Friday, May 30, 2008
All over the papers today
Independent: House prices now falling at fastest rate since early 1990s
(Yeah, I know this is the zillionth story based on the same Nationwide figures, but let's celebrate while we can.)
The largest monthly drop ever seen in the Nationwide's survey of the property market prompted some economists yesterday to predict a "deep and prolonged" housing slump.
The price of a typical house is now £8,000 less than at this time last year. Negative equity in this downturn will be much more serious than it was during the early 1990s, simply because the price of property has trebled since then. Repossession orders are running at a 15-year high. Figures from the British Bankers Association this week showed a fall of almost 40 per cent in the number of new mortgage approvals.
Further pain seems likely.
Posted by little professor @ 12:34 AM (1520 views) Add Comment
42 Comments
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1. gardeniadotnet said...
Nice graph.
How do you insert an image into comments?
G.
2. Airey said...
Its an astonishing graph. The plummet line can't get much more vertical.
3. amjidk said...
house prices are falling and it's about time.. how big a fall do you guys think it could be, love to hear your opinions.....
4. mken said...
"...though prices are still high"
... sounds like the editorial team still have property portfolios
they're desperate to shift
5. techieman said...
gardeniadotnet yes i think the webmaster should post this as a tip on the front page . Its to do with all that clever html cody stuff.
Amjidk - yes there are 2 issues here IMO. first is how far will they go and second is in what format will the falls be.
Basically the guys here have a range of estimates from around 20% to 40% plus. My view - for what its worth - is around 30 - 40% then a suck back in (i.e. a move back up - possibly quite sharp) at that time the bulls will once again come on here and start the "well you lot had your chance and missed it" tag line, and then a final devastating plunge. However that premise is based on a couple of things:
1. How the economy is after the first period of falls (by first period i mean without a move back up - although that needs a bit of licence given the way these stats are kept)- and the extent of debt deflation we have had by then.
2. How far the move has already gone.
6. sold out said...
YeSSSSSSSSSSSSSSSSSS.Ha ha ha,Krusty eat your hat,krusty,krusty eat your hat.Who needs the footy when you have the great uk house price crash of 2008, Euro 2008 boring."kirstie,phil,beeney,David Smith,Greenbay,Rosie millard,the england rugby team,Blair,foxtons your boys took a hell of a beating"
On a slightly more serious note, the average house has lost 8k in a year.Thats £8000 per BTL landlord,if they have 5 properties thats 40k.A massive loss and its only just begun,what will their losses be in 12 months time?
amjidk@2
how big a fall? This crash is happening so fast its difficult to keep up with predictions.In 3 months even the VI mouthpieces have changed from a stagnent market to 10% falls this year.I reckon that we are going to see a fall over the next 3 years of at least 50%,but i will have to adjust my prediction even higher next month,when the disasterous June Data is no doubt released.
7. confused76 said...
I see people are laughing!
"Negative equity in this downturn will be, in absolute terms, much more serious than it was during the early 1990s, simply because the price of property has trebled since then, and even though, very recently, borrowers have been putting down larger deposits."
this debunks the last mith
AH HAHHHHAHH AHHAHAH
8. Dead Money said...
Here we go, here we go, here we go ......
I've noted one or two posters talking about making offers already, I know everyone's circumstances are different but really you should hold off for now. The end game is a long way off at the moment, IMHO.
9. pendulum said...
While this is great - all you need is one flat month for VIs to call the bottom and start yelping for everyone to pile in. There must be stacks of people with some sort of deposit just waiting to get on the ladder. The question is - how long do you hold off? It will be tricky if the credit situation stabilises and the market becomes more sentiment driven.
If you check the 2002 price for the house you're looking at and put a cheeky offer in at that price; if they bite maybe you should go for it.
But then again, if the credit situation worsens....
10. crash bandicoot said...
Last time round people were going bust and being reposessed with only 3x salary mortgages. At the moment we need a 50% crash even to reach those levels.
techieman, I like your suck back idea I never thought about it happening like that before, although it all comes down to affordability, real affordability that is not the recent idea that all of your spare cash for the next 25 years be diverted to your mortgage.
