House Price Madness?

What on earth is going on with the ever increasing house prices? There is so much being written on the subject that it is mind boggling.

The rise is being blamed on so many reasons, massive city bonuses, lack of supply fuelled by the ever increasing number of immigrants. Banks are offering new packages to help the less fortunate house buyer, including joint mortgages and an increase in borrowing of up to 125%. Interest only mortgages appear to be the norm. The continuing low interest rates fuels the increase in borrowing.

As reported by the RICS there has been a more sudden increase in prices, in what would appear to be panic buying… a ‘must get on the ladder’ mentality.

This all comes in a month when the number of house repossessions has increased.

There is a lot of optimistic rhetoric being published all the time.

Spare a thought for the more pessimistic press. For those just about to buy have a look at House Price Crash. Or maybe just have a look at their amusing movie .

There have been more recent predictions that suggest that a collapse will occur in 2010. Fred Harrison explained his theory in his recent book previewed in this article.

Whilst we believe something must happen, imagine if property prices did fall, the amount of negative equity….

This rant follows a survey we undertook yesterday. Whilst we run a job board and this blog, we also work as meagre Building Surveyors.

We inspected  a property yesterday for someone buying a flat. This Ground Floor Flat is riddled with damp from at least four different sources. The undertaking of the repairs will be a major inconvenience. The will be restricted access to repair the damp furthermore the water sources emanate from the neighbouring properties. Great!

My client was seeking a discount from the vendor, a Building Society which had ironically repossessed the property. His mortgage company would not loan him the money until the work was completed, costing circa £10k. The Building Society would only come down £2k. My client being left with an £8k shortfall.

This coupled with the fact that the property in 1997 was worth £47k compared to £153k current asking price. Madness, £153k for this pokey damp flat.

What really got me was when he turned round and said “the £2k discount was great, even better value for money” Oh boy!

We have included some links on our partner’s page to websites that may be of interest.