Mikhail Liebenstein

I have just done my weekly trawl of Surrey using property bee on rightmove. Having seen some serious action in February, March was a little quite. However. just this week I have found close to a hundred new reductions and many more properties coming on the market. I am also seeing what appear to be competitive devaluations in some places that I know, ie the same road or a nearby road. I suspect this pattern is something to do with the estate agent's perception of the natural cycles throughout the year? i.e. "Let's try and get ourselves set up for the Spring Bounce starting in February", "oh dear, no bounce." "Let's reduce it a bit to try and get a sale early in the summer before July/August holiday season bites" - followed by "bugger no one wants to move after September as little Tarquin has just started at a new prep school". Let's see if we can close something by Christmas. Have others had similar experiences? The other interesting thing is the size and in some case number of reductions. At about £750k, the general step size seems to now be about £50k. Though I am also starting to see some properties reduced 3 or even 4 times those usually by £25k at a time. A lot of properties over £1m have had £100k plus reductions, though there seems to be a group of my "gaffs worth over £1m" dreamers are having their illusions shattered and are having to make bigger drops - a lot that started at £1.1m have now gone to £975/950k. Edited due to Green Grocer Syndrome

What would it take to turn Ztuart Lawz I ask?

Ok, we have just slipped over the edge of the precipice and so there is still a long way to go before the jagged rocks below. But what we really want to see is the sales at 100%, mortgage approvals at 70% and mortgage funds advanced at 50%. At the moment we have less mortgage money and less houses, so the average price (though falling) remains too high. Once sales start to climb, but without growth in mortgage funds, that will mean the back of the sellers will have been well and truly broken and we can start to see some really big discounts.

LIAR LOANS Eric, having tried it, this could really catch on.

I agree that STR as a deliberate financial strategy can have cost issues. But that said if you were thinking of moving, last August was the time to have gotten off the ladder with perhaps a few years in rented to follow. I feel quite lucky, we agreed the price in August setting a road record, but then had to sit nervously until completion in January. In retrospect I'd have rather sold for £10k less a few months earlier, a) because the interest would have met the £10k anyway and because the daily near heart attacks just weren't worth it. Anyway, very chilled now, several hundred k in the bank and after tax is about equivalent to 1/3 of my take home pay. All of which is being saved and compounded. My current rent is exactly what the previous mortgage was (admittedly repayment) and so now in a much bigger rented house with the prospect of picking up a house previous worth £1-1.5m for somewhere between £650k and £900k.

I wouldn't be so sure that family houses will hold up. One big factor now is baby bomers struggling to keep up the cost of heating and maintaining larger homes or other trying to sell (too late) to release retirement funds. Do a search on right move between £1m and unlimited for Surrey. There are something like 2000 listings (so allowing for duplicates) probably 1600 houses. Hardly any have shifted and if you have property bee you will see some major falls happening in place like Richmond, Weybridge, Kingswood. To be fair some of these will have been over inflated by City Money, so perhaps they also have a long way to fall.

i_godzuki, agree entirely. This looks like a placed article by a commodities trader - i.e. another vested interest trying to drive up prices by getting investors to buy grain ETFs etc.. The Yen had gone through the floor not that long ago at 250 Y:£ , but its now 205 Y:£. So compared with the UK, Japan is now 20% richer in just a few months. I have also read that fuel prices have recently fallen in Japan as well as a temporary levy has been removed, this should reduce transport costs. Japan is remains a very rich country and is the world's second largest economy (despite the lost decade), so if Japan were to be in trouble I'd be evenmore worried about some of its neighbours.

The figure of between 70% and 90% of face value is of interest in terms of the Government's internal expectations of house prices falls. I wasn't going to take these exact percentages as the expected falls, but I think it is pretty close Let's assume the 70% figure is protection sufficient for a 95% LTV mortgage. Suppose there is a 30% fall in prices. A £100k house with a £95k Mortgage will drop to £70k, leaving the house worth £25k less than the mortage. £25k is 26.3% of £95k, so this is not quite 30%, but then I guess there will be other costs to take into account on a repo. So basically the Government is forecasting house prices will fall by 30% - and that further losses will be met by the banks. Oh dear, given Mr Brown's and Mr Darling's records we could be in for much worse. So if houses fall by 40-50% as some say, won't that mean the banks that are insolvent are still insolvent, they'll just owe HMG the money instead.

Brian, you sound like it might up for a new version of Auf Wiedersehen Pet Though this time round it might be 再见 Pet (Zai Jian Pet).

People still fall for these, recent ones include things like "women empowering women" Someone should update the wikipedia entry to include the UK Housing Market.

How about Dislocation Dislocation Dislocation Following a group of repossessed BTLers, as they are forced first out of their own homes and then between various assured short hold tenancies.

May be an emergency change of outfit due to loss of bowel control?

You mean they didn't stress test their financial purchase model? Oh well, I guess it will get stress tested by the market! I think the banksters have the same problem.

