Tuesday, Apr 14, 2009
The plight of the downsizers: Record number of middle classes desperate to sell homes
Mail: The harsh reality in UK housing ....
Record numbers of middle-class homeowners are trying desperately to sell and move to smaller properties. As a 'white-collar recession' begins to bite deeply, new figures show a sharp jump in families looking for a quick sale on houses worth £500,000 or more. Experts say the downturn is entering a new phase and even high earners face losing both their jobs and their homes.
Posted by hpwatcher @ 03:37 AM (2563 views) Add Comment
22 Comments
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1. japanese uncle said...
Properties which have been sold at knock-down prices include a garden flat with three double bedrooms in Chelsea, which went for £1.4million, and a four-bedroom home in Guildford, Surrey, which sold for £900,000.
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'knock-down prices'?? 1.4 million for three bed flat!? and 900,000 for a house in Guildford? Stay dreaming.
The validly 'realistic' prices in an economy under the 'born-again Great Depression' are 300K and 180K respectively.
2. paul said...
"Hospital receptionist Mrs Jordan, 55, said: 'We put the house on the market for £575,000 and we had loads of viewings. 'Everyone loved it but there were always excuses. 'One potential buyer couldn't get a mortgage, another wanted double glazing.' The couple dropped the price to £550,000 and again there were a lot of viewings but no offers. It was only when the price was reduced to £525,000, within striking distance of the stamp duty threshold of £500,000, that they finally got an offer.
It was a disappointing £470,000, a reduction of 18 per cent"
Utter denial.When buyers show now interest because the price is too high, they are actually making excuses!!
3. dbc reed said...
"White collar recession."?Can't be many white collar workers looking to buy three bed flats in Chelsea.
Strange to see the true blue Mail attacking the bankers whose lending practices are straightforwardly private sector, putting the interests of their own businesses first. The Mail is now suggesting that the bankers should lend at the direction of the State- to maintain overvalued
house prices.This paper is probably the single most destructive influence on opinion in the country.
4. quiet guy said...
'The biggest issue is that there are people out there who are very interested in buying but they are not able to get a realistic mortgage.'
The meaning of the word of 'realistic' is being changed here.
5. will said...
Paul
The Jordans will lose the next 20% in the house they have downsized to.
6. Capitulatesoon said...
"and 900,000 for a house in Guildford? Stay dreaming"
but don't you know, that part of Surrey is so posh, they even spell phuck with a 'ph'.
7. uncle tom said...
Sooner or later the penny will drop, and the older generation will realise that the number of younger people who can genuinely afford (and want to service..) a £500k mortgage, is actually very small; while the number of properties that are supposedly worth £500k+ is exceedingly large..
..too many older people put off downsizing during the boom years, because they saw their home as a great investment.
- Too late now to start whinging..
8. This comment has been removed as it was found to be in breach of our Blog Policies.
9. inbreda said...
I agree with UT @6. They had a (another!) golden opportunity to downsize while prices were massively over-inflated. They got greedy. They missed the boat. Next they'll be wanting state compensation funded by printed money that is effectively stolen from my savings.
10. tudorian said...
inbreda @7
Dont worry mate, I can't imagine any competent first world government headed by a sober international statesman-like leader allowing that to happen...........uuummm
11. mark wadsworth said...
Re what UT says, if you look at the population pyramid, there will be more and more older people in large homes and fewer and fewer younger potential FTB's to buy them.
So the long range forecast for the next few decades must be gradually declining prices - this may or may not be part of the reason for the twenty year slide in Japanes land prices, which shows no sign of stopping any time soon.
12. uncle tom said...
I hope Mark's not right, but have to admit that while the general course of events is not difficult to predict, the timescale is always much harder.
With very few forced sales (so far), asking prices in affluent areas are remaining stubbornly high. However, despite the government leaning on lenders not to kick people out, we will see a significant number of repos as the year progresses, in all areas and in all price brackets.
I recall that during the last housing slump, it was only when people heard the outcome of repo auctions in their locality, that they really believed that prices had fallen.
