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Everything posted by abharrisson

  1. I loved the Bill cramer piece.. hadn't seen it.. what a classic.
  2. You've missed the point by a light year... duh everyone knows a boom has happened... duh everyone knows there is a correction going on.... duh no ones blaming this website for the problems..... all I am simply saying is that I find it amazing that there appear to be so many on here prepared to cheer the misery of others, who have so much bile and jealousy in them they can't see the wood for the trees and blindly cheer every bit of bad news becasue it will all help either "prove" they were right or "hurt" those who invested in housing when they couldn't or simply becasue it will help them get on some kind of ladder........ I would say get over yourself, if you're renting now in the hope of buying later, great, no problem.... but cheering the misery of others with your "every man for himself" attitude is sick.... and if the 40% crash some think is coming, comes.... it WILL have such a huge impact on everyhting... not just house prices... that it will be bound to hurt someone close to you... job loss whatever. But then again you don't care about that do you... you just cheer the bad news as it comes in hoping for more and more of it. I'm not sorry, that kind of attitude just makes me sick.
  3. Not that this was the worst and most extreme reaction to my previous post... simply the easiest to access... to summarise most of them they sounded like a mixture of those who have envied others for having a property when they couldn't afford it, those who have been kicking themselves for ages for not buying before it was too late and have been praying for a fall for years, those who have envy running through their bones and those who as I suspected earlier have little understanding of the situation and /or couldn't care less about others... some of the comments have been quite incredible. The post quoted above as I said is perhaps the least extreme....it also though has an entirely slanted view of things. BTL... well actually there are thousands of BTL investors who make money differently from how you present, in fact many of those are buying now, where they can. On the city.... no understanding of the role finance has, no understanding of how the city works and to claim that cutting london in half would help things is straight from the robert mugabe book on economic management. Linking the recent boom in house prices to industrial competitiveness is out there in the outer reaches alongside Pluto, its one of the madest concepts I have ever heard so prices drop by 40% and the industrial output will boom will it... this is clearly totally bonkers.... but the funs not over it goes on to say effectively that communities have already been so badly damaged by higher house prices that a crash won't make things worse... tell that to the thousands of people who will have their lives ruined by repossession. Theres a lot of sense on this site, but by crikey there are some inhumane people out there, mostly they also appear to be sadly misinformed. There appears to be a real us vs them feeling to some of the posters in the site, a real haves vs have nots, jealousy and bile seems to run through a lot of the posts. This isn't a critique of everyone here, but there are certainly some real crazies out there.... the appriasal of the previous poster and very many others appears to be (spoken in the accent of a german camp guard) " You have listened to outside influences, you have not studied the facts, your poor education is no excuse, you have committed the cardinal sin of buying a home for your family when you should have known A) that the price would come down that you might lose your job C) that you might get divorced or suffer a long term illness. You will now have the house repossessed, you can stay with your family in bed and breakfast for 3 years and have the debt collectors chasing you... it WILL do you good, and you should welcome it because its for the greater good ( or at least so that I can buy a house finally... your suffering is my personal gain and who cares about anyone else). Those who responded to my original post in the manner that they did really ought to be ashamed of themselves.
  4. Quite right I bought a flat in K and C at the end of the last crash... I bought at £120 ish, and the previous price was something like £175.... so in other words about 30% off what they thought they might get even three years into the fall
  5. Bobthe... afraid I am not clever enough to segment the quotes. Actually I think new build flats will be much much harder hit.... why? because people overpaid of the originally (to a much greater extent than a normal second hand flat), becasue very many have been built in "regeneration areas, becasue there will be greater repossessions in the sector, becasue lending is tougher on these than on existing flats, and because where they have been built they have gone up in overly large numbers to fuel the bTL demand for the areas. I agree with you that the "trade up " factor will only return once the bottom is in sight, but after that I do think they'll canter away again (on a ten year view, inflation adjusted it wouldn't surprise me if prices are where they are today in real terms) Personally I think the credit tightening issues may well ease in 12 months and go within 18.... simply on the basis that there is a huge amount of political pressure, all the bad news related to CFD's etc will be done and gone, we'll know who the winners and losers are the banks will therefore feel better about lending to one another. I'd agree with you about the UK taking the recession in 2003, or indeed going for a softer landing in house prices in 2005. Personally I am hoping its not going to be as bad as the doom mongers seem to be saying. It'll be terrible for loads of unfortunate individuals if it is... lives ruined , hopes dashed etc...... I am sitting here hoping for say 10% fall in actual prices, inflation adjusted 26%... the bottom in 18 months with the bumping along over inside four to five years. That I think might mean the best of all worlds... the bubble deflates and we all get out of it without an immensely damaging recession. Sadly we have no manufacturing base any more.... this would have been the time for it shine and help the UK thorugh the coming maelstrom.
