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Posts posted by Jonnybegood

  1. There are positives and negatives for both the rise and fall in house prices.

    Each time house prices fall 10% in brings in another x number of households into negative equity.

    The first 10-15% then those FTB who bought in the last couple of years are affect, a further 10% and those who bought 2004 on are affected and so on.

    If we go for a fall of more than 40% then many who bought back in 2001-02 are looking at negative equity.

    With the government taking control of the banks and now seeming to take charge of when and where money is lent, what is the feeling on here that secured mortgage debt will somehow vanish and the banks come to an agreement that they have been bailed and mortgage debt through the backdoor can be reduced to levels that are more manageable.

    I am not sure how this will / can be done, but would it likely happen, or something along these lines.

  2. Where do they get this info from? 2 places I have frequented over the past few years, Windsor , Bridgend are both in the list.

    From my experience this is what I have seen with regards to the local housing market in both towns:

    Windsor - Prices did get very very silly and to be honest the attraction there I never thought warrant the asking prices last year, it got to the stage where local EA were just plucking prices out of the air, adding 10-15% on prices 12mths earlier.

    Still shocked its in the list, but falls here will probably ease quite quickly and other towns will catch up.

    Bridgend - Its had a bit of bad press the last couple of years with the teenage suicides, job losses are mounting there and if you look at graphs growth there was one of the highest in Wales, its adjusting to the prices of property in neighboring counties.

    Again, its fallen over 20%, I cannot honestly say I have seen this reflected in asking prices, however to think that these falls are going to continue at these rates in these same towns then you really are deluded.

    No doubt in 6months time there will be another chart showing the least amount of falls and the majority of the towns listed will be in that list.

  3. I think sometimes people on here underestimate the amounts of incomes a large number of households have these days.

    Many of the purchase prices mentioned in this thread seem to be single income purchases, i was earning x and my property cost y.

    These days with women holding down well paid jobs in the public and private sector, household income has almost doubled in relation to that of the 70/80s.

    I was having this conversation with my uncle a few weeks back and when he was working as an electrical engineer that was all he did and my auntie never worked.

    These days I know loads and loads of people who work shifts and on their days off from their full time job also do some work on the side cash in hand undeclared, there was my next door neighbor at my previous address who worked in the local car factory full time earning around £25k at the time (10 years ago) and on his days off would use his plumbing skills and fit kitchens and bathrooms (fitted our bathroom) I know he always had plenty of work cause his prices were good, but still adding a tax free £8k a year on top, with his wife a nurse they probably 10 years ago were earning just shy of £50k a year.

    So national average wage should not be relied on, even though there are many earning less than £15k per annum with tax credits etc many wages are soon bumped up to over £20k, especially families with large number of children.

    Another thing, my uncle never traded on the stock markets, no one he knew at the time did, nearly all my close friends have at some point done some share dealing, or invested money in commodities that people 10-20 years ago would not of dreamt doing.

    And I will not even start talking about self employed not declaring their true earnings, prices will fall 30-35% max, this will bring prices back to 3.5x average incomes / 2.5x combined incomes.

    £186k - 35% = £120k

    - 20% deposit = £96k mortgage

  4. That's a very bold assumption. Why are these properties at auction if an able and willing tenant can be found to pay for them?

    Able and willing tenant at £400pm yes, like I say 40-70% fall from peak depending on property type.

    So whoever bought at double that price would be looking for double the rent just to cover the mortgage, i.e £800 now there may not be to many willing tenants at those rental prices, hence I mention undercutting the other BTL in the area and probably the reason why these properties are at auction

  5. I suppose there is alot of truth in this article, I was thinking if I had retired having worked hard and see my savings interest as a percentage of pension then I would really be p**sed off right now.

    Say £100k cash, invested wisely normally returning £6-8k per annum, now with stock market (many have already been burnt) seeing returns of far less than the original investment.

    So I suppose you could still buy into the stock market but it is very volatile and companies going to the wall daily and banks being nationalised.

    Now you may go to an auction and pick up a property 40% below 2007 prices, if its an overpriced city apartment then maybe even 60-70% below their original selling prices.

    If you were to spend £80k of your £100k pot on a property your pretty much guaranteeing yourself at least £400 a month (5% return) and undercut many of the overstretched BTL in the area, with limited risk of any further great falls in the value of that property that would only be realised if you were to sell anyhow and with the outlook of possible long term growth over the next 10 years.

    Its not for everyone, but I could imagine alot of people thinking down this road, it must be heartbreaking to see such a poor return on such a large cash deposit with a bank.

