Sharp fall in Property asking prices - Dec 07

Property Prices?

  • On the edge of a Precipice

    Votes: 0 0.0%
  • Slow slide to a soft landing

    Votes: 0 0.0%

  • Total voters
    0
#1
Precipice or gradual slide??

A BBC report released today makes interesting but slightly worrying reading....unless you are waiting with cash for the bargins that should follow :D
 
#2
It depends if people panic or not. Personally I'm happy for a big drop as I haven't bought yet.

One thought - if the repossessions drastically increase, as expected, where will all those people go? most of the council houses have gone and the immigrants have the rest!

I reckon prices will gradually drop to more reasonable levels - especially if all the greedy property dealers start selling their portfollios. Personally in this day and age I think people with more than 1 or 2 houses are screwing the rest of us over!
 
#3
headgear said:
It depends if people panic or not. Personally I'm happy for a big drop as I haven't bought yet.

One thought - if the repossessions drastically increase, as expected, where will all those people go? most of the council houses have gone and the immigrants have the rest!

I reckon prices will gradually drop to more reasonable levels - especially if all the greedy property dealers start selling their portfollios. Personally in this day and age I think people with more than 1 or 2 houses are screwing the rest of us over!
What by having the good sense to invest their money??? How dare they.
 
#4
Depends... theres loads of factors at play. It depends where peoples finances are after Chrimbo... if enough people find their credit cards are maxed out, can't make the repayments, can't get a loan to pay off the cards, perhaps lose their jobs due to slower consumer spending, etc, then this could all unravel frighteningly fast.

And things could be even worse if buy-to-let investors decide to sell their properties at or near this current peak, so that they can buy them back at a knock down price later on.

People seem to think that houses are an untouchable investment that can't lose. The fact is that all markets are cyclic. Gains are inevitably followed by falls, but no-one can say what the timescale of it will be.

TB
 
#5
Bad_Crow said:
headgear said:
It depends if people panic or not. Personally I'm happy for a big drop as I haven't bought yet.

One thought - if the repossessions drastically increase, as expected, where will all those people go? most of the council houses have gone and the immigrants have the rest!

I reckon prices will gradually drop to more reasonable levels - especially if all the greedy property dealers start selling their portfollios. Personally in this day and age I think people with more than 1 or 2 houses are screwing the rest of us over!
What by having the good sense to invest their money??? How dare they.
Investors act differently to owners though. Treating house prices like shares opens up the possibility of seeing stock market behavior in the housing market. Owners generally won't sell if the market worsens, as they need a roof over their head, investors can, and that can extend bad sentiment in the market and cause a vicous circle that leads to a collapse in prices.

If the question is "Should houses be used as an investment vehicle?" then my answer is no.

TB
 
#6
Bad_Crow said:
headgear said:
It depends if people panic or not. Personally I'm happy for a big drop as I haven't bought yet.

One thought - if the repossessions drastically increase, as expected, where will all those people go? most of the council houses have gone and the immigrants have the rest!

I reckon prices will gradually drop to more reasonable levels - especially if all the greedy property dealers start selling their portfollios. Personally in this day and age I think people with more than 1 or 2 houses are screwing the rest of us over!
What by having the good sense to invest their money??? How dare they.
If its real money and not based on credit cards! - if the buy to letters portfollios are built on large **** off loans then the bubble could burst dramatically and then what would happen to the people living in those properties. All the TV shows repeatedly show people doing just that!
 
#7
I think this will lead to a slowing of the market. Property near my loc is just not selling. This and the HIPS disaster.

Only those forced to sell or reposessed will have to sell. The majority will just see the unrealised profit reduced and hang on to their existing property.

Topbadger has a good point about the buy-to-let punters though, many of them have gone for maximum mortgages and if they decide to cut and run then the market will behave irrationally as usual - they will start their own slide. I suspect however, that most residential owners will just sit tight.

The main concern is that first time buyers are near enough locked out, so who bump starts things again?

My main concern is that we are heading into recession. The global economy has done very well over the past ten years ( and despite Mr Browns' claims, it had little to do with him). Problem is that Brown not only kept spending, in addition, the fool borrowed vast sums to fund his run at the top job. And it is recurrent spending. Those 500,000 new civil servants are hard to sack and their pensions will still need to be paid.

Remember how the Treasury kept changing their own rules on borrowing?

NHS spending doubled - and what do we have to show for it ??

