Housing Market & Interest Rates

[geo]

A few things to ponder and give your opinion on !

 

Do you think the recent warnings by the Bank of England with regards the very real risk of a property slump will have a marked affect on our local housing market?

 

Are any of you in the process of selling your house and are experiencing a slowdown in our own housing market?

 

Are you about to consider buying a house and has the recent news (see above ref BoE) affected your choice of mortgage lender, price range, budgeting ?

 

Has your own personal spending / borrowing been affected (not including mortgages) by the recent rise in interest rates.

 

Geo

[Tearz]

I'm only a young'un but have recently been thinking maybe it's time I should start to save a deposit for a house. I have previously rented property which is all good and well, but seeing that £*insert rent here* go to the landlord every month and having nothing to show for it is a little concerning when the same ££ per month would probably equate to a mortgage payment.

 

My first concern was that even though i'm in a relatively well paid and secure job, the amount of money I would need to borrow would be obcene in proportion to my wage.

 

Certainly the BOE warnings about a potential house market slump have made me think twice - I don't particularly fancy ending up with a mortgage in negative equity :-(

 

Just my 2p from a potential first time buyer....

[Uni]

I don't think it will effect the Isle of Man, I've seen properties selling slow but not for less. The further south you get the more expensive property is, I can't see it changing.

 

Mansion in Ramsey - £5

Park bench in Port Erin - £456,000

 

"What ever you choose, choose mastercard!"

[Observer]

I was considering moving but must admit that I am holding tight for a little while to see how far the BoE go with the interest rates. Usually you can glean a rough guideline from the fixed rates offers (& terms). The trouble with not being totally confident in future rates is that too many people still remember having their fingers well and truly burnt as they saw their monthly mortgage commitments double and this memory is still a little too fresh. I also keep an eye on the governments views on Europe, as interest rates have to remain low to be able to meet the joining criteria.

 

Property is taking longer to sell now as there is much more available on the market but it still seems to be moving quickly when the sellers have opted for a realistic asking price rather than trying to make a killing. I personally feel it is better that people are no longer forced to panic buy.

 

I would be happy enough making the move if I had taken the trouble to secure a good fixed rate deal, or discounted tracker rate (say 2/3 years) but obviously that is with my financial circumstances in mind and all are unique. I am also watching to see if the bracket I would like to move into (circa 275 - 300K) is going to drop back a little, as I personally feel that some of these are still overpriced and not as competitive as they could be.

 

If I was paying rent I would feel disgruntled, I read the rents in the paper and they are more than I pay for my mortgage and if I were a first time buyer I would rather be paying off my own loan rather than some sharp investors.

 

I think so long as you have secured a deal that covers you through the early years and so long as you intend to remain in the market through any fluctuations, then it is proven historically that you always do quite well out of it in the long run.

[lectro]

Mansion in Ramsey - £5

Park bench in Port Erin - £456,000

[R_ReaVeR]

Have been considering a move into Douglas for a few months now, however, most of the properties are just not worth their price tags, some even requiring a fair bit of work doing to them. I understand properties have gone up in value and all that but it would seem a lot of people are still asking ridiculous sums. For instance, their are 2 houses on my small estate up for sale (1 for over 2 months now). Both have risen more than 100% in 5 years and personally I do not think they are worth their selling prices (that would also include my house if it was for sale). I understand from the "financial experts" that the BoE interest rate will be 5% or just over at the end of this year.

[Observer]

You may or may not have already read this, but this was on IOM Online this morning.... it's all speculation though at the end of the day.

 

 

PROPERTY MARKET BUOYANT

30 June 2004

 

 

The Island's housing market remains buoyant, although it now clearly favours buyers.

 

 

 

'As we can all see from the abundance of For Sale boards, the acute stock shortages that we experienced during 2003 has gone. This extra choice has resulted in keen sellers having to price their properties realistically to achieve an early sale, as overpriced and particularly poorly presented homes will simply not sell in what, over the last few months, has become a buyers' market,' said Cowley Groves director Graham Wilson, in the company's half-year report on the market.

 

Only the first-time buyers' market is suffering shortages.

 

Mr Wilson said numbers of new listings were up nearly 10 per cent on the first half of last year, while negotiated sales were down around 11 per cent. He said the value of the sales negotiated for the first six months of 2004 have followed an almost identical pattern to 2003.

 

'I can honestly say that in terms of general activity, inquiries and appointments for the first half of this year, 2004 has been busier than 2003,' said Mr Wilson.

