Tuesday, Nov 13, 2007
Ta-dah!
FT.com: Housing market faces big slowdown
The property market is set for a more severe slowdown than in 2005, according to the most authoritative survey of estate agents, which shows they believe house prices are already falling in almost all areas of the UK and even the rampant London market has recently hit the buffers.
Posted by dohousescrashinthewoods @ 06:21 AM (1773 views) Add Comment
23 Comments
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1. dohousescrashinthewoods said...
And the BBC, about 6:20 this morning baldly stated "House prices are falling in most areas of Britain". Nothing to soften the blow.
By 7:20 they had slipped in that London was holding up.
Perhaps this is the "alarm-clock lottery" in information ;)
2. cornishman said...
Just want to apologise for yesterday - I lost the plot for a moment. Forgive me.
3. Mken said...
If they are admitting this much, I wonder how bad things REALLY are.
4. voiceofreason said...
cornishman, I see you have recovered your composure today. Things are looking up.
Even the BBC are running these CRASH headlines.
My cousin is buying over half a million's worth of house at present.
He got really cold feet after a leisurely Sunday reading the papers.
I ran a search in Google News for fiat money articles. History does indeed show that we are in the longest ever (in modern times) fiat money period. But is it really "different this time" ... ?
5. Quiet Guy said...
@cornishman
What's the problem? If you apply contrarian investing principles to this site, then you are obliged to consider the unthinkable - buying a house.
BTW, I am also concerned that the current incumbents are going to do something silly trying to postpone the housing bubble reckoning until after the next election. It's strange; after waiting so long for a change in the housing market, I find myself worrying about what will happen now that it seems to be upon us.
6. dohousescrashinthewoods said...
Don't worry about it. It's good to think laterally.
After all, if you were right a lot of people here would need to change their minds in a hurry and take some losses on the chin.
I have reassessed my position a couple of times, particularly against a background of "true inflation" being markedly higher, possibly approximating HPI.
However, this latest story lends weight to the "reversion to mean" theory.
7. paul said...
ummm ...immigration ... the Olympics ... only ever go up .... mumble ....
8. Is It Me said...
and tomorrow we will be told that now is the time to buy property. The only fortunate thing is that the lemings who would do just that will no longer be able to finance their stupidity. What a mess the housing market is in.
But don't worry- research shows that we are all going to spend more than ever this Christmas so quick- buy your shares in the retail sector- and don't forget- Northern Rock share price can only go up !
9. justwatching said...
This months survey is good news for those who don't own a house(s).
What still makes me angry though is the way the BBC website puts the most positive spin on statistics. I have posted before about this but this months (seasonally unajusted figures) would make for a fantastic headline if they followed their own methodology in reporting the July figures; 20% up, 16% down translated to 20% more surveyors report a rise as opposed to a fall (4 more than 16 is 20%)
Go on the beeb, do it this time, dare you.
4% up, 43% DOWN!!!! Go on then (excuse my maths 43-4=39 39/4 X 100 =975%)
yes 975% MORE SURVEYORS REPORTED A PRICE FALL
te he
10. voiceofreason said...
Channel4 news ran a story last night where the govt minister (forgot which one) was arguing that immigration needed to be relaxed to get enough workers in to build stuff for the Olympics.
Good old Frank Field MP was given a much smaller slot to argue that it is lunacy to import more people when we have 4.5 million economically inactive people here already. Including 450,000 of them in the locality of the Olympics works !!!
My take is that GDP goes up if you have more imported labour to pay taxes to keep the inactives on the dole.
Retraining the inactives would cost money, not make it. Hence HMG's position.
11. Orwell said...
Frank Field is VERY highly respected among Social Welfare groups as well. Whereas many of these people are merely talkers paid to sit in their parlours and pontificate by HMG, Frank Field actually got his hands dirty and pretty much devised the Child Poverty Action Group. If you want to know about welfare benefits, fuel rights, Council Tax, Housing Benefit, Child Support, read their text books they are damn good....
12. little professor said...
"Estate agents have become extremely gloomy about the outlook for property prices as they experience falling demand and an increasing supply of property. Some 34 per cent more surveyors now expect prices to fall than think they will rise over the next three months.
The large negative balance on house price expectations is worse than that recorded in the 2005 slowdown and represents a huge shift in sentiment on a year ago.
New stock on estate agents books leapt 8.8 per cent in October at the same time as newly agreed sales were lower that at any time since Rics members were first asked how their businesses were faring."
13. stillthinking said...
Lower waged immigrants also mask inflation. The "inactives" realise that the pay is too low for their living costs (or more to the point the various taxes and rent they suddenly become liable for), which is not an unreasonable position to take. Low paid work in the UK isn't worth doing, a.k.a the benefits trap. They won't be bringing up children in a big house in Poland after a couple of years here. They will have just worked, probably not got any savings of substance and gone back 7 years on any government waiting lists they are on.
A council tenancy in London is worth at around 4K a year. Call that 6K before tax and enough to make you think. Unemployed think about property as well, and succeed in property a lot better than those working quite often.
14. converted lurker said...
