Buying your first house in the UK in 2007

have you been to see the one i linked yet? that looks good, compared to the others on there

inflation is way above 3% people, jesus.

Is that one above the shop near the station/ Imperial?

inflation is way above 3% people, jesus.

-- That one guy that quit

which is why i wouldnt bank on interest rates stopping at 6

My latest fix lasts till December 2009 so fingers crossed it'll peak and drop back before then.

inflation is not above jesus

Nor is above 3% any more, if you use the Consumer Price Index as the measure, which I think is what Nasty, Brutish & Short was referring to - it's been the official one, for which the Bank of England has targets, since 2003.

I remortgaged just before Christmas and got a fixed-rate deal and BOY am I glad. Think the interest rate has risen four or five times since (I've lost count).

If you're looking for an up-and-coming area, find somewhere that has a Blockbuster and no other chain stores. This worked for me (actually it was Global Video but what the hey) and my flat is worth quite a bit more than it was in 2003.

Having said that, the thing I value most is having neighbours I know and get on well with. It's really nice to have a chat over the privet and be all domestic like. So do try to find out what the neighbours are like.

The two things I wish I'd known before I moved in are:
- My bedroom is 25m from the main route of all the Orange walks, so I get woken by ye pipes and drums early every weekend at this time of year
- I may have had the budget to fix the rising damp the survey picked up, but I really didn't have the energy and am still recovering after all this time. I wouldn't ever take on another flat knowing there was major work to do (I guess you can't help the odd bit of surprise fixing).

Nor is above 3% any more, if you use the Consumer Price Index as the measure, which I think is what Nasty, Brutish & Short was referring to - it's been the official one, for which the Bank of England has targets, since 2003.
I know desperately little about these matters, but our wise business desk bod tells me that this is only so low because the CPI excludes just about everything to do with property -- rent, mortgage payments, house prices. If they were included, you'd get a much more accurate picture of inflation. Which, he says, is soaring.

"Do I buy a house just now," I asked
"In markets the time to sell is when the last bear turns bull," I think he replied. "Tthe time to sell your house is when the last cynic starts buying. The people that have held out that long waiting for the crash buy, there's nobody left to prop it up, it crashes".
"Does that answer my question?"
"No. But if you do buy, be prepared to have to stay there a while, paying a bigger mortgage. The price always goes up, in the long game"

that pretty much covers it (not convinced about rents rising though - i pay less rent than i did 5 years ago - market is saturated with places to rent because of buy-to-let)

as far as i can tell the official inflation figures are basically kind of meaningless, considering they dont include the most inflationary thing of all. but because cheap imported bits of electronic tat stay cheap apparently inflation is low;) and you can pretend inflation is whatever you like, but markets won't be fooled, and this is why you shouldn't bank on interest rates staying as incredibly low as they are right now

i think hes kind of right about it being a pyramid scheme (hence rate cut of 2005 to bring more people into the game), but its also the fact that prices can only be high if people have money to spend, and people only have money to spend if banks lend them those sums. banks tighten their belts and theres less money, and therefore less buyers, and prices come down.

yes when it happens people are going to be stuck where they are, not able to move (with many having to let go because of being overextended). im still not entirely convinced that property 'always' goes up in the long run (as people mix up real and nominal prices)

as stated upthread, the real problem now is that a crash can have severe repercussions for the uk economy, seeing as it appears to be basically propped up by credit fuelled consumer spending, which will stop immediately

the impending collapse of buy-to-let is i guess just the latest of endowment mortgages, dotcom shares, stock market crash, etc etc, where the great british public saw an opportunity to throw their money down a well

anyway, whats interesting is that in britain - we've separated out our society in such a way that many of us think that current times are the default setting, the traumas of 73-85 and the transition away from manufacturing a distant memory, as we have all become 'rich' through heavy borrowing, but this doesnt mean there aren't other transitions ahead

the impending collapse of buy-to-let is i guess just the latest of endowment mortgages, dotcom shares, stock market crash, etc etc, where the great british public saw an opportunity to throw their money down a well

OTM. I just wish the 'inevitable' would hurry up and happen so I can buy a house. Been waiting since 2005.

If buy to let crashers there is a danger that any price drop will be knocked out by an inrush of pent up first time buyers.

