Housing - Will Prices Fall?

I am lucky enough to be a home owner. I got my first and only mortgage at the age of 18 and haven't looked back over the last decade. In that time period though I have seen like so many others prices rise so fast and high that surely the market is now becoming un-sustainable. There is no shortage in demand, but the market is becoming so inelastic that it is not meeting demand.

Stricter lending guidelines have made it more impossible for first time buyers to enter the market. Banks are now un-willing to go beyond lending more than 75% of the mortgage value. Home ownership is currently at 67% and is set to fall to 63% in the next ten years. The NHF have put pressure on the government to 'build new homes' this is a silly strategy given that this is going to massively under-cut the market value and under-cut the investment that the government would also put in. In a sense it has become more like Quantative Easing by where you print money in a crisis and by doing that you devalue the currency. The issue at hand is demographic too. Why are properties cheaper in north in compared to the south? Would it be any surprise that on average the amount of people living in poverty would be higher in the north than the south? Why is ther such a gap given that as a country we have the same interest rates and the currency is still valued the same?

There is no doubt that the renting market has become a monster and is leaving so many people out of pocket and in debt. Landlords are cashing in and it is not their fault entirely that first time buyers are finding themselves in a Catch 22 situation. Over the years there have been schemes by where council tennants have been given the option to buy their homes and have done so. Where can the government introduce a housing scheme that benefits buyers as well as them? If for example an auction scheme was brought on new properties by the government by where people could bid for the mortgage would leave the government out of pocket if they claimed a clause on the re-sale value and % entitlement given that they may not receive that for years to become and also it would be accused of favouring the rich given that families without any wealth unable to bid competitively.

As a homeowner it pains me to say that the value on properties needs to come down to allow new buyers into the market and also allow sellers more control of valuations which could allow for more competition in the market.

What do you guys think?

I blame the banks,they have dictate the price of property due to how they were lending money, they were giving out loans upto 125% of the properties, and house prices soared now people need 20% plus as a deposit, and house prices have dipped dramatically, just no happy medium.

When you lend money on property, the 2 things you must be sure of is

a) is the property worth the value of the loan

b) can the people you lend the money to afford the monthly re-payments.

Asking for a about a 3% deposit is more realistic providing the above criteria is met. It would appear that the government does not want to get involved in something that they should be putting in a larger input.

I would then ask the question, as they were frightened of the press and sat back and did nothing, is it the same with the banks, are they afraid to stand up for Joe public against these big organisations

oldparwin wrote:I blame the banks,they have dictate the price of property due to how they were lending money, they were giving out loans upto 125% of the properties, and house prices soared now people need 20% plus as a deposit, and house prices have dipped dramatically, just no happy medium.

When you lend money on property, the 2 things you must be sure of is

a) is the property worth the value of the loan

b) can the people you lend the money to afford the monthly re-payments.

Asking for a about a 3% deposit is more realistic providing the above criteria is met. It would appear that the government does not want to get involved in something that they should be putting in a larger input.

I would then ask the question, as they were frightened of the press and sat back and did nothing, is it the same with the banks, are they afraid to stand up for Joe public against these big organisations

3% deposit? Great, and what happens when values drop 20%? Your point a) then goes out the window. Why would a bank lend at such a ridiculously high level anywhere other than prime London (which, to answer the OP, is the only place house prices will continue to trend upwards)? If the property is in negative equity then what's the bank to do if b) goes pop as it can't recover the value of the loan?

Also, 97% deposit? How is that ever going to be repayable and not totally kick your point b) into touch anyway? Take a typical average price of £165k, 97% LTV = £160k mortgage which at 5% is £666 pcm interest only or £931 pcm repayment. That's a lot of money to be able to afford for someone who apparently isn't earning enough to save up more than a £6k deposit (in this example).

To further answer the OP, social housing policy causes a massive distortion in the market. It's jazzed up with names like 'affordable housing' but it isn't, it's local authority/housing association accommodation. Forcing ridiculously higher proportions of social housing on new developments drives the price of the private element up otherwise developers cannot make a return. If the government wants to take the heat out of the market (and genuinely get property affordable to all) it needs to increase the supply of private development.

I have sold my property (£200000) now RENTING A PROPERTY and invested in GOLD, by 2018 it will be doubled.

so you're paying someone else's mortgage in the hope that gold will continue to grow exponentially in value for the next 7 years? You may as well have just gone to Vegas and stuck it all on red.........

TopHat24/7 wrote:so you're paying someone else's mortgage in the hope that gold will continue to grow exponentially in value for the next 7 years? You may as well have just gone to Vegas and stuck it all on red.........

activereactive wrote:

TopHat24/7 wrote:so you're paying someone else's mortgage in the hope that gold will continue to grow exponentially in value for the next 7 years? You may as well have just gone to Vegas and stuck it all on red.........

activereactive wrote:I have sold my property (£200000) now RENTING A PROPERTY and invested in GOLD, by 2018 it will be doubled.

Spot price of gold has fallen 13.5% over the last 30 days, London resi on the other hand continues to increase in value. So how's that working out for you??