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jimi

Green Shoots Of Capitulation?

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The last year as been rather frustrating as the haliwide indicies have fallen significantly and yet where I live asking prices have generally remained at peak prices, especially in the specific area where I would like to buy.

However, in the last week a significant number of decent properties have come on to the market, all with prices lower than the existing bunch. In actual fact, they make everything that was on the market look really overpriced.

I don't know if it's due to unemployment, realisation that the economy really is screwed and therefore so are house prices, or if it's just a blip, however it has certainly provided me with a boost to optimism levels. In particular, the type of property I'm after, in the area I want to buy has finally fallen within my budget. I will resist though - the lower prices fall, the lower my mortgage payments will be for the next 25 years!

Has anyone else seen any green shoots of capitulation, any increase in volumes for sale, or are prices still holding firm?

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Has anyone else seen any green shoots of capitulation, any increase in volumes for sale, or are prices still holding firm?

Yep, I've been tracking Hale in Cheshire and North London for quite some time. It's only very recently that some serious falls have started to occur. Still, most house are still vastly overpriced. My feeling is that there are still a large number of sellers who just won't "get it" until at least the next six months are out of the way; I still genuinely feel that many of them believe there will be some form of Spring Bounce. I also believe that there is an even larger number who believe that in 2010 things will start to boom again, so if they "rent out and take a hit for a year or so" they will be OK. Another couple of failed Spring Bounces are still required - IMHO - before we get a more sensible view from sellers. Still, I'm patient. :)

Nomadd

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Yep, I've been tracking Hale in Cheshire and North London for quite some time. It's only very recently that some serious falls have started to occur. Still, most house are still vastly overpriced. My feeling is that there are still a large number of sellers who just won't "get it" until at least the next six months are out of the way; I still genuinely feel that many of them believe there will be some form of Spring Bounce. I also believe that there is an even larger number who believe that in 2010 things will start to boom again, so if they "rent out and take a hit for a year or so" they will be OK. Another couple of failed Spring Bounces are still required - IMHO - before we get a more sensible view from sellers. Still, I'm patient. :)

Nomadd

Went to view a property yesterday (nr Bedford) . I asked agent if prices had fallen since December. He replied no. The property I was viewing had just been reduced by 10k!! and the agent said that the vendor would accept 20k less than new asking price. Worth probably 30k less than new asking though.

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Yep, I've been tracking Hale in Cheshire and North London for quite some time. It's only very recently that some serious falls have started to occur. Still, most house are still vastly overpriced. My feeling is that there are still a large number of sellers who just won't "get it" until at least the next six months are out of the way; I still genuinely feel that many of them believe there will be some form of Spring Bounce. I also believe that there is an even larger number who believe that in 2010 things will start to boom again, so if they "rent out and take a hit for a year or so" they will be OK. Another couple of failed Spring Bounces are still required - IMHO - before we get a more sensible view from sellers. Still, I'm patient. :)

Nomadd

Yes, I've been tracking Kingswood in Surrey as a local bell weather.

Given that new homes in this area are on at £2.5m and small rubbishy ones were selling for over £1m not long ago, to see a decent 7 bed house with 0.6 acre on for £1.25m is fairly refreshing.

http://www.rightmove.co.uk/property-for-sa...74%26index%3D20

It tells me the £2.5m ones are still 100% overpriced, but then I guess to admit the fall would render the developers bankrupt.

I still think the area has along way to fall mind you. I am reckoning 60% off peak as it got so over inflated and relies on City and small business money.

Edited by mikelivingstone

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I also believe that there is an even larger number who believe that in 2010 things will start to boom again, so if they "rent out and take a hit for a year or so" they will be OK. Another couple of failed Spring Bounces are still required - IMHO - before we get a more sensible view from sellers.

I am seeing this a lot. I've looked at properties to buy where the vendors have said that if they can't get a certain price they'll rent out, because it'll all be okay next year. I've also viewed properties already to let where they are renting out because they believe that prices will return in a year or two and they can then sell.

Capitulation will be the point where these people realise that they are wrong, and prices won't return to 2007 levels for another 10 - 20 years. They should therefore give in and sell.

I can only assume that estate agents are partly to blame. Lots of people who are considering the 'do I sell or rent' question must ask the opinion of the estate agent, and estate agents are notoriously bullish. Also, I would imagine that an estate agent would see the income from letting a property as guaranteed and immediate. Over a few years they may make more money through management fees than through a sale. Best case scenario for them would be to get the fees from letting it out and then the fees for selling. So why would an EA encourage someone to sell verus rent?

