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red

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Posts posted by red

  1. ...

    Without HPI our economy is doomed--at least in the short and medium term. But it is better to break the habit than to allow it to destroy the entire country once and for all. Our dependence on house inflation is the cause of boom and bust and each time the extremes of high and lows get larger and more threatening to our infrastructure and viability as a nation. IMO, the Brown boom and bust was a boom and bust too far. All we can do is pull the plug on the supply (HPI) and allow our economy to realign itself naturally without Merv's vigilance (inaction) which continues to try to fuel the remnants of the Brown HPI boom.

    Bottom line: we need to go cold turkey and allow the housing market to find its level naturally. This will mean a drop of between 40% and 50% to align prices with incomes and rentable value.

    You're right, of course, but it is that dependence on HPI that I fear will make declines in prices sticky going down, with the majority of people, from the media to Jo Public, fighting tooth and nail to preserve the value of their most expensive (overpriced) asset.

    Unless we see a significant catalyst (IR rises, mass unemployment) I fear there won't be enough forced sellers to drive falls.

    We'll just have to see what effect the forthcoming cuts make and how much sentiment swings.

  2. In 1980, at 34 years old, my dad became a senior partner in a firm of chartered surveyors/ estate agency in North Devon. With his salary of around £12k p.a and a £5.5 k deposit, he was able to get a mortgage for 3 times his salary and buy this 5 bedroom detached house with 8 acres & 4 barns for approx £41.5k.

    Edit to add - the house continues to the right of that picture and is actually twice as long as the pic - it also had an extension around the back so it was 2 rooms deep. (if that makes sense) The bedroom on the top left was mine (though some of you ladies would have already known this hey, hey?)

    pic005.jpg

    It was a lovely house. I miss it dearly (sniffs)

    Fast forward 30 years......

    At 32 years old, with a £30k deposit and borrowing 3 times my salary, here's what I can buy...

    .

    .

    .

    .

    .

    3449_EXC100264_IMG_00_0000.JPG

    Living the dream.

    So what's the problem? You get a nice wide driveway and garage on the second place...not like that mingy narrow one on the old house. ;)

  3. Its one of those situations where this won't be a problem in ten years time. House prices will have to fall.

    In fact every way you look at this, its the only solution. You can't have a zombie housing market.

    Correct.

    But isn't it odd that in most media reports there a lot of chin-rubbing about 'solutions to the housing crisis' - the idea that prices might fall sufficiently to solve the issue offends so many people, they look to other schemes: shared ownership, more building...etc.

    Another case of Nelly in the corner getting fat on buns and almost everyone turning a blind eye...

  4. But this is North London ... it's different ... that's what they all say, prices never fall in this area :o:o

    but in reality nothing is selling, stuff on for a year or more, SSTC back to Available or back on as 'new to market', lots of email with Subject; PRICE REDUCTION then the property turns up 'for rent' (the old wait for the market to pickup routine), lots of 'no chain' ie ex BTL trying for a sale before renting out again.

    Stagant market, but with no force sales, no significant reductions ... but the fear is there in the background and at some point there will be a trigger, probably in October when the cuts take shape, but if there are no cuts HPI back on but with very few sales IMHO.

    Satch, I'm also N London and am seeing exactly the same. A lot of chancers taking advantage of HIPs scrappage to market their properties for 2007 prices. Very little selling, some places been on for 12-18 months. Not enough forced sellers, quite simply.

    We need a catalyst.

    I remain unconvinced that the austerity measures will kick in that early (October) around here...next Spring, maybe, when it's filtered through?

  5. Interesting.

    Maybe it is now that the estate agents will realise the banks won't overlend on overpirced property any more, so the only way they can hope to do business is to talk sellers into bringing down their asking prices to a sensible level.

    Interesting reply here, which suggests that some EAs feel powerless to reduce prices for fear of losing clients:

    ...If all agents were able to reduce their stock prices down hugely it would regenerate sales market volumes, be fairer to the next generation, create a higher office turnover and become, frankly, very lucrative. So far, so good.

    One problem.

    Try telling 75% of sellers that their home is losing/has lost value. They simply refuse to accept it. This applies especially when you initially value them. Madness! I had one guy completely refusing to accept that prices have fallen since 2007. He won't be using us in a hurry. Or selling, for that matter! Recently some rag ran an article about price growth and a client called in to up his price accordingly. Strangely, he'd never read any articles in 2008/9 when he couldn't sell. We wouldn't do it & he went elsewhere.

    Houses are many peoples 'Get out of jail free' cards in life. Their Joker. There to bail them out of life's little problems. Or so they think. The minute you start to introduce reality into their lives is the minute they go to another, less capable agent.

    It's right to encourage price reductions. Realistic too. In my experience though, sellers only accept the market has collapsed when they offer on a purchase elsewhere.

    Wow. An EA with brains.

  6. Exactly!

    Has to be because of the "house prices always go up" mantra!

    I think the people's root problem is not being able to differentiate between nominal prices and real prices. Because in the really very long term, in nominal terms, even the 2007 peak may be reached, and surpassed. And they will see only the nominal value. So, the mantra is "true" - for nominal prices.

    More so the 'house prices never go down" mantra.

    My work partner said that so long as his property didn't go down in value nominally, he'd be happy. A strange logic given that inflation will mean it's ultimately 'worth' less in real terms.

    I think it's part of the stubborn attitude that vendors are currently displaying: " I won't take a penny less than I bought it for..."

    Fine. Hang onto it for 10 years and sell it for a fiver more. Whoopee, you've made a profit. :blink:

    Of course, deflation may mean that the nominal v real terms equation is somewhat different...

  7. It makes you wonder whether the BBC are starting to see the shift. I am sure there must have been lots of call-ins in the past where the bears have not been given the airtime. Today they were let through and allowed to speak their minds. I really hope there will be a change in media sentiment (or at least a loss of the previous bias). As Nolan said the market was talked right up by the media, so I am sure they can talk it down equally well...

    As I said, the longer the slide continues, the more they'll all be jumping on the bandwagon for fear of sounding out-of-touch and contrary.

    Remember the backlash after the credit crunch? How Krusty & Phil et al were being vilified? The pendulum will swing back their way, for sure...

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