London property prices-Its bonkers

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    #16
    Originally posted by ram View Post

    Last time the bubble burst, Brown, or whoever was the chancelor at the time, injected money somewhere, and the T.V. reports were coming back "My mortgage payments have reduced since his actions" Which means they could sell their houses for more than they paid for them because of reduced payment, so the Governmant perpetuated the sale of overpriced houses.
    Call me dense, but please can you explain this? Why could they sell for higher than the buying price BECAUSE their mortgage payments went down?

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      #17
      Originally posted by monkeysee View Post
      They're (foreign investors) snapping them up because London is seen as a 'status symbol' place to live, or at least own property, and because London property is seen as a safe place to store wealth.
      I think you're right - recently a German friend asked me whether it is normal that the estate agent asks for a 2.5% deposit to be paid to them by any potential buyers for the privilege of arranging a viewing.

      He was looking to invest some money into a property and since you can't earn any income in German properties he was looking to buy in London, and obviously nearly fell for a scam.

      But that's why prices go up - because rental properties in the UK are now a worldwide investment

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        #18
        Originally posted by Bird View Post
        Call me dense, but please can you explain this? Why could they sell for higher than the buying price BECAUSE their mortgage payments went down?
        Don't quote me on this.
        You normaly buy a house on what you can afford to pay back every month.

        If a repayment on a house is £ 800 per month at a given sale price, then if the mortgage repayments reduce by the governments actions, you can adjust the house price to bring up the mortgage back up to £ 800 per month.

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          #19
          Originally posted by Bird View Post
          Call me dense, but please can you explain this? Why could they sell for higher than the buying price BECAUSE their mortgage payments went down?
          I think it is because if mortgage payments go down people are under the fallacy that they can afford to buy more expensive properties, so people can sell them for more. Of course once interest rates come back to normal those people are screwed, hence this is the next version of "pass the bucket"

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            #20
            Yes - I think that is the basic idea and it is probably valid at least to an extent. However, the buyer's mortgage payments seem a whole lot more relevant here. The sale price of a property is determined by the buyer (or, in the case of an auction, the second highest bidder) not the vendor. A policy change may result in mortgage repayments reducing across the board in which case the vendor's payments would be affected, but this is an effect rather than a cause.
            There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

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              #21
              in the case of an auction, the second highest bidder)
              Eh! Surely the value is set by the highest bidder, please explain.
              I offer no guarantee that anything I say is correct. wysiwyg

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                #22
                Originally posted by doobrey View Post
                However, the buyer's mortgage payments seem a whole lot more relevant here.
                I think this is what both myself and Ram said?

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                  #23
                  Originally posted by jta View Post
                  Eh! Surely the value is set by the highest bidder, please explain.
                  The gavel price will always be one increment above whatever the second highest bidder bids. So in that way it's the second highest bidder who sets the price.

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                    #24
                    Originally posted by ram View Post


                    Don't quote me on this.
                    You normaly buy a house on what you can afford to pay back every month.

                    If a repayment on a house is £ 800 per month at a given sale price, then if the mortgage repayments reduce by the governments actions, you can adjust the house price to bring up the mortgage back up to £ 800 per month.
                    I made a bolding/colouring in your answer.
                    Do you mean that AS A SELLER, you adjust the asking price of the house so that the buyer --- presuming whatever deposit will be paid is fixed, i.e. same across all buyers, plus payment term is fixed across all buyers -- will still be paying that 800 per month?

                    If no, then I'm still confused. If yes, I got it.

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                      #25
                      Originally posted by mattl
                      I think this is what both myself and Ram said?
                      I think it is what you said, yes, and my response should probably have more clearly acknowledged agreement. This may differ from the original point, however, which is why I was highlighting the distinction between the buyer's and seller's financial position. I was questioning this:

                      Originally posted by ram
                      ..."My mortgage payments have reduced since his actions" Which means they could sell their houses for more than they paid for them because of reduced payment
                      which I understood to mean that because someone's mortgage payments had reduced, they could sell their property for a higher price. My point being that this refers (or I understood this to refer) to the seller's mortgage rather than the buyer's. Maybe that was not the intention.


                      Originally posted by JamesHopeful View Post
                      The gavel price will always be one increment above whatever the second highest bidder bids. So in that way it's the second highest bidder who sets the price.
                      Exactly...
                      There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

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                        #26
                        As regards auctions I would concede that the winner could in an unusual case just wave their catalogue in the air, name the price they are willing to pay, and not be challenged. In this scenario they would be setting the price. However, in the vast majority of cases they will pay no more than they need to, which is determined by the person they are bidding against.
                        There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

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                          #27
                          doobrey,

                          I saw this happen in an Allsops Auction last year (Actually it may have been a Barnett Ross one!). Price was moving up very slowly, got to 1million and the under bidder said "1.2 Million" everyone looked confused as to assume that she had accidentally said 1.2 instead of 1.02 but she went with it and won at 1.2
                          [I]The opinions I give are simply my opinions and interpretations of what I have learnt, in numerous years as a property professional, I would not rely upon them without consulting with a paid advisor and providing them with all the relevant facts[I]

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