OK This has been 'getting my goat' for ages and just in case anyone
else feels the same, here's a thread to vent your feelings & views!!

So then...House prices currently...
1. Are they truly realistic?
2. Do you see a crash and burn possible in the next 12 months?
3. Is it lulling people into a false sense of wealth that really
is just an illusion?

My thoughts are they are not realistic and as controversial as this
may be, I hope some type of re-dress does occur sooner rather than
later - although a crash and burn scenario seems a little harsh!

This can't go on surely?? The last two booms didn't, is it different this time?
I can't see it, sooner or later be it through interest rates or
economic factors (unemployment) it has to change. The longer it goes
on the further people will have to fall financially.

It is causing an illusion of wealth?
Well when I speak to friends who are younger who don't remember
the last crash and haven't experienced
15% interest rates on mortgages (which I have) and they can't imagine
having to tone down their lifestyle to pay higher mortgages, or can't
imagine a time when thier homes wont just automatically go up every year...
YES IT'S CREATING AN ILLUSION!!!!!

Any typos please excuse - the bunny's not 100% today!!

Brianboru
It would bother me if people got hurt.....but I think it will happen!
Average wages are suppposed to be circa 30k, but look in the Evening Standard and there's lots of jobs that pay half that or less, and that's in London!!! People are borrowing huge multiples of their income that they really can't afford because the newspapers tell them to buy or they'll miss the titanic...so they lie about their wages. When rates head north as they will eventually, they will be forced to sell. Companies like Ocean Finance will realise how appropriate their company name is when they see how many people are drowning in debt!
Most buyers of bigger houses are greedy buy to let gannetts who are buying up the supply of houses making them so expensive....they'll all sell together when the top has passed creating the crash....and if they lose they'll get no sympathy from me! Those that want to buy a house to live in are being priced out by selfish people who want to own many houses, which creates the shortage which pushes up prices.
Interest rates must rise in the US as they can't let the dollar collapse completely. If they do, the 'value' of America compared to the rest of the world will dive and so will Americans' wealth....it's a prime function of a central bank to protect the country's currency!
If US rates rise ours will as well to protect the pound against the dollar. Rates usualy rise and fall together for currencies where the economic cycle is in harmony.....like the US and UK.
All my opinion, and probably wrong!

>>

Andy my stocks are not making 100 per day, but on some days they do (like today), but on most they do not, and on some days it is very nasty indeed.

Property prices have rise by 2% over each of the last 3 months (apparently). If you have a property worth 300K that means that is has risen in value by 200/day. Do the maths.

Unfortunately I have things called mortgages, expenses and a wife!! One day though, before I die !!!

Regards
gk

Zoltar,

Thank you for pointing out that very important fact about wages in London and the South East - they are not fantastic for the ordinary working person. My partner and I are in the fortunate position of having 20k in the bank but as we only earn average wages this is not a big enough deposit to secure an affordable mortgage. Yes we could get a mortgage to buy the cheapest house available but would most certainly be repossesed if the interest rates went up by 2% - who wants to live with that thought hanging over their heads.

www.fool.co.uk are running a property section.
rgds aj

House prices seem to depend almost totally on job security, or a feelgood factor, and affordability - At the moment we 'seem' to have a booming economy with more jobs than people willing to do them (hence our new chums from the third world flooding over here) and no sign of onerous interest rates in the future (a small rise maybe but money, worldwide, is cheap) - So people feel they are secure and will be able to afford the repayments (which afterall are historically low compared to times of higher interest rates).

As for BTL's, where else should they invest their money? Financial markets? Under the bed? Piss it all away? Property is seen as the one solid investment and, even at these heady prices, yields of 4%+ still beat the yield on the FTSE.

However, having two children of my own who will shortly be on the property ladder or renting, I do appreciate the problem FTBers face. To rent or buy? I really couldn't say myself.

Ah.What's the chances you may have the kiddies home with you
for some time to come Brianboru? I'm certainly not expecting to
see my 18 year old leave home anywhere near as fast as I did
years ago.

We didn't have the 'calls' on our spare cash they
have/need today, there were no mobiles to keep topped up, no
PS2 games and consules to buy,plasma TV's to aspire to,designer
labels to buy,take-away fast food consisted of Wimpy or fish and chips
so was hardly appealing, the pub closed at 11pm and the clubs at 2am
AND we weren't bombarded with programmes
on the telly about how your dream home is supposed to look!!

All in all we could opt for freedom first, our own place and sitting
on boxes or tea chests for a while, as long as the portable TV
could go in the corner and we didn't worry about all the
other stuff until later on - these kids can't do without,
because they can't imagine life without!!

AND that's before you get to the price of property!!!

we have been told that this is a housing bubble for the last two years at least. as i said before i early listened. i nearly went inot rented accomodation and waited for the bubble to burst , ready to pounce. i am so glad i didnt and borrowed to our maximum and bought a property 15 months ago.all the reasons being given today are the same things that were said back then . there is so much logic to the arguements given that this is a bubble that it is almost impossible to argue against . i think what people should be doing instead of looking at their homes as an investment , is to look at them as a HOME, somewhere to live for the next 5 to 10 years or longer. then it really doesnt matter if it is a bubble .thats how i looked at it. its our home , not a pension , sipp, isa , money making , load of bollocks . yes we have what for us is a large mrtgage , but have done the sums and we are ok until interest rates hit about 8 %. (then we are f**ked,lol). i really dont see interest rates hitting the 15 % highs of the mid 80's early 90's. the other thing i have noticed amongst ftb's is that expectaions are different . my ftb was a bit of a shed that needed some work . i did the work and sold at a profit , thats how you get on the ladder . ftbs now are looking for the 3 bed semi in a nice area as a ftb. i dont know too many ftbs who managed to do that.

I can't see 8% certainly not in the short term, and I hope for
you that it doesn't get that far, but 6% I can foresee. It's not
people like yourself bosley, it's the ones who are financing off
the back of their properties that are the problem. Some have a string
of properties all financed from each other at high mortgage values
and those buying expensive consumer goods again financed by their
bricks and mortar. They are driving up debt and the housing market.
I agree with you first and foremost our houses should be our homes!