  6. Er, actually its more complicated than this ... let me try and explain... some banks or mortgage providers have withdrawn from the market becasue they cannot access funding.... no money to lend... no mortgage business. Others have buckets of money to lend using their own balance sheets... mainly the high street lenders. As these guys have large deposit bases they are not nearly so reliant on wholesale funding. As the market has contracted in terms of the number of players then these banks have seen a massive rise in demand (eg C and G lent 200% more in the firts qtr, First Direct 500% etc). Their operations are unders stress so they have raised the price to limit demand... nothing to do with how much they have to lend or indeed "affordability" as you say. In fact from a lenders perspective "affordability" has pretty much nothing to do with where we are now. all those still in operation will lend pretty much exactly the same to a normal mainstream client as they always used to even though the price of their mortgages have gone up. When lenders talk about affordability in the market, they exclusively mean what the consumer can afford to pay, I can assure that none of the changes in product availablity is down to affordability... it is down to money supply and the cost of those funds, and it is down to lender risk assessments (which by the by are more concerned with credit score and LTV than they are affordability). Affordability in the mortgage market never means anything other than an assessment of whether an individual can afford to repay the loan they are taking out.
  7. I have been here from time to time, and quite a bit today. I have a pretty balanced point of view on the main topic.... ie there will be falls but perhaps not as big as everyone here seems to be screeming about. Its the tone of many of the posts that seems to be amazing to me. In this particular thread there are a number who appear to be positvely salivating at the effect the financial crisis is having on everyone and everything.... it appears similar to extreme right wingers who were welcoming every baton thrust during the miners strike... its odd. Lets have a quiet look at what people seem to be cheering about: repossessions are up... loads of cheers for that apparently... pity the poor people who are struggling on low incomes, who perhaps haven't fiancially planned themselves very well, have got into difficulties and have now, or are going to lose their homes and be pursued by debt collection agencies for the rest of their days... these could be working families where there has been a upset like a divorce or one party has become ill or someone has lost their job... personally I think its pretty sick to cheer about repossessions being up when you think about the real life situations behind it. there are loads of pages cheering the downfall of buy to let, characterising all landlords as greedy etc and salivating at the prospect of them losing their all.... again rightly or wrongly this includes a number of people who were persuaded that owning a property or properties to rent out might be a good thing, they have entered into it without malice, many have made good choices and now they risk the whole enterprise coming unstuck... whats to cheer. These families who did it in a small way have lost effectively years of pension savings and will effectively therefore have less disposable income in retirement, less disposable income in retirement = a less robust economy. Its not just them who are losers we will all be in the long run. Job losses generally and city job loseses particularly... I wonder if the same people were cheering when Rover closed its doors, or when one of the several factories to announce job losses recently did so. The attitude appears to be city job loses good riddance. The vast majority who have or will lose their jobs will have had nothing to with the credit crunch, will be relatively high earners9 £30,000+) whose tax now won't be coming in (more for the rest of us to pay) and who also will have stories of personal disaster least of all becasue in the city's case in a contracting economy there won't be many new jobs like that.... again whats to cheer, lower tax take, personal disaster stories, shrinking economy. Why have an unseemly cheere for job losses I really don't see it. Its clear a correction is going on , to what degree is still unclear. But in my view and sorry of this spoils anyones party I think on a personal level its pretty shocking to effectively applaud every bit of bad economic news ... theres normally a series of sad personal stories on the end of each piece of bad news. It appears a large number of people on here have lost all perspective... some are cheering for a house price crash for personal reasons ( eg it helps them get on the ladder), others are doing so out of professional pride (they want to be proved right) but very few seem to greet the promise of a slowdown or let alone a crash with any degree of compassion for those who will get caught out by it and the after shocks or really appear to spend any time thinking about what it might mean for them and their families...... some on here are predicting a 40% drop in prices.... well probably around 50% of people with a mortgage may well be in negative equity at that level (including many on here I suspect), a drop of 40% would certainly I feel result in a recession which again will effect either directly or through a connection many on here (job losses, no pay rises, forget the new job prospects, tighter household budgets etc), a drop of 40% would destroy very many communities where there high penetrations of people who are struggling with credit, more people renting which will be caused by rising repossessions will push up rental costs for everyone and indeed have a knock on effect on council housing budgets raising council tax as a result etc etc. Only those who are renting currently have buckets of savings and are in an absolutely rock solid job with much more income than they need and a very very strong pension will be the winners if there is a crash, the rest whether you own a property, rent a property or are waiting to get on the ladder will be the big losers for all sorts of reasons , some will lose more than others granted but it will effect most of us, mostly negatively........ Comment on the news by all means, add to it, predict the fallouts etc...... but really please do have a carefull think about cheering poor economic statistics in the manner so very many here seem to do, seemingly wanting regardless to be proven right that house prices are going to fall by a massive margin... all you are really doing is cheering for future pain for yourself and entertaining yourself with news that will certainly mean broken dreams and families and a ruined life for many.
