Is this the start of the long predicted housing crash? [Archive] - Page 4

cjanderson

19-07-2008, 09:13

why can you not exchange on friday and that way you KNOW it will all happen on time?

is vendor on hols for 5 weeks? could he not arrange storage of his stuff when away and move into whereever when they get back.

Not sure you'd be able to get another house sorted by end of July (bought). If its that stressed and you MUST have a 3 bed place (baby coming maybe), then move to rented yourself for a year :) that solves a lot of hassle.

Chris308

19-07-2008, 09:26

We had a similar experience when we moved last year. Vendor wanted a quick sale and then messed us around for over 2 months. We gave the ultimatum that we completed by the end of that week or we were pulling out. We completed on the Friday of that week.

Besides the aggravation and stress this causes, it also has financial implications. The difference in initial interest charges between completing at the end of the month (Friday) or the beginning of the following month (Monday) was over £1000 because of the way they calculated interest :eek:

pigpicker

19-07-2008, 10:23

If he doesn't see sense before next Thursday then as other people have said pull out and make a significantly reduced offer just before they go away on holiday. If anything it will prey on their mind whilst their away!

dvds2000

19-07-2008, 13:43

Not sure you'd be able to get another house sorted by end of July (bought). If its that stressed and you MUST have a 3 bed place (baby coming maybe), then move to rented yourself for a year :) that solves a lot of hassle.

That crossed my mind too, although it would cost a few grand for rent, if house prices keep falling and repossesions start increasing chances are in a year they would either get much more for the same money or save quite a few grand.

Dave h-j

20-07-2008, 19:30

Do people really not have a secure grip on on current economic conditions?

In my experiance - not a clue..

We're buying a house and last Thursday the seller demanded that we exchange contracts in 15 minutes otherwise he would increase the price by £2k :lol: :lol:

It took me 10 minutes to stop laughing...

Crazily enough, the day before I had already told my solicitor that I was happy to exchange at anytime as long as they were happy with the legal side. So we actually did the exchange there and then (so I suppose he'll think it was a great strategy win :nuts: ).

He's very very lucky that my wife likes the house, as I was very close to dropping my offer in tit-for-tat pettyness - my wife would have had my balls though so I stopped short..

RobinL

20-07-2008, 19:49

He's very very lucky that my wife likes the house, as I was very close to dropping my offer in tit-for-tat pettyness - my wife would have had my balls though so I stopped short..

I was going to say, that would have probably been my response!

Bapapapa

20-07-2008, 20:24

We're buying a house and last Thursday the seller demanded that we exchange contracts in 15 minutes otherwise he would increase the price by £2k :lol: :lol:WTF? :lol:

jester

23-07-2008, 12:13

Well I stood my ground and basically said that if we could not agree to complete by the end of the month then I would definately oull out and re-offer on the previous house as 99% of the paperwork existed for that sale. I checked before hand that all the paperwork was available and the BS would be OK with it.

After a bit of thought they agreed to complete this Friday, my solicitor has this in writing as well!

I signed today and initiated the chaps transfer straight afterwards. They are also signing today. Although I will not really relax until I can jingle the keys in my hand. :lol:

You really would not think it would be so difficult to give people the full asking price for thier property having only been on the market for 2 weeks. :cuckoo:

So roll on Friday :clap: I hope that does not jinx it!!!

dvds2000

23-07-2008, 15:45

Well done

Kryten

23-07-2008, 16:36

Change the locks the moment you move in, I actually changed the locks whilst the previous owner was still moving stuff out :D

Jim989

23-07-2008, 16:45

Change the locks the moment you move in, I actually changed the locks whilst the previous owner was still moving stuff out :D

That must have been a sight! I did not change the locks for 2 years after moving in. But then again, the only things I had in the house during that time was the bed and wardrobe from the guy who I bought the house off :)

jester

23-07-2008, 17:49

At The Gates

23-07-2008, 17:55

House prices are crashing? Where's this then? Prices in London are still insane. I'm trying to buy around Tower Hamlets and 1 bed flat that isn't council is still £280k+. In fact i think E London may have even gone up over the last few months.

Kryten

23-07-2008, 18:25

:lol::lol::lol:

I will be changing the locks as I do believe several members of their family has keys :suspect:

They are the internal UPVC type, I have done yales and 5 lever mortice before . Are these DIY?

Yeah I think you can get them. Check out Screwfix (http://www.thedvdforums.com/affiliatelink.php?localaffiliateid=71)

bollecks

23-07-2008, 18:37

basegreen

23-07-2008, 18:41

Same here in Cambridgeshire - there's been some "reductions" but basically all that is, is a house goes on the market at XXX, then a week later it's XXX - £2000.

jester

23-07-2008, 18:50

I think that the market may fragment into two distinct types.

1 - Those who HAVE to move, they need the space or relocation (job) or are retiring. They will just buy from others who have to move, hence not such massive drops in prices.

2 - Those who have previously moved every couple of years or so up the ladder by doing up a property etc. These people will sit tight and wait for thier investment to bounce back before starting again.

This in turn will restrict supply, especially of decent housing stock (not flats) which is already in short supply, thus stopping really massive falls in prices.

I am willing to entertain the possibility that having just bought a second property (technically the first is the wifes) then I have rose tinted specs on.

Butch Coolidge

24-07-2008, 10:59

http://www.metro.co.uk/news/article.html?in_article_id=232102&in_page_id=34

A home seller caught in the middle of the credit crunch is slashing £1,000 a week off his property till it is sold.

'At some point someone is going to buy it – we just hope it's nearer to the current price than zero.'

AndrewP

24-07-2008, 15:31

Well I'm a first time buyer close to buying a house.

Got a decentish price, if prices fall short term then so be it. I'm expecting it.

jester

25-07-2008, 14:27

Well, I have the keys :)

Quick visit to the house reveals everything to be pretty much in order and as agreed. Bigger than I remembered it although some of that is due to it being nearly empty.

So pleased its done and dusted, not to decorate :lol:

AndrewP

25-07-2008, 15:41

Kryten

28-07-2008, 08:51

http://news.bbc.co.uk/1/hi/business/7528248.stm

They are now saying that a 25% rise is expected by 2013, but short term drop again. Obviously cannot make their minds up here!

pyrogena

28-07-2008, 08:54

I registered for details on a new development down in Bristol a few weeks ago. Just had an email from the developer saying they are cutting 10% off the current asking price. The apartments aren't due for completion until summer 2009 - surely can't be good if they're already doing things like that!

Kryten

28-07-2008, 08:56

beaky

28-07-2008, 08:59

There is a planned 250 home development (which is huge for a town this size!) nearby. The company - Persimmon Homes I think - have just announced it is on hold 'indefinately' because of the current state of the market. Phase I was due to start next year.

The land is owned by the castle estate. The tennant farmer has just sold a load of his stock in preperation to move but now doesn't have to.

pyrogena

28-07-2008, 09:00

Apartments are in a really bad market right now though, they have been massively over priced for years so will take the biggest hit in the market. I would say 2 bed houses will be the strongest (typical 1st time buyer properties)

I'm in a situation whereby I could afford a mortgage (equal to rent) but have no deposit. Tempted to go along next year and if they're still not sold ask the developer to pay my deposit and I'll take on off his hands.

Looking to own the same place for at least the next 5 years. Thoughts on whether the value of an apartment will turn around again eventually? Obviously dependant on what you pay to start with.

Kryten

28-07-2008, 09:07

All property will probably turn around in the end, but apartments have been so expensive they will just be slowest to do so I think.

basegreen

28-07-2008, 09:27

Let's put it this way, in five year's time, the prices will not be lower than the recent peak.

kingmonkey

28-07-2008, 17:57

Let's put it this way, in five year's time, the prices will not be lower than the recent peak.

I wouldn't be so sure.

House prices in the last 10 years has nearly tripled. Petrol, gas and electric bills are starting to increase significantly, and are very unlikey to come down substantially if at all in the near future.

Household shopping bills are also increasing by more than inflation.

So unless the banks return to the crazy salary multiples, 125% mortgages and no deposit, how are prospective buyers going to pay the high prices you say will return in 5 years?

Of course in the long term house prices will eventually get higher, but I cannot see it in 10 years, never mind 5.

Wishfull thinking on your part maybe?

.

AndrewP

28-07-2008, 19:08

Let's put it this way, in five year's time, the prices will not be lower than the recent peak.

I bet they are!

bollecks

28-07-2008, 19:53

Let's put it this way, in five year's time, the prices will not be lower than the recent peak.

Property in Japan is still worth less than it was in 1988.

Property in Japan peaked at 10x the average salary. That's equivalent to the averge home in this country costing over £250,000. Can you imagine house prices here ever reaching such a ludicrous level?

Luckily we're a small densely populated island with a housing shortage, so it could never happen here unlike in the broad open countryside of say, Tokyo.

And in Japan, banks lent money irresponsibly and there was a collapse in available credit. You might call it a credit crunch.

.

Butch Coolidge

30-07-2008, 06:56

Let's put it this way, in five year's time, the prices will not be lower than the recent peak.

You might want to read <a href="http://www.rbs.com/includes/utilities/pdf_tracker.asp?URL=/content/economic/downloads/events/Calverley_Scottish_Lecture.pdf">that</a> or watch <a href="http://www.youtube.com/watch?v=eBGIQ7ZuuiU">this</a>

vulture

30-07-2008, 08:29

Property in Japan is still worth less than it was in 1988.

Property in Japan peaked at 10x the average salary. That's equivalent to the averge home in this country costing over £250,000. Can you imagine house prices here ever reaching such a ludicrous level?

Luckily we're a small densely populated island with a housing shortage, so it could never happen here unlike in the broad open countryside of say, Tokyo.

And in Japan, banks lent money irresponsibly and there was a collapse in available credit. You might call it a credit crunch.

.

And the lowering of interest rates didn't have much affect either, except for the Yen carry trade.

Masanevre

30-07-2008, 19:33

Brunodog

30-07-2008, 19:50

You might want to read <a href="http://www.rbs.com/includes/utilities/pdf_tracker.asp?URL=/content/economic/downloads/events/Calverley_Scottish_Lecture.pdf">that</a> or watch <a href="http://www.youtube.com/watch?v=eBGIQ7ZuuiU">this</a>

Thanks for that link to the RBS presentation, it was a very interesting read.

pyrogena

31-07-2008, 08:42

JUst looking on a website and noticed in Jan 2000 on a house at the other end of my street (semi detached) sold for £109000. In March of this year the same style of house just a few houses up from it sold for £263000
thats an incrediable jump !

I bought a 1 bed flat for £105,000 in 2000 and then sold it for £145,000 in 2003 - I thought that it had reached it's peak and got "out". Never thought a 1 bed in this area would do much more. It's currently on the market for £205,000...

Of course, it still has to sell!!

Butch Coolidge

31-07-2008, 09:41

http://news.bbc.co.uk/2/hi/business/7534052.stm

Bad stats for July. House prices dropped by 1.7% in July. Falling at a faster pace than during the 90's crise.

daveb_dvd

31-07-2008, 10:23

http://news.bbc.co.uk/2/hi/business/7534052.stm

Bad stats for July. House prices dropped by 1.7% in July. Falling at a faster pace than during the 90's crise.

Should see a couple of months soon where the month-on-month figures aren't as bad as recent months due to a mini revival in mortgage approvals 6 months ago. This might stall double digit year-on-year drops until October/November, but the carnage should resume thereafter.

Baz

31-07-2008, 11:41

njc

31-07-2008, 12:01

Its amazing how a lot of posters have suddenly turned into top economists on this thread and are confidently predicting the future housing, employment, interest rates markets with ease.

There are loads of people just waiting to jump in and buy a house at what they think is the bottom. It will only take a little bit of news to reverse the current trend and people will think the drops have finished and the slowdown will stop.

How anyone can predict anything, and that includes the experts, is nothing more than just opinion.

You really don't know whats going to happen so why go on like you do?

Wot he said.

If forecasting were a science, we'd all be socialists. Thankfully, it isn't and we're not.

When the price drops so that the financing can be put in place to make it worthwhile, the market will change direction. Until then, prices will drop. Leaving the market alone will ensure we reach the bottom sooner, and hence start climbing out sooner. Intervention by government will only make matters worse.

DVDWotcha

31-07-2008, 12:04

How anyone can predict anything, and that includes the experts, is nothing more than just opinion.

