Thursday, Oct 11, 2007
Can't put it better than the original article title
Citywire: Mortgages: Here comes the Repo Man
Brilliant 6 page article on Citywire today, makes very scary reading. Worth reading, if only for the sub-headline: "BUY-TO-LET SMALL FRY ON THE RUN" on page 2.
"The property market appears to be unravelling at an increasing pace.
Repossessions are on the up and a growing number of ‘flash sale’ companies are waiting in the wings to prey on fears of negative equity. RICS reported a sharp rise in properties sold at auction in the second quarter of 2007 and warned that the figure will continue to rise as the impact of increased interest rates filters through.
According to property website landlord.co.uk, some investors are panic-selling, trying to get out before the market crashes and leaves them with negative equity."
Posted by little professor @ 10:35 AM (1339 views) Add Comment
18 Comments
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1. sovietuk said...
"A recent auction by Barnard Marcus at London’s Café Royal saw 225 London properties go under the hammer with 61 not sold, many failing to reach their reserve price. If the reserve prices represented the lenders’ mortgages on these properties, then there is real trouble ahead.
Ho Ho Ho, and it's just the beginning of the cycle. You bet there is real trouble ahead.
2. Unstoppable_hpc said...
My girlfriend works for a Property Auction company in Essex, yesterday they had their October auction and most of the properties did not reach their reserve prices and remained unsold. The auction was dead quiet with very few people there, maybe a sign that borrowed money is getting harder to come by and perhaps the reserve prices were too high.
Either way, roll on HPC.
3. Yorkshireman said...
This is a very scary article. We do not know the reason behind all of the repossessions and it is easy to judge. If it is through misfortune, then it saddens me, as this can happen to any one of us. It sickens me that unregulated companies can feed off this.
See link http://www.bbc.co.uk/consumer/tv_and_radio/watchdog/reports/consumer_goods/consumer_200710102.shtml
If it is through greed or stupidity then I have no sympathy. What goes around comes around and you have to take what is coming to you. Sovietuk, I agree. There is a whole lot of trouble ahead.
4. Realist said...
"A recent auction by Barnard Marcus at London’s Café Royal saw 225 London properties go under the hammer with 61 not sold, many failing to reach their reserve price. If the reserve prices represented the lenders’ mortgages on these properties, then there is real trouble ahead".
I can't understand why these weren't bought at knock down prices. After all, there is a huge supply-demand imbalance in London. Isn't there.....?
5. Cheekie Charlie said...
"For example, a two-bedroom apartment in a luxury waterfront block in Ipswich, sold in April for £279,950. It was then repossessed and auctioned in July for just £140,000"
6. tyrellcorporation said...
'For example, a two-bedroom apartment in a luxury waterfront block in Ipswich, sold in April for £279,950. It was then repossessed and auctioned in July for just £140,000. If the original buyer had purchased with an 85% loan, the auction price would not have covered the mortgage of £238,000.'
Oh my ribs, no, stop it...
7. planning4acrash said...
It is a tradgedy, so many people sucked in. The VI's like to F*c£ with our dreams, whilst homebuyers and investors lay back and think of England.
8. Dave The Box said...
I like:
‘The property industry has been deliberately hiding the truth from homeowners about the state of the market to protect their own interests. The property crash has already begun.’
The truth will always out...... eventually!
9. Oldfashionedbanker said...
It would be nice if we could distill some of the knowledge of the very informed people on this site into some kind of guide for converting the sheeple. Something like 'Top 10 things you didn't know about the housing market' or 'The House Price Myth' Which we could then post to everyone we know like a viral campaign. I know this stuff is finally hitting the main stream press but it's always distorted by VIs or dumbed down to the point of dish water drivel. We need really hard hitting points why the housing market IS over-valued. Why BTL is not providing a service but denying people the chance to own their own fairly priced property. How mortgage lenders have slackened standards to an insane and unsustainable level, now being corrected by the credit crunch. How, on new builds, brokers / surveyors / developers are more often than not conspiring to inflate the market price and rip people off. How brokers are encouraging *everyone*, not just the vunerable and easily led, to commit fraud and lie on their mortgage applications. How the amount people are paying for houses has meant mortgage repayment costs have become completely disconnected from rental of the same property. Disprove the supply/demand myth, and expose developer land banks. The scandal of interest only mortgages. And finally let everyone out there know how buying and selling houses from each other at ever increasing prices DOES NOT CREATE WEALTH, it actually robs us of it, taking money out of the hands of ordinary folk and putting it straight into the coffers of banks, estate agents and property developers.
Good find on this CityWire article, more like this please!! I particularly like "The property industry has been deliberately hiding the truth from homeowners about the state of the market to protect their own interests. The property crash has already begun."
10. crash bandicoot said...
If BTL landlord are forced to make a sale, who would the ideal purchaser be? Why the sitting tennant of course. The problem is that they can only afford a mortgage payment that is the same size as the rent they are currently paying. Oh dear my sides are hurting too.
At least asset apreciation will save the day - what do you mean, prices are falling now? Oh I must stop before I hurt myself!
11. This comment has been removed as it was found to be in breach of our Blog Policies.
12. Gumbo said...
Is it me, or is anybody else looking forward to heckling the estate agents as they queue up at the back of the dole line. ( I will supply the rotten veg)
For far too long we have had to put up with these muppets steering the housing market to astronomical levels,whilst whipping up a frenzy driven purely by greed. A house locally to me priced at £255k, currently varies by £36k on the websites of 4 local agents!!!!
But its not only EA's who are to blame........ unsustainable monetary policy/interest rates, illegal money lending practices by the banks, (would put Shylock to shame), self satisfied BTL'ers, and quite frankly mug punters who have queued like lemmings to buy overpriced boxes in areas they really dont want to live in, just so they can call themselves property owners, and ride the wave before the rest of us drown in a market, that in their own words " will never drop" and never revert to former trends.....b**locks....utter b**locks.....
I also can't wait for the media backlash against Brown, with the reoccurring soundbite..."No more boom and bust...no more boom and bust...no more boom and bust."
Buy to let.....Bought too late............... more like.
Enjoy the sh*t storm, I know I will.
13. Gumbo said...
Buy to let........Bought to late!!!
Watch me cry my little heart out for the greed of EA's and the portfolio brigade....boo hoo
14. uncle tom said...
It does now look as though we are seeing the beginnings of the collapse - it is certainly difficult to see anything on the horizon to reverse the current downturn. The graph watchers in the financial services sector will be increasingly aware of the broad similarities between what is happening in the US and what is happening here - albeit with a sizeable time lag between the two. There is therefore, little chance of lending terms being relaxed over the coming months
The CGT changes announced recently may well provoke significant profit taking by the more established BTLers, while tougher lending criteria will deter portfolio expansion by the more blinkered players. Without heavy net acquisition by the BTL camp, the market will be forced down to what FTB's can afford, which in turn will unleash a raft of economic consequences - leading to a full-on crash.
In short, I think it's finally started!
15. speculatorone said...
uncle tom... I hope you are right.
16. speculatorone said...
Also can anyone recommend the best online company/bank to buy and sell shares?
17. Dushinka said...
I would recommend Hargreaves Lansdown. Not the lowest transaction charges in town, but excellent customer service (no other company I know only employs trained graduates in their call centre).
18. planning4acrash said...
Oldfashionedbanker, check out the wiki and discussion forum sections. They provide what you are after.