  8. Unfortunately we have the doom and gloomers and the talker uppers and neither is right. It's not likely I feel the drop is going to be anything like the nasty headlines, nor I think are those who talk the market up going to be right. The answer of course is somewhere in the middle.... my betting is for something like a three or four year slowdown, with falls in actual prices dependent on when the financing pressures ease. If they ease within 12 months then I would go for overall actual price falls from peak of about 10% with another say 16% in inflation adjustment. I'd also say some areas will badly effected and others not... so it won't necessarilly be a national cut in the true sense. But of course the middle ground however right and sensible holds no water with the media who need a headline. Equally some on HPC and other sites love to talk up big numbers and feed the fear. At the moment I really think those VI's who see their role as talking up the market are pretty quiet... in fact whoever was on the radio before the HPC chap this morning did I think make a valid point that there will be a difference between some areas slumping a lot and others not (although I wouldn't go as far as she did and predict some areas will be unaffected).
  9. Very fair point, equally rental rises can come out of the blue and be pretty lumpy... landlords are ceertainly pushing rentals up now. The truth is the summation of this whole thread... rent until the market bottoms out and then buy... or sell (too late me thinks) then rent then buy again..... is not wrong. But it forgets one thing. Human nature... people want a home to live in and like it or not most people in the UK would prefer to own rather than rent if they can (wasn't the same 50 years ago when people quite happilly rented, buying a cottage only in retirement).... it is that basic desire which drives the market forwards, and will keep people buying (admittedly in lower volumes) throughout any downturn. I have both rented and owned and personally , money to one side, I prefer to own. The last place I rented (out in the sticks) I got hit with a 20% rental increase demand and decided enoughs enough. I needed a home, my childred needed a home, so we bought, regardless of the financials.... we may not make any money but if we move on after 10 years I doubt we will have lost any either.
  10. On the financing point my point was all about the effect the financing problems is having on buyers, and my point simply was that from a buyers perspective the financing crisis is stalling sales not simply because the price of mortgages has risen.... the financing crisis has stalled sales also because of the uncertainty of product availibility, limited choice of financing types and also limitations on borrower acceptability by type.... in other words the points not wrong, or even plain wrong. In fact its right or rather plain right.
  11. No not quite. What happens in many cases is the instability of the situation puts them off. Take couple A..... they want to buy a house for whatever reason. A year ago they would have offered got their offer accepted , put the financing in place and moved ahead pretty quickly. Now... they still want to buy ... for whatever reason... problem is they don't want to overpay obviously vs current conditions so it takes them much much longer to find someone who will accept a reasonable offer (many give up going through this stage where they wouldn't before), they can't "secure" finance in the same way as before, and even when they have an offer accepted quite a few pull out either because conditions have tightened and they cannot get a mortgage (if someone offered them one they would buy knowing they could afford it), or they again give up because deals available at lunchtime today are often pulled which creates trauma, and equally sometimes there are no deals out there that they like... eg they might specifically want a tracker but those are very very thin on the ground. The financing situation I referred to is not solely about affordability... its also about product choice and Ex-clusion (currently) of various sectors of the market. So no what I didn't mean was the financing costs have gone up so they can't afford it... what I meant was that the crisis has created a number of issues in the market that if resolved will help the situation. It goes beyond affordability.