You really don't know whats going to happen so why go on like you do?

Yeah well nobody can be sure. Just like this thread was wrong for a few years before it was right. I should raise a new thread "is this the start of the next housing boom ?". Doesn't take a genius to work out.

Anyway, simple facts of the matter is borrowing money is tricky now. lending is at a 30 year low. Interest rates are high due to inflationary pressures. The only people in the market now are those that have to sell. Everyone else is just sitting tight. So the pointers are towards a downward trend.

With a bit of an ease in inflation, the BoE will likely drop rates to stimulate spending. The banks may then offer better mortgages, you'll probably then see a glut of first time buyers jump in and the prices will start to rise again. probably at a fair rate too.

NicolaUK

31-07-2008, 12:16

Yeah well nobody can be sure. Just like this thread was wrong for a few years before it was right.

Like a stopped clock ;)

And my OH says the new catchphrase at his office is 'Another day closer the boom'!!

BigPappa

31-07-2008, 12:35

Its about expectations of the future. People flooded into the market because they expected prices to rise each year and in some cases indefinitely. The most salient point that needs to be addressed is the common misconception that home purchases is risk free.

House price inflation should have been curtailed in the past but the authorities did not think it was expedient to do so. Now they are left in the position of do they let the market correct or do they intervene.

They should let the market correct. Interest rates need to be raised by 1/2 of a percentage point. The quicker this is done the quicker the economy can rebound.

daveb_dvd

31-07-2008, 12:36

Its amazing how a lot of posters have suddenly turned into top economists on this thread and are confidently predicting the future housing, employment, interest rates markets with ease.

There are loads of people just waiting to jump in and buy a house at what they think is the bottom. It will only take a little bit of news to reverse the current trend and people will think the drops have finished and the slowdown will stop.

How anyone can predict anything, and that includes the experts, is nothing more than just opinion.

You really don't know whats going to happen so why go on like you do?

Falling house prices are caused by reduced demand which has been caused (largely) by tighter credit conditions and higher interest rates which has shown up as falling mortgage approval figures.

If you accept the strong correlation between mortgage approval figures and house price inflation (http://www.houseprices.uk.net/articles/property_transactions/) then you will also accept that the current (worst ever) approval figures need to improve by a factor of around 2.5 times from where they currently are just to maintain current prices. As there is a 6 month or so time lag in approvals affecting HPI, it doesn't take a genius to work out what will be happening for the next 6 months as long as the relationship holds up at these low transaction levels.

DVDWotcha

31-07-2008, 12:46

They should let the market correct. Interest rates need to be raised by 1/2 of a percentage point. The quicker this is done the quicker the economy can rebound.

Problem is another 0.5% on the rate would cripple spending and then you'd end up with businesses dropping like flies and not just house prices.

vulture

31-07-2008, 12:50

Whatever happened to the soft landing???

daveyb

31-07-2008, 12:57

There are loads of people just waiting to jump in and buy a house at what they think is the bottom. It will only take a little bit of news to reverse the current trend and people will think the drops have finished and the slowdown will stop.

How anyone can predict anything, and that includes the experts, is nothing more than just opinion.

So....you make a prediction about loads of people waiting to jump in, and then ask how anyone can predict anything ? :cuckoo:

daveyb

31-07-2008, 13:06

Its about expectations of the future. People flooded into the market because they expected prices to rise each year and in some cases indefinitely. The most salient point that needs to be addressed is the common misconception that home purchases is risk free.

Agreed, and perhaps we should view house purchases as investing in a home again.

Also, if we can get rid of some of the property pimp telly flooding the channels, that would be a bonus.

One point which we could address (but wont) is this :- banks go into lend-crazy mode; brokers and city types make mega bonuses off the back of easy credit. Suddenly, the bubble bursts and its poor old Joe and Joanna Public who suffer.

When people talk about a finance-driven economy and trickle-down economics, I didnt quite realise it meant trickling down the brown stuff too.

Baz

31-07-2008, 13:33

So....you make a prediction about loads of people waiting to jump in, and then ask how anyone can predict anything ? :cuckoo:

Its hardly a leap of imagination to state that people still want to buy houses, and that first time buyers still want to buy there first houses.

The motivation to own a house or own a bigger house is still there. And the motivation to own one as cheaply as possible is still there too. You can work out the rest.

Hardly cuckoo really is it? :shrug:

If some news came out today that suggested that the drop in prices was over, the demand would rocket overnight. You just can't predict what that news could be, conversely it could easily get worse.

Falling house prices are caused by reduced demand which has been caused (largely) by tighter credit conditions and higher interest rates which has shown up as falling mortgage approval figures.

If you accept the strong correlation between mortgage approval figures and house price inflation (http://www.houseprices.uk.net/articles/property_transactions/) then you will also accept that the current (worst ever) approval figures need to improve by a factor of around 2.5 times from where they currently are just to maintain current prices. As there is a 6 month or so time lag in approvals affecting HPI, it doesn't take a genius to work out what will be happening for the next 6 months as long as the relationship holds up at these low transaction levels.

There we go again, amateur economists, predictions about transaction levels and so on.

Its fine to discuss this stuff etc, but to go to some of the lengths that some people go on, and MSE is even worse to be honest, is ridiculous. I know people blame Phil and Kirsty etc for the boom, but amateur internet economists are equally to blame for the paranoia at the moment.

Baz

31-07-2008, 13:40

BigPappa

31-07-2008, 13:45

Problem is another 0.5% on the rate would cripple spending and then you'd end up with businesses dropping like flies and not just house prices.

But how much business was created off the demand from cheap debt. You think its prosperity creating mountains of debt?

BigPappa

31-07-2008, 13:49

How much does it cost to buy the PM or Chancellor?

Perhaps a salary of £2m per year when they leave office and join the ranks of big business.

LiviLion

31-07-2008, 14:00

How much does it cost to buy the PM or Chancellor?

Perhaps a salary of £2m per year when they leave office and join the ranks of big business.

Who would want Gordo? Ratners perhaps?

Someone looking to trade gold?

A pension house?

etc

ROne

31-07-2008, 14:03

But how much business was created off the demand from cheap debt. You think its prosperity creating mountains of debt?

I completely agree with your point, but our shagged-out economy is only being serviced by the debt life-support machine. I would guess there ain't that much liquidity about - and an interest half-point rise is hardly going to play in the hands of the home-owning middle electorate is it? (It would benefit people like me though who pay their rent with the interest!)

daveyb

31-07-2008, 14:23

Hardly cuckoo really is it? :shrug:

If some news came out today that suggested that the drop in prices was over, the demand would rocket overnight. You just can't predict what that news could be, conversely it could easily get worse.

............

There we go again, amateur economists, predictions about transaction levels and so on.

Its fine to discuss this stuff etc, but to go to some of the lengths that some people go on, and MSE is even worse to be honest, is ridiculous. I know people blame Phil and Kirsty etc for the boom, but amateur internet economists are equally to blame for the paranoia at the moment.
I know what you mean about predictions and stuff, but everyone does that...all the time. To say that amateur economists are to blame is stretching things somewhat though; the public pay more attention to what Kirsty, Phil, or the Tonight program say.

BigPappa

31-07-2008, 16:40

Who would want Gordo? Ratners perhaps?

Someone looking to trade gold?

A pension house?

etc

Anyone who Gordo has benefited for example the PFI companies -change a lightbulb sir? That would ne £400.

quagaar

31-07-2008, 21:12

Yeah well nobody can be sure. Just like this thread was wrong for a few years before it was right.

The first post was 03/11/2006, which is only around 10 months before the whole credit crunch thing kicked off, so not exactly years.... :)

daveb_dvd

31-07-2008, 21:38

There we go again, amateur economists, predictions about transaction levels and so on.

You are obviously unaware that the link between mortgage approvals and house price inflation is well established and is even used by 'proper economists'.
E.g. comment from the chief economist at Lloyds TSB in 2006 from here. (http://www.global-view.com/forex-trading-tools/research/index.html?nid=4689)
"Chart b suggests that there is indeed a powerful connection between these variables, with mortgage approvals leading the change in annual house price inflation by seven months. The correlation between the two variables is, at 0.9, nearly one for one. A test of the extent to which house price inflation is impacted by changes in mortgage approvals suggests that a 1% sustained rise in the number of mortgage approvals raises annual house price inflation by 1.6% above where it otherwise would have been in seven months’ time, see chart c."

Approvals are now down 67% on the year (http://news.bbc.co.uk/1/hi/business/7520834.stm), so where do you think the Halifax/Nationwide indices will head from this (record low) point, given that this drives reported house price inflation 7 months from now?

What's wrong with putting some faith in a prediction based on observed historical relationships of housing stats?

It seems better than claiming that 'pent up demand' will save the day whilst conveniently ignoring the tightened credit environment ('the credit crunch', if you must) that prevents that demand being translated into actual transactions.

Baz

01-08-2008, 10:07

OK then, I predict that the once the banks have written off their bad debts and sub prime mortgages that have gone bad and their profits return to a reasonable level they will again start to look to pick up more business. The LIBOR will fall again and mortgages will become more available. Good rates will be available for fixed mortgages and more people will start to get accepted for them and the cheaper prices due to the recent fall will mean the can afford somewhere when they couldn't have last year. This leads to house prices rallying and the house price falls will cease.

Really, when people go on about 25% falls this year and then the carnage continuing next year, 50% falls by end of 2009, blah blah blah. Doom and gloom, recession redundancies etc.

I'm not saying it will or won't happen because it's impossible to know.

Its like everyone is suddenly an expert and a recession is virtually guaranteed and we will all be in negative equity and losing our jobs.

daveyb

01-08-2008, 10:22

Baz

01-08-2008, 11:02

I think Baz that people are tainted by their experiences.

An honest question....did you experience the last housing crash in the early-mid 90s ?

I did, and it makes you realise what can happen and how fragile something like the housing market really is.

Personally, I think cheaper houses is a good thing. People in the UK have far too much of their income committed to borrowings in my view, and mortgage debt is a big part of this.

It is going to take more than the credit crunch and rising food and heat to let the housing prices get down to the levels talked about on here. It will take a full blown depression.

Thats a hell of a prediction, it could quite easily go the other way.

I think people are enjoying the misery at the moment and are almost willing things to get worse.

Seriously if it does get that bad that house prices aren't selling at 50% of their current values then thats because they cant afford them. And if houses aren't affordable at that price then something much more serious has happened. And if thats the case then the people who are wishing for them to crash will probably still be the people who are still the most unable to afford them even at the 50% prices. So nobody wins.

Careful what you wish for.

Kryten

01-08-2008, 11:05

Also remember that people would not sell houses if they dropped that far as most of the country would be in negative equity (not just those with "sub-prime" mortgages) and that would cause the housing market to totally drind to a halt excluding new builds and those that have massive equity amounts.

jester

01-08-2008, 11:23

I also think that it is too simplistic for people to say "its wishfull thinking your house price will not crash". Most people do not need to move but knowing what thier house has been worth means that they will not sell unless forced by circumstance to do so (emigrating or up/downsizing, job etc etc)

Sure there is a correction going on but as Baz has said here it would take a seismic event in the economy to get us to where people are willing it to go. I wonder how many of those willing such a crash are not on the housing ladder but would wish to be?

Wishfull thinking?

vulture

01-08-2008, 11:27

It is going to take more than the credit crunch and rising food and heat to let the housing prices get down to the levels talked about on here. It will take a full blown depression.

Thats a hell of a prediction, it could quite easily go the other way.

I think people are enjoying the misery at the moment and are almost willing things to get worse.

Seriously if it does get that bad that house prices aren't selling at 50% of their current values then thats because they cant afford them. And if houses aren't affordable at that price then something much more serious has happened. And if thats the case then the people who are wishing for them to crash will probably still be the people who are still the most unable to afford them even at the 50% prices. So nobody wins.

Careful what you wish for.

That's why you shouldn't have an economy based on house prices and speculation

njc

01-08-2008, 11:29

There are only three main things that need to be considered when moving house and remaining an owner/occupier:

1) how much can I sell my house for
2) how much is the house I want selling for
3) can I finance the difference.

Everything else is just numbers in the aggregate, and therefore meaningless for your particular situation. It doesn't matter today if they are rising or falling prices, as it's the relative difference rather than absolute value that counts.

daveyb

01-08-2008, 11:50

Careful what you wish for.
I'm not interested in talking down the market. Events will unfold in the coming months.

