Sunday, Jun 10, 2007
Pretty gloomy picture!
Times: Boom or gloom?
I have this feeling that in a year's time cheerleaders like Professor Nickell and David Smith will be laughing stock. Read the article at this link. The situation is gloomy just anywhere outside London with house prices next year predicted to grow at something like the CPI. But even these pretty flat forecasts heavily rely on assumptions that (a) the employment rate stays 100%, and (b) there continue to be strong demographic pressure from economic immigration. Economic migrants are a bit of a question mark - they may leave in no time the first sign of a downturn here or when the economy of their countries improves (and it is improving fast). I do not have a crystal ball, but one thing for sure, inflation is going up and it is dragging interest rates.
7 Comments
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1. sirgoogle said...
Looks like it is turning. Confidence is changing:
“It’s difficult to know why people are taking a long time. We had someone here at the weekend for his second viewing, and he brought his family along. Now he wants to bring his business partner. He said he had been looking for this type of home, and that his wife liked it. It’s as if he is looking for someone to say that property is still a good buy and a safe investment. There’s a lack of confidence. Everyone’s looking for a seal of approval. That’s the best way I can describe it.”
Also FTB Anger is rising as the penny drops (if it was not high enough already):
Welch says that anger about affordability is growing among her peers. As private tenants, they have little security, and face the prospect of raising children in homes where they could be given a month’s notice to quit.
The answer is for FTB to refuse enmasse to offer asking prices.
2. paul said...
I think it's simpler than that, sirgoogle.
These sellers have been influenced by greed, and the likelihood is that they'll be just as easily motivated by fear. Slash 20-30% of the asking price and explain to the estate agent that your indemnifying yourself against the slump. The EA has to communicate the offer by law, and the EA will probably pass on the reason why. That should put the willies up the seller, who may well then accept.
You're right that people have to force prices down - they're not going to go down automatically without anyone buying.
CAPITALIZE ON THE UNCERTAINTY.
3. Scott said...
For the past 2 years, it was a matter of deceiving the first time buyers to pay the high prices, and you have to admit; it worked. However, now the prices are so high the FTBs could not buy them even if they wanted to. The sellers cannot hate us for not having the money.
4. Warrk said...
I've thought the same as you Paul for a while. Could a crash be triggered by placing offers on multiple houses at prices way below the asking price? If enough people do it to enough sellers, would it send a panic across the market, lowering expectations and prices?
Maybe its happening already; when www.propertysnake.co.uk was first mentioned here a couple of weeks ago, there were 161,000ish reductions, the total now stands at almost 190,000!
Almost makes me feel warm and fuzzy ;-)
5. confused76 said...
Paul
Why dont you go ahead and by a few more places, then I will rent from you... I am a fantastic tenant, I ve even fixed the dishwasher the other day.
Only just do not forget if today you "capitalize" on someone else uncertainty, when you have to sell you will be fooled by the same uncertainty... what goes around comes around
6. Ticktock said...
..and if you get a 30% discount, you have managed to borrow yourself an asset that is now only now 35% overvalued, with rising rates, during the biggest global financial bubble in history!
Who wants a life time debt when nobody has job security?
Wait for the 'correction' to play out, the political trmoil to unfold, and the (sadly now inevitable) war to conclude, and then, if you are still standing, think about buying buy a home. (IMHO)
7. inbreda said...
FTBs shouldn't just refuse to offer asking prices, they should organise a "non payment of rent month".
That would really put the s***s up the greedy BTL