  12. Bobthe...... don't quite get the point you are making.... do you think the reduction in prices is going to be worse nationally (drops aggregated up) than last time ?, do you think its going to worse than 20% in price and 20% in inflation related falls. Do you not think that the downturn (like the last one) will be characterised by some massive falls in certain parts with others only seeing price easing. if you look in depth at the current stats most of it is down to repossessions increasing in some areas, new build flats coming onto the market at a discount, a scew in some of the statistics towards lower than average priced housing coming up for sale etc etc.... looking only at a National figure I really don't feel helps understand the nature of any market correction. The media appear fascinated with the national number, as I have to say did the HPC rep this morning. To me its largely meaningless as it reveals very little about where or why prices fall. Although it may sound silly to many prices are not falling solely becasue properties are overpiced, there are other stronger drivers out there. The point about the new builds is that those prices will be hit hardest... anyone who has bought one to actually live in in the last say four years is likely to catch a cold... a lot have been sold to investors.. but some unfortunates have also been hoodwinked by the " free carpets, part -exchange, 5% deposit etc " marketing of these places, many didn't even bother negotiating much..... like the more savvy investors they should have pushed for 30% off the starting price... even then they'd be in trouble, just less trouble. These people will definately be in negative equity for quite a number of years. so the answer is they won't be able to get up a rung as you say unless they have more cash. Mnay will have their finances damaged for the next decade. If there is a significant fall in prices it will however help people trade up, although in recognising that we are also recognising that prices are likely to canter away again pretty quickly once the drop has finished( becasue like most drops it risks being overdone if allowed to run forward unchecked) Like many on here I share the view that prices will fall, but don't share the view that it will be national, and don't share the view that it will be anything like 40% in actual prices... I would argue even 20% in actual price and 20% in inflation would be extreme over the next four or five years. Just to pose a point I just wonder what will happen if the credit crunch related financing issues are resolved in the next 6 to twelve months and some competitveness returns to the mortgage market. Personally I don't think it will trigger a bounce in house prices but I do believe it may well cut off much by the way of further falls. if the financing issues do disappear then in my view we could see whatever is going to happen this year 5/7/10 followed by say three years of stagnation........ I base this on the belief that without the financing crisis prices would have stopped rising and maybe dropped a little but not much more than that. I know that runs counter to some of the vested interests here but there we go thats my view. Its a balanced view.... and would in any event equate to say 26% in total with 10 being in actual price and 16% being inflation related.
  13. I heard the piece, and actually I think the HPC chap balanced it wrong... it would have sounded a lot more reasonable if he were to have said over the next four years we expect inflation of around 4% and house price drops at the same time. During the period we expect a 20% drop in actual prices with a total inflation adjusted fall of 40%...... That would have been a reasonable way to put the point accross even though I personally do not think it will be that steep. (Note... I can't believe he meant a 40% drop in in actual prices over four years with inflation adjustment this would make 60%... the last one was only 13% in actual price falls with the rest being inflation adjustment). Secondly I do think there is credence to the point that falls will be much higher in some pockets... eg new build city centre flat environment, those areas with large penetrations of those who are financially struggling (by the by this dovetails quite neatly with BTL penetration). In other words the fall won't be something we can judge nationally as different areas will have different characteristics even beyond the county level eg Suffolk will be dragged down by Ipswich.... Essex will be dragged down by colchester, chelmsford, southend etc). So in summary I do think he could have made the point he wanted to just as clearly by perhaps firstly breaking down the inflation effect from the actual price drop and secondly making the point about regional differences. My own view for what its worth is that there will be a blood bath in the new build flat sector and in those areas where people are more stretched financially..... and that this will create a gloomy national picture... however we will not necessarilly see dramatic falls everywhere, and some house types in some areas may not have much of a correction at all. I would say as I have before that there are plenty out there who want to buy, who can afford it and who I see every day, but financing is getting in the way.... if we can find a way to reduce the margin between the BOE rate and LIBOR back to a more healthy 50 basis points (traditionally about 30 basis points) then I think the financing situation will ease considerably.