I AM interested in you answering my question :), because I believe it explains the basis of your views.

Baz

01-08-2008, 12:16

I'm not interested in talking down the market. Events will unfold in the coming months.

I AM interested in you answering my question :), because I believe it explains the basis of your views.

I was at Uni around that time. However my Dad's business went down the drain and he was made bankrupt and we lost the family home. Whether thats a yes I lived through it or no I didn't I'm not sure?

daveyb

01-08-2008, 12:27

Eeeps, Baz, it certainly did sound like hard times.

I remember initially being told to 'hold out for 77k' on my semi in the mid 90s.....a long protracted period of too little / too late drops later, and I managed to dispose of it for 52K ; to sell the property I had also completely recarpeted, redecorated, and put new double glazing in. It definitely took a mindshift to move the property, and perhaps this is what I am on about.

A guy on tv the other day said people will have to adjust their perceptions on value by 35% to move property on....maybe it struck a chord with me.

Butch Coolidge

18-08-2008, 11:55

http://www.guardian.co.uk/money/2008/aug/18/houseprices.housingmarket

Asking prices in London fell 5.3% in August, according to the Rightmove house price survey - equivalent to a £21,000 drop in a single month. Prices in some of the most sought-after suburbs are falling much lower. The average asking price in Wandsworth fell from £522,000 to £481,000 in a single month - or 7.9%. Homes in Brent, Kingston-upon-Thames, Richmond-upon-Thames and Greenwich were down more than 6.5%.

London house prices fell on average £21,000 in a month. Nationwide, asking prices tumbled by a record 2.3% in August.

TheoGB

18-08-2008, 11:57

£522,000 to £481,000

So a swift fall from amazingly stupid money to amazingly stupid money. I don't think anyone's going to be starving just yet.

ShakeyJake

18-08-2008, 11:57

Well if that trend continues I should be able to afford to move back home in 20 years!

Crazy Squirrel

18-08-2008, 23:26

Sorry if this has been raised before, this is a big thread and i've not gone through it all. I live in Harringey - greater London. The media seem to be saying London prices are falling but not as badly as other parts of the country?

However the Land registry says that prices for Harringey are up 8.1% on the year from June07, although volume has halved.
http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?step=4&locationType=0&area=Haringey&reporttype=3&datetype=1&from1=06%2F2007&from2=06%2F2008&image2.x=22&image2.y=2

Is not at least *some* of this negative hype being based on individual mortgage lenders reporting prices on houses *they* have approved mortgages for have fallen. i.e. to an extent this could just be because they are less attractive than other lenders for people buying higher value homes meaning most of their custom is for lower value homes - thus bringing 'their' average house price down? Why does the media not use the land registry figures over what individual lenders publish?

asadmm

19-08-2008, 01:57

I guess the land registry figures aren't reported on as much as they are bit more out of date.

Its the lenders that are exasperating the situation anyway as they have got a lot more cautious and are not prepared to hand out mortgages. So driving the prices down that they are reporting. I suppose partially its in their interest to cool the market down while they sort out the financial mess they have got and the dodgy debt vehicles they have bought and sold. So they can determine how much bad debt they have to write off. Once they have moved out of the current reporting cycle in 6-18 months time and declared their right offs they'll probably go nuts and start giving money away like confetti again.

Also I don't think its ever that straight forward that prices are moving up or down everywhere. There always be some variation with local conditions applying in some places.

EDIT- For much of the media doom and gloom stories sell more papers, except when they go the other way when prices are booming. They can't really handle prices only varying up or down only slightly.

Butch Coolidge

19-08-2008, 07:17

There was an interesting article in the IHT this week-end.

http://www.iht.com/articles/2008/08/15/business/wbroubini.1.php

On the same page the IHT was also talking about "second mortgage".

Basically the US (and now Europe) are sick of their addiction to credit. Too much leverage and not enough cash. 90% of the growth in the US between 2001 and 2006 was due to real estate. Growth made from a stack of bricks can only end up in tears.

Vulcan101

19-08-2008, 12:24

In the UK after the last housing crash a lot of people who were repossessed ended up owing thousands and the banks chased them for years recovering the cash (apart from the ones who went bankrupt) so they could recover a proportion of their losses.

In the US however, in most states it is possible to simply hand the house back to the bank and walk away without any further debt and just a stain on your credit record; this leaves the bank holding the whole debt, a house they can't shift and no one to recover the loss from! Ultimately this has to mean that the banks liabilities increase.

Bender

19-08-2008, 13:29

Yes that is currently the situation over there, many people who bought properties worth in excess of $500k at that time now find their houses is only worth a mere $200k or less.

The logic is why keep paying for the mortgage when you are in such a massive negative equity, many people are just letting the bank repossess the house and walk away, they no longer give a damn about their credit rating, the huge loses are passed onto the banks, the total loss is estimated potentially to be in excess of hundreds of billions.

Masanevre

27-09-2008, 14:55

Just noticed the 7 new houses up the road from us have had 25k knocked off each of them, 1 and 2 bedrooms.1 bedroom down from 175k to 150k and 2 bedrooms from 200k to 175k

Kryten

27-09-2008, 15:01

I just read on the BBC website that 3 major lenders are increasing their mortgage rates so that will not be helping those wanting to buy a house that is for sure!

GlennSh

27-09-2008, 15:13

Just round the corner from ours there was a planned development of 5 new houses. Looks like they've built 2 of them (started earlier this year) and have abandoned building the others. I've also seen shells left boarded up elsewhere :(

Mark B

27-09-2008, 15:40

I just read on the BBC website that 3 major lenders are increasing their mortgage rates so that will not be helping those wanting to buy a house that is for sure!

Well it will reduce the amount of prospective buyers further which would then drive house prices further down due to a shrinking pool of buyers. That's not going to help prevent the crash.

As a related aside, there was an interesting BBC article on the situation in France which is far less drastic it would seem because banks are cautious and heavily regulated (there's a maximum interest rate that can be charged).

http://news.bbc.co.uk/1/hi/world/europe/7635327.stm

Danimal

27-09-2008, 15:44

So a swift fall from amazingly stupid money to amazingly stupid money. I don't think anyone's going to be starving just yet.

:lol:

Call me an ignorant north londoner but I wouldn't say that "Wandsworth" and "sought-after" could ever be in the same sentence.

London asking prices went a bit silly from mid-way through 2007 (£900/sq foot in West Hampstead) :doh:

I reckon the Chinese and Russians are waiting for it to cool down before buying up vast swathes of central London.

daveyb

27-09-2008, 16:28

Did anyone catch that bastion of quality telly, the 'Tonite' program last Monday?

Jonathan Maitland was basically smug, because he made a prediction of a % drop a year ago and it came true.

The tone of the experts called in was dire though. One guy who was predicting a max fall from peak of 40% last year had to issue a correction; he now reckons 50% is not impossible!

I remember when this thread was busy last year, some people were quite bullish....have any of these same people changed their outlook? It'd be interesting to know.

GlennSh

27-09-2008, 17:03

Usually the lows are about 1/3 off of the highs, but I guess in this instance there's alot of unknown factors ie If there are any more large banks about to go bust and what links they have to everyone else. If this uncertainty continues for a long time then who knows what the bottom prices will be (although 50% would seem pessimistic)
We've all known for a while house prices are crazy...If first time buyers cant afford to buy a house then there's something fundamentally flawed with the system

Mark B

28-09-2008, 01:01

I remember when this thread was busy last year, some people were quite bullish....have any of these same people changed their outlook? It'd be interesting to know.

If can't believe anyone still being bullish about the current situation of the housing market. Then again, I'm surprised it has taken so long to get to this point. The scary thing from a homeowners perspective is that looking at the graphs, it would seem that this crash/"readjustment" will be a lot more severe given the exponential rises that have come before it.

I imagine the guy at housepricecrash.co.uk must be jubilant he got it right although to be fair his timing was all wrong.

NicolaUK

28-09-2008, 01:05

I imagine the guy at housepricecrash.co.uk must be jubilant he got it right although to be fair his timing was all wrong.

And I bet the guy at housepriceboom.co.uk is biding his time to be proved right ;)

Kryten

28-09-2008, 01:10

Still remains to be seen how hard the crash will be, but I certainly feel worried for those with very little equity. I know my house will be dropping money over what I paid for it very soon at this rate, but I have equity and am agressively overpaying my mortgage to try to reduce my exposure through interest payments (e.g. I'll still have paid the equiv of someone who paid 2/3 the price of me but paid their mortgage over the full 25 years)

Still its going to hit hard I will say that, but the question will be how low and then how much they will go up again after! Houses will not go back to prices for the 60's/70's but may go back to prices of 5-6 years ago at a guess. However if they do so that will leave a lot of people in negative equity which will be very bad for the economy even more so than now! Not sure what can be done to stop it at the moment though, and judging by the daily news neither do any of the governments around the world!

NicolaUK

28-09-2008, 01:27

The thing is, your house has dropped in price but so has the next house you buy. Unless you have to sell now, sit tight and wait it out. I would like to see a breakdown of the falls in prices, especially as it relates to the price of flats that are in freefall in many areas whereas house prices seem to be falling at a slower rate.

The next 12 months are probably a right off in terms of increasing prices but the volume of sales should rise when interest rates are cut and that can only happen once the threat of inflation recedes.

daveyb

28-09-2008, 12:38

What Nicola says is true about relative falls...unless you have to sell, or you were relying on equity release to get you through current times; or you need to move for work purposes; or you were using a property as your pension - 2 people I know were relying on this in the near term.

I reckon different layers of property fall at different times, starting off with flats and terraces etc.

Kryten

28-09-2008, 13:28

Yeah, I have no intention to sell any time soon (rent it out maybe but not sell). What is important for me is very good long term profit as this house will form part of my retirement plan after many years of renting it out hopefully.

NicolaUK

28-09-2008, 14:00

as this house will form part of my retirement plan

Which is exactly how people started to think when the realised that pensions cannot be relied on to allow people to live with dignity when they finally retire. So much of the housing price bubble was created once that idiot Gordo robbed the pension funds and many people rightly thought that they would need to invest somewhere else for their retirement and that was in property.

Kryten

28-09-2008, 14:05

Yeah, I understand that and think the same way, if pensions had been more secure then this would not have been an issue!

Danimal

28-09-2008, 20:01

I imagine the guy at housepricecrash.co.uk must be jubilant he got it right although to be fair his timing was all wrong.

Let me just wait till two-bed flats in London drop by £200k before I start :notworthy him.

vulture

28-09-2008, 22:41

Considering falls have been 10% yoy so far and that the economy is taking a nose dive, I think it's safe to say there will be no soft landing. **** knows how Gordon Brown thought he could avert the economic cycle when he said "no more boom or bust".

Could be as late as 2012 before we hit the bottom of the market.

RobDickinson

28-09-2008, 23:16

Its now been rebranded Boom and Plumet(tm).

Checked my old street, ours was the last house to sell, just over 3 years ago :O

tdevon1

28-09-2008, 23:37

Am I right in thinking that given new regulations are going to be added to stop banks over stretching themselves by lending to people who cant really pay back. Wont this mean that house prices will take even longer to regain the losses as less people will have the means to get a mortgage in the first place?
If correct this could mean that people who are waiting out this, hoping that their homes will go back into positive equity may be waiting a long time.

philbw

29-09-2008, 01:18

Prices in my area are finally becoming sensible again - terrace houses were averaging £80-100K, now they've fallen to as low as £40k...

ROne

29-09-2008, 06:19

Prices in my area are finally becoming sensible again - terrace houses were averaging £80-100K, now they've fallen to as low as £40k...

Which area is that? I've yet to see that around here.

jester

29-09-2008, 07:32

Me too (thank god!)

Not overly worried yet despite the doom and gloom merchants. I do believe as well that a lot of the figures are skewed by the falls in flats as opposed to proper houses. Local evidence shows that although prices are weakening it is nowhere near apocalyptic leves yet.

It will always be supply and demand, like anything really. Prices will reach a level locally where they will be snapped up by someone and the slide will stop, supply will dry up and then as prices hold up new builds/renovations will get going again.

Doubt we will see such rapid growth again though but I am in it for the longer term. We have two houses now, one rented out.

philbw

29-09-2008, 07:48

Which area is that? I've yet to see that around here.
East Lancashire... Burnley & Pendle areas

splobber

29-09-2008, 07:54

£40k? I might buy that on my credit card.