Education spending doubled - and what do we have to show for it ??

Other countries have grown their economy or paid off their national debt in the good times.

I don't think the average punter realises just how much damage the "Iron Chancellor" has done.

Over the next 18 months, those with maxed out credit cards and sensitive mortgages will really, really suffer.

Unfortunately, UK plc has a number maxed out credit cards
 
#8
Article here:

http://news.bbc.co.uk/1/hi/business/7147563.stm

BOE are upbeat... but then they would be, call me cynical but i'm reckoning they have a vested interest?

What worries me about this article is that BOE are upbeat because they reckon most people can ride out a storm by borrowing against the equity in their homes. I'm not sure if i've missed something obvious here, but for me this throws up two further problems:

1. This puts people further in debt, and theres nothing to say the storm would be short lived. Debt is expensive at the moment, could have very long term implications.

2. If the market crashes... so will the equity in their homes. Those that have bought in late will of course suffer the most.

Ok, so prices would have to drop a fair way, but it could happen. And how many home owners have already leveraged a fancy car against their house?

We've mentioned the buy-to-let investor, and it occurs to me that there is another reason why this group may have to sell. If the tenants can't make payments due to their own debt then in turn the landlord might not be able to make their own repayments!

TB
 
#11
The housing market needs to slow down and in some cases prices need to drop.

The British housing market is over valued because we are a nation of homeowners, where as the rest of Europe are mostly renters or property is passed down through generations.

There will be areas of the country where there is still growth, but it will be in areas where 1st time buyers can still get on the housing ladder. The usual areas where house prices fall is usually the South of England or major cities like London, Edinburgh, Manchester etc and it starts at the top level of properties and works it's way down.

Currently Edinburgh is showing a slow down in it's housing market because the top tier propeties are now on as fixed prices whereas last year they would be on as offer overs.

The government is not to blame for the slow down in the housing market, the baseline interest rate is still extremely low and is about 10% lower than when the housing market collapsed in the 90's.

The reason for the current financial situation is because Banks are not lending to each other. The rate of borrowing ie the interbank rate is far higher than it has been over the last 10 yrs and the people responsible are the Chief Execs of banks as they are wanting to make large profits.

The Banks are the main reason why there are no properties available to FTB because of their inerent lending to BTL investors. I know that banks lend on up to 10 properties to the same client and will lend up to a max of 90% ltv, which if you have some money in the bank you could outbid a FTB who has less deposit money available.

The housing market will not fall as sharply as it did in the 90's, but there will be more repossessions because people have been remortgaging their properties and taking out the equity to go out and buy item's that will only depreciate in value.

Oh by the way I am a Mortgage Underwriter :oops:
 
#12
Little Miss,

As you know the system I've got a question for you:

If I buy a house with only 2 years or less left to serve how do the mortgage providers view that? i.e does having only 2 years guaranteed salary limit how much I can get for a mortgage?

many thanks in advance
 
#13
They do not know or care, you are a punter after cash from his bank/BS/financial institution!


This is the fundamental reason for many of the Sub- prime failures in the USA and in the UK (It is going to start failing soon).

Even UK lenders had bargains like 115% loans or undocumented applications regarding SELF-valuations and SELF-salaried applications.

So…

“Yes Mr. Smith, you are a part time ferret wrangler and you say you earn 55000 pounds PA gross- that’ll do fine”
 

Biped

LE
Book Reviewer
#14
The taxes on second homes should be increased firstly. The reason why there is such high demand for housing stock, and why the increases in prices have been so unrealistic is because of people speculating by buying lots of extra homes. IMHO, they are just that 'Homes'.

Currently, there are approximately 330,000 people in the UK with more than one home - so that is at least 330,000 houses that have been effectively taken out of the UK market by speculators.

The gobment says we need to build another million homes to satisfy demand . . . so we could deal with one third of that need at a stroke.

My hope is that this housing/credit crash forces many of these speculators to sell up their extra properties, and thus, further decrease house values.

For those of you who have bought during the boom - tough luck.

Just my humble oppinion of course.
 
#15
i have a few thousand stashed away ready to put for a deposit when the houses in my area drop in price again. atm my current house that i live in is worth £128000, but when it was bought it was £40000...hopefully it will drop to somewhere near that figure again!!
 