  14. Those who bought new build flats recently anywhere are certainly in some trouble. I suspect like most downturns this one will be characterised by steep falls in particular areas and in particular property types but perhaps no falls in others. The stats always amalgamate everything so it looks like everything has gone off but it may not necessarilly be the case. New builds could go anywhere.... some in leeds and manachester are struggling, Hull has recently become an issue, Colchester and Ipswich are in a degree of difficulty. I shouldn't think Bristol will escape with the rate of build thats been going on there, and london east of tower bridge south of river may well be a bit of bloodbath. In those areas we could well see 20/30/40... even 50 per cent drops depending on what the sellers situation is (it all depends on that)..... in other areas say where there is established family housing , good (for england) infrastructure etc etc... you may see just a stagnation in say the value of family homes with the value being erroded by inflation over the nex few years. "novice" BTL investors in new build flats are certainly in significant trouble.... others in say new build family homes will do better... interesstingly the "pros" who do it for a living normally either buy tatty stuff, do it up, take their money out (in other words they have no cash in the property) or they buy below market value from others and then remortgage again taking the money they originally put in out..... the "pros" are still active where the numbers stack up which tends to be north of england where house prices are say circa £80,000 ... (the pros would be buying at £20000, through their contacts). A lot of the "pros" will continue to make money in this downturn, some may even make more..... imagine if your old aunty had to sell her home to go into an old peoples house... slightly tatty but servicable.... she had to sell. The "pros" would target that type of property, in this market normal home owners might struggle to get a mortgage on it because of its state, whereas the pros take bridging finance or commercial finance or buy to let finance or cash and buy it way below what is actually worth, do it up and sell it for a big profit. They can do this becasue they know how to get the right finance for each job and in the land where mortgages are rare this sort of thing is happeneing. I think there actually will be an explosion in the number of houses owned and rented out by landlords..... driven partly by the above but also by all those people in difficulties who have to sell, or who get repossessed. Those houses also need to sell, and the only people buying them may well be the pros at auction who will get them for knock down prices. A lot of these properties will sell with rental yields of 8%-12% which is way below the cost of financing, so its makes good business sense for the pros to buy them.
  15. You are correct if you want to sell a house in a falling market thats the way to do it, go under what people expect and you will create a chain of people all bidding to buy over what you asked. Despite all the gloom and doom there are loads and loads of people out there who would buy now if the financing were a little easier (not the price of it, the access to it). They clearly think they can afford the debt and they want to buy for whatever reason... they might for instance be inconcerned because they are going to buy and keep for the frseeable future so if the price comes off in the meantime it doesn't really make any difference to them..... this might be true of a family with a child or a second or third child for instance who want to buy for the long term.
  16. Actaully to a degree you are right. First off for some mortgage finance houses EG paragon, chl, kensinton, spml, etc there is a real crunch which has either put them out of business or radically changed how they operate. For others who have very large deposit bases like LTSB, Halifax, HSBC there is no real crunch. The stats show for instance C and G did 200% more mortgages in the first three months of the year than they did in the first three months of 2007........ these guys are raising their rates for two reasons: 1/ becasue if they are the cheapest then with such little competition now they get innundated and their operations break down... they control this by raising the price. This has nothing to do with the way the BOE rate is going, we could quite likely see the BOE continue to go down and mortgage rates rise. 2/ They are doing it becasue they can and because it helps them boost profitability. They are of course partially using BOE lending in the process... LTSB has a ratio of about 130% ie 30 % of the money it lends comes form the wholesale market (now direct from the BOE) but HSBC has a ratio of about 85% which measn it does not even lend to consumers the whole of the funds it has in deposit. In your case with the loan , banks also have made siginificant investments building say a loan presecnce and building call centres and building a lending book etc , if they cease for instance doing personal loans or credit cards or indeed mortgages then they can kiss goodbye to that investment which is why they still lend. The spoecialist operators who were wholly reliant of the wholesale funding market are largely gone, what remains are some very profitable and increasingly profitable banks.
