House Prices

[annanimo]

It winds me up though when people talk about 'throwing money away' on renting.

I have no option other than to "throw money away renting" unfortunately. My problem isn't that I'm resigned to never being able to own a house - it's that as a tenant I have absolutely no rights. In the last 3 years I have been forced to move twice - each time because my landlord looked to make a quick buck from selling the property. Basically, if they can make more money from selling, why should they care less about their tenants?

They're just a bunch of self-congratulatory individuals, priding themselves on the fact they were lucky enough to make a huge amount of cash having put in little effort in the first place. They wouldn't think twice about evicting someone and rendering them homeless if they can profit from it.

All I want is somewhere which can be "mine" for as long as I want to live there. I couldn't care whether I rent (at least for the moment). It would be nice to think that one day me and my wife could ctually buy our own place but that looks as likely as Bristol Rovers winning the European Cup.

In the meantime, we just have to hope that our current landlord doesn't want to sell. If house prices either stabilise or come down significantly there will be less of an incentive for people like my former landlords to cash in.

[Maesknoll Red]

Well, if a cartoon character working for the bank says so....

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And there's me remembering him as a cloth puppet..............

[Maesknoll Red]

It winds me up though when people talk about 'throwing money away' on renting.

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But, your rent will continue to increase, whereas over the years your mortgage repayments will become a smaller and smaller burden on your income. Also consider that paying for a house during your working life, gives you rent free accomodation in your retirement.

[annanimo]

But, your rent will continue to increase, whereas over the years your mortgage repayments will become a smaller and smaller burden on your income.  Also consider that paying for a house during your working life, gives you rent free accomodation in your retirement.

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Very true, but not everyone is in a position to make the choice, especially now property prices are so laughable as to be reaching Beano proportions.

[Xiled]

Most of what other people have stated above is true, but the fact is that for a "bust" to occur, there would need to be an error in the setting of interest rates, or an unemployment increase.  I cannot see either happening, really I can't.

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According to the Telegraph, unemployment is probably on the up:

Telegraph Employment/Housing Article

And from that article, house prices can fall even when employment levels are good. However, as prices start to fall, unemployment take off:

"Worryingly, and in marked contrast to widespread misapprehension, unemployment has never acted as the trigger for a housing market correction. In the early 1980s real house prices fell and unemployment rose at about the same time; but in the other two major housing slowdowns, house prices fell before unemployment rose. In the last downturn they started to fall in the final quarter of 1989, but unemployment continued to fall until almost a year later. By the time it did start to rise, real house prices on the Nationwide index had fallen by about 13 per cent."

[Gerry Gows' Tash]

There are all sorts of factors which affect house prices, interest rates and unemployment are two of them, local factors like employment, transport links, education and other factors also play a part.

The other big one is basic supply and demand and the fact that a house is only worth what someone is willing to (usually borrow) to pay for it. At the moment average house prices are about £160K, average incomes are about £25K, so Mr average cannot on his own afford an average house by a long way unless he gets a mad multiple from a dodgy broker or goes in with Mrs average.

That situation isn't sustainable, either wages have to go up to make houses affordable (and they won't by anything like that much) or there has to be a lot more supply i.e lots more houses being built. If that doesn't happen then eventually the market will start to stagnate (as it's starting to now) and then fall until the average house becomes closer to the average wage.

[lukejones2]

well Mr Tash.. this is true but possibly the single biggest short - medium term factor could be the changes to the pension rules in April next...

next April (A - day), the governements pension reforms will come into practisre and basically all pension plans will now follow the same basic set of rules governing contributions, tax relief and how and when the pension can be drawn.

Oneof the main changes isthe decisions to allow residential property to be held within a self- invested personal pension, this would give massive tax breaks to property owners, and could encourage an excessive reliance on property within pension funds which could increase house price inflation.