AdsterUK

29-09-2008, 08:28

I know someone who put their house on the market around 6 months ago for £100k, the same estate agent is now advising them to drop it beneath £70k

philbw

29-09-2008, 08:41

If anyone still wants to play the property speculation game - you can buy a whole row of terraces in some rundown areas of East Lancs. for £100k

Uncle Nick

29-09-2008, 10:25

If anyone still wants to play the property speculation game - you can buy a whole row of terraces in some rundown areas of East Lancs. for £100kThere's been religions founded on firmer bets than that!

bh1

29-09-2008, 10:33

£40k? I might buy that on my credit card.
:clap:
.. and then do a balance transfer for cashback!11!11!

Butch Coolidge

03-10-2008, 11:21

The scary thing from a homeowners perspective is that looking at the graphs, it would seem that this crash/"readjustment" will be a lot more severe given the exponential rises that have come before it.

The financial mess we experience today comes from the real estate massive bubble that is popping now.

The politics and economists knew about it as early as 2005 and did not do anything to stop the bubble inflating to disastrous proportions.

The scary things is that the bubble did not pop yet in every countries concerned. Only Germany was not concerned but this country is already suffering financial pain.

GlennSh

03-10-2008, 17:16

The politics and economists knew about it as early as 2005 and did not do anything to stop the bubble inflating to disastrous proportions.

Didnt do anything ? They put up stamp duty

...and then there's the introduction of HIPs

:suspect:

driver8

03-10-2008, 17:45

East Lancashire... Burnley & Pendle areas
£24,950 - 2 bedroom terraced for sale, Larch Street, Nelson, Lancashire, BB9
Mid terrace property in need of some updating. Lounge, kitchen two bedrooms and bathroom. NO CHAIN

£25,000 - Terraced for sale - Abel Street, Burnley, Lancashire
A stone built mid terrace property located in the Daneshouse area. The property requires complete modernisation throughout and has suffered from some fire damage. Cash buyers only. Please note that extensive works are required on this property

£25,000 - 2 bedroom terraced for sale - Pomfret Street, Burnley, Lancashire
A terraced property with 2/3 bedrooms, one reception room and a yard to the rear of the property which is on a sold as seen basis.

£30,000 - 2 bedroom terraced for sale - Grange Street, Burnley, Lancs. BB11
Two bedroomed mid terraced house requiring scheme of upgrading

Uncle Nick

03-10-2008, 17:54

£24,950 - 2 bedroom terraced for sale, Larch Street, Nelson, Lancashire, BB9
Mid terrace property in need of some updating. Lounge, kitchen two bedrooms and bathroom. NO CHAINA decent plumber's merchant should sort that out.

basegreen

03-10-2008, 18:11

A decent plumber's merchant should sort that out.

LOL:lol: You'd have to be feeling flush though.

RobinL

03-10-2008, 18:48

£24,950 - 2 bedroom terraced for sale, Larch Street, Nelson, Lancashire, BB9
Mid terrace property in need of some updating. Lounge, kitchen two bedrooms and bathroom. NO CHAIN

£25,000 - Terraced for sale - Abel Street, Burnley, Lancashire
A stone built mid terrace property located in the Daneshouse area. The property requires complete modernisation throughout and has suffered from some fire damage. Cash buyers only. Please note that extensive works are required on this property

£25,000 - 2 bedroom terraced for sale - Pomfret Street, Burnley, Lancashire
A terraced property with 2/3 bedrooms, one reception room and a yard to the rear of the property which is on a sold as seen basis.

£30,000 - 2 bedroom terraced for sale - Grange Street, Burnley, Lancs. BB11
Two bedroomed mid terraced house requiring scheme of upgrading

Any idea how much these would have been a year back? Or perhaps they require so much spend on refitting that they aren't very cheap after all

Lagerlout

03-10-2008, 18:50

Round here its still £60k for a half ownership 2 bed flat.

basegreen

03-10-2008, 18:51

Round here it's still 120K for similar

daveb975

06-10-2008, 10:12

Any idea how much these would have been a year back? Or perhaps they require so much spend on refitting that they aren't very cheap after all

I expect that is it. Judging by the amount of money I seem to have to pay to get small jobs done on my place, you could easily double the purchase price getting these places right. I don't know the area, but would £60-70k represent a cheap price for these.

still average joe

06-10-2008, 10:34

Seems prices are dropping even in Edinburgh now.
http://www.espc.co.uk/MarketReviewAug08.html

Raigmore

06-10-2008, 10:42

vulture

06-10-2008, 13:30

House prices are really relevant to only those who are planning to buy or sell in the next few months - of which there will be quite a few, of course. In the 11 years that we have owned our present house, there have been a few fluctuations either way. We are not planning to sell for another 8 or 9 years and so the present situation is not relevant to us. Similarly, there must be many people and families who are not really planning to buy or sell for a few years and I think they can all relax and monitor the market. This sort of think happens in cycles and there is no point in worrying about it, especially with a change in government not far around the corner.

Let's say you bought after 2005 i.e. at the top of the cycle. If you stretched to afford the house (as it appears the majority did), I would say there is plenty to worry about.

In years past, inflation would take care of massive debt and no doubt that is what the Govt is hoping for. However, there is a real danger of deflation being around the corner which is going to be very unhealthy for those in debt.

Raigmore

06-10-2008, 13:50

Yes, circustances can vary a lot. When we bought our first house back in 1988, those awful Endowment Mortgages were the in-thing and our then IFA advised us to go for one. It seemed a good idea at the time, but when the housing market started to take a downturn, we did not change to a rapayment mortgage right away.....in fact we did not do so until 1999. By then we were 2 years into the present house but fortunately acquired a good new IFA (who still helps us) and belatedly went for a repayment mortgage.
Let's say you bought after 2005 i.e. at the top of the cycle. If you stretched to afford the house (as the it appears the majority did), I would say there is plenty to worry about.

But we had got a very good deal when we bought the house in 1997 partly because the previous owner was keen to sell and move. Since then we have added an extension and when we remortgaged last year, the house was valued at nearly 3 times the price we paid for it and nearly twice the total of our expense (including the extension). We got a good fixed rate for 5 years last year after the extension was completed and the market still steady and since we had been on a repayment mortgage for 8 years, only needed to borrow 55% of the value of the property. The equation should improve further in our favour in 8 or 9 years time when we both plan to retire, but by how much will depend on how the market is at the time. There is nothing we can do about it but wait and hope for the best.

This plan was suggested to us by the IFA taking into account our individual circumstance. I am sure that was every person or family, there will be a "best under the circumstances" plan that they we all can use. Some will do better, others not so much depending on where they are in their planning cycle and the variabilities of the economy in general and the housing market in particular. That is all any of us can do, I'm afraid.

njc

06-10-2008, 14:13

farmroad38

06-10-2008, 14:39

Without wishing to resort to hyperbole*, the housing market has only just started to fall apart.

We're in for a bloodbath over the next two years, as the economy atrophies, unemployment rockets, banks lend even less than they are now etc.

* I may have failed here.

Do you really think so?

I'm renting at the moment, but I was thinking of buying in about twelve months time. I thought that this would give time for prices to drop and then stabilise a bit, but I'm also beginning to think we may still be on the downward slope by then.

I've also been wondering whether it's worth buying at all. Why not just carry on renting - means I have no worries with regards to price fluctuations, maintenance or anything.

njc

06-10-2008, 14:51

Yes, I really do think this is going to be the case.

If I was renting and wanted to buy, I'd be more than happy to sit on my hands for the next couple of years.

vulture

06-10-2008, 15:39

If you believe the tin foil hatters, it's going to get a lot worse. The housing market is second fiddle to what's happening to the economy as a whole.

farmroad38

06-10-2008, 15:42

If you believe the tin foil hatters, it's going to get a lot worse. The housing market is second fiddle to what's happening to the economy as a whole.

Very true - the markets are in absolute free-fall again today. Time to just hide underneath the stairs and come out when it's all over.

basegreen

06-10-2008, 15:58

Very true - the markets are in absolute free-fall again today. Time to just hide underneath the stairs and come out when it's all over.

True enough - but they were a lot lower post 9/11 (and I don't just mean the day after). Once the bottom is reached, they'll all be making the money on the upside again (whether or not the fundamentals have changed).

It's all a big game until they work out who actually owns the toxic debt.

vulture

06-10-2008, 17:34

9/11 was a short shock to the financial system. The potential collapse of the banking system has a deeper impact. All the issues of fiat currency, fractional reserve banking, regulation, risk etc need to be addressed.

There may be appetite by those who think property is a one way bet to purchase more property, but the lenders have tightened the purse strings. With over a decade of house price rises, it will be a nasty shock to a generation that has relied on debt as the housing pyramid unravels.

One of the common fallacies is that the Govt won't let the housing market collapse. Whilst the Govt needs to give the illusion of addressing the problem, it is more concerned with the banking system and inflation. There are no more billions to pump into the housing market. The banks are using Govt funds to cover their positions.

Looks like another big asset grab.

daveyb

06-10-2008, 20:03

Vulture has called it right.

The government is prepared to pour yet more billions into the banking system; this isn't a free ride....it will take quite a while of hardship before this favour is repaid.

And, while all this is happening, the real hardships are taking place. People will lose their homes in the coming months. I suspect calls to the government to dip their hands into the pockets to help these people will fall on deaf ears.

jerl100

06-10-2008, 22:57

I have a plan re mortgage rates. If enough (ie millions) of people tell their lenders that they won't pay the mortgage for maybe three months unless the banks reduce their rates, they'll have to either give in or go bust. Blackmail in action. it can't fail!

vulture

06-10-2008, 23:33

Raigmore

07-10-2008, 05:56

The real reasons of speculation, greed, and affordability are glossed over.
You're right, but hasn't that always been the case, and will always be? After all, it is the collective population that mirrors the society as a whole and "greed" is very hard to quantify because it is so relative. I mean you might think Joe Bloggs is being greedy while I feel that he is merely seizing an opportunity. Speculation is part of human nature while "affordability" is once again hard to quantify. Two families very similar in their demography and earnings might have very different concepts of what they can or cannot afford. Some people are prepared to take the risk and stretch their resources more than others. That's why I feel that while the experts' prediction of the economy as a whole tends to be more accurate than its impact on individual groups.

driver8

07-10-2008, 06:37

this is how I see it -

after the internet & IT/tech bubble burst in 2000 (?) followed by 9/11, and the occasional pensions scandal hitting the headlines, many people's confidences were dashed.

putting your money into bricks & mortar was always seen as a safe bet, and always seemed like a safe bet compared to the mumbo jumbo of the financial markets.

so many people started moving up the property ladder, or buying 2nd properties for buy-to-let.

The main problem was - this was encouraged by the banks, who handed out mortgages higher than the "x3 single salary" / "x2.5 combined salaries" traditional limit, sometimes as repayments, sometimes as interest only (as 'endowment' was a swear word), which pushed up house prices (they seemed to double in 5 years, and triple in 10). We all became really pleased at how much our houses were now worth.

simplistic, but sound right ?

one thing I don't get though is the credit culture - I was always brought up to "do without" until it was affordable. So apart from my mortgage (which I worked hard to pay off in 10 years) I've always settled my credit cards every month, never had a car loan, and never bought a PC or TV on 0%. Boring I know, but I like to play safe.

So maybe as a society we've brought the whole thing on ourselves ? Just how much can we blame the govt, or even the banks ?

Mattie F

07-10-2008, 11:56

The irony is that people will look back on this episode and blame the credit crunch for the housing market crash, just as high interest rates were blamed for the crash in the 1980s. The real reasons of speculation, greed, and affordability are glossed over.

I'd say it's the housing market crash that's caused the credit crunch.

Here's how I see it:

US banks happily lending to sub-prime folk, safe in the knowledge that if the borrower defaults, the bank simply repossesses the property, sells it and because house prices are ever increasing they get their money (plus a bit more) back.

Then - I believe due to too many new houses being built - there is a glut of housing available in the US and, naturally, the price of property comes down. So, now, when a borrower defaults, all of a sudden the banks aren't getting all their money back and instead have to write off this bad debt, hammering their profits.

Compounding this, packages of this sub-prime investment has been eagerly bought up by banks and investment banks, hoping for a big profit but now it becomes clear that there won't be a big profit - quite the opposite in fact - and these sub-prime investment packages form a tangled web infecting pretty much all banks around the world - and no-one seems to know how deeply any of these banks are involved in this failing sector.