11. Ijjhall said...
@pendulum
Actually there was some kind of an attempt to 'call the bottom' earlier this week with slightly higher mortgage lending figures than the previous months (they ignored the YOY comparison) - some VI's cited this monthly upturn as 'a corner turned' so agree they are/will be constantly on the look out for any kind of data to latch onto to lure mugs in to buy at current inflated prices. Of course this time, they were quickly blown out of the water with the Nationwide survey but a desperate man is a dangerous one and they will stop at nothing and we can expect a lot more of it.
For me, daily reference to this site gives me the confidence to know I will be in full receipt of all the information I need to decide when to make the plunge. Personally, at this stage I am saving and aiming at late 2009 possibly at auction to cover future falls in 10/11.
12. it_is_going_with_a_bang said...
"Negative equity in this downturn will be, in absolute terms, much more serious than it was during the early 1990s, simply because the price of property has trebled since then"
A 1% drop now represents £1700 to £1800 on the average house, whereas in the 1990's it would have been £500 / £600 - have wages trebled since then ... no.
Troubles ahead for alot of people.
13. planning4acrash said...
I predicted about 1.5yrs ago that measures would go negative this month, based on what i knew about the delayed impact of ir's. Extrapolating the last crash, prices cld fall to between 95&105k in 5yrs. That assumes that the financial system remains intact
14. uncle tom said...
amjidk,
I'm still with my original prediction as to how this will map, although I'm beginning to think that the final sustainable level may be a little lower than I have previously projected.
Essentially, we are looking at a crash proper, an accelerating fall that finds a very low base before rebounding, over-correcting, and then settling at a sustainable level.
Previously I have indicated a crash to 70-80% below peak (probably with a false dawn or two along the way) followed by a strong re-bound back to 30% below peak, and then settling at 40% below peak (these are real values, so adjustment for inflation needs to factored in)
I now think that the economic consequences of the downturn will be more severe than I previously allowed, and that in the aftermath, household income will be lower than I previously projected.
I still see the fall going to 70-80% off peak, but I am now less certain about the strength of the rebound, thinking that this may now rise to perhaps only 35-40% below peak, and the final settled level is more likely to be 45% below than 40% below.
My essential message remains unchanged however - don't call the bottom too soon!
15. sold 2 rent 1 said...
For what its worth
100pc crash with the end of money and global enlightenment in 2011-2012.
Exchange you gold for property in late 2010 to early 2011
16. sold 2 rent 1 said...
Burntgreenfinger (reply to question yesterday)
"I find the Mayan conscienceness ideas interesting. What do you actually mean by "co- create?" Is this purely spiritual or a means by which to trade and live a sustainable life away from the influence of those that would have us in servitude for the rest of our lives?"
My wife can handle all our cash in gold, and a depression that makes the Great Depression like a picnic, but co-creation is a difficult one to buy into.
Imagine the Earth is a giant brain. It has an East and a West side just like the brain has a left and right side.
See article to see how each side of the brain has different functions
http://www.news.com.au/dailytelegraph/story/0,22049,22535838-5012895,00.html
Now true geniuses can maximise both parts of the brain.
The Earth is not working very well as the East and West are not functioning together properly.
Co-creation, world mind, global enlightenment, or the singularity will basically mean 16bn years of evolution will be complete.
It will be a totally new existence for the planet.
LEFT BRAIN FUNCTIONS
uses logic
detail oriented
facts rule
words and language
present and past
math and science
can comprehend
knowing
acknowledges
order/pattern perception
knows object name
reality based
forms strategies
practical
safe
RIGHT BRAIN FUNCTIONS
uses feeling
"big picture" oriented
imagination rules
symbols and images
present and future
philosophy & religion
can "get it" (i.e. meaning)
believes
appreciates
spatial perception
knows object function
fantasy based
presents possibilities
impetuous
risk taking
The shift in world power is from West to East.
The shift in consciousness is from LEFT to RIGHT brain functions
17. quiet guy said...
@pendulum
"While this is great - all you need is one flat month for VIs to call the bottom and start yelping for everyone to pile in. There must be stacks of people with some sort of deposit just waiting to get on the ladder. The question is - how long do you hold off?"
Excellent question. Personally speaking, I am doubtful about trying to call the bottom of the house price market. I intend to buy when I can do so at a comfortable salary multiplier (between 2x - 2.5x salary) and keep about 6 months cash for a rainy day. If house prices fall further, then so be it.
