Friday, Nov 23, 2007
Lenders factor in 30% fall in 'executive' flat prices
FT: UK lenders retighten rules for new flats
Mortgage lenders have further tightened their criteria for loans on all new-build flats in the latest sign of growing nervousness about the housing market as new figures showed a “stunning” slump in mortgage lending in the autumn. Alliance & Leicester has told mortgage brokers it will tighten its loan-to-value on new flats to 70 per cent amid reports of falling prices in many regional cities. ***** Hmmm - how many years have we been saying that new-build flats will become the slums of the future?
Posted by uncle chris @ 09:01 PM (443 views) Add Comment
6 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. Dlitman said...
You fundamentally misunderstand the state of the new build flat market. The problem is that developers deliberately overprice by about 20% to 30% and catch a range of buyers, some pay near 100% asking price, others make offers closer to the market value. Those that have been buying right are not suffering huge falls. Why would they become the slums of the future? Some may do, others may not, it's a bit of a sweeping statement!
2. stillthinking said...
"Many repossessed flats were selling at auction for about 35 per cent less than the market level,..."
Given that the auction -is- a market, the market level mentioned above is irrelevant. So 35% down for some unlucky types and we aren't even into December yet. I can't remember the last crash properly but we must be in or entering a wild foreclosure binge by the banks, before prices tank to such an extent that there is no point foreclosing and they look to make arrangements. I think that the number of people who get foreclosed is probably the same proportion as before, but the fact that BTL is so common now will multiply the numbers of houses. I hope the BBC makes the case that the number of people affected is not the same as the number of houses at auction.
I feel that many of the people who jumped into this wholeheartedly and bought a string of properties would in fact be alright if they sold half of them, as for many there are still gains to be had even if the market falls considerably.
Somebody from work is waiting to finalise contracts on the sale of his house and is on tenterhooks about it. Talk about the last minute. His whole economic future rests on the ignorance of this single buyer, otherwise he is out of luck. He is already talking about dropping the price by 10K should the buyer even look a bit nervous....
3. C'mon Correction said...
There is "posh" flats in Cardiff that have already fallen by over 30%.
In 2005 one which I've been keeping an eye on a 2 bed executive flat that was built and advertised for £295,000 (bear in mind this will buy you a 4 bed house in nice part of cardiff); I used to live in a flat (rented it) that was bigger and half mile up road in an even nicer area that was valued at £120,000 also in 2005. I still can not understand why the "executive" flat is £175,000 more just because it has a power-shower and granite work-tops ???!
Most new flats are way,way,way over valued, I wouldn't touch one with a barge pole.
4. paul said...
Ewwww. Nasty.
We have a few new build development near my very comfortable rented flat that are tanking in the market:
A perspex and aluminum carbuncle of "luxury flats":
http://maps.google.com/maps?f=q&hl=en&geocode=&time=&date=&ie=UTF8&t=h&om=1&ll=51.512315,-0.312507&spn=0.001143,0.002511&z=19
and a nasty, mostly finished slapdash mostly empty development here:
http://maps.google.com/maps?f=q&hl=en&geocode=&time=&date=&ie=UTF8&t=h&om=1&ll=51.511655,-0.316246&spn=0.001143,0.002511&z=19
Both of them look very wanting for tenants and I'll bet the off-plan "investors" have fear and loathing right now.
5. confused76 said...
Michael Saunders of Citigroup said: “The severity of the slide in mortgage approvals in October is stunning.”
6. drewster said...
A lot of these flats were sold with a "15% developer discount", which meant an 85% LTV mortgage could magically be used to buy 100% of the flat (the banks weren't told about the 15% cashback). So we could expect a 15% loss straight away. Compounded to that is the oversupply of flats in many areas (northern cities), the credit crunch, and the general fall in prices, and I think a 30% fall is optimistic.