Always a popular subject in the pub.
http://www.nationwide.co.uk/hpi/Monthly.htm is todays Nationwide survey showing prices up by another 2% this month giving an average home a value of 131,947 and the long suffering property bears yet another black eye ;-)

Any views?

i have to say that i am with you on this one bingo
we as a nation seem obsessed with property ownership and i have watched many friends and colleagues buy into the 'dream'
They have neglected to look back into our past and see what happened late 80' early 90's and will find themselves extremely stretched if the rate rise takes a hold.......
There are those that say that the buyers can afford a rise in rates and this may be so but many have bought housing on borrowed money not just for the mortgages but for deposits as well. A very good friend of mine was advised to raise a 10k portion of her deposit by taking out 2 new credit cards.....the advice came from the bank!!
Also take a look at self certificated mortgage deals, 25% down and as long as you say you can afford the repayments then the bank will stump up the cash....theyre not worried, if times get tough theyll repo and hopefully the 25% down will cover the loss if the market goes into decline.

As for personal borrowing well thats another story all together
The figures i believe back in the late 80's were roughly 70p borrowed for every 1.00 of disposeable income, now that figure is upwards of 1.35 per 1.00......dont have to be a mathmetician to work that one out
Maybe its time to start looking at Debt business's as a good investment for the not too distant future !!!!

Would you be able to buy a house in a much cheaper place,decorate it yourself
and rent it out ?If you get everything right your income will = your repayments
e.g.tax relief,costs allowances,,,,etc

"Have they peaked?"

Well the facts clearly show that prices are still going up. There is no 'mania' in the market - sure the market is expensive, and keeps ticking up, just like many were saying stocks were cheap as they crashed through support after support over the last few years! Anyway, who in their right minds cares, you won't know it was the peak until afterwards and until you get that signal you are betting against the long term trend and that is pure gamblers fallacy!!

Ajren,
one minor fault with your equation in post 9. You seem to assume that a tenant is assured. there are so many buy to lets on the rental market in the South East (as an example)add to this properties that are not selling easily are on the rental market aswell. Tenants now have a huge choice of places to rent which in turn drags down the value of rental income. The amateur BTL will start to panic if they cannot cover their payments and may be forced to sell.

Could we be witnessing the start of a BTL crash ?

regards

Yes, I think some of the new breed of BTLs are in for a shock - They often live miles from the property they've bought (lots of Southerners buying in West Yorks for example). They hand the property to an agent who charges them a fortune and recommends a ridiculously high rent (to cover their fees) - They are then in competition with local letters who do the work themselves and can afford to charge much less - The distant BTLs don't do their own decorating/repairs and can't keep an eye on tenants. The list of problems is long and many, I'm sure, will be sitting on property void for long periods. Will they really hold on or will they start selling?

As an example. My youngest has just rented a property in a nice area of West Yorks. He initially looked at some on with agents - typically small, two bed, not particularly nice flats @ 450/550 pcm plus bond and most agents also wanted between 120 and 200 to vet his application etc.

Looked in local paper - superb 2 bed cottage, beautifully decorated, furnished to the highest standard - 380 pcm - Local landlady, her and hubby do the decorating etc as was generally the case in the local market until the BTL craze started.

He took the cottage! A month later most of the agents still offering the same flats.

I think House Prices are close to peaking, maybe March-time. Prices in London are ridiculous, 6 times earnings, not many people can afford that. Furthermore, the BBC documentary clearly shows that Mortgage Fraud in the Self Cert market is what is driving prices up, with greedy lenders trying to sucker people into paying higher rates, knowing they can repossess if they default. Thats what happened in the eighties, do people never learn?

Another seriously bearish indicator is the plethora of property shows on TV and check the latest on yesterday: Million pound property investment: 2 blokes seek to make a million buying and selling 7 houses! This is all total madness, reminds of the tech boom, with the daytrader bloke off watchdog giving up work to trade F/T etc.

Final comment, unlike the stockmarket, the housing market is illiquid and moves slowly like an oil tanker, so it may take a while before people see it turn down. But down it must surely go..........

The property market is still rising so the peak has yet to be reached. Whether this is a last gasp rise before the top or just a part of the continued HPI, is difficult to determine but I'd be surprised if the peak wasn't close at hand. The arguments for continued HPI revolve around low unemployment, low interest rates creating an easy environment in which to service debt, supply/demand and the lack of a trigger to cause prices to fall.

I'm not going to comment on unemployment as I believe the official statistics are hardly useful and easy to massage. Low interest rates do make the debt affordable for a greater number of people although a large number fail to realise that the low inflation environment results in that debt still being large in a number of years. The low rates have given us a debt fuelled frenzy of spending and being ablt to borrow for free on a credit card has been used to the maximum by many. Today's rise in rates will not affect the average mortgage much, 9 per month extra on the average 100k but we will likely see an end to the 6 months zero interest deals. This will kick in April/May next year when interest starts getting charged on the CCs. People will have to pay off the minimum and they will have to begin reducing their debts. So, the extra 9 now is easy to absorb but what abou the extra 50 per month interest on the CC? Add in additional Council tax next year and families could be paying and extra 80 upwards per month to just stand still. That could create a selling environment.

Another factor that has been driving up prices is the lack of supply of new housing trying to meet an ever increasing demand. This is a basic rule of economics and will drive up prices. However, when prices get too high, people will stop paying as they either cannot or will not. Once that happens, prices fall until the general market feels that there is value there. If the BTL brigade begin to start selling, supply will rise and act as a dampener on the price, so I see little reason why prices can be supported based upon this argument.

Finally, despite historical statistics that state prices are well above the earnings/average ratio before the last 'crash' and so on, I believe that a trigger does exist in the system. Self Certified Mortgages. The recent publicity surrounding these will make lenders far more wary to allow large sums to be borrowed and any resulting FSA investigation will just make the lenders more nervous. With people suddenly unable to make their actual 30k per annum stretch to that dream 250k two bedroomed flat, they'll be unable to enter the market. With the demand suddenly gone, sellers will have to reduce prices to reach that level in the market when buyers return. The HPI of the last few years has been fuelled by fraudulent mortgage applications resulting in hundreds of millions entering the market that should have been kept on the sidelines.

For those waiting to buy, I'd hold fire, in two years, the auction houses could be so awash with repossessed properties that you could get your dream house for far cheaper than you ever thought. Having said that, there'll be a lot of misery around with those who have large debts now.