Tuesday, Nov 18, 2008
Twenty percent falls, according to Rightmove
Telegraph: House price falls hit 20pc
House prices have already fallen by 20pc from their peak, according to one of Britain's largest property websites [no, not this website...]. Evidence suggests that prices will continue to fall sharply, with sellers dropping their asking prices by almost 3pc last month, Rightmove reported. Agents are reporting sales at 20% below peak asking prices. The number of new sellers has fallen to 20,000 a week (down from 35,000 a week a year ago). Full Rightmove press release link in comments below.
Posted by drewster @ 12:58 AM (1034 views) Add Comment
17 Comments
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1. drewster said...
Official press release: Rightmove House Price Index, November 2008
Contains some classic head-in-the-clouds quotes:
"Winter of opportunity for cash-rich bargain hunters"
"Cheapest base rates since 1955 coincide with onset of winter market, giving opportunity for ‘cash-rich and mortgage ready’ buyers to bargain hard"
"... quicker sales would be achieved if sellers started at an asking price closer to where they are highly likely to end up"
"... prospective sellers may find it easier to delay marketing until the New Year to find the money for a HIP."
"Lower interest rates make rental yields look increasingly attractive to the long term professional investor – with examples of rental yields of over 7% starting to be achieved by canny investors buying the right properties."
"... pent-up demand ..."
"... potentially a good hunting ground for the bottom feeders whilst the mainstream buyers are still being kept on the sidelines."
2. quiet guy said...
Great post Drewster but events are beginning to worry me.
"Halifax, the country's biggest mortgage lender, recently reported that nearly £1,000 was being wiped off the value of the average house each week"
Something terribly ugly is going to raise its head soon. I don't see how the average indebted household will get through this unscathed if the above quote is realistic about what is happening to the typical house-debtor. I don't have a mortgage but I live and work among those who do. Statistics suggest that some of my friends and work colleagues are going to get hurt.
3. drewster said...
QG,
Depends what you mean by "something ugly". Middle-class homeowners rarely start riots. Most people I know are still living and spending as normal: buying cars, going on holidays, eating out, etc. On an individual level the most likely scenario is people cutting back on those "luxuries" and working hard to repay their debts instead.
The pound will be devalued too (see Telegraph: Pound could shrink to $1.28) which will help the economy (although most people will feel poorer as a result). A weak pound means people will cut back on holidays abroad and will holiday in the UK instead which will help the domestic economy to recover sooner. A falling pound should, ceteris paribus, boost exports; although the credit crunch means exporters are hurting as much as everyone else. Ideally now is the time to spend a few years abroad, earning in a stronger currency, before coming back to the UK.
The big worry for me is jobs. As banks cut back companies' lines of credit, some perfectly viable businesses are going bust because they simply don't have short-term cash for day-to-day running costs. Jobs are easy to destroy but difficult to create. Whole companies are even harder to create.
4. mark wadsworth said...
@ QG, I must admit, although I have been cheerfully predicting the HPC for years and was glad when it happened, I didn't realise that it would drag everything else in its wake like this, things are going to be quite awful for a lot of people. But, who's fault is that?
5. titaniccaptain said...
Yes I also have been revelling in the downward spiral of house prices.................and yes its going to hurt alot of people..................but.........................at least our children HOPEFULLY wont have to face up to a mortgage that enslaves them.......its up to us to make sure that never happens.............by the way 3% in one month is a big big drop....could we see 5%+ drops per month next year?
6. phdinbubbles said...
How accurate are the figures though with such low volumes?
Anyone watch Locations last night? Krusty typed in 'Krusty Allsopp' and 'fault' into google - don't blame it all on yourself duck - there was that Phil bloke as well. It's going to be chilly this winter without yer hat.
7. Orcusmaximus said...
@QG - "nearly £1,000 was being wiped off the value of the average house each week"
So what? Is this £1,000 coming out of their pockets? No.
Another way of looking at it is that £1,000 is coming off the price of the house they want to buy next, or even £2,000 if they want to move up the ladder.
This is a good thing made out to be a bad thing.
8. Jimmyb said...
Drewster, I beg to differ, have you tried to sell a car recently. I had trouble with my 3.5 year old Astra and eventualy had to take nearly 1k of the book price. believe me, not much is selling.
9. Will said...
While prices were rising, they were all having a ball. I have little sympathy for those who borrowed massively with no thought as to what may come around the corner.
10. phdinbubbles said...
"Rightmove said the low level of sellers suggested that people were not currently under pressure to sell their home, with many unwilling to enter the market until the outlook for prices had improved."
Crikey there's a lot of patience out there - going to wait 10-20 years are we?
11. tyrellcorporation said...
Just think guys last year you were losing £1000 a week - now you're 'making' £1000 a week. Don't beat yourselves up. We've waited patiently for this situation using sound reason and judgement. We watched while our friends piled in and smirked at us from the sidelines. We were all idiots and fools for not mortgaging ourselves up to the eyeballs.
In the words of Tyrell - 'revel in your time'
12. Fjcruiser said...
Aside from the usual pent up demand claims and UK is an small island so there will always be demand for property in the long term (Location,Location,Location program last night), a couple of interesting figures stoud out: 70% of the population own their property of which 32% own it without a mortgage.Although the without mortgage looks like a high figure, it means that 38% ( so over 1 in 3 people in total) have a mortgage. We also know that the majority of people bought and sold in the last 2 years, mainly getting low fixed rates mortgages. There are about 1.4Mil whose mortgage is due to come out of the fixed rate next year on top of those who have already come out this year and fetl the pinch. As home ownership is quite large in the UK, there is little cushion if things go wrong, specially when people loose their jobs. The collapse of the property market is affecting everybody, whether you own or dont own your property.
Had the governement raised the interest rates 4 or 5 years ago too cool down the property market, we would not be in this mess today.It is not an illness confined to property ownership, but it has its metastases now.
13. andrew said...
The price drops have not materialised into sales of cheaper houses yet, so I don't think we can celebrate just yet.
Let's keep it simple, most of us just want a place of our own to live, a home that is ours for a reasonable price, that's all.
I am not going to feel responsible or sorry for the collective stupidity of a whole group of people that felt happy to pay too much money for a house and feel proud that their house was now worth x amount more than it was 6 months ago, remember the smugness? This was a con and some fell for it, others didn't.
14. little professor said...
"How accurate are the figures though with such low volumes?"
Not very- Rightmove's figures are generally all over the place. Last month they showed a 1% RISE in prices.
15. jackas said...
I put up my cat for sale at £10,000. I recently dropped the price to £5000.
Cat prices down 50%.
16. letthemfall said...
andrew: "a home that is ours for a reasonable price, that's all. "
Mind you, maybe we will move closer to the European way, where many more people rent than buy. Since renting, I haven't climbed a ladder once, the paint brushes are gathering cobwebs and I haven't even changed a tap washer. A lot to be said for renting apart from it being cheaper at present.
17. Danny said...
Houses on my street were valued and sold at £80k in 2000.
They are now on the market for £239,500.
Even a 50% reduction from the present prices, would still leave the properties MASSIVELY overpriced.