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AtW
8th October 2009, 18:48
House prices 'have further 17pc to fall'

The recent rises in house prices will prove to be a false dawn because of the broader problems facing the British economy, Fitch Ratings said yesterday.
By Angela Monaghan
Published: 10:34AM BST 08 Oct 2009

The ratings agency predicted that house prices in Britain would fall by around 30pc in total from the October 2007 peak, indicating that they have a further 17pc left to fall. The current average house price of £162,000 is 13pc lower than that peak, Fitch said.

Rising unemployment, which will peak next year and remain at that level into 2011, as well as a low wage inflation and poor credit availability, will drag on house prices, the report said.

“Despite the fact that a global economic recovery is under way, the economic fundamentals do not augur well for a sustained strong recovery in the UK housing market,” said Alastair Bigley at Fitch.

Both Halifax and Nationwide have reported house price rises in recent months but Mr Bigley said they were being driven by a lack of supply in the market and cash-rich buyers, which was not sustainable.

Fitch says the UK’s average house price-to-income ratio is likely to come down to below the long-term average, as it did during the early 1990s' recession. The ratio is currently “significantly higher” than the long-term average.

“A 30pc fall from the peak of October 2007 would bring this ratio back in line with the long term average,” said Brian Coulton, head of global economics at Fitch.

The report also warned that recent signs of easing in credit availability were only likely to be temporary. It said that as unemployment continued to rise, the rates of mortgage arrears and repossessions could rise, which would in turn prompt mortgage lenders to tighten lending criteria.

Attractively priced funding with a loan-to-value (LTV) of more than 80pc remained scarce, Fitch said, pricing first-time buyers out of the market and stifling housing demand. Fitch calculated that a first-time buyer would have to find £32,000 in cash as a deposit to buy a house in the current market, more than the £25,000 average pre-tax salary in the UK.

Lenders were also judging mortgage applications against a growing number of criteria, Fitch said, for example by declining loans where they see evidence of significant debt consolidation, regardless of whether the LTV and credit score were within policy.

“An appropriate loan-to-value ratio alone is not enough to secure a loan. Lenders are increasingly judicious about whom they will lend to and as the effects of unemployment and possible rate rises in 2011 feed through to performance Fitch expects lenders’ risk appetite to remain reduced,” said Mr Bigley.

The agency does not expect the UK economy to start growing again until next year.

But not everyone is as downbeat as Fitch even though many analysts have reservations on the pace of recovery.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "Despite further likely gains in the very near term, we suspect that house prices will be prone to significant relapses and will probably be no more than flat overall between now and the end of 2010."

Ray Boulger, senior technical manager at John Charcol, said: "I think during the next few months there is every indication that prices are going to keep rising."

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Too tired to put my comments in italics :tired

bogeyman
8th October 2009, 20:16
Still no property in your investment portfolio then?

Ruse
8th October 2009, 20:17
I certainly hope so as I'm still waiting for the market bottom or close to it so I can buy somewhere to live.

However that would be the same Fitch ratings agency that told us all the Investment Banks were all in fabulous shape until they started collapsing like a house of cards....

And as for all the tossers from within the industry, mortgage brokers, Estate Agents and their associated bodies, when did they ever tell us that the housing market wan't going to rocket perpetually skyward ?

So I think we can safely ignore everything that was said in that article. :bang:

bogeyman
8th October 2009, 20:26
I certainly hope so as I'm still waiting for the market bottom or close to it so I can buy somewhere to live.

However that would be the same Fitch ratings agency that told us all the Investment Banks were all in fabulous shape until they started collapsing like a house of cards....

And as for all the tossers from within the industry, mortgage brokers, Estate Agents and their associated bodies, when did they ever tell us that the housing market wan't going to rocket perpetually skyward ?

So I think we can safely ignore everything that was said in that article. :bang:

Why not just rent?

What is the obsession in the UK with buying houses?

I've rented some lovely properties in London that I could never afford to buy - even in the good times.

My missus and I own a few properties, and our tenants are all nice, respectable people, who are not going to hobble themselves by getting a mortgage.

If I were starting over, in today's market, I would rent - not buy.

AtW
8th October 2009, 20:27
Still no property in your investment portfolio then?

Nope, invested all my money into SKA :grey

One house nearby that did not sell / get rented for the last 3 year is now gone - ******s, I was thinking to move into it (renting) before Xmas :mad

bogeyman
8th October 2009, 20:30
Nope, invested all my money into SKA :grey

One house nearby that did not sell / get rented for the last 3 year is now gone - ******s, I was thinking to move into it (renting) before Xmas :mad

Bad luck. I think you're right to stick with rental though. Especially if you're working hard getting your business off the ground. The last thing you need is a mortgage.

AtW
8th October 2009, 20:38
Bad luck. I think you're right to stick with rental though. Especially if you're working hard getting your business off the ground. The last thing you need is a mortgage.

Indeed - with a morgage I would not be able to quit working for someone else.

I should have bought in 2000 or so, but back then I did not have permanent residency, so it was too risky from my point of view.

Current prices for real estate too high - either them or pound will have to fall, or some serious inflation (after £ falls).

Ruse
8th October 2009, 20:42
Why not just rent?

What is the obsession in the UK with buying houses?