    If inflation picks up it really is a no brainer

  6. I bought a 2 bed terrace for circa £50k in 1990.

    I expect to be selling it for £75k at most in a few years time.

    Normal lending is 3.5 times single salary or 2.5 times joint salary.

    Average modern day (last 50 years) interest rate is about 8%.

    I reckon we'll return to both the above within 5 years.

    Average house price based upon current wages should be under 100k, and then there's the undershoot.

    What do you think will happen to those who bought a 200k house and can't afford 5% when rates are 8% or above?

    Whoever wins the next election will try to inflate away the debt so percentage falls less than 50% are possible if we all get 100% payrise.

    I remember the last recession in the 90s. This one is way beyond that one and it's only just starting.

    For those a little younger, the downturn and redundancies after 9/11 and the dotcom bust were nothing compared to what is happening now.

    I think if you check the ONS website average uk wage stands at £25,500 per annum.

    The combined wage average is £36,400 (i.e 2 income families)

    This gives a single mortgage of £90k average

    or combined of £91k average

    or how about 3.5x first income plus second income where your looking more like £105k mortgage

    Given a 80 LTV if you really want to stick with old fashioned lending criteria and average house purchase prices will be around £120k and that is using your own multiple figures.

    I for one are not totally convinced that multiplies will go back this far and 4 - 4.5x single income / 3.5x combined will more likely be the norm, with the deposit being the big difference, this removes / insures the lender against risk more than multiplies.

  7. When people say 50% falls then I do think maybe, if the worst case scenarios come true then maybe, when people say 80% I tend to lose all interest and really think this site is run from one of those places where they have high 20t fences and people walking around with white coats on.

    There was a film made around 30 years ago with Jack Nicholson and I am starting to visualize the posters on here stepping right into the film.

    A £300k property falling 80% = £60k.

    Around here £300k currently buys a decent 4 bed detached property.

    I know that to build a 4 bed detached of this size myself would cost not far off £80k, with assistance £100k.

    Plus the land!!! Say it also falls 80% to around £24k giving a total self build a price tag of £104k

    Labour and land costs may fall, but there is no guarantee that raw material costs will fall, they could even rise if inflation begins to pick up.

    So with 80% falls property would simply not get built, nobody would build at a loss.

    Prices will stabilise long before they get anywhere near 80% falls, this would be different with shoebox flats that cost far less to build per flat

    There are too many factors to mention that underpin house prices and as mentioned the public sector is one of them

    And it is impossible to compare the stock market with house prices, shares are bought and sold in the millions daily, down 30% one day and up 40% the next, there is no emotion attached to shares, one press of the button and their bought and sold.

  8. :lol::P So funny how people have kept on saying things like "It will only be 5-10%", as they did about 18 months ago.... and now "it will only br 30%" etc etc......... :P:P



    So you think its worth waiting for this to fall from £1.25m to £250k



    What will I spend the other £400k I tucked away on, a row of £30k terraces

  9. There are a number of different indexes on house prices one can follow, LR , Halifax , Nationwide , Rightmove , RICS etc but lets go with LR figures and say they have a 3 month lag, after all they are the only figures that actually go on the prices of completed sales, unlike others that go on mortgage approval , asking prices etcs.

    However I am well aware they do not include Auction sales, which in some ways is a good thing as auctions do not really reflect reality and often account for a small number of distressed or sometimes problematic sales, boundary disputes etc.

    At the end of last year a number of key figures in the banking industry were talking about house prices falling 25-30%, since then many others have come forward and suggested similar falls, even those who initially said 20% have now indicated 30% is more likely.

    Many people I seem to be speaking to recently are coming around to the idea and saying that they can see prices falling around 30% from their peak.

    So according to the LR falls of 15% have been seen so far bringing average prices to just over £156k , so another 15% fall and average prices will be more like £130k.

    Now I have often say, in 2000 average prices were around the £95k mark, so falling back to £130k (£35k increase) after 10 years is not exactly that great and many could probably have got a far better return investing their monies elsewhere over the same 10 years.

    It strikes me that the banks will not return to normal lending practices until property prices on average have fallen 30%, this seems to be the level they think that further falls are going to be unlikely or very small in comparison and with a normal 10-20% deposit are well protected against any further falls.

    Why are we currently seeing 30-40% deposits? Its the standard 10-20% plus the 10-20% insurance against the projected further falls.

    I assume that over the next 12mths this LTV will get better for the borrower as the falls across the market play out, i.e for every 10% fall in the general market 10% less deposit required.

    I think when we get nearer to the 30% fall mark being published by the LR then people (FTB,STR) will return to the market with confidence and the mortgages with good LTV and multiples will be there and MOM falls will naturally get less and less which is likely to be around 12mths from now.