Anyway, I digress. Hopefully people are starting to get the message that the housing market is in downturn, and they'd better sell quick!

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I am seeing this a lot. I've looked at properties to buy where the vendors have said that if they can't get a certain price they'll rent out, because it'll all be okay next year. I've also viewed properties already to let where they are renting out because they believe that prices will return in a year or two and they can then sell.

Capitulation will be the point where these people realise that they are wrong, and prices won't return to 2007 levels for another 10 - 20 years. They should therefore give in and sell.

I can only assume that estate agents are partly to blame. Lots of people who are considering the 'do I sell or rent' question must ask the opinion of the estate agent, and estate agents are notoriously bullish. Also, I would imagine that an estate agent would see the income from letting a property as guaranteed and immediate. Over a few years they may make more money through management fees than through a sale. Best case scenario for them would be to get the fees from letting it out and then the fees for selling. So why would an EA encourage someone to sell verus rent?

Anyway, I digress. Hopefully people are starting to get the message that the housing market is in downturn, and they'd better sell quick!

There are plenty of plces on the market that are unrentable (trashed repos/inheritance properties) These will sell at below market value as it's a case of take what you can get now or leave it empty and not only look at the value decrease but pay the overheads as well. These are the properties I am looking at. No point at even looking at anything where the seller doesn't need to sell.

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I can only assume that estate agents are partly to blame. Lots of people who are considering the 'do I sell or rent' question must ask the opinion of the estate agent, and estate agents are notoriously bullish. Also, I would imagine that an estate agent would see the income from letting a property as guaranteed and immediate. Over a few years they may make more money through management fees than through a sale. Best case scenario for them would be to get the fees from letting it out and then the fees for selling. So why would an EA encourage someone to sell verus rent?

Yep, completely agree. But as you say, only from the estate agents view.

What staggers me is the number of properties I'm now seeing for rent at prices that wouldn't even cover a fraction of the mortgage payments. The argument I've always heard is "these people have probably owned the property for years and therefore don't have a big mortgage..."

IMO, these long-term owners are actually the least likely people to be renting out. No, it's the recent purchasers (i.e. last 5 years) who are desperate to find some way out of the mess they've got themselves who are the most likely to be trying to rent out.

I think you are right that they will be "sucked in" buy the EA sales talk, but 1 or 2 years of mounting mortgage debt due to rent not covering it will make even that seem the nonsense that it is too sellers.

Roll on the next two years! :)

Nomadd

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I think you are right that they will be "sucked in" buy the EA sales talk, but 1 or 2 years of mounting mortgage debt due to rent not covering it will make even that seem the nonsense that it is too sellers.

I think EA's actually are starting to realize that attitude is killing them. They now know that what they need is transactions to survive, at any price, even if low.

What we hear from EA's as buyers is the usual bullish speech (with a few honest exceptions), that is expected as part of their job is to maximize value extraction from us. But they are constrained by what the owner accepts as asking price (still unrealistic in most cases). It is within that context that the poor fellows have to move and I am sure that in the background most EA's resent it deeply while trying to keep a straight face with us.

A few years ago their goal was to support easy credit, inflate prices and pick buyers. Now they are desperate for transactions, and the only way now that buyers have retrenched in waiting for further falls is to talk owners down, I am sure most of them are trying hard. As long as we continue making cheeky offers they know there is hope, i.e. that the owner will accept. That is the sociological key to get into the Panic phase, continue making cheeky offers across the board.

Not that I pity them, mind you, before the crash they did not pity us a bit, so I, for one, will try and not have any mercy.

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What we hear from EA's as buyers is the usual bullish speech (with a few honest exceptions), that is expected as part of their job is to maximize value extraction from us. But they are constrained by what the owner accepts as asking price (still unrealistic in most cases). It is within that context that the poor fellows have to move and I am sure that in the background most EA's resent it deeply while trying to keep a straight face with us.

Yep, agree completely. But I think it's just this sort of "attitude" (and I do mean that in the "rude" sense) that will keep me well clear of buying a house for at least another 2-3 years. I just can't be bothered putting up with the BS from sellers and EAs whilst I struggle to get them to accept the reality of prices 2 years from now. It just seems to be a lot easier to wait a couple more years until it's firmly hit them in the face - and wallet! :)

Nomadd

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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