That's how I see it anyway.

olivetti

07-10-2008, 17:11

Today has been a pivotal point in the whole debacle that has been going on for over a year.

Brown/Darling, amongst other word leaders can now be compared easily with Nero. We are now going to enter a world similar to Japan in the 1980/90s. Rapidly dropping house prices and the worst of all deflation.

Confidence is gone, credit is gone the FSCS is having to be implemented we are days away from capitulation which will take probably decades to recover from and 2008 will be mentioned in the same breath as 1939, if not before it.

I for one will punch the mouthpiece of Brown/Darling which manifests as Robert Peston. I wonder if he really realises what he is doing?

We in the UK have no manufacturing to speak of, mostly service industry, we can not build ourselves out of this.

I for one welcome our new masters in the form of China, India and Middle Eastern countries.

driver8

07-10-2008, 17:37

^^ so how could the recent crash have been prevented ? what mistakes were made, and when ?

how can UK manufacturing complete with China ? and UK call centres with India ? without subsidising, what could any govt have done ? would things be different now if the Tories had won the last election ?

seems like we've been riding the crest of a huge wave since the mid-eighties, it's started to crash, and the far east is waiting ...... if the borrower defaults, the bank simply repossesses the property, sells it and because house prices are ever increasing they get their money (plus a bit more) back. Then - I believe due to too many new houses being built - there is a glut of housing available in the US and, naturally, the price of property comes down. So, now, when a borrower defaults, all of a sudden the banks aren't getting all their money back and instead have to write off this bad debt, hammering their profits.but I wonder just how many borrowers are defaulting ? and if there are lots more of them, what has caused this ? it must only be a small % of people who end up with their house repossessed, surely ?

I don't know about the US, but in the UK the impression I got is that repossessed houses were seen as a bargain purchase as the banks just wanted rid (so hardly making a profit ?)

if nothing else, it just goes to show how precarious the whole system has been, and how greedy the companies & upper echelon management are. I suppose the personality types it takes to be a millionaire CEO are used to taking risks and living close to the edge !

NicolaUK

07-10-2008, 18:36

I for one will punch the mouthpiece of Brown/Darling which manifests as Robert Peston. I wonder if he really realises what he is doing?

The bloke's a menace.

caygs

07-10-2008, 18:38

The bloke's a menace. I can only hope that his time is coming, and that he will shoot his mouth off once too often and get sued or something. Made worse by the fact that Gordo and Al seem to flip-flop between a rabbit caught in the headlights and Fraser's "We're all dooooomed".

GlennSh

07-10-2008, 18:41

Excuse my ignorance but who is he ? A quick search notes he's a BBC journo, but I don't know what his involvement is as the "Brown/Darling mouthpiece" etc

NicolaUK

07-10-2008, 18:55

He amended one of his blogs at the weekend when people thought that he had implied that the German Government's plan to protect savers would lead to the type of policies that lead to the 3rd Reich. He needs to understand that he is reporter of the news, he isn't the news.

driver8's comments about confidence is spot on. It's all very well for people to point the finger and talk about greed and speculation but the the truth is for many people in the private sector is how will they finance their retirement?

My OH's pension has dropped by 25% this year and property has fallen by half that amount.

07-10-2008, 18:59

Weren't people desperate for a fall in house prices here? Ironic really as the price has dropped no-one's going to do FTB's a mortgage..

Mattie F

07-10-2008, 19:04

...but I wonder just how many borrowers are defaulting ? and if there are lots more of them, what has caused this ? it must only be a small % of people who end up with their house repossessed, surely ?

I haven't got the link to hand but I can tell you that 1 in 10 US mortgages is 90 days or more in arrears - and that's frightening.

What I read today - on the BBC site somewhere - was that a number of these sub prime US folk already owned property but were sold refinancing packages (remortgages) on a 2 year fixed rate basis and it was never explained to them that payments would jump up in 24 months. Morally disgusting and an accident waiting to happen - driven by pure greed.

Here's a good link for details of the sub prime US market:

http://news.bbc.co.uk/1/hi/business/7073131.stm

Quote from that link:

By late 2007, one in ten homes in Cleveland had been repossessed and Deutsche Bank Trust, acting on behalf of bondholders, was the largest property owner in the city.

Sounds pretty bad to me.

basegreen

07-10-2008, 21:04

The sub prime bell curve is over the peak now though, surely?

Dan

07-10-2008, 21:08

I can only hope that his time is coming, and that he will shoot his mouth off once too often and get sued or something. Made worse by the fact that Gordo and Al seem to flip-flop between a rabbit caught in the headlights and Fraser's "We're all dooooomed".

He doesn't half ham it up a bit when he's in the studio.

yaffle

08-10-2008, 09:14

Weren't people desperate for a fall in house prices here? Ironic really as the price has dropped no-one's going to do FTB's a mortgage..

Quite. And as many people pointed out, the only time house prices fall is when the economy tanks, at which point many people (including FTBs) will be more worried about keeping their jobs and income than about buying property and potentially losing money on it in a falling market. It may help once the economy turns the corner again, but who knows when that will be?

DVDWotcha

08-10-2008, 10:47

Here's a good link for details of the sub prime US market:

http://news.bbc.co.uk/1/hi/business/7073131.stm

There's a better explanation in this prog :

http://www.bbc.co.uk/programmes/b009r2f3

Worth a watch.

Butch Coolidge

08-10-2008, 11:50

so how could the recent crash have been prevented ? what mistakes were made, and when ?

The house market rocketed out of common sense. At the time it was seen as a good thing - just look at the house inflation history on the BBC.

Let see a homeowner sitting on his ass seeing his stack of brinks increasing by more than 10% a year. It could only end up in tears.

This is the lost of common sense on the house market that is to blame for the mess and today everybody is going to suffer.

mikegray

08-10-2008, 11:56

Quite. And as many people pointed out, the only time house prices fall is when the economy tanks, at which point many people (including FTBs) will be more worried about keeping their jobs and income than about buying property and potentially losing money on it in a falling market. It may help once the economy turns the corner again, but who knows when that will be?

Indeed. I was in a good position as a FTB with some investments and therefore a decent deposit, but given the amount that my investments must have dropped these last few weeks, even if the price of houses drops, I'll still have to borrow the same amount because the investments have dropped as much if not more, I imagine!

BigPappa

08-10-2008, 12:00

Trott Law in Michigan is a millionaire owner of law firm making bucket loads turfing out home owners. So someone is benefiting from all this!

Also Trott Law houses the campaign headquarters for Mccain in Michigan!

stillill

09-10-2008, 08:06

The bloke's a menace.

Questions being asked of the BBC's own Lord HawHaw...
http://www.order-order.com/2008/10/exclusive-michael-howard-complains-to.html

Coolio

09-10-2008, 08:20

Indeed. I was in a good position as a FTB with some investments and therefore a decent deposit, but given the amount that my investments must have dropped these last few weeks, even if the price of houses drops, I'll still have to borrow the same amount because the investments have dropped as much if not more, I imagine!

I'm just too scared to buy. We could buy a nice 4 bed in London. On the other hand, I could buy almost outright a place in Canada or Florida. But I am just too scared to do anything :doh: What if we lost our jobs, we could be screwed.

stillill

09-10-2008, 08:23

I'm just too scared to buy. We could buy a nice 4 bed in London. On the other hand, I could buy almost outright a place in Canada or Florida. But I am just too scared to do anything :doh: What if we lost our jobs, we could be screwed.

Get mortgage protection insurance? Getting on with your life is probably the most important thing, you could hang around for years waiting for this stuff to settle down..

Coolio

09-10-2008, 08:25

How easy would it be then to get a mortgage if both people are contractors?

NicolaUK

09-10-2008, 08:31

Questions being asked of the BBC's own Lord HawHaw...
http://www.order-order.com/2008/10/exclusive-michael-howard-complains-to.html

It couldn't have happened to a nicer bloke :thumbs:

I do wonder what history will make of his role in all of this? He seems to get off with his 'The world is going to end - Exclusive by Robert Peston' blogs :oh-hum:

caygs

09-10-2008, 08:40

Unfortunately he seems to have forgotten that his job is to report the news, not be the news.

NicolaUK

09-10-2008, 08:43

Unfortunately he seems to have forgotten that his job is to report the news, not be the news.

http://thedvdforums.com/forums/showpost.php?p=8264362&postcount=886 ;)

Mattie F

09-10-2008, 09:57

How easy would it be then to get a mortgage if both people are contractors?

Nationwide used to be happy to lend to contractors as long as you had a reasonable length of contract in front of you. I used them when I was contracting some years ago.

More recently, Northern Rock granted me (contracting) and the wife (locuming) a very large mortgage but things have changed a bit since then!

Masanevre

09-10-2008, 18:15

Someone I know has just been turned down on a new deal for their morgage. Their current ones up at the ned of the month. They have been now now they are looking at an increase of £300 taking the morgage from £600 to £900

Coolio

09-10-2008, 20:39

Nationwide used to be happy to lend to contractors as long as you had a reasonable length of contract in front of you. I used them when I was contracting some years ago.

More recently, Northern Rock granted me (contracting) and the wife (locuming) a very large mortgage but things have changed a bit since then!

Oh was made redundant this afternoon :(

farmroad38

09-10-2008, 20:41

Oh was made redundant this afternoon :(

Oh bugger, that's not good. Sorry Coolio.

GCfreako

09-10-2008, 20:42

Oh was made redundant this afternoon :(

Sorry to hear. Move to Canada. Cheap houses over here and a chance to start over

Coolio

09-10-2008, 20:44

Full of Canucks tho :lol: Finally getting rid of the outlaws after a 3 week stay :thumbs: It's ok, she was a bit upset but she's only worked in the City for 18 months so just used to the cutthroat hiring and firing like a 8 year veteran like me. We have awkward placed holidays so I think Accountancy exams will be what she focuses on...and housework ;)

Butch Coolidge

10-10-2008, 13:59

" :lol: :lol: - Qualified advisers will be jobless by the end of the day
V

KennyVader

10-10-2008, 21:47

rent-a-shed :lol:

http://www.foxtons.co.uk/search?bedrooms_to=0&property_id=660808&search_form=keyword&search_type=LL&submit_type=search

got to admire the owner's ambition.

pyrogena

10-10-2008, 22:58

rent-a-shed :lol:

http://www.foxtons.co.uk/search?bedrooms_to=0&property_id=660808&search_form=keyword&search_type=LL&submit_type=search

got to admire the owner's ambition.

It hasn't even got a cooking area! :nuts:

nutter45

11-10-2008, 20:25

Mandrill

13-10-2008, 20:00

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4934513.ece

Nationwide have withdrawn deals for FTB's if people buying at the bottom can't get on the ladder than no one else can move up.

Butch Coolidge

14-10-2008, 11:19

Looks like the Eurozone is entering a deflation era. Too early to tell of course but it will make sense after the burst of two bubbles (house market + commodities)

http://www.guardian.co.uk/business/feedarticle/7867958

Butch Coolidge

10-11-2008, 06:39

Bubble? what bubble?

Nearly £1,000 is being wiped off the value of the average house each week, leaving homes worth no more than they were three years ago.

The latest house price survey has confirmed that the property market crash is gathering pace, with values falling at their fastest since the 1930s.

http://www.telegraph.co.uk/finance/personalfinance/3391500/House-prices-falling-by-over-900-a-week.html

Kryten

10-11-2008, 07:12

Baz

10-11-2008, 08:47

Yep, my house is pretty much back to what I paid for it 3 years ago. At least I do not plan to pay double it's original value like most people by leaving my mortgage to run over the full 25 year term or greater!

You should be thankful you earn enough to do that, I don't think most people plan to take a full 25 years. A lot of people have no choice in the matter.

Kryten

10-11-2008, 09:01

Yeah, I certainly am grateful that I can do this (at the moment eanyway). A lot of people end up apying 30-35 years actually as re-mortgage at least once or twice. extending the 25 years and paying over double what their original house price was.

Also there could always be a risk of interest rates going very high again so need to take that into account (less likely in the short term at the moment though).

Looking at my current plan on the original 124k purchase price I only intend to pay about 10k or less in interest by the end of my mortgage over the initial 3 year mortgage and the current one. That may well change if my circumstances do though, and I am pretty sure I will buy another house afterwards too.

