Tuesday, Oct 20, 2009
House price crash in 2010?
YouMove.co.uk: House price crash in 2010 boom in 2013?
After falling for 18 months is the housing market finally starting to recover?
For the first time since the crash began, both the Nationwide and the Halifax house price indexes are showing a price rise in the last quarter (2.6% and 0.8% respectively).
While this is seen as good news by many in the housing industry the overall picture still looks far from rosy, with Halifax showing an overall fall of 20.1% from the market’s 2007 peak and Nationwide showing a drop of 14.6%.
Nevertheless, has the past quarter seen the start of a recovery or are we looking at an upward blip in an otherwise downward trend? The Royal Institute of Chartered Surveyors (RICS) certainly seems to think things are picking up. Not all agree, however ...
Posted by johno @ 12:05 PM (1567 views) Add Comment
12 Comments
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1. brickormortis said...
I have been looking in my local area and it seems that houses are starting to shift left, right and centre. It seems the UKs appetite to acquire properties is truly insatiable. I have to ask my self why. Is it the belief in the media ramping? Is it the cash rich looking for a return on their money by buying and renting? Is it the deluded individuals thinking that property prices are about to go crazy again?
I often wonder whether I am the stupid one. Am I the guy who says no while the rest of the country says yes, thus driving the prices of their assets through the roof. But what, I ask, happens when rates rise? I am starting to think that they never will, because the UK will be royally stuffed.
I also realise, I think, that most of the property shifting down the lower end are due to investors and that we are in danger of totally isolating generations who will not be able to get on the ladder and thus forced into a life of renting. I just can't see righ tnow what is going to change. And I am still sticking (just) by my 30% fall from peak. But my golly, am I starting to wonder!
What is wrong with the world, unemployment up, house price up! WTF?
2. Johno said...
A lot of commentators recently have cited the lack of supply as the key factor in the recent price rises. It seems inevitable that as prices go up more sellers will emerge - then we'll get to see how sustainable these rises are.
If the FSA follow through on their recent promises to regulate the mortgage market much more tightly then there will be a lot less credit available to stimulate demand over the coming years.
3. Johno said...
I think the other big factor that's stopped prices falling recently is that interest rates are so low - hence far fewer repossessions than would otherwise be the case. As brickormortis says, though: "what happens when they rise?"
If inflation stays low they won't be going up any time soon, but who knows? The economists certainly can't agree on where inflation is going.
4. smugdog said...
You just have to be realistic BorM. At least another year of low rates, so factor that in.
5. crunchy said...
1. brickormortis
You are sane.
These are not normal market forces at work. Last week shinning wit posted in saying he is leaving the UK to buy what sounded to me like
a great place. Ultimately peoples destiny's are in their own hands, which can be taken away from you only if you allow it to happen.
Jim Rogers a while back said he could not understand why people with a future ahead of them would want to stay in the UK.
I could not agree with him more. North Mallorca has been my choice, yes it is a hassle, but only for a while.
What I asked myself in the end was which choice was the maddest of the two.
6. debtfree said...
@1
It's not about common sense anymore. That's not what this government is about. Gordon Brown's mission is to destroy middle class britain, british values and sink us in so much debt we implode and go begging to join the european union.
House's are selling because they always will, it's the Number One thing to purchase and always will be. You can forget about a house price crash, it ain't going to happen. Maybe the currency will devalue and in real terms they will drop, but even then, unless you are very rich and have a stable job, you won't be accepted for a mortgage or be able to meet the deposit requirements.
Private Home Ownership for the middle class working family is history.
7. brownsters_billions said...
I'm currently looking to buy my first home after narrowly avoiding buying in 07 (mainly thanks to this site I pulled out), but I'm basically seeing a real shortage in good homes. The good ones are being snapped up faster than you can say 'fiscal stimulus', whilst the bad ones languish on the market for ages, and no-one wants to touch them.
What I am seeing since I started looking around the start of September is that those that went under offer have started to come back on to the market - probably a sign of people struggling for finance or chains breaking down. Either way, it annoys me that the good places are still going for a ludicrous asking price - when will people stop seeing rising house prices as a good thing?
Do we really want our children to pay more for housing than we do?