I ran a press reelase a few weeks back predicting housing market gridlock in early 2008 - mortgage approvals are going to be 30% down, housing sales ditto, with panic selling emerging as vendors suddenly get the fact that the (on average) 85K equity they have may evaporate. I'm changing it now, it won't be gridlock it'll be a car wreck. Interestingly 2 house sales websites got in touch to discuss the piece, they both enjoyed it but reckoned most vendors would sit it out. Now if you own a house, have a family, shrug your shoulders as prices go up down sideways fair enough. But looking at the debt stats that's not Mr & Mrs average who, if they panic to get 5K out of NR, will 5hit it if their house starts falling in value on a daily basis when they've looked upon it as the lifestyle atm. Jeremy Leaf of RICS made a right tit of himself on R% this morning claiming house sales sotck was low, it's bloody increased by 20% over the past 6 months according to leading websites and the NAEA.
15. little professor said...
Got to love these EA quotes from the RICS survey pdf
"The market is somewhat constipated at the moment, it needs the laxative of lower interest rates to get it going again!"
"The market has frozen. The more savvy vendors are reducing prices and achieving sales. It's a buyers market"
"The global credit crunch has had a bad effect on the ability of buyers to proceed at all. A period of adjustment must follow. "
"This market mirrors the housing market in 92/93 post-boom. Prices dropping, sales well down and market over supplied with many overpriced homes. This may take some time to bottom out!! "
"The market conditions are now as depressing as I can remember. "
"There is light at the end of the tunnel, it’s called a train”. The slow down in sales will continue unless agents/vendors recognise the
market has changed. "
"Very quiet – many vendors are giving up thereby reducing available housing stock still further (which, in turn, should prevent prices from falling). "
" Unless rates drop by 0.5% minimum in November real and significant falls in value can be expected. "
" Mervyn King please, a ¼ % cut in November and another in January is essential to prevent a fall back to the recession of the early 1990’s unless of course that is what the Bank is trying to engineer. Who knows, that hopeless forecaster. Roger Boothe of Capital Economics Group, who has been forecasting a slump in house prices for the last seven years, may have got it right at last! "
16. drewster said...
@Converted Lurker: That's an interesting story. There are some vendors who will just "sit it out" initially, but once the realisation dawns that it's falling they'll be more keen to sell. Here's another factor to consider: Amidst all the talk of buy-to-let, divorcees, immigrants, singles, students, etc; there is one group in the housing market who play a major role but who have barely been discussed. These are the wannabe-downsizers, older couples living in large houses whose children have moved out and who are thinking about downsizing. Up until now they have seen no point in downsizing while the value of their large house increases, but now that prices have peaked they'll also want to take their money and run. Add to them the BTL exodus, the subprime defaults, and the credit crunch; and before long we'll see more falling prices.
17. converted lurker said...
Drewster I agree, the housing market has dislocated itself from fundamentals as never before and behaved as an irrational speculative market. I don't think any market commentators are concentrating on the perfect storm approaching from so many angles; 40% less mortgage product available is a huge factor and rips the heart out of speculation, unless you have cash. Add this to all the other factors and its all very scary. The rush for the exits is on and its not a 'velvet revolution'
18. jack c said...
A reversal in UK house prices is inevitable given the current market conditions. All major mortgage lenders have significantly reduced their product ranges and tightened their lending criteria and as a consequence prospective buyers do not have the borrowing facilities using enhanced multiples of salary and “income stretches” seen in recent years.
The UK housing market has (IMHO) “defied gravity” for sometime now but it won’t last forever essentially because of 2 major factors (1) A return to more prudent and responsible lending (which sadly has been forced upon a lot of institutions) (2) Affordability.
19. planning4acrash said...
Quiet guy, the election was postponed, 18% capital gains tax will lance the BTL bubble within a few months time and house prices will bottom out around 2010 just in time for the next election and Olympics and crossrail feel good factor. The political game is to lance the boil as early as possible, maybe that's why CPI has been allowed to creep up this month?
20. dbnazz1 said...
Quite Guy....
I feel the same way. I now feel that I am looking into the eye of a stormthat i new was coming, only to find that the storm is looking bigger than i thought it would be and is growing larger all the time. Rather than being the cyclical correction that occurs before the economy starts the upswing all over again, it is starting to look something far more sinister.
21. daft boy said...
@drewster. Its not possible for vendors to sit it out and protect the value of the propertry . Their property price is controlled by the price paid for a similiar property in the street. People will not be able to downsize because there are no buyers in any range. In the last crash prices just dropped even though very few sales took place. Thats when I had my pick of prime properties at least 50% off peak price.
22. wiltshire said...
p4ac, I don't believe this government is smart enough to turn the current situation into a win. GB sold most of our gold reserves at the bottom of the market, they've allowed public spending to get out of control, they've massaged the inflation figures to the point no-one believes them anymore and they've allowed the UK to run up £1.4trillion of debt. All that has been happening when a financial storm of biblical proportions has been brewing. I would bet everything I own (and sadly I probably have already by virtue of living in the UK!!!) that this government will not be able to do ANYTHING to save us now. Can I be the first to call the 2012 Olympics cancelled????
23. drewster said...
@Wiltshire: Maybe they'll introduce a new olympic sport: stadium-building. Or how about abandoning the stadium and holding the triathlon outdoors (cycle in bus lanes, swim across the Thames, and run away from knife-wielding hoodies).