Dispelling market myths

“If you want to guage the health of the housing market, pick a local estate agent and look up their credit rating (lots of web sites do this and it's free) My local established outfits threw up a few surprises.....”

“@Vinnie

I am a hypocrite and neither did I but we got there in the end. I was a salutary lesson and one I repeat to anyone buying a property - even £10 month overpayment now will save you hundreds 15 years down the line.

Like you, I think house prices are being artificially kept too high and a 20 - 30% correction is needed now. Better to get it over and done rather than linger. That will kickstart the market and allow many young people to get a property - at a reasonable price.”

“fiest 1406
That's informative stuff. I think, as painful as it will be for some, prices do need to drop a long way to get them back to an affordable level. The more the market is manipulated the bigger the eventual pain will be.
The problem is that you are telling a lot of people (including politicians and businesses that make profits from big price rises) something they don't want to hear.

Walter
I wish I'd overpaid the mortgage in the early years, it would have saved me a lot of money. I didn't of course, I had a young family and there was always something more interesting to spend on.”

“Why UK house prices are set to collapse...Extracts from A copy of a special report by Galvin Research & Trading dated 29th August 2012. Buyers beware of Developers sales pitches. Even the financial markets are stating It's been revealed only recently that the UK's biggest banks are still sitting on £40 billion in undeclared losses, (Reflecting the true valuation/ self certificate/ actual house price & interest only mortgages) which is preventing them from making new loans

Common sense tells you that the UK property market has been grossly distorted by central bank
meddling. Not to mention all the unfunded welfareschemes (government giveaways). The Bank of England does not have a magic wand. In the end you cannot argue with the market.
A natural correction has not been avoided, it's merely been deferred. UK property is an accident waiting to happen.

And it's a brave investor that thinks UK property prices can defy history and stay disconnected from salaries. As you've no doubt heard before, when it comes to investing the four most dangerous words in the world are "This time it's different".

How far could prices fall? The Economist describes UK property prices as the "unfinished bust" and thinks they remain 20%-28% too high. Credit rating agency Fitch reckons 25%. Deutsche Bank's calculates 34%. Morgan Stanley estimates 15%-25%. Even the IMF (International Monetary Fund) says UK house prices are 30% over valued.”

“@Vinnie_Garside

Must be a similar age - I also had a low cost endowment mortgage in the early 80s as well as a Unit Trust linked endowment in the 90s. I dumped both of them at the right time. I also bought a house in London for £100K that ended up worth 2/3rds that 3 years later.

My word of advice to anyone buying nowadays is overpay your mortgage by as much as you can afford and remember a house is to live in not to attempt to make money from.”

“timplymouth
We mentioned that to daughter recently and she kicked off, accusing us of being morbid. You can't help some people.”

“On the bright side Vinnie your kids can use the value of your house as a deposit on theirs. The trouble is it will only be after you die and they will probably be retired themselves by that time, given the length of time we are all predicted to live.”

“I know what you mean Walter however:
My mortgage finishes in December and I shall wave it on its way with no fuss and then I will not owe anyone a penny.
Of course its not that simple - for the last few years I have been massively overpaying it because I was foolish enough to take an endowment in the 80s. Remember those?
We were all told they would pay the mortgage and have thousands of pounds surplus. They say we were warned that it may not pay out enough - just one of many bare faced lies these scum peddle. In those days I was young and naive and so believed what I was told, along with millions of other people.

Being ripped of by sharp suited spivs in this market isn't anything new, thats why I like to give warnings to other people to not believe what these lying b*****ds say.”

“A clear factoring missed in this article is the simple fact Plymouth is being flooded with new house builds alongside the traditional second market...With full time jobs at a premium and loss of major industries and service personnel, and further cuts to public sector jobs; affordability is a big issue. Against this the Bank of England's quantitative easing and low interest rate policy has altered the dynamics of the 1990's housing correction. Some have argued the government is trying its best to prop up house prices in-order to make the banks debt sheet look better...what we really need is national interest rates to follow a natural path which will lead to winners and losers but, provide for a correction to earnings bringing borrowing ratio's down to 3-1. This will provide a true picture of where the market currently rests...but as a positive bring affordability into line with wages. Which can only be a good thing for local buyers. Many financial articles are clearly stating property is still 20% over valued so hang on and think seriously before you buy...and be factor in interest rates of 7% as a test of affordability...not to say over the last 15 years Councils should have build not affordable housing that turned out the same price as any first time; buy but, more social housing in argument to keep the building industry propped up.”

“@Vinnie_Garside

Ah, but in the warped eyes of some you have equity in your house which should be released by remortgaging and spending the money on a new car, a cruise, some bling etc”