Average cost of moving house is now £22,000

That's a slightly bizarre survey.I can't begin to explain why 'cos I've got to take the kids to school but I think it can be safely ignored.

as far as i can tell the official inflation figures are basically kind of meaningless, considering they dont include the most inflationary thing of all. but because cheap imported bits of electronic tat stay cheap apparently inflation is low;) and you can pretend inflation is whatever you like, but markets won't be fooled, and this is why you shouldn't bank on interest rates staying as incredibly low as they are right now

But the Bank of England's base rate is set by a committee who are told to try to keep inflation within a range determined by the government, and the government chooses to define inflation as something which excludes house prices. If the prices of 'cheap imported bits of electronic tat' and all other goods continue to rise at a rate that falls within the government's target band and are expected to do so for the forseeable future then there is no reason for the Bank of England to increase interest rates. If the government suddenly decided to include house prices in the measure of inflation, but kept the same target band, then the Bank of England probably would raise rates considerably higher - but if this then triggered the house price crash that everyone is predicting then this would also lead to deflation and inflation would be below the government's target and so the Bank of England would have to start cutting the interest rate to bring inflation back up. Wouldn't it?

CPI doesn't exactly exclude everything to do with housing - it tracks rental prices. These are often out of sync with house price increases, yes (and, of course, mortgage repayments), but there are good reasons for taking them out of the equation in a lot of cases, because they skew things so heavily, and house price rises at least, if not mortgage repayments, affect people in different way to other costs of living. It's not just a "massage the figures" thing.

The RPI (including mortgage repayments) is currently at 4.3%, which is down from a high of 4.8% two months ago, so it's not really soaring any more. It's still much higher than it was a year ago, but the recent trend is down.

x-post

If buy to let crashers there is a danger that any price drop will be knocked out by an inrush of pent up first time buyers.

well, yes, you would think so, except.

once theres a glut of property from buy to let crashing, buyers will be much more choosy, so you better be selling the right kind of flat in the right kind of area, plus buyers will know they now have the upper hand. also, in a falling market, people will pull out much more easily if other places keep on popping up, slightly lower each time

secondly, the conditions that help a buy to let crash may also affect first time buyers, banks more cautious, rates higher etc, in relative terms it mightnt become any easier to buy

thirdly, sentiment. if the newspapers are screaming crash, just as theyve screamed 'buy at any cost', buyers will be a LOT more wary

Would you contemplate buying RIGHT now?

In Exeter... huge new shiny shopping redevelopment in centre of town about to open, university, Met Office, apartment developments all over the shop...

Also, what's etiquette of making an offer on somewhere newly refurbished? And what does 'offers in region of' mean? 10% below? More? Less?

I wouldn't spend too much time worrying about and overanalysing the economic conditions today and what they might be in 2, 5, 10 years. Nobody knows, least of all economists.

If you want to do it, can afford to and are feeling up to the task, then DO IT!

On the offer thing - you have to develop a sense of what's a fair price for that particular property vs what you can afford and what other proerties are going for. Of course the seller doesn't care what you afford or what other properties are selling for, so can hold out for an unfair price...

But as a rule of thumb, if it's a decent place and you would move on it if the offer was accepted I wouldn't offer less than 10% below the asking price. Maybe 7-8% less if it's really nice, but there are lots of variables.

if you find somewhere great, and you can afford it, and you have leeway as well (which you should, with there being two of you and a reasonable deposit), then i'd still go for it. you can wait an eternity waiting for the 'right moment'

(one caveat though: apartment developments all over the shop is an argument for lower not higher prices, oversupply and all that).

put in the offer of what you think is right (some places are priced very well, others badly, so theres no blanket rule of what to offer)

after that, KEEP LOOKING, constantly, if something better comes up, either pull out or lower your offer. if by the time it happens you're still with the same place, its beat off a lot of competition to stay there

Oh yes I think go for it. What's the absolute worst that could happen? You lose the house, you end up having to rent again? I can think of a lot worse things. And anyway that won't happen (probably).

i saw this thing on nosenight where the idea of blanket inflation rates was being pooh-poohed, not just in terms of north/south, urban/rural but young/old because some things are becoming more expensive (eg fuel) quicker than other things...

Well yeah, we all have our own inflation rates. In recent years I've personally been subject to deflation, what with a lower-than-ever rent and cheaper music, electronics, clothing and (in the slightly longer term) air-travel. I've never had it so good!

