Does anyone think that UK house prices are overvalued?

Cantor have started a house price market at www.spreadfair.com. If you look under financial bets you'll see it.

I notice that, in my area, the new official owners of repo'd property i.e. The Halifax or LloydsTSB etc. aren't knocking them out in auction as they used to do. Instead they seem to be carrying them and feeding them through normal channels (i.e. estate agents) at the same price as others in their range. Remember, the insurance company will pay off the difference between what they are owed and the selling price so there's no direct financial benefit to the lenders (Lloyds etc.) in doing this.

I'm guessing but suspect they're scared of spooking the market as a modern, 4 bed detached would almost certainly fetch 15 to 25% less at auction than in an agents window at this moment in time.

i heard from a mate today who works in the morgage industry that there is a lot of worry within the industy about the amount of personal debt and that alot of morgage payers do not have any personal savings to fall back on in case of emergency which is prob why the halifax etc are doing their best to talk up the market and not send propertys to auction etc which would only push the prices down !!

I'm not sure how they collect their data but...

LONDON (AFX) - Fears of a sharp slowdown in the UK's housing market may ease
with news today that house prices rose in March.
The Office of the Deputy Prime Minister reported that house price inflation
rose to an annual rate of 12.6 pct in March from 10.5 pct in February.
It added that the mix-adjusted average house price in March stood at 183,346
stg compared with 179,491 stg the previous month.
In addition, it said the annual rate of house price inflation in London rose
to 9.8 pct in March from 7.1 pct in February.
The government's findings echo those from the Halifax, the UK's biggest
mortgage lender, and the Nationwide, the UK's largest building society.
Today's news may ease concerns on the rate-setting Monetary Policy Committee
that a sharp fall in house prices may prompt an equivalent drop in consumption.
It is unlikely to prompt another rate hike later today though.
The MPC has not raised interest rates since last August as evidence emerged
of a slowdown in the growth of consumer spending, particularly in the housing
market, and the economy appeared to come off the boil.
Between November 2003 and August 2004, it raised its key repo rate a quarter
point on five occasions, taking the base rate up to 4.75 pct.

The ODPM data is always out of date. I tend to find the Halifax and Nationwide data to be better as it is based on mortgage approvals data rather than house completions.

Good to see interest rates have been held again ......

Land Registry said just 159,116 properties changed hands from January through March, down 35 percent on the 243,914 in the same period one year ago.

That is not surpising as this time last year the market was booming and now it has just stabalised.

Jan to March Land Registry figures are for contracts made six to eight weeks beforehand so are rather out of date. Accurate, but old.

ratios of house prices to incomes in the south have reached record highs.

Does this apply to a couples joint income or individual incomes?

Sorry to be contrarian - but I think we are in a temporary "soft patch" in the housing market, and over the next few years prices will head considerably higher. Income multiples may be stretched, but in the Irish Republic they are nearly twice as high as a result of the 2% European base rates - and hence prices have soared much higher than in the UK.

It looks now as though interest rates have peaked in the UK. I notice Roger Bootle (who's he!) predicting interest rates here of 3.5% in 12 months time.

In the world according to gallick, oil prices will surge to perhaps $100 per barrel over the next 3 years. This will lead to high inflation (infact stagflation). The MPC will be unable to put up interest rates as they will not want to damage the housing market and thereby trigger recession. We may well end up with negative real interest rates. House prices go up with inflation (so do wages), so it will be a no brainer to borrow money very cheaply and sit back on the sofa whilst the value of your property rises at a faster rate than the cost paying your loan.

rgrds
gk

I have to agree, I'm to the west roughly of stockdog.
You just can't buy a studio rabbit hutch round here
these days for less then C100,000 (C=carrots) and that's for a small
one in hooded fox infested territory.

Now a nice glade-like location, quieter, less litter etc, with
entry-phone etc for your more executive hutch dweller, easy C160,000
go from a studio to an actual one bed hutch of the multi-storey
variety (like your flats) and well C200,000 easy.....

What they go for round by stockdog I hate to think......
;>)

What effect will the new SIPP legislation allowing property into pension funds do?
I am split between thinking that either the effect on the market will be neutral, i.e. those who own `buys to lets` will merely move them into SIPP`s
and not buy more, or the effect will be a humungous rush to buy property, with the consequent price jump.But there again the latter might cause a glut of buy to lets, causing a sell off.
Basically totally confused, no change here then.

>> Sequestor

I do not think this will have much impact. Firstly to buy a property for 150K (not much these days) you would need 100K in your pension fund (which could borrow the other 50K). The average pension fund at retirement in the UK is only about 30K.

It may appeal to buy-to-letters, but they all seem to be pulling out of the market. To move a property into a SIPP you also have to pay all the costs (including stamp duty)again. Could all be a bit of a damp squib.

rgrds
gk

yes I`m moving to the ` neutral` feeling too, but watch this space,as my neighbour has just put his house on the market for an obscene amount, but it`s in 0.5 acre with a nice view over the Cotswolds, at a price +20% more than I got offered last summer, for my similar property- frightening.
I read that such properties are rarely being built any longer, ah well more boring dinner parties this summer I suppose-
",, my dear- it will be worth that when I retire"

cheers!

This month's www.rightmove.com housing report makes VERY interesting reading. Sounds as if the real decline in prices is about to start.

Move to Thailand 3 bed 3 bath house under 40,000
and the females well you can guess

The females have all got STD? But seriously, how much do you need to live on over there to match a UK lifestyle of, say, 30,000 net after tax and housing costs?

What have the men got?

The Bank of England's rate-setting committee voted 8-1 to leave the benchmark rate at 4.75 percent this month, compared with a 7-2 vote in April, according to the minutes of the May 6-9 meeting

Rates going down and not up!

going down?

House prices? Seems they're 'sticky upwards' in EA talk. Without a bit of fear in the market they may not fall as fast as doomsters predict?