn't what happened. We got into the mess we got into precisely because that was what interest rate policy WASN'T aimed at.

It's a long and complicated story with roots dating back to the Gold standard, the Bretton Woods agreement and the political desire certain major European nations (Germany and France) to break the dominance of the dollar as a worldwide standard (largely because of the economic and political clout it gave the US to have their currency used as a standard). The short version is that various European exchange rate policies were overtly political tools aimed at breaking that dollar standard by establishing the Deutsche Mark as the anchor point for a competing standard. What that allowed was the Bundes Bank to set the D-Mark in the interests of the German economy (and no surprises there) and domestic policy while the rest of the ERM members were committed to following D-Mark rates, regardless of the effect on domestic policy. Interest rate policy was explicitly designed to maintain exchange rates by affecting the comparative desirability, or otherwise, of national currencies and hence controlling their exchange rates. This was done formally during the ERM period, but that D-Mark shadowing policy had been in less formal operation for years beforehand. And it was done despite the domestic impact of interest rates, not because of them. That's the reason they went the way they did - precisely because inflation control was seen as secondary to exchange rate control, though with some irony, one of the objectives of stable exchange rates was to reduce inflationary pressures from exchange rate fluctuations. Interest rates were used as the tool of international political objectives, not domestic inflation targets.

And that is the great difference. Now, interest rates are aimed explicitly at major domestic issues, primarily inflation, with the government setting inflation targets and the BofE MPC implementing interest rate policy to meet them.

Interestingly, a certain Labour politician had been firmly in favour of the ERM because he thought it was such a good idea, became heartily sceptical about anything that took domestic interest rate control out of the hands of national governments (albeit marginally indirect control), and has since shown a very marked lack of enthusiasm for the successor of the ERM, that being the eurozone, and precisely because of the Black Wednesday experience and the lessons it taught. And while I don't agree with him on a lot of things, on that, we do agree.

Which politician? For anyone that hasn't guessed, Gordon Brown, of course.

The irony is that the pain inflicted by those excruciatingly high rates did actually squeeze inflation out of the UK economy, and at a speed and to a degree that probably wasn't possible any other way, and certainly wouldn't have been politically possible as an overt target. That had a lot of very significant economic benefits, in that it set the scene for the low-inflation stable-growth economy we've seen in recent years, and that's given Gordon Brown his very largely undeserved reputation for sound economic management, but it also did it at a high price, notable among which was the wrecking of a large proportion of UK manufacturing. And that, in itself, is a mixed blessing, because it's forced the UK to adopt a lot of advanced industries where skills are more important than manual labour, and we couldn't compete on the latter with emerging economies anyway. But on the other hand, it's led to some whopping balance of payments deficits, especially in the visibles section, which in turn is a major factor in the growing level of national indebtedness that is going to be the economic problem that gives us national indigestion at some point in the future. It also set the scene for the house price rise, because prolonged low interest rates fuel that fire, and it's those rates and the confidence that comes from people thinking the equity in their houses is cast-iron bomb proof that gives the ability for personal debt to get into the ghastly state it is, which is the other side of the national debt problem.

One of the problems for us, the public, is that the government has a very limited set of measures with which to influence the effect on the economy, and none of the others are anything like as subtle or predictable in effect, or as fast-acting. They can increase or reduce public spending, but it takes months or years to feed into the economy .... by which time, the situation may well have changed. The same applies to fiscal policy - most tax changes take place months after they're announced, and many are restricted to one or two tweaks a year anyway. Similarly, the government can change money supply, tweak the reserve ratios the banks have to hold, and so on, but they're trivial in effect in comparison. But changing interest rates does tend to affect people's spending habits because it hits them in the mortgage, and therefore in disposable income, and often within days of a change.

Few tools are as useful as interest rates, which is precisely why Brown doesn't want to cede control to the ECB (by joining the Euro), but you do have to be careful, because they not only have a direct effect on disposable income, but if the rises are either too big too quickly, or too frequent, they have a subtle psychological effect too.

[iranu]

Is this a record for a thread resurrection? 3 years and 2 months to the day is quite impressive, I'm surprised Hexus keeps them for that time.

[Rave]

I don't think it's a record, but anyway: I'm jolly glad to see that I was right three years ago.

[TeePee]

Average house prices in the south east fell for the first time in June, but theye are still on the way up in the North of England and will likely to continue to rise for some time. I think the market will slow and eventually reach a more stable level, to reflect the 30 year average of about 8%. As for myself, I'm planning to move North!

Wow, was I ignorant back then!

I guess I chose West instead of North