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Turnbull2000

Has There Really Been A House Price Crash?

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I'm struggling to see any real indication of a price correction over in here in North Tyneside. Asking prices generally seem stuck at 2007 levels, with sellers stubbornly refusing to budge in an apparent belief the recovery is just around the corner and the area is too good to fall. My mam's neighbour listed her small 2-bed terrace at a peak price of £145,000 in February, had only two viewings since, but simply refuses to budge on price. Others have pulled their property off the market so they can remain paying a pittance on their base rate trackers. The young lad I had convinced at work to hold off is desperate to buy, and so are his mates. They all beleive prices are due to go back up very soon.

I'm starting to worry the VIs were right when they told us the government will do whatever it takes - regardless of long-term consequences - to support house prices.

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There's definitely been a bit of a bounce the past two months, and seller denial seems rife.

Anecdotally seems to be coming to an end though, none of my property watch list have gone STC in the past three weeks, whereas around Easter they were selling at about one per week.

I was intending to buy now, but have just signed a new one year rental contract as I reckon it will take until at least Christmas for people to start to 'get it'.

You're 100% right about the tiny mortgage payments though, has really reduced the incentive to sell IMO.

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There are simply many people out there keen to buy. The ongoing crash has, so far, not eradicated the desirability of homeownership in British culture, maybe quite to the contrary. It has not converted Britons to a society of long-term tenants. Many bears are every bit as obsessed with property as the VIs are - is there a "stockmarketcrash.co.uk" or a "inflationruinsyoursavings.co.uk" site out there? I think not.

I think it may be misleading to take a return to "traditional income multiples" for granted. How long did those traditions last in the first place? By the standards of many European countries, British house prices outside London are not particularly high.

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WE were looking at a house, came on the market this Friday, so arranged a viewing for next saturday. Got a call today to say it had sold. Wasn't cheap either but was nice. Seen plenty of houses sell, the only ones that don't are priced sky high with the seller not budging or complete dives in need of restoration.

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There are loads of empty properties on the market but asking prices haven't changed that much here.

During the bubble, as I walked the streets, I used to watch the same houses being bought and resold over and over again, prices going up each time. Now we're in a stalemate.

I think the house across the road illustrates perfectly what's going on.

The guy buys it in 2007 for £82k. Even at the top of the bubble I think this is around £5k too much.

Without doing a thing to the place he immediately puts it back on the market for £110k! :o

For almost 2 and half years it's been empty, For Sale sign outside the entire time. I don't think there's even been a viewing. Checking now the place is down to 100k, 25k - 30k more than I think it's worth. (It's amazing that it was only 30k in 2002.) There's propbably half a dozen houses just like this on the street, although no one has taken the piss as much as £110k.

So what does this guy do? Interest rates are so low he'll be paying hardly anything to keep it on the market. (I'm assuming he just wants to flip the place for the money otherwise he'd have put it up for rent by now.) Maybe he'll find someone dumb enough to pay 100k for a 70k house, (could happen). If he sells it for what it's worth then he makes a massive loss.

I think he doesn't know what to do and there's plenty like him. People have bought these houses thinking it'll be a nice earner only for the wind to change on them. And they're stuck, they're not going to make the easy thousands they'd hoped and if they sell for what they're worth it's going to cost them thousands.

Some, realising they're in for the long haul, have started putting up For Rent signs. (There's loads of them too, I've started checking out rental pages as well as the for sale properties.) I'm reluctant to buy here, not just because of the prices but because most of the properties don't have anything going for them. 35 minutes walk from town, no garden. Gyms, swimming baths, cinemas, night clubs all a good 45 minutes hike from where I am now, local amenities consists of a bus stop and a chinese takaway. My social life died when I moved here.

When I walk the streets now I get the feeling the market's like a lorry rocking on the edge of a cliff.

It might be the policy of the government to keep prices high but what more can they do? Interest rates lower than 0.5%? Print even more money and go Zimbabwe?

If/when interest rates go up (And there's evidence they're going to have to go up alot) the guy with the 100k-70k house (and all his property flipping friends) is going to find it harder to have a property sitting around doing nothing. Then he's going to have to make a choice, does he cash in/cut his losses and get rid of the place now or does he continue to hemorrhage money, holding out for......something?

What if the other properties flippers nearby decides they can't afford to hemorrhage money anymore and start pricing to sell, undercutting each other. Then when prices really start going down the pressure to get out while you can increases, which puts more pressure on undercutting the competition and more pressure on getting out while you can, which makes it harder to find a buyer willing to buy when prices are going down. This is the crash, this is the few degrees of tilt that sends a lorry over the edge.

Of course things might not happened like this, the lorry on the cliff edge could get a grip and continue on up the mountain. But I really struggle to understand how this can happen...

What I do understand is if you simplify this situation into a stalemate between people who are carefully watching the market, planning, absorbing information and waiting until the time they feel comfortable making their move against people who decided to become property flippers at the top of a housing bubble, then I know which side I'd rather be on.

