Monday, Sep 22, 2008
And now for something completely different
Telegraph: Repossessed properties at auction too pricey
An article about house prices crashing. Properties are not selling at auctions because the reserve price is too high, meaning they will have to come down a lot more for the market to start moving again. They are already down 25%, and with buyers on strike and repossessions increasing rapidly, they are going to fall a lot more.
Posted by jonb @ 07:36 PM (491 views) Add Comment
5 Comments
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1. drewster said...
Nice. The auction room is the best leading indicator of where the market is going. No blue-painted doors or wafts of baked bread will help in the auction room.
"Donna Searle and Derek Armstrong (above) are a couple of landlords from Staines, Surrey, who are still buying at auction. They have 19 properties – nine of which they bought at auction – and have set up a company, Auction-insider.co.uk, which acts for investors who don't have the time or confidence to bid themselves."
When a company offers to sell insider information, alarm bells should start ringing. These guys aren't making money in property directly so they've decided to try sucking in investors instead. "Those who can't, teach."
2. str 2007 said...
Was at an auction 8 weeks ago and most lots weren't reaching reserve. One I had valued at 235-250k turned out to be reserved at 300k. Given it was purchased in 2003 for 235k that's one hell of a lot of MEWing that had been going on.
And I think that's the problem. The first properties to hit the auctions as repo's will be the ones who's owners are MEWed to the eyeballs and hence the reserves are so high. More bank losses.
3. drewster said...
str2007,
Thanks for the insight.
4. Archijc said...
Every now and then, you get a beauty of an article that shows just how dumb broadsheet journalism can be... like this bit, near the end of the article (note the word 'experienced')...
'Experienced buy-to-let investors who do want to start buying at auction, need to remember some simple rules:'
...This part of the article has been written to appeal to any idiot who might be reading who still fancies catching a bit of the property action. The same idiot the papers have been spurring on to buy up property for a number of years. And then the writer has suddenly re-read his piece and thought 'oops, it looks like I'm encouraging any old sod to buy investment property when the market is in freefall - I might get criticised for that' - so he then drops in the word 'Experienced', re-reads it and thinks 'That's better.', not realising that the end result is a statment which makes no sense.
A more generous interpretation of this stupid statement is that it might be sarcasm, a subtle comment on the fact that most 'buy-to-let' investors, whether experienced or not, are as dumb as a bag of hammers.
5. last_days_of_disco said...
This is the banks finding out how much those dodgy investment vehicles are really worth. Not much!