Housing ' Time Bomb' Clicking

[Gladys]

On another note, what exactly is the point of the Celtic League? It seems like something of an anachronism, like having a Roman Association or a Norman Congress.

 

Like the Judean Peoples Front, or the Peoples Front of Judea?

 

Its straight out of Monty Python.

Splitter!

 

Well, if the doomsayers have their way, there will soon be plenty of affordable housing around.

 

If we do what Maggie Thatcher should have done in the 80's then we would be in a much happier position. Offer public housing for sale to the current tenants at a discounted from market price and then use the funds generated to build more public housing. Simple. By reducing the public housing stock all that resulted was demand outstripped supply and we had the massive bubble which later burst. Now, 20 years later they are realising that they should have been replacing the public housing which was sold off.

[thebees]

Theo

there will be a lot of long property owning faces on the Isle of Man

 

No, because the majority of people have bought a house because they need somewhere to live. When house prices go down it is not specific to a certain type of property so people requiring to buy homes to live in will be fine.

[gazza]

Theo

there will be a lot of long property owning faces on the Isle of Man

 

No, because the majority of people have bought a house because they need somewhere to live. When house prices go down it is not specific to a certain type of property so people requiring to buy homes to live in will be fine.

 

it is the inflation that will see a lot of long faces, that with the price going down will make it even worse,

prices dropping inflation riseing, how many of these ppl that bought houses on 4-6 times there wage will be able to affored the repayments after there fixed rate ends, that is going to be the problem IMO

 

but on the plus side there could be a few cheap houses up for sale from the banks

[manshimajin]

Time bomb ticking? It obviously wasn't ticking when Mr Bell made his budget speech...

 

2008 Budget Speech

“An Island of Opportunity”

Clearly the global economic situation will continue to unfold as lenders, borrowers, central authorities and governments react to the liquidity problem. The full impact may not be felt for some time yet, but we can take some comfort from how the Manx economy is continuing to grow. Treasury estimates put growth in 2007/08 at around 8% in real terms, with contributions coming from all sectors. Growth next year is estimated at 6%, which is still well above many of our competitors.

This strong economic performance is being reflected in the labour market where end of year unemployment was at its lowest level for 3 years at the end of 2007 and remains below 1½%. Vacancies continue at near record levels, up 10% in 2007, and job creation continues at a rate of around a thousand a year. Overall we enjoy record levels of employment, with more than 42,000 people currently in work.

The housing market remains buoyant. To date there is no indication of a reduction in prices as has been seen in the United Kingdom.

Hon A. Bell MHK
Minister for the Treasury

[Tugger]

prices dropping inflation riseing

 

Isn't that internally contradictory? Inflation is typically good for borrowers, as it means that over the years their debt becomes less valuable in real terms.

 

I just got a flyer for the Dandara apartments on the quay. £1.2 million for a two bed flat, anyone?

[ai_Droid]

it is the inflation that will see a lot of long faces, that with the price going down will make it even worse,

prices dropping inflation riseing, how many of these ppl that bought houses on 4-6 times there wage will be able to affored the repayments after there fixed rate ends, that is going to be the problem IMO

 

That only impacts the people who've bought very recently, and if wages go up with inflation those mortgages will become more affordable. Unemployment is a bigger problem, if we do go into recession and pepole lose their jobs, that's when you start to see lots of repossessions.

 

For most people, their property price dropping doesn't make much of a difference, if your moving up the ladder, the house you buy will have dropped by the same amount as the one your selling.

[VinnieK]

For most people, their property price dropping doesn't make much of a difference, if your moving up the ladder, the house you buy will have dropped by the same amount as the one your selling.

 

That only holds true if property prices fall and rise at a uniform rate accross regions and types of housing, which is rarely if ever the case. It's relatively common for prices to fall at the lower end of a market, whilst they remain constant, fall to a lesser degree, or in some cases rise for other properties. Sure, if you decide to sell the old house because it got dirty and buy one that's exactly the same, you should be fine, but moving up the ladder can actually be more difficult.

[ai_Droid]

That only holds true if property prices fall and rise at a uniform rate accross regions and types of housing, which is rarely if ever the case. It's relatively common for prices to fall at the lower end of a market, whilst they remain constant, fall to a lesser degree, or in some cases rise for other properties. Sure, if you decide to sell the old house because it got dirty and buy one that's exactly the same, you should be fine, but moving up the ladder can actually be more difficult.

 

Sure that's true, but my point was, for most people a drop in price wont actually matter a jot. It's only if you're selling up and leaving that you might actually lose out.

[fubar]

Bear in mind that when people talk about getting a foot on the property ladder, they assume that everybody starts off with a detatched 3 bed-room house with a garden!

 

Part of the problem could be resolved by charging a fair market rate for public housing. Of course there are many people who are wholly deserving of public housing but there are those who play the system and could quite easily afford to buy in their own right.

