[Killer Bunny]

andrew_uk, on Feb 14 2005, 10:43 PM, said:

What can you do in a falling housing market?

Ignore the spin, prices are falling.

While vested interests (mortgage lenders) use the black art of 'Seasonal Adjustment' to produce house price statistics which show a stable or even rising market the most important body has clearly stated that house prices fell.

The Land Registry figures, from the only body that does not make money from rising prices, have shown that national house prices fell between October and December last year by 2.7%, with London falling 3.7%.

These figures are based on actual sales prices which means that they represent transactions agreed last summer when prices traditionally rise, not fall.

Looking at more recent figures, Rightmove.co.uk - a company 29% owned by Countrywide Plc, the UK's largest estate agent - has stated that prices have fallen in five out of the last six months.

Incidentally, Countrywide  - which owns John D Wood and Bairstow Eves estate agents, and others - has recently made 6% of its workforce redundant.

The forum members of www.HousePriceCrash.co.uk expect an average 30% fall in prices over the next three years.  With a growing number of prominent academics and economists forecasting between this and even larger falls we may have underestimated the drop.

The only hope for a recovery in prices put forward by estate agents etc would have been an increase in transaction numbers but instead they are falling. Sales last quarter were down by 22% in the £100-£150K range and down 40% for properties below £100K.

Buyers - mainly investors - are increasingly worried about buying at the top of the market and with the massive number of available rented property they seem to have gone on buying strrike.

As the fall in prices gains momentum, will these people buy into a falling market?  We do not think this is likely.

The chance of a quick sale has now passed for many and we recommend that anyone who bought in the last two years should seriously consider reducing there debt levels and focus on reducing their mortgage.

The recent offer of a 130% mortgage - a mortgage that instantly puts the owner into negative equity - shows lenders are more interested in their profits than the welfare of their customers.

But don't take our word for it. Look around. Talk to colleagues and friends who are trying to sell, Look at the special offers on new developments and count the number of 'To Let' and 'For Sale' signs. Then ask yourself: if everything is so rosy, why are estate agents shedding staff. Then think, what should you do in a falling market?  If you are serious about selling keep your price 20% below the 'market'.
<{POST_SNAPBACK}>

Here is my effort.

[Bubble Pricker]

Two apologies: (1) it's taken a while, and (2) the text has been revised quite a lot. Please let me have any final comments:

Mortgage Lenders are talking up the Market, but UK House Prices continue their Fall.
Independent property website housepricecrash.co.uk comments on the housing market.

Mortgage Lenders in the UK have recently published house price figures that claim a stable or even rising property market. However, these rises are not real, they are the result of applying smoke and mirrors such as 'Seasonal Adjustment'. Actual house prices are falling, as the most authoritative body for house price figures has clearly stated.

The Land Registry figures for the fourth quarter of 2004 show that national house prices fell between October and December 2004 by 2.7%, with London falling 3.7%. These figures are based on actual sales prices of all properties, not asking prices, which may be no more than wishful thinking, and include cash and auction purchases, unlike the mortgage lenders’ (Nationwide and Halifax) figures, which represent only one portion of the market.

Looking at more recent figures, Rightmove.co.uk - a company 29% owned by Countrywide Plc, the UK's largest estate agent - has stated that prices have fallen in five out of the last six months. The Royal Institution of Chartered Surveyors (RICS), in a report published on the 1st of March 2004, reported that “South East house prices continued their steady decline in 2005.” A few days earlier, property website Hometrack, reported a drop of 0.2% in February, “the eighth consecutive month that house prices have gone down.”

Reinhard Schu, press spokesman for independent property website housepricecrash.co.uk said: “The mortgage lenders and other vested interests whose business models depend on ever rising property prices are desperately trying to talk up the market; some do this with questionable figures. The reality is, prices are falling and are continuing to fall.”

The forum members of www.HousePriceCrash.co.uk expect an average 30% fall in prices over the next three years. A growing number of prominent academics and economists forecast falls of this magnitude, if not even larger falls

The best sign that the market is on the verge of collapse is the sharp drop in number of transactions, a classic sign in any financial market for an imminent drop in prices. The number of properties sold in the fourth quarter of 2004 were down by 22% in the £100-£150K range and down 40% for properties below £100K. Estate agents are feeling the pinch from this slowdown: Countrywide - which owns John D Wood and Bairstow Eves estate agents, and others - have recently made 6% of its workforce redundant.

This dearth of transactions has been caused by first time buyers being priced out of the market and the disappearance of buy-to-let investors. According to a recent report by the Association of Residential Letting Agents (ARLA), today's geared landlord has seen his rental yield after mortgage costs collapse to minus 0.5%. In other words, many buy-to-let newcomers subsidise their tenants.

“Currently, many would-be sellers are putting their properties on the market at yesterday’s asking prices and are surprised to find no interest. With the buy-to-let hype being over and first time buyers priced out of the market, there are simply no buyers left. Once that realisation sets in, the bottom will fall out of the market,” Reinhard Schu commented.

[Dee Monic]

Looks good to me. Couple of queries:

Bubble Pricker, on Mar 2 2005, 06:43 PM, said:

The best sign that the market is on the verge of collapse is the sharp drop in number of transactions, a classic sign in any financial market for an imminent drop in prices. The number of properties sold in the fourth quarter of 2004 were down by 22% in the £100-£150K range and down 40% for properties below £100K.  Estate agents are feeling the pinch from this slowdown: Countrywide  - which owns John D Wood and Bairstow Eves estate agents, and others - have recently made 6% of its workforce redundant.

This dearth of transactions has been caused by first time buyers being priced out of the market and the disappearance of buy-to-let investors. 

Excellent point about the drop in transactions. Are the numbers you are quoting the land registry ones? It doesn't actually say whose they are. Also why have you only mentioned up to £150K? Are they not down for more expensive props too or is it that you are concentrating on FTB props?

Who is Reinhard Schu?

But in all very good.

[Dee Monic]

Bubble Pricker, on Mar 2 2005, 06:43 PM, said:

This dearth of transactions has been caused by first time buyers being priced out of the market and the disappearance of buy-to-let investors.  According to a recent report by the Association of Residential Letting Agents (ARLA), today's geared landlord has seen his rental yield after mortgage costs collapse to minus 0.5% after mortgage costs and voids. In other words, many buy-to-let newcomers subsidise their tenants. 

After mortgage costs mentioned twice in same sentence.

Bubble Pricker, on Mar 2 2005, 06:43 PM, said:

Once that realisation will set in,

Is will the correct word to use here?

[Bubble Pricker]

Dee Monic, on Mar 2 2005, 06:01 PM, said:

Looks good to me. Couple of queries:
Excellent point about the drop in transactions. Are the numbers you are quoting the land registry ones? It doesn't actually say whose they are.  Also why have you only mentioned up to £150K? Are they not down for more expensive props too or is it that you are concentrating on FTB props?

you need to ask andrew_uk. I took that part from his draft


The other points have been corrected.

[andrew_uk]

The figure are from the quarterly land registry report.

I've sent a personal message with my other comments about the revised article.