pumpkin blossom

I think your advice is bad, does that give me the right to be as rude as you have been?

HCJ

There is a very good (if slightly sensational, it is MSN after all!) summary of the issues here:

http://money.uk.msn.com/Investing/In...mentid=5886240

daunted

Thankyou for posting that. I will have a good read of it and try to remember that it is slightly sensationalised, possibly, hopefully

Bobcat

Why are we hungry???????????

Nursebank

No, i have to disagree, i make no appologies for this, my advice is correct with regards to the actual situation, the situation is not generic, unlike yours, so rudeness is very welcome as long as the advice is correct, whereas politeness is something that is not very welcome when advice would mean that i am at a financial loss. Not that i feel i have been rude to you, i have just let you know that your advice is incorrect in regards to the situation but it might be right for you, so i will say it again, good luck to you my old pumpkin!


HCJ, Great find, must say it is, well not a bad article, coming to a town near me, maybe?


Why the property market is heading for a nasty fall

By John Stepek
August 15 2007

There’s no doubt that the housing market is starting to look a little peaky
The latest report from the Royal Institution of Chartered Surveyors (Rics) found that the number of people looking for a home fell at the fastest rate in three years last month, while the number of unsold properties rose to its highest this year. Surveyor confidence on future sales also turned negative for the first time since way back in March 2003.
The Rics survey was one of the first to show evidence of a slowdown during the last big tremor in the housing market that kicked off in mid-2004 - which was also accompanied by rising interest rates, just as we’re seeing just now.
The Rics survey isn’t the only evidence of problems in the property market.
Repossessions are also surging – data from the Council of Mortgage Lenders (CML) shows that they hit an eight-year high in the first half of 2007, and are still climbing
However, plenty of pundits are still arguing that prices in the UK won’t fall. At worst we’ll see a soft landing. Not for us the housing carnage seen in America.
They’re wrong. There are several reasons why.
What next for interest rates? Our experts give their predictions
Salaries vs property prices
Firstly, the housing market is growing ever more unaffordable. First-time buyers are now shelling out 3.37 times their salary on average to buy a house, says the CML, the highest ever. Meanwhile, the proportion of their income going on mortgage payments has jumped to 19.3%, the highest level since 1991 – around about the time of the last property crash.
These figures are almost certainly understated too. The average house price (according to Nationwide) is nearly £185,000. Yet the average salary is – optimistically – in the region of £30,000, and far less if you take London out of the equation. So the average house costs six times the average income. It’s little wonder that the proportion of first-time buyers entering the market has fallen sharply.
The slack, of course, is being taken up by buy-to-letters. Nearly one in six mortgages taken out in the first half of this year was a buy-to-let loan. The sector now accounts for 10% of the mortgage market, from just 3% five years ago.
But none of this is sustainable. That’s because the housing market is propped up on cheap debt – and debt is becoming steadily more expensive, due to rising interest rates.
The trouble with buy-to-let is that it only makes sense if your costs are lower than your outgoings. It also only makes sense if you can earn more by investing in buy-to-let than if you put your money in a bank account – after all, it’s riskier and more hassle.
But, according to Landlord Mortgages, the average rental yield on a buy-to-let property is 5.42%. That compares to the more than 6% interest rate that you can get on some savings accounts.
And, in many areas, there’s more and more anecdotal evidence that landlords – particularly those who have bought in over-built city centre apartment blocks – are actually subsidising their tenants’ rent every month. In other words, they are earning less in rent than they have to pay out in mortgage costs.
The higher cost of living
This situation will only get worse. Interest rates having risen sharply in the past year or so, which means that anyone who took out a two- or three-year fixed-rate mortgage in 2004 or 2005 is looking at paying a lot more when their deal comes to an end. The CML reckons that, in the next 18 months, around two million borrowers will see such deals expire.
This comes at a time when consumers are already struggling. Just this week, US retail giant Wal-Mart (which owns Asda over here) issued a profits warning, and said that consumers all over the world were battling rising interest rates and high petrol prices.
“It’s no secret that many customers are running out of money towards the end of the month,” said chief executive Lee Scott. “The pay cheque cycle is, in fact, more pronounced now than it ever has been.”
If you’re still sceptical about the idea that house prices in the UK can ever fall, just take a look across the Irish Sea. House prices in Ireland fell for the fourth month in a row in June, and were down 2.6% on an annual basis during the first half of the year. The falls are down to rising eurozone interest rates cutting into the amount that Irish homebuyers can borrow.
Property chickens come home to roost?
And, on top of higher interest rates, the recent turmoil in the credit markets and the lessons of the US sub-prime market are likely to make it harder for lenders to offer the same kind of deals as they have in the past five years.
As Melanie Bien of independent mortgage broker Savills Private Finance recently told The Telegraph: “Problems in the wholesale lending market filter through to borrowers in the mainstream mortgage market in the form of tighter lending criteria or higher rates of interest.”
So a credit crunch – as seems to be happening right now - would tighten up lending standards across the world, not just in the US. And for a property market that’s been propped up by six-times salary mortgages, 125% mortgages, and other exotic forms of lending, that’s bad news.
Recently, credit rating Fitch put the UK economy as being one of the three most vulnerable housing markets to interest rate hikes.

It reckoned that UK housing was 20% overvalued.


To be honest, this is a very conservative estimate, i would say more like 30% minimum, then on the down side, it will always overshoot, so a drop in real terms of maybe 40% much dependent on where you are and demand for the type of property.

A better article http://business.guardian.co.uk/story/0,,2148207,00.html

http://www.telegraph.co.uk/property/...4/pwait114.xml


I am a nurse, i make an important contribution to society in the UK, and i will do the same in OZ, when i and similar people like me, firemen, teachers, ambulance drivers cannot afford to buy even the most conservative place to live in and call my own. Well i make no appologies for making known the fact that the price of houses are somewhat SKYHIGH, all down to the lie to buyers here in the UK, the loose credit brigade, but this is all but drying up i hope.

But i can back up my theory on this situation with real facts, i have done my research, unlike many i feel?

daunted

Wish I had never asked the question now!

Nursebank

I am afraid that the euphoria of emigrating tends to overshadow the real facts of life sometimes?

You must live somewhere, and if that cost is removing the quality of life you would expect, then there is something seriously wrong with the situation?

chrisandvee

I personally wouldnt offer any advice to people, unless i was 100% sure that what i was saying was 100% correct. But thats me!!!!!!!

mbike

Hi Bobcat,

It was a reference to "commission-hungry", the situation where employees in certain professions are highly motivated by the promise of commission, often on a very low base salary.

Cheers

Mark

pumpkin blossom

Well said Chrisandvee.

And unlike Nursebank I wouldn't slag people off for giving 'poor advice' without first rereading it to see if they actually were giving advice, or just telling their own situation, which was relivant to the other post.
But it seems some people have to be right, and think they can be as rude to people as they like to make people think they are. Obviously it doesn't work!

Kalenge

Nursebank, I think your bedside manner has been found wanting. Surely you aren’t really a nurse, but a brilliant all-seeing, all-knowing, economist ... old pal?

Buzzy--Bee

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