Where we are now is very strange and surreal. Whilst in reality it has taken a few years for the market to peak, it almost feels now as if at some random point in the last five years there was a conspiracy where the whole population suddenly agreed that over night that house prices should double for no reason other than that is what people would now pay for them, i.e. one day they were x thousand and the next they were 2x thousand. Suddenly everyone has twice as much housing wealth, but in reality savings have not increased and neither have wages. I am sure I would get a similar feeling if the government suddenly decreed that all bank balances should have an extra zero put on the end and that the denominated value of notes could be adjusted with marker pens.

Phil Spencer seems to be showing some realism in The Sunday Times “Take a hit on the sale of your flat in the knowledge you will be asking for a hit in your favour when negotiating for the house,” says Phil Spencer, presenter of Channel 4’s Location, Location, Location and director of Garrington Home Finders. “You can be greedy or cheeky, but not both.”

Great exclusive article from the News of the World picked from the News Blog. I love the comment, "In some areas house prices have plummeted nearly 10 per cent in a month and sales dropped 25 per cent. " That will really frighten the News of World reading sheep.

I would say the agent is almost certainly lying. I have continued to visit houses for sale just to maintain my knowledge of the market and keep the wife happy - in practice I am happy sitting on my STR fund. On the few occasions we have put in a lowish offer in, the agent has said, "oh but we have had other offers" and they have even tried to organise open days with viewers arriving back to back. I usually finish say, "I don't think its worth that in the current climate" In most cases the house never shifts and eventually the price drops. My personal advice is don't get into a bidding war real or imagined. Understand what you would be willing to pay (if you really do want to buy) and don't be pressured by agents. The phrase I used above is usually a good gauge, many agents ither just look deflated or say "well the vendor is open to offers." Funny as a minute ago I was being told there was a competing bid.

I think the BBC will need to get a new graph next month for the Haliwide figues, ie a graph with a negative axis! Any way I thought I'd help them along with this blank template and my own guess at where we are heading. Any other contributions welcomed:

Sossij thanks for the compliment - definitely what I would call my elevator pitch on the subject. Theory being that you happen to have 30 seconds in the elevator with a senior executive and you want to get a short and concise message across. Perhaps one if I ever bump into Gordon Brown at a urinal.

This should be the new HPC catch phrase when talking in serious circles: misallocation of capital ie a complete failure by the banks to do what they are supposed to do. This message does need to be rammed home and hopefully the G7 leaders have got the message.

Mdman, very good point and I particularly draw on the phrase "in the interest of efficient allocation of capital" The Banks have completely failed in this role and frankly have been corrupted. How on earth can providing bigger and bigger mortgages on assets of consistent quality and consistent utility so that the prices rise evermore be considered an efficient allocation of capital. Surely this is the most inefficient allocation of capital as nothing new is made. My personal feeling is that the banks have simply acted as a dead weight on the economy sucking out economic surpluses through the mechanism of bidding up land prices. If they lent to a company that made stuff, the loan will get repaid out of trading profit. If the money is lent on houses, it never truly gets repaid , as the next person to buy simply ends up borrowing an even greater sum. Clearly this is not sustainable as the debt interest eventually exceeds the ability of the economy to repay the debt.

I love this. Whilst I guess issuing bond to pay for new infrastructure (in this case sewerage) is not unusual, though perhaps the terms of the swap are, it is the fact that the bonds are referred to as "sewer bonds" which made me laugh. How better to illustrate the general crappiness of the US banking system. "Toxic sludge sir? No, I wasn't refering to our Mortgage Backed Securities, we also have the real thing!"

An interesting discussion on MSE on how to sell those hard to shift flats. Have you made sure the photos are sharp and clear? Include white goods/furniture - I included the white goods, I think this helped me get my asking price. And even advice on whether it is correctly priced. The link is here: Unsellable Falts/ apartments

Well if they haven't a nice STR fund by now its all a bit later really. Perhaps this article is designed not so much for pensioners, but to scare the young back onto the housing ladder. Hmmm, I don't think it is good advice right now though. In 50 years time I can see an article saying something like "millions of pensioners unable to repay huge debts they acquired in the noughties. Back in 2008, an average house cost £180k, ten times what they cost now, but many pensioners are still stuck with debts they incurred over 50 years ago. Pensioner Stu Lawz added, "It's really difficult to get by these days, in my youth I ran up huge debt on a buy to let portfollio. I still owe £250,000 pounds and its really hard to repay this on my pension of just £140 per week - though I am thankful that the Bank of England who kept base rates at zero pecent for the last 45 years.

The real question of course is what is today's basement price for the unsold stock. At this stage in the market it has been the better, but keenly prices houses that sell. This acts as an initial break to slow the speed of falling prices in terms of the land registry data. However, at some point the market needs to get to a market clearing price, as only 1 in 6 houses actually sold in the last quarter I reckon the market clearing prices is far lower than 6% off, even today. If mortage lending this year and next is only 50% of 2007, it is going to be very hard for the market to clear without large price falls. I reckon 30% lower is what is currently needed, and I hear agents are know advising people to knock upto 20% off already. Frankly if this happens, then we will see 40% off eventually as serious downward momementum will have entered the system.