8. crunchy said...
http://www.youtube.com/watch?v=68w506LH3BE&feature=related
9. Devrem said...
As a successful small developer, I have made some mistakes, but never lost money since 1990. There are two camps. Those who are associated to the industry, and those of us who are buyers/investors. The first camp will never shoot themselves in the foot, with not even a hint of pessimism about the market when it's dive-bombing! Estate Agents or anyone directly related to the property market will tell you what they want you to hear for obvious reasons. That's why you should discard all reports and reviews on the market from these people. However, when the market is rising, and this marries up with the intelligent economists reports you should be following, they can be a great help to us all.
If I owned a business and I knew it was in bad shape, but told every share holder, and prospective purchaser that they should buy more shares in my stock because business was great, I would be jailed for Fraud. I see no difference in an Estate Agent telling house owners and buyers that it's a good time to buy or sell, and that we are on the road to recovery, or that the market has 'bottomed out'. These poor people who have been hoodwinked by hype, and false prophesy for the benefit of the Agents pocket stand to lose the most. Now that's a form of Fraud, and I think Estate Agents, who all read the same articles as us should be under tighter regulation. Not everyone is switched on, but everyone should be protected, considering this is the biggest risk purchase we all make in our lifetime.
The market is certain to go down, and there has never been, since the fall of Northern Rock any indication it would do otherwise. Gordon Brown has created a fathomless problem for us all. He's tried to change the tidal flood damage of finance, but that just means that it will effect us all further down river in other ways, and prolong the inevitable. People are gripping onto their house prices in a form of greedy denial like a Pirate refusing to let go of his (more than a fair share) booty. But as the market falls further, it will get to that equilibrium where first time buyers can buy a house for £130k. Those Sellers who hang on and wait will be the true losers, unless of course you intend to live in your current home for the next five - ten years. You should sell when the market goes down, and you buy when the market starts to turn.
So don't buy just yet. Bide your time! Save yourself the trouble, and rent a home like me. I have no maintenance, no house insurance, no redundancy insurance, and all the other multiple costs Building Societies charge for a new home. My money is safe, I have a reasonable interest rate, and I don't stand to lose tens of thousands of pounds making an unnecessary investment right now.
First time buyers (today) stand to go into negative equity next near, pay the stamp duty, face rising interest rates, pay council tax, maintenance, House Insurance, Home contents insurance, rising cost of living, higher indirect taxes, and face the threat of business shrinkage and unemployment. Remember, Estate Agents will be your best guide on a rising market, but your worst enemy in a falling market. All thanks to Gordon Brown. He took risks in a falling market, and now we are all paying for it.
I want a home, and so does my wife, but to buy now would be foolhardy and destroy your ability to progress further up the ladder in 3-5 years time, when you've lost your equity. Follow closely the Economic experts, and not the industry related members articles who preach false hopes.
“An investment in knowledge always pays the best interest”
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11. britishblue said...
Brownster_billions@5. If only the good quality houses are shifting then by definition house prices will statistically go up. the last home I owned was a two bedroom (swing a cat) Victorian terrace. These now go for around 450K. However, some of them have had over 100k spent on them (kitchens, bathrooms, extensions, etc). The unmodernised ones that would sell very quickly now don't shift and its only the ones with thousands spent on them that do. In a boom any house will sell as no one wants to get left behind. In this market if only the best houses sell, than statistically house prices will show a rise as none of the indices grade houses by excellent, good, fair or poor quality. If they did this we may see a different picture
12. Drumhead said...
To alleviate your misery, and for those who are waiting for that 30-50% drop in the house price, I'll help you to point out some facts important facts for you to decide:
1. The UK house price has had a fall of approx. 50% in April 2009. You would have thought that I'm just joking. It's actually quite simple. House price fell approx 20% + pounds fell 30% remember? So you may have got your predictions right and may well be missing the boat as well.
2. UK cannot escape the globalisation effects of the world. None of the countries in the world managed to do that. Even China, Russia. And that's why unemployment in UK hasn't been such an impact to the House price. To the rest of the world, UK house price was at a discount of 50%! At current market price, it is still significantly cheaper than before.
3. Your Cash is just going to loose it's value very quickly, and I do mean very quickly. You don't have to look at the inflation report to know this. BOE have told you that they've printed tonnes of money and have you not listen? Well they call it 'Quantitative Easing'. All can tell you is that the printing press has been running on full speed like never before. 175bn pounds! That's about 25k per UK citizen if they were to distribute it evenly. Cash or Asset? You make the pick!
4. At this moment in time, I would advice you to safe guard your wealth (And I don't mean Cash). If you don't want a house, then use your money to clear your debts. You know that you're doing well if you're not loosing. Winning is a tall order. Minimising your loss is the key.
Hope this helps.