 

I knew of a chap several years ago who lived in Willaston and often bragged about the properties he owned across the water.

 

As I said, I am a firm believer that the less well off in society have an expectation, not a right, to be assisted by those who are better paid etc but if Mr Moffatt is going to lay the blame for the lack of affordable housing at anybody's feet, he can start by asking why people earning a good salary are allowed to pay what amounts to a peppercorn rent for large properties.

[Cambon]

That only impacts the people who've bought very recently, and if wages go up with inflation those mortgages will become more affordable. Unemployment is a bigger problem, if we do go into recession and pepole lose their jobs, that's when you start to see lots of repossessions.

 

For most people, their property price dropping doesn't make much of a difference, if your moving up the ladder, the house you buy will have dropped by the same amount as the one your selling.

 

Sorry droid, that is not the way it works. When I bought my house the difference between mine and the next one up was £20000. The difference is now £100000.

 

More importantly, wages will not go up with inflation. As you said, unemployment is a bigger problem and the last time we were in the situation we approach now people were being asked to take wage cuts rather than having to make people unemployed. I, myself remember not getting a pay rise for 3 years. At the same time day to day costs rocketed.

 

However, what happened back then was nothing compared to what lies ahead. Look at the cost of petrol? heating oil? Do you know that oil has jumped $10 a barrel today? When winter sets in a few months from now, heating oil will be 30-40% more expensive than last winter. The knock on effects will be everywhere, including affecting people's ability to buy and sell property.

 

As with all waves the bigger the crest, the longer the fall.

[ai_Droid]

Sorry droid, that is not the way it works. When I bought my house the difference between mine and the next one up was £20000. The difference is now £100000.

 

Not really impressed by that kind of anecdotal evidence to be honest.

 

More importantly, wages will not go up with inflation. As you said, unemployment is a bigger problem and the last time we were in the situation we approach now people were being asked to take wage cuts rather than having to make people unemployed. I, myself remember not getting a pay rise for 3 years. At the same time day to day costs rocketed.

 

Again, there's no sign of that happening currently. If it does, yes things will get grimmer, but unemployments rising quite slowly at the moment.

 

However, what happened back then was nothing compared to what lies ahead. Look at the cost of petrol? heating oil? Do you know that oil has jumped $10 a barrel today? When winter sets in a few months from now, heating oil will be 30-40% more expensive than last winter. The knock on effects will be everywhere, including affecting people's ability to buy and sell property.

As with all waves the bigger the crest, the longer the fall.

 

Actually, no, the oil price is a couple of bucks down today.

[Cambon]

Actually, no, the oil price is a couple of bucks down today.

 

Gosh, how stupid of me. I bow to your incredible wisdom. Oil CLOSED UP OVER $10 a barrel on Friday. And it has slipped back a bit as you quite rightly stated. So that is alright then.

 

The point is, in the past year, the price of petrol is up massively, the cost of food is up massively, the cost of transporting goods is up massively, the cost of heating oil is up massively, the cost of electricity is up massively, do I need to go on?

 

In 6 months time, this is really going to bite.

[Alias]

Comparing house prices to past ones relative to salary is a bit misleading because of the population (especially population desiring houses - single parents etc.) change on the demand side.

[manxman8180]

Sorry droid, that is not the way it works. When I bought my house the difference between mine and the next one up was £20000. The difference is now £100000.

 

It's not unsurprising that more expensive houses have increased faster in price though is it. In general a percentage rise will only increase that gap between 'steps' on the ladder.

 

However, prices dropping don't necessarily hurt everyone to the same extent. For instance lets say my current house was worth 300K and I was planning to move up to a house worth 400k. In general a 10% reduction in the market would lose me 30k in value but save me 40k in purchase price.

 

If I have been in my previous house for a few years, beneffitted from a number of pay rises and am ready to take the next step, then a reduction in the market will actually have helped me.

 

If speculators lose money over what is a protracted gamble, then who gives a shit. As said previously, if you have your home for the long term, rather than a speculative gamble, you will be far less affected. Of course, if interest rates spiral out of control, then that is the greater concern.

[localyokel]

It's not unsurprising that more expensive houses have increased faster in price though is it. In general a percentage rise will only increase that gap between 'steps' on the ladder.

 

The same happens on the flip side. When uncertainty creeps in the gap between the big houses and the average house narrows because there is nobody wanting to move up the chain hence those trying to sell out and downsize tend to be worse off as the price of the sort of average priced houses they want to move back in to do not fall as much as what they are selling. This is even more so in a market where interest rates are not falling as nobody moving up wants to take on big monthly increase in mortgage costs, and those that have took on bigger mortgages want to downsize. There's always a bit of a crunch in the middle where values hold.

 

Its better to move up the chain in a falling market as the more expensive houses become comparatively cheaper as your moving against the market.