If you think you're smart enough to correctly call the bottom of the housing market then good luck but let's be honest - how many of us called the top of the market too soon? As log as you think of a house a something you pay for to live in instead of an investment then it'll probably work out OK.
The graphs at the top of the third page on this report are well worth a look:
http://www.nationwide.co.uk/hpi/historical/May_2008.pdf
Keeping an eye on future monthly releases from Nationwide might be useful as well.
P.S. I've just noticed uncle tom's comment. I suppose he considers me to be an optimist!
18. quiet guy said...
@S2R1
"Burntgreenfinger (reply to question yesterday)"
Are you lost little boy? There is a hyperlink to yesterday's posting, cunningly disguised using the title "Yesterday". Or perhaps you just drifted onto the wrong blog?
19. gardeniadotnet said...
@S2R1
Have you gained any further insight into my system yet?
It really is THAT simple and THAT important.
Your future credibility depends on it
G.
20. C'mon Correction said...
pendulum said...
There must be stacks of people with some sort of deposit just waiting to get on the ladder.
I think that is the real problem going forward, I personally know of no-one that has saved and waited to get on the housing ladder at any point in the last 7 years. As soon as my friends earned x wage to get x mortgage they just bought without question, sadly most of them bought in the last 4 years. I don't know anyone with savings ?! Most have debts on credit cards, finance on cars, sofas, beds, pay for holidays entirely on credit cards and pay off all winter etc,etc. Remember £1.5 TRILLION is the public's debt, that's a staggering amount.
So no, i disagree that there are many people out there can afford above and beyond of whatever restrictive mortgage offer they can get currently.
21. uncle tom said...
Quiet Guy,
The problem with calling the bottom is that there will probably be one or two false dawns that lure in the impatient.
It's a tricky call to get it right, but if you make your move when you can buy for less than half the peak price, you are not likely to lose your shirt in the long term. However, don't make cosy assumptions about how much you are going to earn in the future - leave a fat safety margin in your calculations.
22. sold 2 rent 1 said...
gardeniadotnet,
I was just looking into it.
Have you approached anyone with the idea?
You are basically saying you can increase harvests from 1 per YEAR to 1 per MONTH.
Sounds too good to be true but in a world of exponential change I could buy into it.
Remember the power elite won't be too impressed with your idea.
Their goal is an Orwellian state that enslaves us into our own debt/poverty.
They want us enslaved into their own patented GM crops.
Remember Stan Meyers (water powered car) died under suspicious circumstances. That was in 1998. We are now in 2008, where the power elite are losing a battle over information. We atre entering a new consciousness.
What exactly do you need to go forward?
BTW - remember the NWO spies are reading this blog too!
23. george monsoon said...
I just read my own tea leaves and the signs are not good... there is no tea left in my cup and I will need to make another..
24. sold 2 rent 1 said...
gardeniadotnet,
I would like to meet up at some point but not until this destruction period has passed later this summer.
Be very suspicious of any government organisation or big corporates.
25. paul said...
sold 2 rent 1.
Isn't it you who latches on to K-cycles too?
Mayan Consciousness, Kondratieff Cycles, K-Wave, Fifth Night, Bile Chanting, Tantric Monetary Policy.
S2R1, *what happened*? You used to be rational!
"As soon as you discard scientific rigor, you're no longer a mathematician, you're a numerologist"
You will end up drilling a hole in your head!
26. dohousescrashinthewoods said...
Is anyone surprised?
If it weren't for the fact that HPI has hung around like a fart under a duvet for so long that we came to accept it, this would be completely unremarkable.
If the status quo 6 months ago had been "normal", this would be shocking
The fact is that "normal" was over five years ago. Relative to that, this has't even cut the crust.
(Caveat: I'm relieved and not unhappy to finally see the market heading in the direction of sanity. I dread to think of the suffering that is already baked into the pie for millions, whether by their own actions or the malice/foolishness of those that convinced them)
27. Still-waiting said...
@sold 2 rent 1: Stop smoking those funny cigarillos and watching joke videos on youtube.
28. sold 2 rent 1 said...
paul,
"what happened*? You used to be rational!"
I have had a change of consciousness.
Unfortunately the underying mathematics of the unuiverse only allows a certain flow rate into the new consciousness.
