inflated house prices

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Guest

inflated house prices

All we are told by various bodies is how predicted house prices are rising and will continue to rise.
However, I strongly disagree, I predict many recent buyers of homes, especially first time buyers and buy to let are going to lose out big time!.
Reasons as follows:
a)House prices have increased so dramatically in the last five years to such an extent that lenders have increased the spending limit for single buyers to five times earnings, why, to allow purchasers the chance to attempt to buy the property they wish to purchase. Fantastic, for now, but wait till interst rates increase again, perhaps to 10% or more, dear oh dear there will be trouble. Interest rates are low, due to the past troubled economies of the world.
b)If America does not come out of recession, this will impact even further on our economy and in-turn on business. Business in-turn will impact on employment, leaving many people who have just borrowed a large over-sized amount on their property, without a job to repay their mortgages - return of repossesions. The signs are already here, e.g Telewest, Bookham, Zen research, etc, etc. There are too many companies to list that are going bust and these in turn cause problems to many smaller companies.
c)Too many buy to let propoerties, which are now showing signs of major over-saturation of the market. Many properties in the south of England are not renting already, I have friends and relatives who are struggling to rent properties. Rental prices are decreasing.
I read an article recently, whereby it was stated that the property market does not have an impact on the economy of England at present, without it England would be o.k - Rubbish!! I will not explain why, as it is very complex.
Therefore, I do feel sympathetic to those potential losers in the housing market, unfortunately, they will soon learn who they are.
I'm afraid like buying stocks and shares, you must buy at the right time. When house prices are cheap and interest rates high, that way you know that you can afford your property at the worst times!!, especially for first time buyers.
The losers will be first time buyers and buy to lets, who borrow all the money to purchase.
BE WARNED THE CRASH IS COMING AND SOON. THE WINNERS WILL BE THOSE WITH DISPOSABLE CASH TO BUY THE CHEAP REPOSSESSED PROPERTIES BACK.

GOOD LUCK TO ALL.

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Report Abuse | Date 6/5/2002 6:19:00 AM

Guest

inflated house prices (in reply to Guest)

So you are not bitter about being a loser then?

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Report Abuse | Date 17/5/2002 9:49:00 PM

Guest

inflated house prices (in reply to Guest)

I personally think that lessons have been learned as regards management of the economy, and as long as we don't join the euro, I don't think we'll be seeing interest rates of ten percent for a long, long time, if ever.

To get to your worst case scenario, you paint a picture of spiralling UK interest rates and the impact on our economy caused by America not coming out of recession. I don't believe that high interest rates are compatible with the scenario you describe in point b).

Fair point about the number of rental properties being too many in some areas, but again, if interest rates were to rise and put homeownership beyond the means of even more people, there would be a surge in demand for rental properties.

But the key is not to overstretch yourself, get the right protection policies in place and if you can hold out for the long term, then you will still reap grand rewards in the end. There will be some losers and some winners, but then life's like that, isn't it?

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Report Abuse | Date 18/5/2002 12:06:00 AM

mantis

Posts: 12
Joined: 3/2/2002

inflated house prices (in reply to Guest)

One thing to remember is that interest rates are at a low and this government is now moving to control inflation through taxation as well as the bank of Englands base rates.

Money is cheap and salaries are rising = House price inflation.

I am a soft landing believer rather than a doom and gloom merchant.