UK Housing market.

[gooze]

I got some good news this mornning that certainly suprised me and may suprise one or two others. My parents and my grandfather both put there houses on the market at the start of June. Grandads house was sold in four days and mum and dads in ten days. Both at full asking price (obviously subject to contracts).

Now having read this forum regularly there is a lot of doom and gloom written on this subject. Did my family just get lucky?, is it because the properties are in the Shire counties?. Or is the UK market on the up.

The reason I ask is I have a small property there that I am considering cashing in on.

[lomuamart]

As I've said a number of times on the forum, I've got property in central London and as it's been my bread and butter for living here off rental the past 9 years, I keep a pretty close eye on what's happening with the market back home.
Increases in value all over the country have been obscene over the past 5-8 years. As first-time buyers found it increasingly difficult to find the funds to buy, so the lending institutions increased their earnings to lending ratios and it's not unusual to find banks lending 5x salary. (When I bought 18 years ago, 3-3.5x salary was the top end).
Unfortunately, this lending policy has the tendency to lead to repayment problems/repossessions, so that's partly why the Bank of England have raised interest rates 4 times (I think) in the past year - another 0.25% increase was narrowly avoided this month. (Too many people fall into the trap of saying "it's only a 0.25% increase. Not too bad", but they forget that it's a 0.25% increase on 6%, so to 6.25%, which is effectively a 4% increase on repayments).
I'm sure the market will slow down and in fact I was reading an article yesterday that showed the Assoc of Building Societies had experienced a sluggish last quarter for loans.
Nevertheless, I don't think there are that many properties for sale at the moment. This keeps prices high, depite the cost of borrowing. It also keeps the rental market bouyant, which from a selfish point of view, I'm happy with, but it must now be extremely difficult for young people wanting to get on the property ladder.
Do you sell? Well, you're obviously involved with the business, at least over here, so I'm probably teaching you to suck eggs when I say you have to weigh up your location and what's happening to prices there, your rental value (if you're renting it), what you bought it for against its value now and how much longer you've got on any mortgage and what you're paying each month.
Personally, I'm holding onto mine. The market may dip over the next few years, but looking longer term, I can't see any real downturn. Mind you, I'm 50 next year, I won't live forever and as I have no dependants other than my wife at the moment, there certainly will come a time when selling back home makes sense for us to enjoy life over here a bit more.
I'm looking forward to the golf!!

[lomuamart]

Found the article:
http://business.guardian.co.uk/story/0,,2107313,00.html

[Guess]

Both at full asking price (obviously subject to contracts).

These prices were almost certainly set by agents who have the fingers on the pulse and know the national market and usually specialize in their own area. There aim, despite the stick they get, is to shift the house as soon as possible at the right price. Sold in 4 days implies to me that it was underpriced slightly or the seller were just lucky.

The post give no indication of what they would have got if they has sold the house 12 months ago. I have a brother in London who owns an apartment outright and he has a girlfriend who owns a house outright.

They have to show to the outside world that they both live in their own houses for many financial reasons. He keeps his finger on the house market in London at least. The general message is that the market is slow but just about keeping up with inflation.

A buy to let policy is completely out of the question. On a 90% mortgage you could expect no more than a 50% return at best. In some area only 30% but the gap is closing as rents still increase while house costs increase.

That is the worst scenario. At least there is no sign of a repeat of the 1989 situation.

[caller]

My property has significantly increased in value in the last 12 months. So much so that I had a hand written note put through my door the other door by an agent stating they had just smashed the record for the road and had one disapointed potential buyer wanting in!

Its easy to track prices now as since 2000 all UK sales details are included on each updated land registry, which is public knowledge and as a result several Co.s now provide data on recent sales. In my case within 500 metres of where I live (I live in a cul-de-sac). The (web) company I use is called our property.

In my area, they are predicting an overall increase of 8% in the year and if that happens and a similar rise continues into the next year, then at some stage, I will review my plans for the future.

[lomuamart]

An agent specialising in a particular locale is obviously necessary. So, also, is the vendor's knowledge of their market. Certainly, estate agents don't want properties on their books for too long. It dosn't make commercial sense.
Buy-to-let is definitely a bad move, although I don't think gooze was asking that. He/she owns already. As I do.
Renting the property out and being able to afford to live here "just happened" to me. It wasn't planned.
I do think the property market has reached its height in the UK for the time being. In fact, I think it's totally overpriced ( and I say that despite my ownership).
There are just too many factors to consider, that are personal to each situation, to say to the OP do it, or don't.
However, I'm looking forward to the day I can safely sell my place without having to worry about the future too much. Hopefully, I will do that at the right time. Mind you, after 18 years of owning the property, I doubt there's a bad one. It's just a matter of time.
Again, roll on the golf. (I'll be too flipping old to hit the ball 400 yds by then).