A long lingering fall in house prices is the worst possible outcome, but not one that I think is at all likely. I sense a degree of false optimism at the moment, and see the misguided assumption being made that the BOE can keep interest rates at zilch indefinitely. They can't; and will probably feel obliged to raise them before the year is out.
That, I think, will have a very sobering effect on asking prices..
13. george monsoon said...
Going DOWN>>>>>>>
14. letthemfall said...
If markw is right - and I have seen that demographic view put before over the years - it would mean that there is no financial case for buying a house for the foreseeable future. An interesting situation perhaps: the British thing about houses, still clearly unquelled, versus the irresistible population changes.
15. Deaky said...
Visited London this w/e with my girlfriend from spain, she could not believe the prices she was not shocked but she was absolutely disgusted at the mentality and complete illogical nature of it, she explained spain had similar but not as extreme problems. I looked in 2 EA windows in complete disbelief, there must be some pretty affluent people out there!! Strangely enough i couldn't see any of the pavements made of gold that i'd heard about ;-) but plenty of homeless and lots of pretty stressed out looking folk talking dribble who seemed to be trying to bury their heads in the ground for some reason.
16. drewster said...
MarkW,
You're not taking into account immigration. If present trends continue, immigration will more than make up for the gap in the population pyramid. At the height of the bubble this was frequently cited as a reason why property could never fall in value.
I agree partly on Japan. They have very strict controls on immigration and an inverted population pyramid, so the overall demand for housing should be steadily declining. However I think most of Japan's housing market problems stem from the previous boom. At the peak of the bubble, banks offered 100-year mortgages and multi-generation mortgages (where your children inherit your mortgage!). Much of this debt is still in existence because it was so long-term. Until this debt is substantially repaid or inflated away, the banks can't lend more.
Another problem in Japan is the lack of job security for the younger generation. The pre-boom generation are embedded in their safe jobs, while the younger post-boom generation are mostly employed on short-term contracts with no job security. Without job security they can't borrow.
Fundamentally people want as much housing as they can get (within reason); few people choose to live in a hovel when they can afford a mansion. Lack of job security and lack of lending are what's holding back the Japanese market; not demographics (yet).
17. george monsoon said...
Drewster..@13
Is immigration still on the up?
I thought migrant workers had started to go back home because of the current economic climate in the UK?
18. montesquieu said...
Working as a journalist for a regional daily at the time of the last crash I recall the demographic argument being used even then (91 or thereabouts) to argue this was the mother of all bubbles and prices would never go up again in anyone's lifetime.
It was widespread acceptance of this and other doom-laden opinions that kept prices going down until 94, and memory of the pain from burnt fingers that kept the next bubble from fully taking off skyward till nearly 10 years after that.
We have yet to reach the level of concensus gloom that we did then, and probably won't until after this summer's incipient bull trap runs its course.
I personally think there was strong merit in the 'falling demographic' argument both then, just as there is now, but there is no accounting for mass madness .... a bubble is not rational, indeed the rational thing is to jump in but be aware of what is happening and to try to avoid being caught out.
I agree though on the lack of people up for £500k mortgages these days ... lower income multiples have a far greater effect at this end of the market than on the lower end. Would love to see some analysis of this effect, say on the difference in purchasing power between a couple on (for example) £80k + £40k before and after, I suspect it would be dramatic.
I would also doubt very much whether there is anything like the required number of people in this bracket to support would-be down-sizers achieve anywhere near their asking prices.
19. pelethar said...
What montesquieu said. We are not at the capitulation stage yet.
20. iguana said...
As I recall, "every generation blames the one before".
Rather than point fingers at an amorphous boom, pre-boom, post-boom or whatever, why not blame and bring to book the individual criminals that stimulated, profited from, and then left us with the fiancial chaos.
21. mr g said...
£500k houses?
Looks as though the upper classes are in trouble, never mind the middle class.
22. bidin'matime said...
Drewster - "I think most of Japan's housing market problems stem from the previous boom. At the peak of the bubble, banks offered 100-year mortgages and multi-generation mortgages (where your children inherit your mortgage!). "
So what is an interest only mortage (a major feature of the UK bubble), if not one that will last 100 million years (or more..) and a be passed on to your great, great (etc...) grandchildren..?