Sunday, Oct 07, 2007
Survey of EAs - prices falling virtually everywhere
Telegraph: House prices: on the edge
and not just newbuild flats.
Sarah Nixon of Hammond Harwood, a Nottingham-based agency, says none of the city's agents could remember a time when so few sales were going through.
"It's frightening," she says. "We have properties which have been on the books for months and months, which have suffered price reduction after price reduction but are still not selling." Nixon says September is usually one of the busiest months but was "completely dead".
"Even buy-to-let has gone stale, in a normally buoyant students' market. The returns mean that as an investment buy-to-let simply isn't feasible any more."
Enjoy!
Posted by mybrainhurts @ 05:08 PM (1363 views) Add Comment
27 Comments
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1. su said...
"estate agents quizzed by The Sunday Telegraph argue that these (Nationwide's) figures are "three months out of date" and do not reflect the current crisis on the high street."
Ah! So that's why halifax's figures are considered more accurate!
2. japanese uncle said...
This article convinces me of the more acute/violent nature of the HPC in 2007/UK than that in Japan/1990. Initially I predicted 60-70% in say seven years, whereas HPC in Japan/1990 lasted 10+ years until it reached the rock bottom, reducing the price by nearly 70%, (80%+ in some areas). I guesstimate that prices might suffer 60% drop by 2010, and further 10% by 2012.
3. David Smith's Sub Prime. . . said...
Oh dear and Prime Minister (Crash Gordon) Unelect Bottler's 'miracle' economy as well? Will that go down the tube?
4. Wilee said...
Alan Emery of Ocean estate agents in Bristol says "...last year we had 80 properties to sell and now we have 240. ...There are too many houses and not enough buyers"
So much for all the supposed short supply / never-ending demand arguments.
5. Jimmy_joe said...
It seems to be popular among the Vested Interests to blame HIPs for the falls in the market and this article is no different. However, I don't understand how this would work. The only mention of HIPs other than as a cause of the crash is "People are not putting houses on the market just to test it. Hips have killed that activity," which suggests that there has been a constriction of supply and any economist would tell you that would increase prices. But another quote is "This time last year we had 80 properties to sell and now we have 240," so there has been no reduction in supply.
6. Baudot said...
Astounding. Prices fall by 0.6% for one month and the party's all over. The next 6 months through to Easter and the usual "spring bounce" will be interesting. Expect BoE to cut interest rates though to try and keep the bubble floating.
7. larry pickleman said...
but I thought we needed more and more and more new builds?? :)
QUOTE
8. larry pickleman said...
oops...the quote...
There are too many houses and not enough buyers," he says. "We are having to reduce prices. A house that might have sold at £290,000 last year will be put on the market this year at £250,000 and still struggle to sell."
9. su said...
JU. If you're right then what we're about to see is not so much a "crash" as a "meltdown" as defined in HPC Wiki.
Larry. Isn't that quote marvellous! The guys on this site have been proved right again! You lot deserve a medal. I wonder if Gordon will put you forward for one...
10. sold 2 rent 1 said...
JU,
You may be right on your 70% if we have a second great depression.
From Morgan Kelly of Universiry College of Dublin as his analysis, an HPC of over 50% in real terms tends to be over a long period of time (6-10 years)
http://www.ucd.ie/economics/staff/mkelly/papers/housing.pdf
In Ireland in August 2006, asking prices were slashed 10-20% in a 4-6 week period. This is what is happening here now.
11. alan said...
Wow, things must be really bad: 9 houses in my postcode are on propertysnake! We don't usually get a mention.
The highest is a 4% reduction, which may be nothing to most readers, but in my area, property has been snapped up really fast over the last 5 years. You should see the rubbish that has been fought over !
12. crash bandicoot said...
What is the support level for house prices once they start falling? We know for "proper" FTB's it is a max of 3.5x salary. So what is an average FTB salary? For the sake of demonstration I will suggest £15k. Which gives a price of £52.5k for what used to be known as a "starter home" (not an "investment oppertunity"). This is half the price of such properties where I live. The jokers in the pack are BTLers. They are currently propping up the market. Common sense suggests that this activity should cease at the moment but as prices fall it will become more profitable again. The big question is how much the negative sentiment of falling prices prevents BTL from re-inflating again.
13. tyrellcorporation said...
This is probably the most heartening piece I've read for months. This is coming straight from the horses mouth and relates directly to what's happening on the ground. Forget the VI spin, this is it, HPC is pretty much happening before our eyes!
14. planning4acrash said...
Japanes Uncle, are you referring to a 70% fall in absolute or real terms? A 70% fall in real terms between 2007 and 2012 would be about 45% in absolute terms if RPI remains around 5%.
15. Mark said...
but we dont use RPI.....remember!!! It is CPI...
16. larry pickleman said...
that's a very good point crash bandicoot...c*%ts!