    So when falls of 25% are released I really expect the market to begin to slow and almost stagnate with falls of below 0.5% MOM being published and many really seeing a bottom to the market.

    Just like the peak when you could things getting out of control the same will be at the bottom when you see a nice property on the market at a price that you last seen maybe 6-7 years ago and a mortgage with 85% LTV.

    Before anyone pops up with £130k will only buy a 1 bed shoebox here or 30% fall from peak will only bring prices back to £1m or £130k will still be 10 x income around here then I suggest you do your own maths but this is the uk average so there must be a large amount of property above and below this average price around the uk, just like there are many people who earn £20k per annum and many that earn £40k per annum even if they do not declare it all.

  10. Are you sure they would of been sold at that price? The 3 auctions I have attended recently had a large number of city apartments, each time the guide price was past and still the property was not sold.

    I have asked the question and by all accounts its a common and legal practice, so unless the property actually sells I no longer go by the guide price as a guide to auction prices.

  11. Only last week talk of a vote on a 4 day week and pay freeze.

    Then there is an order to supply 13,000 vehicles


    Jaguar Land Rover has announced a deal to supply a Chinese company with 13,000 vehicles, providing a dose of good news for the beleaguered UK car industry.

    Jaguar said it was "a very significant" order, and was particularly welcome at "this challenging time".

  12. A prediction that Wales will fall another 16% due to high unemployment is quite possible.

    However land registry data that may lag by 3 months shows that falls in Wales are currently at 8%, so another 16% will only make the total fall to bottom of 24%, add on the 3 month lag and you get something just below 30% from peak to bottom.

    Total falls to end 2008

    South West: 15.6%

    South East: 14.9%

    East: 13.6%

    West Midlands: 13.6%

    East Midlands: 13.5%

    London: 12.9%

    Yorkshire and Humber: 11.9%

    North West: 10.9%

    North East: 10.8%

    Wales: 8.6%

    Source: Land Registry

    I do think that a few months during 2009 will show slightly positive data

  13. Watch unemployment soar in Wales this year - house prices are on a crumbling cliff.

    I am not sure MT, we have been heavily reliant on manufacturing and industry in Wales which have taken a hit.

    However we have never had silly wages like London and South East where finance ruled, we got the call centres.

    At times of cost cutting I cannot see Wales coming up on the radar as excessive spending for these companies and many here do work in the public sector which probably will be the safest bet for employment over the next couple of years.

    The older generations in Wales are also quite prudent and not risk takers as a whole, many bought their properties when £40k would buy a nice 4 bed detached, up until 10 years ago £100k would still have bought a nice family home in a good location.

    I know wages have never been the highest in the uk here, but many of the older generation have lived good lives on their earnings due to the cost of living here, a lot of them are cash rich.

  14. I think your all missing the point, VW , MB , JAG/LR etc all need to make profit, otherwise they simply go to the wall alot quicker than what they may eventually.

    Many of the parts used in new vehicles are sourced from all over the world so vulnerable to exchange rate changes, staff wage negotiations were agreed during last April for many of the big companies and I know Ford agreed to a 5% rise, some are even set over the next couple of years.

    So yes prices do need to rise at least for now, money has been committed to advertising, R&D, we all want our new vehicles to become greener and travel further for our ££££.

    However these price rises are on the wholesale price to the dealership/franchise, if I remember correctly this used to be between 10-40% under retail price, yes a £10,000 car to you were sometimes bought by the dealership for £6000, this was dependent on the number of vehicles sold per month and the manufacturers margins, the more they sold the better cut they would get.

    Quite often you can pick up a Vauxhall Vectra for £4k under list price, however an Audi A4 will be lucky to get £2k off

    Have you noticed over the last few years how dealerships have become bigger and plusher, especially the Audi ones with big glass fronts on 2 levels, the dealers have not been eating into their margins and all along passing on the annual price rises to the customers without question, and the biggest profits are made after the car is sold, servicing etc is where the big profits come from.

    So these price rises may not mean more expensive cars on the forecourts, it all depends on how much of the price increase the dealership is prepared to absorb.

    For the better sellers the dealer may chose to pass on the full price rise, but not on other less frequent sellers.

    Lastly there will still be deals for the foreseeable future as old stock is sold off, the fields full of cars, if the colour and spec that you want is in that field than you will get it heavily discounted, however if its to order than it will probably be little room for negotiation on list price.

    Think about it, its a good way of moving old stock - Mr Jones that green 5 door will be £15000, however if your prepared to take it in Red with 3 doors then you can have it for £9000.

