Is the UK property market heading for a bust? - Ajarn Forum

Welshman · 20th August 2007, 17:08

The price of houses in the UK have been increasing exponentially over the past few years.

Now, it seems that, in some areas, prices are beginning to actuall fall.

With even London prices falling, could this be the end of the homes boom?

Asking prices for homes in London - seen as the engine of the property market across the country - have fallen for the first time in a year.

Five interest rate rises in the last 12 months are also cooling the market in other parts of the country, including the West Midlands, the North of England and the South-West.

At the same time, there has been a fall in the number of new homes coming onto the market, which could be a result of the introduction of Home Information Packs.

Industry leaders believe owners will be less likely to put their property up for sale 'on spec' because of the £500 cost of a pack. Over the last few years, house prices have

reached such a peak that many first-time buyers have been forced out of the market altogether, while others cannot afford to climb the property ladder.

http://www.dailymail.co.uk/pages/liv...n_page_id=1770

Add to that this article from a week or so back...

Property market in peril with houses 'overvalued by 20 per cent'

House prices are 20 per cent overvalued and the economy and property market are among the most vulnerable in the Western world to interest rate rises, it was claimed.

The warning came from experts in debt and risk at the respected Fitch credit rating company who have placed an alert against the British economy.

They believe a combination of unsustainable house prices, record personal debt and rising interest rates has created a potentially explosive cocktail.

The Fitch research, which assessed 16 major economies, suggests that the current average house price of some £211,000 is overvalued by more than £40,000.

It says the problem stems from the fact that house prices have risen some 210 per cent in the last ten years, while incomes have grown by a much lower 53 per cent.

Consequently, it argues that only a property crash or - more likely - many years of stagnation can possibly bring prices back into line with what people can afford.

Such is the weight of household debt on mortgages, credit cards and loans that Fitch considers Britons are particularly likely to be tipped into the red by interest rate rises. It listed the UK among three countries which it says are "most exposed to house price and interest rate shocks".

I sold my house last year. It had doubled in price in the space of just 7 years. It really does beg the question of how people are supposed to afford to buy and that those who do are mortgaged to the hilt with no room for manouver one way or the other.

So, is the property market headed for a bust?

Jasper · 20th August 2007, 17:12

The Times had an article recently and they believe the market will cool off rather than go bust. Similar thing said in the Guardian.

With starter homes at 200K, I'm hoping for either a crash, or a win on the lottery.

Well · 20th August 2007, 17:13

damn right mate! i'm with you...an old 2 up/2 down terraced house in the rough part of my town is starting at 100'000 right now...

Jasper · 20th August 2007, 17:36

I've also been looking at buying some land and getting one of those wooden Swedish-style houses. They only problem is getting any bloody land!

I joked with my family that I'd live in a caravan until I saw one for sale at 76K!!!!!!

Well · 20th August 2007, 17:39

Quote:

Originally Posted by Jasper

I joked with my family that I'd live in a caravan until I saw one for sale at 76K!!!!!!

mate, i know where you're coming from...was looking at some little bungalow chalet affairs...i stopped looking after i learnt the prices.

think we're gonna dig a big hole and live in that.

Jasper · 20th August 2007, 17:43

I've been eyeing up my Dad's shed for the last few months!

Well · 20th August 2007, 17:51

LDMA · 20th August 2007, 18:42

Yeah, you'd have to be mental to shell out 100k on a shithole in the ghetto.

LDMA · 20th August 2007, 18:42

Yeah, you'd have to be mental to shell out 100k on a shithole in the ghetto.

Well · 20th August 2007, 18:54

the point being louis there ain't much cheaper...

kiwiling · 20th August 2007, 18:58

I recall the London property market booming in 1987 and then many people went into negative equity after the crash. If they could afford to hold onto their property they would have a nice tidy rate of return now. The problem with property is if you have to sell because you can't afford the repayments. I have never lost money on property...only women!!!

LDMA · 21st August 2007, 00:25

For 150k you can get a beachfront property in Spain.

Jasper · 21st August 2007, 00:37

150K won't get you anything in the home countries these days, except a 'studio' similar to Bangkok condos. So once you've shelled out all the money, you can sit there and think back to your wilder days in LOS while stroking your nice new sideboard.

I went to see a new development yesterday and the one-bed 'coach houses' were 225K. Come on, crash baby, crash....

Well · 21st August 2007, 00:59

true enough jasp...

Jon · 21st August 2007, 02:04

It's bad, Well, but we still live in the cheapest two towns in East Anglia, so it could be much worse.
I'm ok, because I bought my first house in 1995. Now I live in a house I couldn't really afford to buy as a first time buyer, but because of the way the market's been my mortgage is under 2 yrs salary.
The price of a basic human need, a roof over your head, is absolutely outrageous in the UK now. I don't know how people new to the market ever hope to cope

I worry for my daughter, 17 in a couple of weeks. No student grant and free higher education like me, and then house and flat prices that normal people can't realistically afford.