The kitchen is open-plan with the living space, so windows at front. We're looking at it on Wednesday morning, and also this one; http://www.bradleys-estate-agents.co.uk/properties-sales-brdrps-BNH070414-1181552579

Jonesy take note of what's downstairs...

-- Scik Mouthy, Monday, June 11, 2007 1:50 PM (2 days ago) Bookmark Link

Well, what did you think?

one day you'll suffer inflation Alba, just like all the rest of us!

We've had an offer accepted. Not on either of the properties we looked at this morning... We saw a two-bed maisonette conversion, the top two floors of a big town house, very central, at 4pm, and we'd had an offer accepted by 4.45pm. I am slightly bemused. It is a beautiful property though.

So, I know this is dumb, but you mean two bedroom property then?

Yeah, two bedroom maisonette. Large bathroom, open-plan kitchen / living room, landing, stairs, one bedroom on each floor. Incredibly light and airy, nice part of town; exactly what we were looking for, I think.

I'm probably spoiled or desperate for my kids to have some private space: I'd opt for three bedrooms. :-(

No link to the propery? I love watching houses!

So when will you know for sure if you have it?

I dunno yet; the other flats in the building are still being converted / refurbished; ours is 99% done, just needs a fridge freezer fitting and a cupboard door, but as it's at the top we'd have to walk past builders everyday.

You do realise posting links to property = hello, please come and stalk me.

We've just been diddled out of another house due to estate agents talking pish to us. I *hate* housebuying.

Yeah, it's bad enough telling my brother the address, let alone you lot...

go see the house i linked!

We're gonna arrange to see that on Saturday.

You moving, Ailsa?

Um, yeah. We REALLY need to catch up for a pint soon, don't we?

I'll email you.

Yes we do!

Consider yourself emailed.

"It's not just a "massage the figures" thing."

Id agree with this, re basic economic model; net sector approach of householders vs producers. Id hazard a guess most of the money isn’t really leaving the household sector.

I see you’ve bought a place, congratulations. My advice is a bit redundant but for others Id say most impt is NEVER TRUST AN AGENT. EVER. Im too trusting and I paid slightly on the high side, next time round I wont worry about manners so much. Be cheeky and put in a lowish bid to start with.

Also as nice as it is, don’t get fooled by the swanky new kitchen/bathroom thing, its often cheaper to renovate than you might think. Invest all your deposit into the home, and remind yourself you’re not paying a variable rate of 10.5% like NZ! Yes 10.5% :(

how was the house on saturday, scik?

that bad?

I has a new house (sort of, subject to lots of complicated technical legalish stuff)!

congratulations!

for uk people interested in the us situation:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a.YQgRkCGscI&refer=home

difficult to tell how similar/dissimilar us and uk is over this. americas problems seem to be led by subprime and then oversupply, i cant really tell how prevalent subprime is in the uk, but it seems the major lenders themselves have been too happy to lend out unrealistic amounts to people. i guess the difference means lenders here wont go to the wall in the same way?

so the uks problems are likely to be led by overzealous lending also(esp interest only mortgages) but by major banks? and then buy-to-let, mewing to an extent, and then oversupply but only in certain sectors?

i guess buy-to-let will be the equivalent of the dotcom thing, and interest only mortgages the equivalent of endowments (as people are unlikely to have been wise about what to do with the rest of their money - if there is a 'rest of their money', that is)

with the us, spain, ireland (aus/nz?) all running into difficulties, uk is sure to follow, but itll be interesting to see how they try steer the ship through the rocky waters ahead

will it be
a) sharp shock of higher interest rates, big drop in consumer spending, recession, nominal price drops - 90s style
b) chasing inflation through incremental rises, nominal prices dont drop, moneys worth less in your pocket every day, inflation inflation inflation - 70s style

first would be more painful, but the second would drag out for a very long time

looking like rates are going to hold again at 5.5, will they try hide 5.75 in the august holidays? 6 by october? or by christmas? is that too little too late, spectre of further rises next year? all beginning to point more towards scenario b)

what did your mortgage advisor say, scik? its definitely worth getting that sorted as early as possible, it will hold for 3 months i think, even if you dont go through on this particular house

i hope a big crash will happen soon.

so i can buy a house