Delaying buying a house, time for a little honesty from some.

[MrXxxx]

https://www.thisismoney.co.uk/money/podcast/article-11522129/Could-house-prices-really-fall-20-Money-podcast.html

[Frank Hovis]

14 hours ago, MrXxxx said:

https://www.thisismoney.co.uk/money/podcast/article-11522129/Could-house-prices-really-fall-20-Money-podcast.html

 

Telling it as it is IMHO:

Hill’s CV includes setting up property giant Rightmove and selling estate agency group Countrywide for £1billion a year before the 2008 banking crisis.

Hill told the The Mail on Sunday and This is Money: 'My view on the housing market is that it's going down in every direction. Transactions are going to go down. Prices are going to go down.’

He added that a bad recession would mean ‘we could see 20 per cent price reductions’.

[MrXxxx]

7 hours ago, Frank Hovis said:

 

Telling it as it is IMHO:

Hill’s CV includes setting up property giant Rightmove and selling estate agency group Countrywide for £1billion a year before the 2008 banking crisis.

Hill told the The Mail on Sunday and This is Money: 'My view on the housing market is that it's going down in every direction. Transactions are going to go down. Prices are going to go down.’

He added that a bad recession would mean ‘we could see 20 per cent price reductions’.

But that 20% reduction only gets us back to pre-Covid price levels! :-(

[onlyme]

9 hours ago, MrXxxx said:

But that 20% reduction only gets us back to pre-Covid price levels! :-(

Could all be an exercise in achoring expectations, not the usual (ever continuing price rises) but the scale of falls, the 20% is probably already a given and may have largely already happened come spring with the froth blown off.

Walmart have apparently just stated double digit goods inflation (maybe specifically food) to continue for a while. Inflation is the joker in the pack, it can and if unlucky will continue to erode purchasing power and higher, the same or even slightly lower rates without significant pay rises affordability gap goes nowhere or even further down. 

[MrXxxx]

2 hours ago, onlyme said:

the same or even slightly lower rates without significant pay rises affordability gap goes nowhere or even further down.

Hope you are right, I have patiently waited for far too long/sacrificed a lot waiting to be settled, to accept 2020 prices...I want it back to 4X salary levels!

[Wight Flight]

2 hours ago, MrXxxx said:

Hope you are right, I have patiently waited for far too long/sacrificed a lot waiting to be settled, to accept 2020 prices...I want it back to 4X salary levels!

They almost are. It is just 4X 2 salaries.

And we wonder why the birthrate is through the floor.

[MrXxxx]

.

[MrXxxx]

Mortgage payments to surge by £3,000 a year, says Bank of England (msn.com)

Interesting to see that the BoE figure of £3000 pa increased payment is midway between those figures I posted above [North £150/South £300k @ 4.5%]...so what are the government going to do?

1. Trash the pound and support the housing market [by lowering rates] OR

2. Trash the housing market and support the pound [by keeping rates or increasing them to temper inflation}

...of course there is a third 'Kicking the can down the road' option alluded to in this article:

3. 'Encourage' the banks to stall/resist on foreclosure [by guaranteeing any mortgage holders in 'temporary' default]

...guess which one we will see, I think I know looking at their previous form!

 

@spunko is it worth/would it be a good idea to combine this with several other threads in this section covering UK housing outcomes?...just a though as I noted myself and another posted posted same/similar articles a couple of days ago.

[MrXxxx]

Thought this was interesting/useful:

https://www.uswitch.com/mortgages/mortgage-statistics/

So looking at these figures:

1. Of the 24.7 million mortgage households about 4 million [16.2%] will need to remortgage in 2023 BUT

2. Of the 24.7 million, 85.5% in the age range/groups 55 or over own outright meaning only 57.25% are indebted by mortgages [85.5%/2=42.75%; 100%-42.75%=57.25%]. As a result the number of indebted households is 14.14 million [24.7 x .5725], and 4 million due to remortgage by the end of 2023 is actually 28.5%....a far higher number than that in 1. above i.e. 28.5% versus 16.2%

So what does this actually mean i.e. what is the significance?

1. We can see that the majority of those of over 55 will be less impacted by interest/mortgage rate increases

2. Those over 55 will be in more 'mature' type properties.

3. Those over 55 if moving are not restricted by mortgage debt and so can 'pay what they want' for properties when moving [but see caveat * below].

4. Those under 55 [and the properties they are able to afford] will see the greatest impact of interest/mortgage rises, with almost a third about to suffer a sever financial blow/impact by the end of 2023, and this doesn't not account for the further financial impact of inflation on Utilities/food.