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Bloody Hell! Just walked back from the Co-Op on Tynemouth Front Street to my place in front of Longsands, I've have seen what can only be described as a surge in sold signs. Counted 7 in all, with one under offer. A massive sea of change from all the for sale boards. A few others that have failed to sell are now to let.

Edited by Turnbull2000

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I'm struggling to see any real indication of a price correction over in here in North Tyneside. Asking prices generally seem stuck at 2007 levels, with sellers stubbornly refusing to budge in an apparent belief the recovery is just around the corner and the area is too good to fall. My mam's neighbour listed her small 2-bed terrace at a peak price of £145,000 in February, had only two viewings since, but simply refuses to budge on price. Others have pulled their property off the market so they can remain paying a pittance on their base rate trackers. The young lad I had convinced at work to hold off is desperate to buy, and so are his mates. They all beleive prices are due to go back up very soon.

I'm starting to worry the VIs were right when they told us the government will do whatever it takes - regardless of long-term consequences - to support house prices.

The crash was going nicely until they cut rates to near 0%.

This stopped the crash in its tracks and marked a bottom in prices.

If the halifax/nationwide indexes fail to make new lows for the rest of this year, then you can be pretty sure those lows will mark a permanent bottom.

Edited by Iron Condor

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The crash was going nicely until they cut rates to near 0%.

This stopped the crash in its tracks and marked a bottom in prices.

If the halifax/nationwide indexes fail to make new lows for the rest of this year, then you can be pretty sure those lows will mark a permanent bottom.

Unless/Until the rates go up to 5%+. If that happens when we still have 3m plus unemployed, and deep public service cuts (including many jobs), then I'd guess that we could see further substantial falls, driven first by repos. However, that might take until the first anniversary of the next government (I'm betting Tory - any takers?), so we may have to wait.

db

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The HPC is going to hit Newcastle and the North East in a massive, massive way. I know so many people across the NE who are losing their jobs now, and from history we can see that the region always gets hit hard. This will be no exception. This is the calm before the storm and when the forced sales and repos get going later this year and into 2010, it will be carnage everywhere. :ph34r:

We are looking at another Detroit on our hands up here. But what can you expect with low wages, chavs and high unemployment?

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I've just seen the RM data for June (clearly labelled "Under embargo for 00:01 hours: Monday 22nd June 2009", but clearly someone had it early). The headline is a small drop for June - c.0.4% IIRC.

BUT the figures for "The North" (Northumberland, Durham, Cumbria + T&W) are quite spectacular:

Avg. Price Jun 09 £141,430

Avg. Price May 09 £145,719

Monthly Change -2.9%

(I actually went to the calculator to check the arithmetic, it sounded so way out.)

Avg. Price Jun 08 £158,078

Annual Change -10.5%

(RM June 09 HPI report)

That's catching up with southern rates with a vengeance - nearly 3% in one month. :o:o

db

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So the date has changed for this event, to the weekend after...

Ill be there, and it could be a good reason to clean those rides before H20. I hope you all can make it the next week.

Lets get a cruise started...

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I don't think house prices in Whitley Bay/Monkseaton etc have fallen by much really, apart from those properties which have HAD to be sold for a variety of reasons.

Most of the good properties still seem to come under offer fairly quickly, & I think we all know of the properties that have remained up for sale for 12 months +, with little interest until the owner reduces the prices or takes it off the market !!

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Please try following the threads on the main discussion boards, cash buyers are hoovering up anything decent under the scared premise that property is safer than the banks and gives a better (rental) return (AT THE MOMENT, this is entirely daft as property is highly illiquid), stuff that's on for 12+ months is sh*te and / or overpriced.

Facts:

High unemployment with no sign of recovery

Banks not lending in significant numbers

Large deposits are still required for reasonable rate mortgages (in comparison to the base rate)

We are living in a Quantitavely eased, illusory, la la land people, WAKE UP. The moment the BOE stops QE or foreign investors' confidence finally balks at the pounds "strength" (sic) then interest rates will need to go up to protect the pound, additionally, next year, either the IMF officially deems us a basket case and we get a credit rating down grade (i.e. higher debt payments = higher tax, higher interest rate, service cuts) or we get a government that actually takes its head out of its a**e and cuts the national debt (higher tax, higher interest rates, service cuts)

So in summary, yes, the north east is doing just dandy, buy a house now and be a billionaire next week.

Edited by meow

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My mam's neighbour listed her small 2-bed terrace at a peak price of £145,000 in February, had only two viewings since, but simply refuses to budge on price.

Update. No viewers at all since that post, but she did reduce the asking price by £5,000 three weeks ago, which equates to a mere 3.5%. Reducing the price to very slightly below 2007 peak value unsurprisingly failed to entice views, so she's took it off the market and decided to stay put.

People who don't have to sell below 2007 prices simply won't.

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