  17. I haven't really posted much on here before and I know if its read the following is likely to get howls of laughter but I would put it to you anyway. The statistics at the front end of this post make interesting reading... most notable for me was the quadrupling of tax proportionately taken... not including VAT and other discretionary taxes I assume. Anyway, there is a premise that one can measure overvaluation in housing by a measure against earnings either through disposable incomes or through earnings per se. I have seen a number of these charts all going back to the 60's or 70's and all showing huge increases which of course are at their highest today. I am not at all convinced that one can lay such a huge amount of force behind these statisics as is happening and I'll tell you why. Firstly the earning profile of families and indeed the way people live their lives is very different these days. For instance there are many more dual income homes I believe (but these type of statistics only ever count income once) , secondly there is much more state support of lower earnings than there was say in the 60's which is not I think picked up in either the earnings stats or the disposable income stats, thirdly the make up of social housing is very different now, fourthly the overall population vs overall household number are also different, fifthly people buy property differently with people buying together when not part of the same family, and finally I would also bring into doubt some of the house price statistics from previous years as very many more houses were not on any registry then that is true of today. The figures from earlier years were I believe skewed downward from their true mean level by exclusion of a large proportion of more expensive homes. In short life has moved on, society has changed, the make up of the stats has changed and I am not sure that therefore that as much weight in terms of prediction can be put behind these numbers. I also feel that whilst a slowdown or correction in house prices was well overdue and probably should have emerged in 2005, that the situation would be very greatly different if the financing issues were not so prevalent. I think its impossible to argue that the slide in prices is not going to made more severe than it would have been if the financing issues had not come on so strongly in the last three months. If that is the case and its difficult I think to argue against then one comes to the conclusion that easing the financing issues will go a long way towards slowing any reduction in prices. In essence what this means I think is that more weight should be put behind an analysis of affordability in the case of housing finance rather than say disposable income vs absolute pricing or incomes vs absolute pricing. Lets also rememebr that while the disposable income chart is fascinating it does not make a calculation for interest rates... if I recall average rates certainly from say 1970 to 1992 were running at around 9% or 10%.... extrapolate that out and any gap in perceived affordability I suspect would be greatly narrowed. Pre the fiancing issues fully emerging this qtr, affordability was better than it is now even with some house price reductions having happened recently. If the or indeed when the dust settles and mortgage availablility becomes better and cheaper than today vs the BOE base then I can see any reductions in the housing market ending quite rapidly. I know it won't amuse many here to know that I do believe the biggest driver of house prices is not Absolute costvs disposable income or incomes vs cost, but actually a mixture of confidence and funding availability and affordability. Funding pressures can only ease (they may get worse first but in the end they will get better, theres no logic for them not to) and its the timing of when those finance pressures ease which will decide if the 30% or 40% falls most on here seem to want will come through. Here is a scenario to think about: If we get back to more normailsed financing by the end of the year... and by that I would say LIBOR at say 50 basis points above the BOE rate then I think I could see maybe a 10% slip this year, perhaps 3% next year, and then stagnation for a year ( bear in mind this is pretty severe as actual cash prices pre infaltion adjustment only slipped by 13% in 1989-1992) That scenaio would efectively equate to 13% absolute fall in terms of cash prices, inflation adjusted would be something like 20%. In the meantime the precious price/earnings ratio would have moved from about 7 (when judged on single income households) to about 6... or if you look at it against dual income households then from 3.5 to 3. Bear in mind also the afforability measures I believe are the truest comparrisson and the effect that mortgage funding at say 5% vs an average of say 11% between 1972 and 1992 and that makes the picture much more rosy when coupled with a fall in absolute prices of say 13%. If the powers that be find some way of easing the LIBOR pressure more quickly then we could see half that fall followed by a period of stagnation of say two to three years this would equate inflation adjusted to around 14% or about 7% in real terms. There is a huge pent up demand for houses ( I see it every day in my business) which I know many don't understand but there we are, it is there, although granted it cannot execute against its desire becasue of the current financing issues. if the financing issues were not there there are plenty of people rightly or wrongly who would be happy to buy a house now at the current price level. So to summarise I do feel whilst useful historically earnings vs cost or disposable vs cost are not usefull measure in assessing where prices are now... there needs to be a wider measure of affordability which no one has come with yet for the historical years. if there were a measure for affordability I do belive it would show that whilst high things are not as out of kilter with history as people feel. Equally the financing issues I believe will be the biggest driver to define where this market goes. if its resolved quickly then I think any falls will be limited, although we may still go through a period of stagnation thereafter. And finally whatever people feel, I can tell you from experience that there is strong demand out there for houses at the current pricing level. You may feel these people are bonkers but there we are the demand is there I believe to support prices at roughly this level once the financing issues are resolved.... but I have to say I don't see the financing issues disappearing this side of christmas so falls this year would seem to be inevitable, caused largely by forced sales repossessions creating sellers and buyers not being able to take up the slack due to the non-availability of suitable finance. So there we are , chortle away at your leisure, we may yet see what everyone seems to want here which is amssive falls, but I think theres plenty of evidence to suggest that may not happen.