NicolaUK

26-12-2008, 00:46

Grandmaster

26-12-2008, 07:23

My wife is selling her flat (outside of the UK) and it has to be said that the fall in the price of UK housing, combined with the collapse in the value of sterling means that UK property looks like an irresistable investment opportunity for foreigners. We're looking at a 30% drop in the value of homes, combined with a 30% drop in the value of the sterling. And it will probably drop lower yet on both counts.

GlennSh

26-12-2008, 12:05

http://news.bbc.co.uk/1/hi/business/7798019.stm

Things are so uncertain that those paid to make predictions dont want to stick their necks out...that really is uncertainty ;)
My wife is selling her flat (outside of the UK) and it has to be said that the fall in the price of UK housing, combined with the collapse in the value of sterling means that UK property looks like an irresistable investment opportunity for foreigners. We're looking at a 30% drop in the value of homes, combined with a 30% drop in the value of the sterling. And it will probably drop lower yet on both counts.

Depends - many people agree our housing market was 30% or so over priced anyhow, and our sterling was artificially strong as we didnt drop interest rates as fast as other countries. So compared to our peaks these look cheap, but not when those peaks were over-priced in the first place

nutter45

28-12-2008, 20:54

Butch Coolidge

29-12-2008, 11:59

(just need the banks to start lending sensibly again to kick start).

Do you really think banks will be ready to lend vast amount of money on properties any time soon? They almost lost their shirt on this bubble (no it is not only a question of American subprimes).

Now regarding lack of property for sale you have to take into account all the foreigners that are now back home because of the lack of job in the UK.

Yes, of course all those Poles back in Warsaw cannot wait to be able to buy an overpriced flat in Slough. :doh:

gagsy

30-12-2008, 01:29

It looks like the media are starting to wake up to the fact that the next housing bubble is already forming, mainly due to the total lack of new homes being built:

http://news.bbc.co.uk/1/hi/business/7798019.stm

2009 could well become the new 1996 as the bottom of this downturn looms.
Depends what caused prices to boom in the first place - a shortage of homes or an oversupply of credit? I favour the latter. If credit is better controlled in the future there isn't the scope for such a big or rapid recovery.

What we've had for the last decade or so is not a regular supply and demand, people borrowing money to buy a home market. It's been skewed by BTL borrowing and a massive increase in re-mortgaging to take advantage of higher perceived prices, both of which have largely come to a halt.

Is there a genuine shortage of homes? It's been said there is approaching a million homes stood empty and that figure hasn't changed much in years. The Government have been banging on about a need for 3 million more homes for about a decade. The number has not decreased but every few years the timeframe is pushed forward. Given the rate at which housing estates and blocks of flats have been thrown up, if anything there was a danger of a surplus of housing which the BTLer brigade were encouraged to soak up with cheap lending.

nutter45

30-12-2008, 20:40

Do you really think banks will be ready to lend vast amount of money on properties any time soon? They almost lost their shirt on this bubble (no it is not only a question of American subprimes)....

:thinking:

No.

'Properties' in my area are approaching decent value (imo) now so lending on sensible purchase prices to sensible purchasers should be possible.

I'm trying to sell my flat at present and to get a decent rate a first time buyer will need the best part of £50k. There aren't many people who have that sort of cash available who haven't bought already.

NicolaUK

30-12-2008, 22:07

Depends what caused prices to boom in the first place - a shortage of homes or an oversupply of credit? I favour the latter. If credit is better controlled in the future there isn't the scope for such a big or rapid recovery.

What we've had for the last decade or so is not a regular supply and demand, people borrowing money to buy a home market. It's been skewed by BTL borrowing and a massive increase in re-mortgaging to take advantage of higher perceived prices, both of which have largely come to a halt.

Is there a genuine shortage of homes? It's been said there is approaching a million homes stood empty and that figure hasn't changed much in years. The Government have been banging on about a need for 3 million more homes for about a decade. The number has not decreased but every few years the timeframe is pushed forward. Given the rate at which housing estates and blocks of flats have been thrown up, if anything there was a danger of a surplus of housing which the BTLer brigade were encouraged to soak up with cheap lending.

The banks will be lending again, slowly at first and only to people who are good credit risks but then their greed will kick in again.

As for a genuine shortage of homes, the issue is the right type of homes in the right areas. The Governments plan in 2000 was to introduce PPG3 which has been a disaster. This encouraged smaller homes in high density developments with little regard for parking. This has been tinkered with with PPS3 but until homes that people want to live in are built, the shortage will only get worse.

The fact that the only people who were really interested in those types of developments were naive BTL'ers pretty much sums up the problems with new build over the past few years.

Butch Coolidge

31-12-2008, 08:58

:thinking:

No.

'Properties' in my area are approaching decent value (imo) now so lending on sensible purchase prices to sensible purchasers should be possible.

Prices still have to fall further before being attractive.

Just looking at prices in my post code (SW Greater London) , 3 bedrooms houses were sold around 150K£ in 2001 and sold around 375K£ in 2007. For 150K£ today you still ony get a 1 bedroom flat. So prices will need to fall further to be attractive.

On the other hand the devaluation of the Pound versus the Euro might make the UK attractive to foreign investors (but it is also true for shares on the London stock exchange - far easier to trade than real estate). For the moment it is probably the reverse that is happening. I mean Brits are trying to cash on the devaluation and are hoping to sell their 2nd house on the continent at a decent price.

nutter45

31-12-2008, 09:51

Attractiveness of pricing is obviously subjective, but good luck if you're holding out for a 3 bed (with walls and a roof) at £150k. That's just not going to happen.

We're currently under offer on a 3 bed in KT5 (SW Greater London, just :) ) at £330k, it was originally put to the market at £460k (which was way over value) c.18 months ago. It's madness really, a year ago our flat was 'worth' 90% of what we're paying for a house now.

daveb975

31-12-2008, 12:09

We're currently under offer on a 3 bed in KT5 (SW Greater London, just :) ) at £330k, it was originally put to the market at £460k (which was way over value) c.18 months ago. It's madness really, a year ago our flat was 'worth' 90% of what we're paying for a house now.

I live in neighbouring KT6, and a lot of 2 bed flats were selling for more than £330k last year - and this is probably less than a mile away from the house you are buying.

£330k does not seem too bad a price for a house in Berrylands, good luck with the sale.

daveb975

31-12-2008, 12:17

Attractiveness of pricing is obviously subjective, but good luck if you're holding out for a 3 bed (with walls and a roof) at £150k. That's just not going to happen.

I am not so sure. Whilst the KT5 area may be relatively cheap compared to neighbouring Surbiton and Kingston, there are much cheaper areas in outer SW London.

For example, in parts of Sutton, Worcester Park or Croydon, average 3 bed semis would never have gone much above £250k, so have probably fallen to below £200k already.

I'd agree that a reasonable 3 bed house in Berrylands for £150k looks a long way off, though.

NicolaUK

31-12-2008, 12:44

Berrylands = Sewage Works :gag:

nutter45

31-12-2008, 13:38

I am not so sure. Whilst the KT5 area may be relatively cheap compared to neighbouring Surbiton and Kingston, there are much cheaper areas in outer SW London.

For example, in parts of Sutton, Worcester Park or Croydon, average 3 bed semis would never have gone much above £250k, so have probably fallen to below £200k already.

I'd agree that a reasonable 3 bed house in Berrylands for £150k looks a long way off, though.

I was going off the 2001-2007 prices mentioned in the earlier post. I'm sure a house could be found in a murky corner of Merton for some way less than £200K.....but it would never have cost £375k last year.

The sewage is a slight concern :suspect: We have though lived a 10 minute walk from the house for 5 years and very rarely noticed it.

Selling the flat is causing me concern atm :(

daveb975

31-12-2008, 14:07

Selling the flat is causing me concern atm :(

Well, you never know what will happen in the new year. I live in the Maple Road area of KT6 and the prices of flats have taken an absolute battering over the last year, whilst the prices of the rare house that does come onto the market has only come down slightly.

If we were looking to upgrade our flat to a house now the price differential is actually more than it was a year ago. This is to be expected in an area that is 90% flats.

Berrylands is slightly different as it has a far greater proportion of houses and fewer flats. Good luck with it.

daveb975

31-12-2008, 14:24

I was going off the 2001-2007 prices mentioned in the earlier post. I'm sure a house could be found in a murky corner of Merton for some way less than £200K.....but it would never have cost £375k last year

You would not even need to go that far - 3 bed houses at the A3 end of Tolworth/Chessington are under £200k, but are probably not good value even at that price and would certainly not have been £375k last year.

I always find the ourproperty.co.uk site an interesting one as it shows sold prices right back to 1995. It does make me wish I has been old enough to buy somewhere at that time, though! In one road in Surbiton, a semi that sold for £171k in 1995 sold again for £780k in 2008. Adjusted for inflation, that £171k would barely be enough to buy a flat now.

A lot of places have gone up even further. You could actually buy a nice detached house in areas like Sevenoaks or Esher for around £150k in 1995. similar houses would be astronomically priced now.

nutter45

06-01-2009, 17:31

Well, you never know what will happen in the new year. I live in the Maple Road area of KT6 and the prices of flats have taken an absolute battering over the last year, whilst the prices of the rare house that does come onto the market has only come down slightly.

If we were looking to upgrade our flat to a house now the price differential is actually more than it was a year ago. This is to be expected in an area that is 90% flats.

Berrylands is slightly different as it has a far greater proportion of houses and fewer flats. Good luck with it.

Cheers :)

We've just gone under offer on the flat at a shockingly low price, but managed to engineer an extra £20k off the house purchase :eek: to make it work for us overall.

NicolaUK

06-01-2009, 18:01

This is a pretty balanced article about the housing market with some interesting comments too:

http://www.citywire.co.uk/personal/-/comment/morning-line/content.aspx?ID=325256&re=4463&ea=187460&Page=1

This is going to be a compelling year to see where the market ends but hopefully the banks will start lending again and that will start to put a floor in.

daveb975

06-01-2009, 18:11

Cheers :)

We've just gone under offer on the flat at a shockingly low price, but managed to engineer an extra £20k off the house purchase :eek: to make it work for us overall.

Great news. I think you have done exactly the right thing as it is only really the extra cost that counts - it doesn't matter if you are getting a bad price for the flat as long as you are paying a good one for the house.

Ultimately, the only thing that counts is being able to afford the mortgage payments. There seem to be a few 3.5% fixed and (collarless) trackers around at the moment that should help with that in the short term!.

Good luck with getting through to exchange/completion.

nutter45

06-01-2009, 18:23

Great news. I think you have done exactly the right thing as it is only really the extra cost that counts - it doesn't matter if you are getting a bad price for the flat as long as you are paying a good one for the house.

:thumbs:

Fingers crossed territory now :(

Butch Coolidge

14-01-2009, 21:23

Some news from Eire

http://www.irishtimes.com/newspaper/finance/2009/0113/1231738220759.html

IRELAND WILL see more demolition than construction of houses over the next decade, as the economy struggles to recover from the collapse of the housing market and the emergence of “zombie” banks, UCD economist Morgan Kelly told the conference.

In a presentation that drew several collective intakes of breath, Mr Kelly predicted that house prices would fall by 80 per cent from peak to trough in real terms.

Kryten

15-01-2009, 07:21

Well the house in my stree I wanted to snap up seems to have been rented out or sold (I think rented as still showing for sale on the estate agent site but then again maybe they just want people to ring up!). It would have to be quite a bit cheaper than it is advertised for though for me to consider it.

I think my house is now down below what I paid for it 3.5 years ago. I am still lucky in that I have massive equity in it though.

neilalford

15-01-2009, 08:27

I think my house is now down below what I paid for it 3.5 years ago. I am still lucky in that I have massive equity in it though.

Same here I think, been just over 3.5 years (closer to 4 from when I was actually looking at houses) and the advertised prices for similar properties seem to be around the same level they were when I was looking.

That puts me at around 30% equity, hopefully that wont drop below 25% before my current mortgage comes to an end in March (though I could top it up from my ISA if neccesary).

Kryten

15-01-2009, 08:34

Same here I think, been just over 3.5 years (closer to 4 from when I was actually looking at houses) and the advertised prices for similar properties seem to be around the same level they were when I was looking.