17. japanese uncle said...
P4C
Actually I roughly quoted 70% from the experience in Japan where inflation was virtually nil during 1990-2007. In the UK inflation ought to be a consideration under normal terms. However I would predict that UK may well follow the path of Japan and suffer long term deflation, because of the affordability constraint and unemployment. (Anyway my arithmetics for UK market is not endorsed by statistics by my impression based on anecdotal observation.)
Incidentally when HPC started in Japan (1990) everybody thought it was a soft landing, as the price declined only 5-7% a year, which eventually turned out to be a spectacular crash after 7-8 years. I think things seem much harsher and more abrupt/violent here because of the much heavier gearing in every area of the market, hence my prediction.
18. Ihopeitgoeswithabang said...
Halifax and Nationwide still painting a rosey picture?
Much like Not So Flash Now Gordon.
Rolf Harris can paint a more accurate picture Im sure? And he can hum a great tune whike he does it.
Lets ask his opinion. Obviously not getting much sense from Halifax!
19. wiltshire said...
And you know what I find interesting? There are still so many people who have not realised what is going on even though the news is now fairly mainstream. A close family member just bought a new build house about 2 weeks ago (actually the week of the Northern Rocks queues!) even though I told her 18 months ago about this site and my feelings. A girl at work has just put in an offer last week on a house. This is partly why I think this situation will unwind really really quickly. All EAs must now know exactly what the situation is now, as must many in related businesses, huge numbers of the public will be sensing problems (downbeat EAs viewing their property, no viewers, chains breaking left right and centre, people who 2 months ago could have borrowed any figure now being told 'no'). All it's going to take now is point blank headlines in the papers so those last few people who never pay any attention and there'll surely be hardly anyone left in this country who will buy property at current prices.
I don't think many BTLers, certainly those huge numbers who got in in the past 3 or 4 years, will be interested in houses as an investment opportunity for a long time. This is going to be a hammer blow for people who see capital gains from property as their passport to riches. Those who have sold in recent months have had a good time of it but I can't see another house price bubble for many years. Housing will be too risky for too many reasons to be worth the trouble.
Obviously this is just my opinion but think how long we've been discussing these things on this site and think how fundamental has been the change in mood in the short 2 or 3 weeks since Northern Rock happened. The unwinding of the HPI process in this 'information age' could be at light speed. And all those BTLer's are a dam just waiting to burst.
20. confused76 said...
This is great news!! The crash is happening, and exactly for all the reasons we have been discussing for years on this site.
I am so glad that immigration, divorces, student population and single households have completely disappeared from the press
21. japanese uncle said...
Let's hope that property speculation will be regarded as a social taboo and a thing of the past for generations to come.
22. taffee said...
that was the feeling in 1995 before the last boom,however,when even your plumber and bt engineer have 2 buy-to-lets...it really makes you question supply/demand!
I think they really meant speculation.
Japan also has interest rates at 0.5% I believe.....at least in japan they make things though.
23. European-bear said...
Once prices start going down, they keep going down for the same reason that they kept going up in a boom....why buy now when next year it will be cheaper (as opposed to must buy now as next year I wont be able to). What is the eventual support level....well like after the last crash property will have to become rediculously cheap (hence a big overshoot) before the market turns. From the BTL perspective you will have to see yields opf 8-10% or more (now it is only 3-4%)....
24. Taffee said...
still....why buy a buy-to-let if next year it will be cheaper.
25. Snow-ball said...
Gordon Bust is shitting his pants... Hope that the general public knows what's really going on.
26. Lierbag said...
This site's far too upbeat and insular. If you want to be really depressed, I suggest logging into Matt Savinar's 'Lifeaftertheoilcrash' website (LATOC) or, for a UK perspective; powerswitch.org.uk.
It's been good to see Peak Oil articles starting to make their way into the forum - which is how it should be. The HPC phenomenon is merely an expression of cultural stupidity: the way playing around with the economic system can stimulate profits or accelerate loss. The entire fabric of the system itself, is underpinned by oil. North Sea output is now declining by 10% pa (imagine the hit the Exchequer is taking on that one alone) while most respected oil industry commentators now concede that oil production globally has plateaued - at a time when demand is still increasing exponentially.
I say we now take the opportunity to upgrade this site - to 'Permanent Global Economic Crash'.
27. iguana said...
Wiltshire,
You would think so wouldn't you. Unfortunately memories are very short and VI / speculator panic promotion of surefire cert investments seems to lure in the sheeple with a depressing predictability. I have watched the last three 'boom/busts', I do not consider myself to be a soothsayer or one capable of accurate economic predictions, but it has been obvious on each occasion what has been happening and what will happen. So after the collapse that we are witnessing now there will be a spell of 'we will never let this happen again' ("sounds a lot like there will be no more boom and bust") then the whole sorry story will start again.