This suggests that we will end up with a two-tier property market in the UK i.e. with drops in the lower end of the market and firm prices in the higher end.

*The only caveat here is where those above 55 who want to downsize can afford to pay more BUT they will firstly need to sell their property to do so; many elderly though prefer familiarity and so are reluctant to move from their larger houses. As a result this means most elderly either a) die before downsizing thus leaving a aged/poorly maintained/'old fashioned' property as inheritance [difficult to sell to the age cohort looking/able to buy] or b) move into a private care home, where their property will then be used by the government to pay for their living expenses.

[King Penda]

2 hours ago, MrXxxx said:

Thought this was interesting/useful:

https://www.uswitch.com/mortgages/mortgage-statistics/

So looking at these figures:

1. Of the 24.7 million mortgage households about 4 million [16.2%] will need to remortgage in 2023 BUT

2. Of the 24.7 million, 85.5% in the age range/groups 55 or over own outright meaning only 57.25% are indebted by mortgages [85.5%/2=42.75%; 100%-42.75%=57.25%]. As a result the number of indebted households is 14.14 million [24.7 x .5725], and 4 million due to remortgage by the end of 2023 is actually 28.5%....a far higher number than that in 1. above i.e. 28.5% versus 16.2%

So what does this actually mean i.e. what is the significance?

1. We can see that the majority of those of over 55 will be less impacted by interest/mortgage rate increases

2. Those over 55 will be in more 'mature' type properties.

3. Those over 55 if moving are not restricted by mortgage debt and so can 'pay what they want' for properties when moving [but see caveat * below].

4. Those under 55 [and the properties they are able to afford] will see the greatest impact of interest/mortgage rises, with almost a third about to suffer a sever financial blow/impact by the end of 2023, and this doesn't not account for the further financial impact of inflation on Utilities/food.

This suggests that we will end up with a two-tier property market in the UK i.e. with drops in the lower end of the market and firm prices in the higher end.

*The only caveat here is where those above 55 who want to downsize can afford to pay more BUT they will firstly need to sell their property to do so; many elderly though prefer familiarity and so are reluctant to move from their larger houses. As a result this means most elderly either a) die before downsizing thus leaving a aged/poorly maintained/'old fashioned' property as inheritance [difficult to sell to the age cohort looking/able to buy] or b) move into a private care home, where their property will then be used by the government to pay for their living expenses.

Terraces houses might do better than you think due to the fact they might be cheaper to heat. On the downside are they ?

[MrXxxx]

19 minutes ago, King Penda said:

Terraces houses might do better than you think due to the fact they might be cheaper to heat. On the downside are they ?

The thing is @King Pendathe majority of property in the UK is old build [see top figure below (ref 1)], and these form the majority of terraces so have a lower efficiency rating, whereas the majority of new build are semis/detached/flats with higher ratings [see bottom figure below (ref 2)]. At the moment there is no requirement for private sellers to ensure their house if of a particular rating, and so there is no compunction to improve older stock with modifications.

 

 

Ref 1

https://www.ons.gov.uk/peoplepopulationandcommunity/housing/articles/ageofthepropertyisthebiggestsinglefactorinenergyefficiencyofhomes/2021-11-01

Ref 2

https://www.nhbc.co.uk/binaries/content/assets/nhbc/media-centre/stats/2020-new-home-statistics-review.pdf

[King Penda]

48 minutes ago, MrXxxx said:

The thing is @King Pendathe majority of property in the UK is old build [see top figure below (ref 1)], and these form the majority of terraces so have a lower efficiency rating, whereas the majority of new build are semis/detached/flats with higher ratings [see bottom figure below (ref 2)]. At the moment there is no requirement for private sellers to ensure their house if of a particular rating, and so there is no compunction to improve older stock with modifications.

 

 

Ref 1

https://www.ons.gov.uk/peoplepopulationandcommunity/housing/articles/ageofthepropertyisthebiggestsinglefactorinenergyefficiencyofhomes/2021-11-01

Ref 2

https://www.nhbc.co.uk/binaries/content/assets/nhbc/media-centre/stats/2020-new-home-statistics-review.pdf

True but one of the reasons a lot of new builds are cheaper to heat and no one meantiones this it’s partly because they are so small imo.mind that could soon be a viable trade off point where people don’t go for the maximum amount of house for the money like they often used to ps mines 1890

[leonardratso]

Just now, King Penda said:

True but one of the reasons a lot of new builds are cheaper to heat and no one meantiones this it’s partly because they are so small imo.mind that could soon be a viable trade off point where people don’t go for the maximum amount of house for the money like they often used to

mates complaining about his detached smaller new build being freezing.