That puts me at around 30% equity, hopefully that wont drop below 25% before my current mortgage comes to an end in March (though I could top it up from my ISA if neccesary).

the problem there is houses are selling for ~20% below asking prices on average at the moment so the actual value ofthe house is much lower!

From my rough estimates on my house at below advertised prices I get for Dec - Feb (projected)

Value, Equity, LTV
£120,021.42, £81,631.75, 34%
£117,621.00, £78,886.99, 34%
£115,856.68, £76,837.17, 35%

So even with my over payments I have made my house is depreciating quicker than I am paying it off at the moment! Although no extra payments in Jan and Feb as they are going towards ISA for 2009/10 and paying off my (0%) visa bill! (and a plasma tv :suspect: ). I also think that the values there are optimistic and not what I would get. It was valued in June at £137,000 for my new mortgage.

neilalford

15-01-2009, 08:53

Well, the advertised prices range from about £125k to £150k, I paid £125k so right at the lower end of the currently advertised prices.

Interestingly, I notice that it seems to be houses at the lower end of the market that have fallen most, others around here are still being advertised at prices close to what they were 2 years ago, vaguely considered moving up back then, as I thought that could happen, as the lower end houses seemed more overpriced, wish I had now.

Kryten

15-01-2009, 08:57

Well I guess those at the higher prices may be people facing negative equity if they sell for less so refuse to advertise it for less!

A friend of mine is looking at buying right now and was told by the estate agent to just ignore all the prices on the adverts! He is looking in the 150k region but the estate agent is showing him ones advertised up to £200k as they are selling for such huge discounts!

farmroad38

15-01-2009, 08:59

the problem there is houses are selling for ~20% below asking prices on average at the moment so the actual value ofthe house is much lower!
...

Where are you getting that from Kryten? I'm not disputing it, but I'd just be interested to know the source.

I've been looking at houses with a view to buying in the next six months, and wondering what sort of offers I could make. If I was certain that I could make offers around 20% lower than the advertised price, it would make me much happier!

nutter45

15-01-2009, 10:18

Where are you getting that from Kryten? I'm not disputing it, but I'd just be interested to know the source.

I've been looking at houses with a view to buying in the next six months, and wondering what sort of offers I could make. If I was certain that I could make offers around 20% lower than the advertised price, it would make me much happier!

The house I'm buying was on the market at £380k (having been reduced to that level), and I'm in solicitors hands at £315k. That's as good as 20%, if my mental arithmetic is up to the job :suspect:

Offer away, they can only say no :) Success will depend on the motivation of your seller.....if it's an executor's sale or forced due to a work move you could snag a bargain :thumbs:

farmroad38

15-01-2009, 10:23

The house I'm buying was on the market at £380k (having been reduced to that level), and I'm in solicitors hands at £315k. That's as good as 20%, if my mental arithmetic is up to the job :suspect:

Offer away, they can only say no :) Success will depend on the motivation of your seller.....if it's an executor's sale or forced due to a work move you could snag a bargain :thumbs:

:thumbs: Thanks for that.

17.1% :dork: Near enough though.

I'm hoping that'll be the case - there's still a significant gap between what I can afford and what I want! Just got to keep calm, as I've still got several months to run on my current lease and most of my deposit tied up in fixed term accounts for the same period.

Kryten

15-01-2009, 11:00

Yeah, 10-20% is what most people are saying to offer below asking price. As above they can only say no or yes!

NicolaUK

05-02-2009, 21:27

The Halifax are reporting a 1.9% rise in house prices in January:

http://news.bbc.co.uk/1/hi/business/7871614.stm

mikegray

05-02-2009, 22:02

Particularly interesting given that Nationwide said it went down for the same period!

Kryten

06-02-2009, 04:33

Yeah, Halifax still say they expect it to return to a downwards trend though.

farmroad38

06-02-2009, 07:15

Conversely, I think Nationwide said prices went up in December, whilst Halifax said down.

Probably just a statistical anomoly, caused by the very low number of sales in the sample. I can't see this being the bottom of the slide with the way the economy, and in particular unemployment figures, are going.

mikegray

06-02-2009, 11:38

As someone looking to buy, I really am not seeing the price decline they're talking about here on the ground. Maybe it's different oop north, or maybe I should be making silly offers.

basegreen

06-02-2009, 11:43

Couple of friends in the EA trade reckon things are looking a bit brighter atm.

driver8

06-02-2009, 11:51

yes - looking on rightmove, the prices now seem to be about the same as at the end of 2006, at least the advertised price (in the towns that I am familiar with, around Preston). A few of them are flagged with "£5000 off" but doesn't seem to make much difference.

And looking on houseprices.co.uk (which gives actual sale price) there aren't enough sales in regions that I know well enough to say whether prices are up or down or what.

But yes, someone said a few pages back that you could make offers 20% lower and see what happens.

Hasn't the average house cost just fallen below £150k recently ? (iirc, from Sky News).

mikegray

06-02-2009, 12:10

The real problem for me is the stamp threshhold which is right around what I want to spend. The £175k houses are often not quite what I want, while the £200k ones are - but even at 10% less it's £180k and then I've got to pay the stamp which feels like just throwing a couple of grand away.

farmroad38

06-02-2009, 12:15

According to the Halifax, average house price is about £163k.

I believe that houseprices.co.uk is delayed by a few months, so it's not going to give you an indication of what is happening to prices now.

I'm looking to buy in the summer, so I've picked a few houses currently being advertised and am keeping an eye on them to see what their prices do. Since just before Christmas, none of the 10 that I'm watching have sold, and four have had their prices cut by between 3-5%.

Have a look at www.propertysnake.co.uk. It tracks the prices of houses and calculates the percentage drop, as well as monitoring when those changes were made and how long the properties have been advertised. It's limited because it only seems to pick up a few agents, but it gives a general idea.

What you can buy a particular house for is going to be governed by how desperate the vendor is to sell. One of the houses I've been watching has been on the market (and vacant) for over a year. In that time, they've knocked about 15% off, but they're obviously not desparate otherwise they'd have moved it by more.

farmroad38

06-02-2009, 12:18

The real problem for me is the stamp threshhold which is right around what I want to spend. The £175k houses are often not quite what I want, while the £200k ones are - but even at 20% less it's £180k and then I've got to pay the stamp which feels like just throwing a couple of grand away.

I've got a similar problem. I'm looking at properties around £250k, above which the stamp duty goes from 1% to 3%. Seems daft that I could end up paying £2500 stamp duty on one house, and over £7500 on a house that cost just a couple of thousand more.

jester

06-02-2009, 12:31

Having bought a house in July I have been keeping a keen eye on prices in my area.

In Hull and perhaps elsewhere it depends on what kind of property it is, the biggest falls have been in flats and newbuilds (houses and flats) particularly where the original asking price was inflated to being with. Traditional housing stock seems to have fared much better.

Also the regional effect comes into play in Hull in a big way, overall I think we are down a couple of percent or so from peak values.

My wife owns her own 2 bed edwardian terrace that she rents out. Our home is an edwardian four bed large end terrace. I do not believe that the rises of the past will return but people will always want somewhere decent to live so I am confident in the long term.

Butch Coolidge

06-02-2009, 14:35

Serious troubles in Dubai. The end of the real estate bubble leaves an ocean of luxury cars at the airport...

http://business.timesonline.co.uk/tol/business/markets/the_gulf/article5663618.ece

For many expatriate workers in Dubai it was the ultimate symbol of their tax-free wealth: a luxurious car that few could have afforded on the money they earned at home.

Now, faced with crippling debts as a result of their high living and Dubai’s fading fortunes, many expatriates are abandoning their cars at the airport and fleeing home rather than risk jail for defaulting on loans.

Many Westerners invested in Dubai’s skyrocketing real estate market, buying and reselling homes before building was even complete.

Those who flee the emirate are known as skips.

daveyb

06-02-2009, 15:50

As someone looking to buy, I really am not seeing the price decline they're talking about here on the ground. Maybe it's different oop north, or maybe I should be making silly offers.
Why not make an offer ?

I know people get touchy about low offers, but would they rather have no interest whatsoever?

Be bold and potentially you will pick up a bargain.

simonmac

06-02-2009, 17:49

As someone looking to buy, I really am not seeing the price decline they're talking about here on the ground. Maybe it's different oop north, or maybe I should be making silly offers.

Houses around mine (oop north) are valued at about £95k and people are opening at ~£80k so a silly offer is a good start, you can always go up and make friends with them again if they feel offended!

GlennSh

07-02-2009, 09:44

I've got a similar problem. I'm looking at properties around £250k, above which the stamp duty goes from 1% to 3%. Seems daft that I could end up paying £2500 stamp duty on one house, and over £7500 on a house that cost just a couple of thousand more.

Agree its totally ridiculous and something the government should sort out to help give a boost to the property market. It was brought in as a quick way of milking extra cash while things were good.

If there's only "a few grand" or thereabouts you could ofcourse pay the extra as "fixtures and fittings" (so long as you dont take the p ;) )

vulture

09-02-2009, 19:27

Few would argue that we are in the midst of a housing crash. Interest rates didn't have to shoot up and few doubt that lowering them will stop the crash from steam rolling ahead.

Butch Coolidge

10-02-2009, 06:46

Few would argue that we are in the midst of a housing crash. Interest rates didn't have to shoot up and few doubt that lowering them will stop the crash from steam rolling ahead.

http://www.nationwide.co.uk/hpi/historical/Jan_2009.pdf

Page 1 at the bottom right "House Price to Earnings Ratio" is probably giving the trend. According to this graph free fall should carry on.

Butch Coolidge

18-03-2009, 06:24

Proposed cap on mortgage lending by FSA

http://www.telegraph.co.uk/finance/personalfinance/5002083/Proposed-cap-on-mortgage-lending-by-FSA-is-suicidal-say-property-experts.html

Sure a good way to get rid of the speculation and restore affordability. On the other hand the property parasites have everything to lose.

Kryten

18-03-2009, 06:50

Yeah, this could mean that there is no way for house prices to really recover in the medium term as no one will be able to get the deposit. Could be good for the rental market though so some of the "property parasites" as you call them will be able to buy up properties for rental as no one can afford to buy them in the short term, and if they have cash they can snap them up for rental (although as the price will not rise they may not bother and certainly will keep a lot of them out of the market).

Personally I think a 3x cap is quite low really, I can see a 4x cap being more sensible with current salary to prices.

hookbeak

18-03-2009, 07:43

Sure a good way to get rid of the speculation and restore affordability. On the other hand the property parasites have everything to lose.

As has any poor first time buyer who has bought in the last few years - who will all be plunged into massive negative equity.

farmroad38

18-03-2009, 07:46

...
Personally I think a 3x cap is quite low really, I can see a 4x cap being more sensible with current salary to prices.

Surely the answer to that is for house prices to come down, rather than to lend more?

I was listening to some bloke on the Today programme on Radio 4 this morning. He was wittering on about how banks should be able to lend more because interest rates are so low and people can afford it. In the words of that known sage, Bugs Bunny: "What a maroon!" How on earth can you base lending over a typical 25 years on current interest rates, that are the lowest they have ever been?

If they were to limit lending to 3x salary, and with the average male salary* allegedly at £36k, that would mean the average house would have to drop to about £108k to become affordable. As the current average is £150-160k, that would be a huge drop, so much as I'd like to see the cap I don't think it will happen. As you say though Kryten, at the very least the inability of many to find sufficient deposits should make house prices drop further.

* This is the figure they tend to trot out when talking about average house prices. Why on earth they should use this, I don't know - do women not buy houses? :thinking:

farmroad38

18-03-2009, 11:14

Report now published:

http://newsvote.bbc.co.uk/1/hi/business/7950355.stm

No cap on multiples. In fact, not much of anything really - what a disappointment.

slatermethuen

18-03-2009, 12:02

Report now published:

http://newsvote.bbc.co.uk/1/hi/business/7950355.stm

No cap on multiples. In fact, not much of anything really - what a disappointment.

According to the report, an FSA Mortgage Market Review report in Sept '09 will include recommendations on LTI capping. So I guess we have to wait...

farmroad38

18-03-2009, 12:35

According to the report, an FSA Mortgage Market Review report in Sept '09 will include recommendations on LTI capping. So I guess we have to wait...

Otherwise known as "Let's put it off and hope that the economy has recovered by then and everyone has forgotten about it..."

JimLin

18-03-2009, 12:55

According to the report, an FSA Mortgage Market Review report in Sept '09 will include recommendations on LTI capping. So I guess we have to wait...