  15. Was in Porthcawl this afternoon and a property caught my eye, prime location but a little run down so just thought I would pop into the local EA to inquire further.

    The EA was empty when I got there so i started asking about the property, then told it was under offer and likely to be accepted, cash buyer ready to proceed.

    The sales assistant then starts to show me other property, told her I was only interested in this particular property, she then says that the last 2 weeks they had sold 8 properties, seemed very happy about it, and to be fair there were quite a few gaps on the wall with missing properties.

    As the shop was still empty and only me and her there I thought I would dig for some info on the local market, she said they have seen a positive rise in inquiries and the properties they have sold have been priced about right, there is just no telling now how the market is going to go, it seems to be stabilising but further big falls cannot be ruled out.

    Then a few people start to come in and have a look around and I leave having left my number with the EA.

    A quick look around the EA it seems that prices are down 10-15%, with an offer some 5-10% below these revised prices being accepted.

  16. The nationwide average uk house price in the top right corner of this website stands at £150k.

    3.5x income mortgages with a 80% LTV

    Average uk earnings £25k

    Average second household income £14k

    £25k x 3.5 = £87.5k

    Plus second income = £14k

    Total £101.5K

    Plus 20% deposit

    = £125k purchase price of average uk property

    At current IR £100k mortgage could be fixed for 5 years at 4.5% = £561.99 per month repayment mortgage

    Nationwide price index will need to fall a further 20% to come back to safe lending levels, however based on monthly outgoings these low IR and lower LTV / Higher deposits would probably allow for 4x income being safe

    Not hard to see how houses being sold with 20% off asking price are selling, it is probably the bottom of the market price for majority of property

  17. I am feeling alot richer than 12mths ago, my mortgage has fallen £330pm, a letter this morning says my energy bills are going to fall 10% (With further cuts likely) and now filling my car up once a fortnight instead of every 10 days.

    Worked it out compared to 12mths ago I am saving £4900 per annum inc the vat cut

    Makes me feel like going out and buying another property or maybe moving up the ladder.

    Not getting much on the savings, makes it even more tempting.

  18. Peak price £185k Bottom price £120k

    Average fall of 35%.

    Why? 3x income mortgages with 65% LTV will be the bottom

    Average uk earnings £26k

    £26k x 3 = £78k

    £120k - 35% deposit = £78k

    All data points towards 3x income mortgages during times of housing slumps, with second incomes now common in most households don't think it will stay at 3x income for long and likely to be 3x first income plus second income probably putting it nearer £95k with 80% LTV = £120k average house price.

    Either way its a fall of 35% from peak LR figures

    Also look from the bottom up, year 2000 average house price £95k.

    No HPC website, no complaints most where happy with the housing market, did'nt seem overvalued.

    Year 2000 to 2009 with annual inflation of 3% compounded = £124k

    However we will probably be at the bottom by 2011 with another 10% fall this year and between 5-8% in 2010.

    Year 2000 to 2011 compounded at 3% = £131k and this is where the overshoot to £120k comes from

  19. Figures from memory so please excuse approximations:

    In the last crash prices fell 14% overall over 7 years.

    So far in this one they've fallen 17%+ in about 18 months.

    How fast do you want it to go?!


    These figures keep getting banded about, our first property in the early 90s fell (sold) 18% below asking price and that was within 2 years.

    I think because the amounts houses fell were quite low for some reason many feel it was not as bad, ours was on the market for £58k and we accepted £48k so still a fall of approx 18%

  20. Considering it was August 2007 that Northern Rock got into trouble and the start of the credit crunch, house prices 18 months on have held up well.

    We have had the biggest of housing booms with record levels of debt, over 12mths of bad data and depressing news and still mainstream property on average in the uk has at worst fallen 17%, where in reality I locally see no more than 10% falls from peak.

    Credit dried up virtually overnight, Job losses keep mounting, shares , savings , investments all down there is very little good news out there.

    So the concern, if all this (which many say is already priced in) only manages to lower prices officially another 13% (30% Total average fall), but realistically another 15% so that locally I see a fall of 25% from peak, any good news you would think would quite quickly put a halt to the fall in assets.

    Even good news from the US may be enough to halt the falls here, we are normally 6-12mths behind, I don't think it would take much for a recovery to start, people are waiting for the first signs of good news.

    I missed out on the Barclays and Lloyds shares a couple of weeks back, it just seems that things are falling but quickly recover.

    Accept at auction it just seems most are hoping to ride out this slump with the hope of a recovery quite quickly, with the low number of sales going through I cannot see big falls ahead in the housing market.

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