Strange question, the obvious aim of buying is so that one day, hopefully sooner than later, you pay off your mortgage and have a much greater degree of financial independence without the major outgoing of a large monthly payment to a landlord or bank/buliding society. In your case you are getting someone else to do it for you and presumably getting a nice little income as well.

Personally I have the equity from the sale of a previous house sitting in an account earning very little interest. So I'm just trying to time somewhere close to within 10% of the bottom of the market before jumping back in.

bogeyman
8th October 2009, 20:47
Strange question, the obvious aim of buying is so that one day, hopefully sooner than later, you pay off your mortgage and have a much greater degree of financial independence without the major outgoing of a large monthly payment to a landlord or bank/buliding society. In your case you are getting someone else to do it for you and presumably getting a nice little income as well.

Personally I have the equity from the sale of a previous house sitting in an account earning very little interest. So I'm just trying to time somewhere close to within 10% of the bottom of the market before jumping back in.

I don't think it's a strange question at all.

Having lived in mainland Europe, and metropolitan Canada for quite a few years, where almost nobody actually buys their house/apartment, I wonder why it is considered the epitome of success here, to own a bundle of bricks and mortar.

AtW
8th October 2009, 20:50
Having lived in mainland Europe, and metropolitan Canada for quite a few years, where almost nobody actually buys their house/apartment, I wonder why it is considered the epitome of success here, to own a bundle of bricks and mortar.

Tenant's rights in this country are ****. That's a good reason to buy - especially if you like pets that most landlords don't.

I don't mind buying, but I do mind paying over the odds and saddling (sp?) myself with a risky debt that can bankrupt me.

Ruse
8th October 2009, 20:56
I don't think it's a strange question at all.

Having lived in mainland Europe, and metropolitan Canada for quite a few years, where almost nobody actually buys their house/apartment, I wonder why it is considered the epitome of success here, to own a bundle of bricks and mortar.

Surely you can see the contradiction in terms here :eek You are a landlord of "a few properties" which you are renting out to tenants who are paying off your mortages for you. But you are advocating that people should not buy but rent. Maybe you should post on here your properties to people when they become vacant so that they can assist you in paying the mortgages. :music:

And as regards to everyone in the US of A renting, then you must have been to a different country to me. Didn't you see the flagpoles outside ?

bogeyman
8th October 2009, 20:57
Tenant's rights in this country are ****. That's a good reason to buy - especially if you like pets that most landlords don't.

I don't mind buying, but I do mind paying over the odds and saddling (sp?) myself with a risky debt that can bankrupt me.

I'm pretty tolerant regarding pets (unlike a lot of landlords). Cats and small dogs are ok. Big smelly dogs that bark incessantly and crap all over the place are NOT ok and are indicative of the sort if tenant I don't want.

You can sort of judge a person by the pets they keep.

bogeyman
8th October 2009, 20:58
Surely you can see the contradiction in terms here :eek You are a landlord of "a few properties" which you are renting out to tenants who are paying off your mortages for you. But you are advocating that people should not buy but rent. Maybe you should post on here your properties to people when they become vacant so that they can assist you in paying the mortgages. :music:

And as regards to everyone in the US of A renting, then you must have been to a different country to me. Didn't you see the flagpoles outside ?

I said if I was starting again, NOW, I would rent.

You assume a lot of things too. For example: "tenants who are paying off your mortages for you".

FYI, I have no mortgages.

AtW
8th October 2009, 21:04
I'm pretty tolerant regarding pets (unlike a lot of landlords). Cats and small dogs are ok. Big smelly dogs that bark incessantly and crap all over the place are NOT ok and are indicative of the sort if tenant I don't want.

Is this why you don't like Churchill?!?! :eek

Sorry Spod - just joking here :wink

bogeyman
8th October 2009, 21:11
Is this why you don't like Churchill?!?! :eek

Sorry Spod - just joking here :wink

But I do like Churchill !!

He's fine if you keep him outside in garden. He's only a problem when he sneaks under the dining table and 'lets one off' during the pudding course.

Doggy Styles
8th October 2009, 22:05
But I do like Churchill !!

He's fine if you keep him outside in garden. He's only a problem when he sneaks under the dining table and 'lets one off' during the pudding course.I do that.

AtW
8th October 2009, 22:05
He's only a problem when he sneaks under the dining table and 'lets one off' during the pudding course.

You sound like his ex now. :wink

bogeyman
8th October 2009, 22:19
You sound like his ex now. :wink

ha ha :rollin:

DimPrawn
9th October 2009, 10:14
Why house prices can go up forever.


In the past, when taking out a mortgage, you were expected to pay off the capital and pay the interest. Banks and BS insisted on this.

Hence, even if interest rates were very low, massive house price rises would be limited by the ability to pay off the capital.

Then came along the free and easy concept of interest only.

What this means is that prices can rise to almost any level as long as interest rates are held artificially low. Infact, if banks gave people interest free mortgages and based the lending figure on "affordability", house prices would become infinite.

The idea now is you buy on interest only (say at £500K for your bedsit) and in 20 years time you sell up at £5M, pay the £500K off and walk away with £4.5M

Sorted.

So with interest only loans and low interest rates and lending based on "affordability" there really is no limit to the price of a house.

To infinity, and beyond!