This might temporarily support the current house prices, if not push them up a bit, as people try to get in before any cap is implemented.

mikegray

18-03-2009, 15:34

w_n_s

18-03-2009, 18:51

I'm hoping the price we've paid for our house (just bought, FTB) was a good enough deal to protect us a bit from further falls (we paid mid £160s for a property initially on the market for over £210k) - we're planning on staying for a good while though, not thinking of it as an investment, just a home!

Just don't read housepricecrash.co.uk and you'll be fine :thumbs:

You tell the guys on there you just bought, and they'll laugh. Half the guys on there are expecting 95 - 2000 prices to come back. Not sure if that will work, because if it did, i'd be selling my granny for a few more houses.

The thing is, some of the stuff they say is actually quite sensible, and quite scary if like me you've bought in the last 3 - 4 years.

So be warned. Stay away! :thumbs:

RobDickinson

18-03-2009, 23:00

housepricecrash.co.uk

1st registered 2003....

farmroad38

19-03-2009, 08:00

Just don't read housepricecrash.co.uk and you'll be fine :thumbs:

You tell the guys on there you just bought, and they'll laugh. Half the guys on there are expecting 95 - 2000 prices to come back. Not sure if that will work, because if it did, i'd be selling my granny for a few more houses.

The thing is, some of the stuff they say is actually quite sensible, and quite scary if like me you've bought in the last 3 - 4 years.

So be warned. Stay away! :thumbs:

:lol: I pop over there occasionally. As you say, some of it is relatively sensible, whilst other bits are... less so! If you believe some of them, we should all be stockpiling food, digging bunkers and buying shotguns, ready for the total breakdown of civilisation!

I'm starting to get a bit worried about this housing crash lark. I've been keeping an eye on prices for a while, and generally they've been coming down at a steady pace. For the last few weeks though they've stopped dropping, and quite a few of the houses I've had my eye on have sold. Got to keep my fingers crossed that it's just a slight spring bounce, otherwise I may have to scrap my plans to buy an 8 bed mansion for under the 1% stamp duty limit in the summer ;).

Butch Coolidge

21-03-2009, 13:04

Back in 2002...

http://www.economist.com/opinion/displaystory.cfm?story_id=E1_TDVSTQQ

Many economists were worried last year [2001] that the wealth loss from falling share prices would force consumers to cut their spending....

Massive monetary easing by central banks has succeeded in propping up consumer spending around the world, partly by boosting house prices...

When will the music stop?

to maintain the current pace of growth in spending, consumers will need to pile up ever bigger debts....

But such spending has literally been borrowed from the future.

Back in May 2007 Ben Bernake said

we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system

NicolaUK

29-05-2009, 09:18

House prices up again:

http://news.bbc.co.uk/1/hi/business/8073157.stm

Those will the correct finances are going to be in a good position to pick up a bargain over the next few months.

I hope the lemmings at housepricecrash.co.uk keep waiting for the 50% crash they've been expecting for so long and miss the boat :thumbs:

Grandmaster

29-05-2009, 09:30

Key quote appears to be this:

"The rollercoaster ride for house prices continues. Up in March, down in April, back up in May," said David Smith, senior partner at property consultancy Carter Jonas.

"This volatility is typical of a housing market dragging along the bottom and mirrors the testing economic conditions."

Which suggests that now, or imminently, is a good time to buy.

nutter45

29-05-2009, 09:33

Friends of mine put their house on last weekend having spotted a potential bargain. They had 14 viewings at an open day on the Saturday and 3 offers that evening. One of the losing offerors then tried to gazump a few days later above asking price.

All fuelled by the chronic lack of supply at the moment is my guess.

mjb1975

29-05-2009, 09:33

Hmm, I'm looking to buy (with my GF) and am quite interested in following things. We have a large deposit so are in a good position but would obviously like to get something for as little as possible.

Am looking at a house which is up for £230k but has been on the market since January (using the excellent Property Bee via Firefox). Wondering whether it's worth putting in a cheeky £205k offer or similar.

farmroad38

29-05-2009, 09:34

For once, even the spokesman for Nationwide admitted that this is a blip, and that prices will continue to fall. They've got so few transactions occuring at the moment that the figures (positive or negative) are largely meaningless.

I can't see prices rising in any real sense for some time to come - you only have to look at the wider economy to see that there is no way they can. And good job too - I'd like my son to be able to own a home at some point without assuming that I'll be giving him all of my life savings to fund it.

The real lemmings are the idiots that think that ridiculous house price inflation is a good thing.

farmroad38

29-05-2009, 09:36

nutter45

29-05-2009, 09:40

Am looking at a house which is up for £230k but has been on the market since January (using the excellent Property Bee via Firefox). Wondering whether it's worth putting in a cheeky £205k offer or similar.

Go lower. No harm in that, they'll only say no and you can get a feel for how desperate they are....

mjb1975

29-05-2009, 09:49

Hmm, did think that, although this is outer London so I have a feeling prices tend to stay a bit higher than perhaps elsewhere.

During our viewing, they did say they're moving due to their son getting a college place somewhere else so, assuming others don't move for it, they could get even more desperate towards August!

NicolaUK

29-05-2009, 09:54

We have 1 sold and exchanged, 1 sold waiting to exchange and 1 that's just gone on the market in my road this year. The prices have dropped by around 10 to 15% from the peak which seems like a good time to buy now, sit tight for a couple of years and ride out the recession and then wait for prices to increase so you don't have to worry about negative equity.

The people on sites like housepricecrash.co.uk don't want to stop house price inflation, they seem angry they missed the boat last time around.

nutter45

29-05-2009, 10:10

The people on sites like housepricecrash.co.uk don't want to stop house price inflation, they seem angry they missed the boat last time around.

Wow, never been to that site before. Some of the posts are unbelievable :doh:

farmroad38

29-05-2009, 10:17

...sit tight for a couple of years and ride out the recession and then wait for prices to increase so you don't have to worry about negative equity...

And hope you don't lose your job, and that rising inflation doesn't cause interest rates to get so high you can't afford the mortgage any more, and that Captain Darling's reckless spending doesn't mean that tax rates have to go up.

In the 90's recession, prices bumped along the bottom for a good couple of years. I don't see any reason why it will be different this time. I was going to buy this summer, but I think I'm going to wait at least six months or so. Might even wait until after the election to see what happens then.

NicolaUK

29-05-2009, 10:22

And hope you don't lose your job, and that rising inflation doesn't cause interest rates to get so high you can't afford the mortgage any more, and that Captain Darling's reckless spending doesn't mean that tax rates have to go up.

In the 90's recession, prices bumped along the bottom for a good couple of years. I don't see any reason why it will be different this time. I was going to buy this summer, but I think I'm going to wait at least six months or so. Might even wait until after the election to see what happens then.

Tax revenue is going to have to increase no matter what happens after the election. I bought my first house in 1996 so have plenty of equity in my house, even after the recent drops. For people who are worried I would wait to buy but as I said, for those who have the right finances in place, there are bargains to be had.

farmroad38

29-05-2009, 10:34

Tax revenue is going to have to increase no matter what happens after the election. I bought my first house in 1996 so have plenty of equity in my house, even after the recent drops. For people who are worried I would wait to buy but as I said, for those who have the right finances in place, there are bargains to be had.

Agreed, and I think that's probably where a lot of the current buyers are coming from - cash rich, requiring smaller mortgages.

I'm just concerned that the false optimism spread by the media when you get reports like this from Nationwide or Halifax are going to draw buyers in. One of the people I work with is already talking about "missing the bottom" and has been to the bank to see how much he could borrow with only a 5% deposit. If he bought now, it wouldn't take many more monthly falls for him to lose that completely.

stu_69

29-05-2009, 10:49

Where I live house prices are just not moving and anything decent is being snapped up within days off appearing on the market.

We found a house we liked but my wife "really" liked it so took on the negotiations and went in low and ended up £5k off their asking price. I didn't want to pay that much £240k anyway so I was glad when they turned it down (saying they have estate agent friends who have told them the market is moving up). they came back 2 weeks ago and accepted our offer. I wanted to lower our offer but the wife wouldn't have it, we could not complete as the mortgage we had "in principle" we didn't get. So again I was glad.

We have now had to drop down to below the £200k price bracket to be guaranteed we can get a mortgage (at a decent rate). Round here you can't find anything decent for under £200k.

Not sure what we are going to do. The market round here has dropped but not by much.

farmroad38

29-05-2009, 10:56

I've been watching the market near me and there is no doubt it has picked up in the last two or three months, but that always happens - the spring rush of house-buying.

Other than that, the stock of houses has mostly been sitting around for ages, with few if any price reductions and few sales. A number of houses that have gone under offer on Rightmove have come back again after a couple of months, presumably because the chain has broken down. We seem to be in a bit of a standoff between buyers and vendors, and this news from Nationwide is only going to make that worse.

daveb975

30-05-2009, 07:38

Wow, never been to that site before. Some of the posts are unbelievable :doh:

To be fair, though, there is a lot of well informed comment on that site. It is just a shame that it is masked by some of the more 'extreme' views.

I have been an occasional visitor to that site since 2003 and even then they were predicting immediate economic meltdown on the basis that one shop had closed down or there was a free seat in a normally busy restaurant.

Once you get to know who the sensible contributors are it can be a very useful source of economic information and commentary.

splobber

30-05-2009, 07:53

Houses need to come down in price. Their value has been artificially manipulated over the last 10-15 years to make it look like we have a powerful economy, which we now know is been built on paper money.

Although I should have bought years ago (but wasn't able to at the time) I have been toying with the idea of buying (we are what you would call council scum), but the problem is that you can only have 3-4 times what you earn and on an average house round here I would need to be earning £60-80k pa, which unfortunately I and many others do not.

I am lucky that I can relocate with my job so are looking at moving further up north and rural just so I can get one, which is a crap reason for moving for most people as it would mean they have to change their job.

The other lame duck now is that you need a hefty deposit as many lenders will only give 75-80% of the house value. That's not a problem for me to find the money, but I don't ideally want to fork out that amount as I would rather have that money for financial emergencies and home improvements. 10% I can easily muster, but the lenders are limited and they charge you through the nose on interest.

What happened all those years back is that a house is often treated as an investment rather then a home and that was the beginiing of the end with the housing market, making it unsustainable today.

daveb975

30-05-2009, 08:30

The other lame duck now is that you need a hefty deposit as many lenders will only give 75-80% of the house value. That's not a problem for me to find the money, but I don't ideally want to fork out that amount as I would rather have that money for financial emergencies and home improvements. 10% I can easily muster, but the lenders are limited and they charge you through the nose on interest.

.

It is mortgage finance that is the key. If banks continue with the policy of lending a maximum of 3x income and a maximum of 80% of the house value then the average house price will have to come back to somewhere around 3-4x the average household income in the longer term. There is no other way around it.

There are always exceptions, e.g. people whose parents can afford to buy them a house or give a huge % deposit, but the vast majority of first time buyers will be coming into the market with a small deposit and will need a mortgage based on their income. If a mortgage big enough to buy a house/flat is not available, they will have to rent instead.

Of course, if the banks start lending like they have done up until 2007, it will be very different.

farmroad38

30-05-2009, 09:37

I checked Rightmove this morning, and already there are one or two houses that have had their asking prices put up! :brickwall

My brother-in-law is an estate agent, and I know he despairs when things like this happen. The vendor will have moaned heartily when told what a realistic asking price was & insisted on putting it on higher, it sits there for a few weeks until they begrudgingly knock a paltry amount off, then when some vaguely positive news is reported, they instantly insist on putting the price back up again!

Thing is, an awful lot of people have just chased the market down. If they'd priced realistically in the first place, they might have sold for much more than they will eventually get. Easy for me to say that as a potential buyer of course...

daveb975

30-05-2009, 10:13

Thing is, an awful lot of people have just chased the market down. If they'd priced realistically in the first place, they might have sold for much more than they will eventually get. Easy for me to say that as a potential buyer of course...

There are always going to be two types of seller, those that are forced to sell, and those that are not. The former are the ones that are likely to be chasing the market down, the latter just seem to be sticking their houses on at peak asking price and not accepting any realistic offers.

It is understandable, though. Why would people want to sell their most expensive asset at 20% less than it was 'worth' last year? Most upsizers fail to see the advantage in buying a more expensive house at a 20% discount.