[King Penda]

Just now, leonardratso said:

mates complaining about his detached smaller new build being freezing.

4 open walls

[Bobthebuilder]

1 hour ago, King Penda said:

Terraces houses might do better than you think due to the fact they might be cheaper to heat. On the downside are they ?

You calculate central heating requirements, taking how many outside walls a property has, problem with old terraces like yours and mine, is they do not usually have cavity walls, so tend to be cold anyway.

[leonardratso]

ahem, what about your filling spare rooms with polystyrene cheapskate method?

Dont forget to have a cig in them as well, kids tell me the fumes make you high as a kite, or was that wheely bins, cant remember, memory not good after burning all those insulated cables for the copper.

[MrXxxx]

52 minutes ago, King Penda said:

4 open walls

I can remember one winter living in a studio flat in the middle of a two storey, with one ground floor flat below and one above, I then went overseas for the summer. Upon my return the next winter I managed to get a ground floor studio flat in a block next to it, with exactly the same layout. The difference in how warm the former felt, and the lower fuel bills was quite surprising...obviously in the former I was getting the heat from below and the insulation from the flat above.

[King Penda]

31 minutes ago, leonardratso said:

ahem, what about your filling spare rooms with polystyrene cheapskate method?

Dont forget to have a cig in them as well, kids tell me the fumes make you high as a kite, or was that wheely bins, cant remember, memory not good after burning all those insulated cables for the copper.

That would be a fun project for the future once I get a bigger house.a cellar or garage would be a lot of fun

[roundhouse]

3 hours ago, Bobthebuilder said:

You calculate central heating requirements, taking how many outside walls a property has, problem with old terraces like yours and mine, is they do not usually have cavity walls, so tend to be cold anyway.

Not sure I should disagree too strongly with a builder :-) but I'm happy to live in another traditional stone-built terrace (or semi). They take a while to heat up change of season, but the stone retains heat once it's warmed. Lovely and cool in summer too. This said, when I do buy again I will be looking to put internal wall insulation (that there cavity!) on the exposed walls early on. So maybe not disagreeing...

[MrXxxx]

14 hours ago, Bobthebuilder said:

You calculate central heating requirements, taking how many outside walls a property has, problem with old terraces like yours and mine, is they do not usually have cavity walls, so tend to be cold anyway.

I have seen older building with retro-fit foam insulation applied on the outside, but do they retro-fit cavity walls?

[Formerly]

11 hours ago, roundhouse said:

Not sure I should disagree too strongly with a builder :-) but I'm happy to live in another traditional stone-built terrace (or semi). They take a while to heat up change of season, but the stone retains heat once it's warmed. Lovely and cool in summer too. This said, when I do buy again I will be looking to put internal wall insulation (that there cavity!) on the exposed walls early on. So maybe not disagreeing...

Need to be careful to use suitably breathable materials. You could cause damp issues. You may also have problems with cold bridges where internal walls meet the external ones. The alternative, external insulation, may be difficult on a terrace.

[roundhouse]

13 hours ago, Formerly said:

Need to be careful to use suitably breathable materials. You could cause damp issues. You may also have problems with cold bridges where internal walls meet the external ones. The alternative, external insulation, may be difficult on a terrace.

Thanks Formerly, agree completely with all three/four points. Wouldn't go for external insulation also because it's a pig to remove if ever that's needed. 

A house I almost managed to buy (before EA *took* it back and sold it to another), and other old ones I've seen needing updating from sixties, have thin polystyrene on all walls under wallpaper! Madness, but I guess we're known for ingenuity and resourcefulness in Cornwall. 

[Bobthebuilder]

52 minutes ago, roundhouse said:

A house I almost managed to buy (before EA *took* it back and sold it to another), and other old ones I've seen needing updating from sixties, have thin polystyrene on all walls under wallpaper! Madness, but I guess we're known for ingenuity and resourcefulness in Cornwall. 

Polystyrene backed wall paper was a big thing in the 70s/80s in an attempt to stop condensation forming inside old Victorian terraces.

[roundhouse]

44 minutes ago, Bobthebuilder said:

Polystyrene backed wall paper was a big thing in the 70s/80s in an attempt to stop condensation forming inside old Victorian terraces.

Glad you put "an attempt"! I hadn't realised the polystyrene was part of the wallpaper itself, nor that it was still happening in the 80s.