Housing market DOOM aheadDecember 10th, 2013 • 8 Comments
It might not seem that way, but we are, apparently, living in a ‘benign period’ – when it comes to interest rates, anyway. But the Council of Mortgage Lenders has hinted that this nirvana of low interest rates could soon come to an end – leaving homeowners penniless and living on the streets.
The CML are predicting a rise in home repossessions as soon as the Bank of England raise the base rate, which has been sitting way down at 0.5% since 2009. They said that although a large amount of families could cope with a ‘slow and steady’ rate rise, families who are already under financial pressure could be badly affected. And, added Bob Parnell from the CML: ‘We remain aware that a sizeable minority of households continue to be subject to financial pressures.’
So that’s something to look forward to, isn’t it? Wait! There’s more. Another report from the National Housing Federation says that the British housing market is ‘dysfunctional’ and that prices will rise by 44% over the next seven years. Which means the younger generation will be priced out of the market FOR THE REST OF THEIR LIVES.
Basically then, the houses will be solely occupied by Russian oligarchs and their trophy wives, or rich Chinese businessmen looking for a UK crash pad, and the entire population will be living underneath the arches frying rats on a hot oil drum.
Ain’t it grand?
Good use of English there…
Thing is, if people can’t afford the houses, nobody will buy them. if they don’t buy them – prices will need to come down until people can afford them. The only reason it’s proving dysfunctional at the moment is the incessant meddling from governmental schemes which are artificially inflating the prices. We live in a free market economy. Stop meddling with the market, because it will bite you back in the bum.
Or Kingelton, people will just rent, thus increasing demand this increasing the number of inverters buying property so nothing changes.
James Eadle – the buy to letter will be paying more for those properties as well which means rent will have to skyrocket also, so pretty soon no one will be able to afford to rent or buy somewhere to live. Capitalism, aint it great.
Prices have to go up otherwise everyone will end up living in their first house for their entire lives. Static prices mean people don’t put their homes on the market because they’re in negative equity and the whole market stagnates.
I think the problem is that younger people have been brainwashed into thinking high house prices are a good thing and they will only increase in “value”. Alexis, if your house goes up in price the one you want to buy will be further from your grasp – a £100k house + 10% = £110k, a £200k house + 10% = £220k – your £10k worse off. And people don’t just sell their house to make a profit (divorce, job change, change in family circumstances, ect)
The killer will be IR rises, they ARE going to go up to their normal values – around 5%. Probably within a year. What this means is that the BTL lot’s mortgages will increase, more rent can’t be charged (people can’t afford to pay much more), empty houses, mortgage can’t be paid, house repo’d, and therefore a flood of repossessions will hit the market, this will drive prices down. Then people will see that high prices are not a good thing for everyone and people will stop acting like utter bellends. FYI, a £150k flat, 10% deposit, at 4.99% is about £790/month, 4% IR increase will cost you about £350 extra a month. And the bank couldn’t give a fuck if they turf you out, they’ve got a business to protect – they’ll sell your repo’d property for less than you paid, the amount you’ve paid off on your mortgage will cover any house price fall. The bank know we’re all mugs.
Alexis – that has to be one of the dumbest comments ever on BW and it isn’t even about unnatural sex with foxes.
High prices only benefit banks (interest payments), estate agents (selling fees) and the government (stamp duty), the rest of us are screwed.
House price must go up. They NEED to go up, they HAVE to go up. I need to boast about how much my house is ‘worth’ month on month on month.
I don’t know why any of this is true.