#16
Biped said:
Currently, there are approximately 330,000 people in the UK with more than one home - so that is at least 330,000 houses that have been effectively taken out of the UK market by speculators.
And its said that the average buy-to-let investor has 10 properties!

Rental homes / temporary accomodation should be provided by government IMHO, not privateers.

TB
 
#17
little_miss_curious said:
The government is not to blame for the slow down in the housing market,
Not directly but the BoE, and hence by association the Treasury, is. The ready availability of cheap money has fuelled this particular asset bubble, and many others, and has caused significant underestimation and underpricing of risk.

The BoE blew its chance to curtail this excess back in 2005 when it chose to cut interest rates thereby reinforcing the message that investors would be bailed out whenever there was any risk of slowing growth or recession. That allowed these asset bubbles to continue to inflate and yet again, in spite of the huge inflationary risk, the BoE has decided to again cut the base rate thereby risking another surge in asset prices.

The only good thing to come out of this is that the banks themselves now realise that they priced money too cheaply and that the losses they will incur over the next few years need to be re-couped through sensible pricing of money. In addition, the huge debt overhang for much of the UK population will now have to be repaid from earnings rather than from additional borrowing, thereby curtailing any prospect of further house-price inflation for a considerable period of time.

The effect of this will be a restriction in the availability of mortgages, further increases in interest rates to combat inflation, and a general and significant curtailing of credit availability elsewhere. Concurrently, the return on buy-to-let in some sectors (flats) will decrease significantly as thousands of new flats come onto the market over the next 12 months or so. This will lead to a sharp drop in house prices as BTL investors start to bail out, housebuilders lower their margins to offload unsold stock, inherited property is offloaded cheaply to realise cash, and sellers realise that a lower price for their property will translate into a lower price for the property they are wishing to purchase.

Finally, unemployment will start to rise next year and then the fun will really start.
 
#18
:D
pombsen-armchair-warrior said:
little_miss_curious said:
The government is not to blame for the slow down in the housing market,
Not directly but the BoE, and hence by association the Treasury, is. The ready availability of cheap money has fuelled this particular asset bubble, and many others, and has caused significant underestimation and underpricing of risk.

The BoE blew its chance to curtail this excess back in 2005 when it chose to cut interest rates thereby reinforcing the message that investors would be bailed out whenever there was any risk of slowing growth or recession. That allowed these asset bubbles to continue to inflate and yet again, in spite of the huge inflationary risk, the BoE has decided to again cut the base rate thereby risking another surge in asset prices.

The only good thing to come out of this is that the banks themselves now realise that they priced money too cheaply and that the losses they will incur over the next few years need to be re-couped through sensible pricing of money. In addition, the huge debt overhang for much of the UK population will now have to be repaid from earnings rather than from additional borrowing, thereby curtailing any prospect of further house-price inflation for a considerable period of time.

The effect of this will be a restriction in the availability of mortgages, further increases in interest rates to combat inflation, and a general and significant curtailing of credit availability elsewhere. Concurrently, the return on buy-to-let in some sectors (flats) will decrease significantly as thousands of new flats come onto the market over the next 12 months or so. This will lead to a sharp drop in house prices as BTL investors start to bail out, housebuilders lower their margins to offload unsold stock, inherited property is offloaded cheaply to realise cash, and sellers realise that a lower price for their property will translate into a lower price for the property they are wishing to purchase.

Finally, unemployment will start to rise next year and then the fun will really start.
Are you that bloke who cornered me at the christmas party and droned on for hours about the end of the world as we know it? You are aren't you? 8O
 
#20
TopBadger said:
Mmm, remember how i said it could go tits up faster if landlords sell up...

http://news.bbc.co.uk/1/hi/business/7149406.stm

Looks like it might already be happening.

TB
I would put a fair proportion of this down to the large ammount of mis-selling that took place over the past few years where people were being persuaded into buying into the 'buy to let dream' on what would seem in retrospect to be at best over optimistic return projections. Too many people have jumped on a bandwagon they just didn't understand.

Buy to let is still a viable market, but only if you do your research, and crawl before you walk, too many invester started of trying to run nad not unsurprisingly have fallen flat on their faces.

I watched a programm on the box on buy to let a few months back and the deals that some investors had been persuaded to take up were guaranteed failures. Over optimistic occupancy rates, over optimistic retal rates, and often not the best type of property for the rental market. The real shame is this is where people burnt on the pension scams of the 90s were putting the money they had left, oops down the pan again.
 

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