[Jaime]

A buy to let policy is completely out of the question. On a 90% mortgage you could expect no more than a 50% return at best. In some area only 30% but the gap is closing as rents still increase while house costs increase.

That depends on whether your investment is to provide short term income or whether it is a long term alternative or addition to a pension scheme. If you can sit it out for 20 - 25 years on an interest only buy to let you effectively have somebody else - the tenant - paying into your pension fund. Buy two properties and the second house is effectively the endowment policy, again paid for by the tenant. Over that period of time you are likely to see significant increases in capital value so there will be a tidy lump sum left over from the sale of the 'endowment' property. If you can keep one or more properties then you also have some sort of regular income.

On the downside - 90% buy to let mortgages are almost unheard of these days. More likely that you will need to stump up 15 - 20% yourself. The risk of a void period in your property also looms but that's the risk. Speculate to accumulate etc.

[lomuamart]

As Jaime says, buy to let is viable, as long as you're a "sort of professional landlord" and have a decent spread of properties to look after. I reckon it'd be a bit difficult to start out on that path now, with one.
However, I've done the living off the tenants thing for 9 years now and each year gets better financially for us. The remaining mortgage only represents 13% of the rent. The endowment policy (wish I didn't have that, but there you go, it's not a problem anymore) represents 4% of the rental and will pay off the remaining mortgage easily in 8 years. Other bits and pieces are 3%.
Agents fees 14% (yeah, what do they do for that? But they've been there for me in the past when necessary and I can't really do without them). Tax - virtually nothing.
So, I end up with about 65% of my gross rent in my pocket. Meanwhile, my property has been appreciating at "a lot a year" (3 bedrooms with garden in central London). That's my pension, my savings, my life. The endowment policy hasn't performed and my appeal to the Financial Ombudsman was turned down earlier this year. However, it will still pay off the mortgage in 8 years and provide me with a small lump sum.
Gooze. Unless it's your livlihood and you've put a lot of years into the property already, you might be mindful to sell. I can't see property prices in the UK going much higher for a while. Then again, you don't tell us where your property is. That's a big factor.

[redzonerocker]

i have noticed a huge increase in for sale signs in my area. 5 in my road have been sold or are stc or are currently for sale.
a lot of people are at their financial limit & another rate rise is imminent, this will take a lot of people further over the edge.the outlook is brighter with reductions in the rates early next year but that may be to late for some.
there is still a good market for sales but i would say the buyers are usually multiple property owners & are for rentals.
a common sales option now seems to be by auction, a friend of mine just sold by this method. he got the price he wanted (just over) & all was done & dusted within the month.only cost him £800 more than normal sale but without the waiting & potential hassles.
it seems the market for lower priced houses is good but the more expensive ie over £250k is a lot more stagnant.

[caller]

Redzone - again, it depends where you live. 250k won't get you much more than than a 1 bed flat where I live and that is below the average for the area. Properties where I live sell very quickly.

A house 3 doors away was bought by a developer (it was in a state), the basics were done and some superficial effects added and it sold immediately. There was a hitch as about a month later it was back on the market, but with a 10k hike in the price. It sold (really this time) straight
away.

Prices are now 15k above the hike.

It will slow, obviously, but come next spring....

[caller]

Double post, sorry. Treated myself to some Singha today - 99p a small bottle. I blame it on the 4th one!

[redzonerocker]

i see your point caller, you live in london i presume?
one bed apartments where i live, which is a major city, start at approx £130/140k.
the reason for the high prices is quite simply the high demand for housing.
i think the market will eventually level out.
those that have bought in the past few years are struggling to keep up with the payments & one more rate rise will see a massive amount of sells or repossesions.there is already a big increase in for sale/to let signs springing up all over my area.there are also a lot of people out there trying to get on the property ladder with no idea of the hardships they could possibly face in the next few years.
i think its spiralled out of control.

[gooze]

"These prices were almost certainly set by agents who have the fingers on the pulse and know the national market and usually specialize in their own area. There aim, despite the stick they get, is to shift the house as soon as possible at the right price. Sold in 4 days implies to me that it was underpriced slightly or the seller were just lucky."

Thats the strangest thing grandads house was in his and my parents oppinion 30,000 stirling above the realisatic price (bassed on a similar house in the same street sold four months ago.

As regards M&Ds house the selling price was probably 10,000 more than they would have been happy with.

I wonder if part of the reason is that both being older properties they both had 100 feet rear gardens. I know many of the new houses have very small yards.[/quote]

[PeteC]

CNN has been running a news headline ticker all day saying " UK housing prices up 11 (or 11.5%?) in June..." What I can't figure out is if this is an 11% increase for just the month of June, or YTD? Whichever, it's a big jump, just the opposite almost of what is happening in the USA. Pete

[STEVE G]

Pete, I think it was 11 percent over the last twelve months and 1.1 percent in the month of June.