  18. My first post but I thought I would add in my tuppence. Firstly I suppose its worth saying that I have a huge amount of experience in the property industry. But perhaps I am that rare beast that is pragmatic about prices even though I work in the industry. On the Panorama programme. I do feel whilst there may be the odd instance of genuine fraud I think what you are most likely to see is the following: 1/ Some people who are smart actually get a very good deal for the developer. As an example I will give an investor who knows how the game works. He goes to a developer on a site thats been "selling" for a while and times his visit say six weeks before that firms financial year end. He knows they all work to qtrly targets /monthly targets /yearly targets and he also knows for instance that for building firms once they have nearly sold out, they are often willing to knock the remainder out cheaply to ensure that they close the site and obviously close out the cost of having sales people there.... he says I'll buy two at 30% off and can complete within six weeks. They say yes, he then gets them to "sweeten" the deal with some free carpets etc ..... thats an example of how to get a good deal from new build, sadly most are not that savvy so it gets worse as we go on. 2/ Young couple upgrading or FTB see a development they like. They go on site and get "wowed" by the show home, they get told the price. They try and make an offer but its rejected but instead the developer comes back with "free carpets" (value probably £2000), at best they might get 5% or 10% off but only if the developer is desperate. They buy. What the developer has done is effectively persuaded them they have a good deal, by that old sales trick of discounting a price he didn't think he would get anyway. The property even in a rising market may take a year or so to actually be worth what they paid. Its not illegal its just a simple fact that developers sell houses and flats for more than they are worth (in reallity) and valuers do not spot this. Unfortunately theres no way through this ... newly build homes tend to lose value from the moment they are built. So from the above "good and bad" deals are available from developers but I think its fair to say FTB's and next time buyers often pay a very full or overly full price for new build housing not becasue of fraud but becasue of how the market works... its perhaps the same as the person who buys new car without much of a discount for £10,000 and one week later its only worth £8,000. If he'd negotiated better he could have got a better deal. The garage owner is not being fraudulent. The fraud comes in the following way and you need a HUGE amount of collusion to make it work. Bear in mind most if not all (apart from Scotland) lenders instruct their own valuers so it is very very difficult to get valuers to collude with buyers or developers (unless you find one who takes brown envelopes which they are not renkowned for). The issue normally is that the buyer will be offered "incentives" say free carpets, pay your mortgage for a year, 7% rental guarantee etc ... these should be declared to the solicitor but what actually happens is that there is a subsidiary agreement run by the developers solicitor so the actual solicitor (acting for lender and buyer) only sees the contract and thats fine. The buyer actually (whether they know it or not) may well have acted improperly by NOT declaring to the solicitor the add on items. This no doubt would have resulted in a down valuation. Where you come up against actual price differences then that is real fraud... getting say a 90% mortgage on a house costing "in the contract" £100,000 (eg £90,000) but getting a back hand cash back later from the builder is clearly fraud..... I don't actually think this (and worse) type of fraud is of a massive scale but is likely to be localised, you may think big firms are imune but actually in the field the big firms delegate controlto individual teams so it can happen. if those cases are uncovered then its straight fraud, the solicitor will always cover themselves so I think you won't see any jail time for them, its the buyers and developers that have colluded here. I do think though that this does not necessarilly harm consumers (see example 2) as these guys will have got a poor deal anyway becasue they have limited negotiating skill. Fraud aside thousands maybe even hundreds of thousands of people have not negotiated hard enough over their new build housing purchases, the developers were legally doing nothing wrong in asking a high price, nor were the valuers but the result is that many will now or soon find themselves at a difficult point. Reading through the posts on this site I often feel a key point is missed. The biggest falls in prices will be in the new build flats sectors and in poorer neighbourhoods where mortgage tightening will take effect. Falls will be characterised by forced sales. But you could for instance see lots of instances where prices in a new waterfront development in say Ipswich fall by 35% over the next two years, prices in ex-council housing areas fall by 15% but prices of victorian housing near the park rise by 5%. The national statistics will not necessarilly reveal whats actually happening locally. Prices for some homes or flats in some areas may drop strongly others may actually rise.
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