 

He said that although interest rates are climbing, at a 4.5 per cent base rate the cost of borrowing is still relatively low.

 

'Add to that the fact that those of us lucky enough to already be on the property ladder have accumulated huge equity in our own homes over the past few years. With this in mind, it is not difficult to see why so many people consider this to be a great time to release this equity, improve their standard of living, and move on,' said Mr Wilson.

 

He said there had been a shift in the mood of the investor market.

 

'There are still a few investors confident enough to put their money into property, although nowhere near as many as last year. Today's investor sees the purchase as a more long-term investment, and some are even treating it as their pension for retirement. A few short-term investors that invested two or three years ago are deciding to cash in and sell.'

 

Despite warnings by the governor of the Bank of England, Mr Wilson said the UK housing market is also expected to be stable during the second half of the year.

 

He said the National Association of Estate Agents (NAEA) is ruling out a market crash because of the sustained low interest rates and continued strong growth in earnings and employment.

 

'A 6 per cent mortgage is still very low by historical standards,' said Mr Wilson.

 

He noted that due to the stronger than expected start to the year, the Nationwide had revised its forecast for house price growth in the UK from 9 to 15 per cent. 'The Nationwide also believes that the latter half of 2004 is likely to see slower growth in prices, although they believe a slump is unlikely.'

 

In the UK the average house price rose to £142,584. This compares with the Island average of around £200,000 for the first half of the year.

 

'Property values continue to rise, and while we probably won't see anything like the rises of the last few years, if the second half of the year continues along similar lines to the first, we should still be in line for reasonable single-digit rises by the end of 2004,' said Mr Wilson.

[Slim]

You might want to consider posting links instead of the entire text. You've a risk of breaking copyright laws right there.

 

God I sound like a boring twat eh?

 

Anyway, never trust an estate agents opinion on the property market, he's got a bit of a vested interest!

[Observer]

I agree about the estate agents rosy view on things - hence my heavily weighted speculation disclaimer.

 

Whenever I post news links, they go and move them! One interesting and innovative one that I previously posted ended up being "Ulrika Voted Rear of The Year" or something similar!

 

And I looked like a tit...... (some might say even more so than usual, but I guess I can live with that )

[simon]

I can honestly say that in terms of general activity, inquiries and appointments for the first half of this year, 2004 has been busier than 2003,' said Mr Wilson.

This is a very partial comment, I can honestly say.

 

General Activity - !

Inquiries - !

Appointments - !

 

What about sales? What about the number of properties sold (on the Isle of Man) at the original asking price within a given period after being originally marketed? Something solid and quantifiable, like an index.

 

The local agents can truthfully say that they are busy because they are dealing with more sellers. And in that sense they can say that the market is busy.

 

Are the claims about continually rising prices justifiable? Strictly, probably, yes, IMO. But certainly not across - the - board. I do not believe that prices are rising across the market. I believe that the figures are skewed by the shortage of cheaper family properties.

 

The rest of his figures seem to relate to the UK, on average and in general. It's a very vague affirmation.

 

EDIT - incidentally:

 

Mr Wilson said numbers of new listings were up nearly 10 per cent on the first half of last year, while negotiated sales were down around 11 per cent.

Doesn't that actually sound like a fairly significant gap? 10% more properties being offered for sale but 11% fewer sales.

[Slim]

Yep, it does. It'll indicate an increase in supply over time.

[spermann]

Well 3 years on, interest rates have risen and yet property prices are still very strong - when will the slow down start?

[GD4ELI]

Well 3 years on, interest rates have risen and yet property prices are still very strong - when will the slow down start?

Only when the offshore finance industry takes a big hit - and that's not on the horizon. Switzerland is more affordable than the Island at the moment, especially with 3% interest rates.

[ai_Droid]

Where are those 'a crash is coming' doomers eh?

[bazcabs]

If you ain't got a deposit, no problem. Just tell the bank you have £10K promised to you from relatives, they won't actually ask for any proof that you have that £10K upfront, they really don't care. Once you've had all your credit checks run and the bank has approved the mortgage, go out and get a £10K personal loan or simply cash it out on credit cards, the bank won't check your financial status again once the mortgage has been approved.

 

Et voila, you've got £10K to hand over to your advocate as a deposit, the bank releases the mortgage, and you have your house or apartment or whatever.

 

Just make sure you can afford to pay the mortgage repayments and the loan repayments......

 

That's exactly what we did after waiting 10 years to buy as the deposit kept going up as the market prices went up.