Interest rates to rise price of flats falling

[Numptycorner]

Bank expected to raise UK rates
The Bank of England is expected to raise UK interest rates from 5.5% to 5.75% shortly, as it resumes its efforts to reduce inflation.
Most economists predict a rise after Bank governor Mervyn King said recently that inflation remained a concern.

"We're seeing more and more people coming in for help with mortgage or secured loan arrears," said Sue Edwards from Citizens Advice.

"People are really stretching themselves to the limit to buy a house and take on a mortgage, so a small increase in interest rates could just tip them over the edge," she told the BBC.

Mixed housing signals

While the Halifax revealed on Wednesday that UK house prices rose 0.4% in June, Land Registry figures showed that the price of flats, as opposed to houses, in most parts of the England and Wales were now falling slightly.
Philip Shaw, chief economist at Investec, said that an increase to 5.75% at this month's meeting was definitely the most likely outcome.


Boomed!

[Ivor1]

Arse

[Paddy]

The interest rate reflects the amount of money the government needs to borrow. (“The Outline of Monetary Theory”)

The government is in the poo with the huge commitment in Iraq and they are at the limit of raising more taxes so they are borrowing to meet the shortfall. The only way to attract the sale of government bonds is to push up interest rates.

[sunnysan]

House Prices in London

Are they actually falling?

I have pulled out of a sale as I didnt want the commitment of a mortgage now, with interets rates going up, and AFAICS the property market in London is starting to look dodgy

It is clearly cheaper to rent now than to buy in London. So I have cashed in and I will see.

Seriously though, I am still on all the property sites mailshots and I can swear they are spamming me with the same melons but at 10% less.

[Causus Deli]

Are they actually falling?

I have pulled out of a sale as I didnt want the commitment of a mortgage now, with interets rates going up, and AFAICS the property market in London is starting to look dodgy

It is clearly cheaper to rent now than to buy in London. So I have cashed in and I will see.

Seriously though, I am still on all the property sites mailshots and I can swear they are spamming me with the same melons but at 10% less.

This is what they wish you to do, by scaring you, it's jealousy. If I had taken the same advice 7 years ago when I started btl then I wouldn't be where I am now having made quite a few bob and sitting on many properties with plenty equity. There may be a reallignment of prices but the best deals will again be snapped up by investors and unless you are vigilant and brave you will miss out. I am simply raising my rents anyway.

[Euro-commuter]

Are they actually falling?

I have pulled out of a sale as I didnt want the commitment of a mortgage now, with interets rates going up, and AFAICS the property market in London is starting to look dodgy

It is clearly cheaper to rent now than to buy in London. So I have cashed in and I will see.

Seriously though, I am still on all the property sites mailshots and I can swear they are spamming me with the same melons but at 10% less.

You need to know the prices of the good properties that did sell.

[chubba]

This is what they wish you to do, by scaring you, it's jealousy. If I had taken the same advice 7 years ago when I started btl then I wouldn't be where I am now having made quite a few bob and sitting on many properties with plenty equity. There may be a reallignment of prices but the best deals will again be snapped up by investors and unless you are vigilant and brave you will miss out. I am simply raising my rents anyway.

Yeah, houses prices will keep rising at 10% year-in year-out! You heard it from someone on a forum so it must be true!!

My house is on the market. At the beginning of the year one just up the road went on the market and it sold in less than 4 days - there was such demand for houses at that time. Ours has been on for about a month, had a couple of offers but both of these were below (not much but still below) the asking price.

Am looking to buy as well (cannot convince the Mrs to take a risk on renting for a year) and yes, I am also seeing the same old melons, sometimes with price reductions, sometimes not but they really are sticking now. Some properties I have seen have been on the market for 6 months or more.

All the Estate Agents I have spoken to have said the market is slowing down, I feel this cannot be disputed.

But then again, this could just be a seasonal blip? People getting ready for holidays etc and not wanting to move at this time of year?

Yeah right!

THE CRASH IS COMING, BATTEN DOWN THE HATCHES

Another couple of rate rises, house repo's go up, mortgage repayments go up and confidence in the market may hit a downward spiral.

Especially if people like Causus Deli get nervous, think we have hit the ceiling and put their BTLs on the market. Market flooded, double whammy, prices will tumble.

I have been predicting the crash for about 6 years though "this can't continue" etc etc so don't listen to me...

[chubba]

Oh yeah, was posted on another thread a while ago:
http://www.propertysnake.co.uk/

Seeing is believing! And this only seems to show houses on Rightmove that have actually been reduced, not all of the deals that go through under asking price...

[sunnysan]

No Crash

I dont think there will be a violent crash butmore the loss of ROI more like it

The point is

People like CD have 7 years of equity in property then good and well. Property is a good investment.

But CD has benefitted from 7 years of strong growth which has undoubtedly(Alongwith some balls) built his BTL empire.

All thing considered
1) Higher interest rates
2) Increased mortgage
3) Pessimistic growth prospects
4) Availablity of cheaper rental accomodation
5) Stamp Tax of 12k

I have made the decision that it is not worth my while to increase my mortgage and expose myself to higher interest rates at this time.

I do believe that if I buy now or in a years time I would have not missed out on that much growth. My decision is based on personal circumstances and risk/reward.

At this point in time, I dont think its a good investment. Not in London anyway

[Causus Deli]

My solicitor told me not to buy my first flat (2-bed) 7 years ago. I bought it for 104K and sold it 2 years ago for 168K. They are now selling at 175K (not asking). Those 2 years would have indeed not been worth it. I'm on hold and will reinvest when things take off which given the population growth must.