I am guessing that the flow rate is a normal curve distribution with a centre around 6 July 2008.
This explains why the number of "crackpots" is growing exponentially.
Obviously if I am wrong I will go looking for that drill.
I do hate DIY though!!!!!
Malct just posted this amazing video in another thread
FULFORD VS. HAARP hi-rez
http://www.youtube.com/watch?v=0VX0JvpW5q0
29. Planning4acrash said...
gardeniadotnet, S2R, I have a harvest every day. Pick and come again salads/herbs in my window box and I sprout pulses and beans for salad. I am self sufficient in salad as a result and only have a couple sqm of window box space.
30. planning4acrash said...
Tantric money policy, what a fabulous idea! Would that involve sitting infront of a pot of gold and resisting stealing and spending it, and seeking transcendence from greed? Far out dude!!!!!
31. george monsoon said...
Guys, what you are saying may well be correct, but how does this help us prepare and deal with the ensuing crisis with the world economy?
32. gardeniadotnet said...
gm
>how does this help us prepare and deal with the ensuing crisis with the world economy?
As long as we continue to communicate openly, the answers will become apparent.
@S2R1
For the record I don't subscribe to ALL your theories, but I have certainly learned a LOT from your postings.
You said :Be very suspicious of any government organisation or big corporates.
I have shared my system with all and sundry for 2 months now .It is now firmly in the public domain.
Getting rid of me would achieve nothing and would have been done by now if I was a threat. (I hope!)
33. planning4acrash said...
gardeniadotnet, what is your system?
34. gardeniadotnet said...
p4ac
Please refer to yesterday's abiogenesis thread. It's all there, well most of it.
G.
35. sold 2 rent 1 said...
garden,
Where arev you based?
Your whois lookup says "Maximum Daily connection limit reached. Lookup refused."
36. Mark Wadsworth said...
@ LP "let's celebrate while we can"
Wot?
Dontcha mean "Let's celebrate the start of a two-year HPC festival"?
And please remind us again how to insert images.
37. letthemfall said...
House prices rise and fall over fairly long periods. Talk of a bottom to prices next year or the year after are in my view unrealistic. Last time was 6 or 7 years from top to bottom to steady rises again. I don't suppose it will be all that different this time. However, expect frequent VI rubbish about bottoms reached and corners turned over the next year. Gradually they will become quieter as everyone starts to believe prices will never rise again, just as they believed they would never fall. It's the way of the world.
Of course, if the more apocalyptic economic predictions come about, we might see a longer downturn.
38. Sloth said...
My first visit to your website - very interesting. I'm a owner of a beautiful 8 bedroom house. No mortgage. Hope to live in the same house for the next 30+ years. My children can sell it when they inherit it. Genuinely wouldn't sell it today if someone offered me twice the current market price. So house prices have no personal interest to me, but I find the debate interesting. I would say two things. I agree that house prices will fall. Have been saying it for years. I would expect 50%+ from peak. However a word of caution for all of you wishing this. If / when this happens the UK economy would be in such a dire mess I do fear that many of you wishing for a HPC would be unemployed (perhaps for very many years). So you still wouldn't be able to afford a house. Indeed you may be in a worse relative financial situation than you are now. Be careful what you wish for.
39. jack c said...
I'm with uncle tom (currently at 14) on how deep the fall in residential house prices will be, finally settling at 50% below August 2008 values.
I also expect those with heavy debts to suffer a decade of despair 2010-2020
40. planning4acrash said...
gardeniadotnet, you are talking rubbish so far as I can tell. Price is a monetary issue. Notwithstanding whether or not you are bonkers about suggesting that propogation is a breakthrough (hello, propogation is an ancient form of farming!), the truth is that speculation ramps up prices whatever the technology, so any technical solution, prior to monetary reform, is like pushing at a slack piece of string.
41. amjidk said...
i think it's a bit risky trying to call the absolute bottom of the market, as soon as prices have dropped to around 40%-50% off peak, i will probably start looking to buy..
42. planning4acrash said...
Same applies to abiogenesis, because, even if that was true, extraction is limited by investment in extraction and the number of rigs. The utilisation of rigs and their general age now is at a bottle neck, so, abiogenesis, if true, which it isn't, would only have very long term implications.