Sharp fall in Property asking prices - Dec 07

Discussion in 'Finance, Property, Law' started by in_the_cheapseats, Dec 17, 2007.

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  1. On the edge of a Precipice

    0 vote(s)
  2. Slow slide to a soft landing

    0 vote(s)
  1. in_the_cheapseats

    in_the_cheapseats LE Moderator

    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. 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.

  5. 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.

  6. 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:

    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!

  9. I'm overhauling my land-rover and investing in ammunition......
  10. Feck it I've got a camper van if it all goes T+ts
  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.


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

    Biped LE Book Reviewer

    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!!