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Sybil13

What Will Stop The Stand Off Between Buyers And Sellers ?

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Recently we have heard from Nationwide / Halifax etc etc., that the blip in falling property prices is due to instructions being down 60% yoy.

I have kept reading on HPC that we need more buyers to drive the market down, so why is a glut of buyers and very few houses driving the market up?

On the one hand of course I can understand that if you have 10 + people interested in every property it keeps the price high.

I assume more buyers pushing the market down requires more properties is that correct ?

So I assume what is happening is that a VERY small % of properties are selling to cash rich buyers for close to peak skewing the figures , whilst the rest of the properties just sit there doing nothing, is that correct?

I keep an eye on 50+ properties in Dorset (£200000 - £250000 range), and I have been watching these for months, and have friends who have put in offers on 6 of them (25% off peak but refused), NOTHING has sold. Some went "under offer" "stc" but have come back on again, some still sit with "UO" "STC" on them but nothing has sold, not one.

So what are the factors feeding into this HPC, and how are they different from last time?

We know the factors are all there for house prices falls such as :

1. severely restricted funds for mortgage lending , 60% down yoy

2. mortgage approvals being 50% lower than needed for the market to stabilise

3. unsustainable loan to income ratios

4. rising interest rates

etc etc...

So is a major factor in this crash the size of the losses perceived or otherwise?

In other words for sellers 30% loss on a £90000 property in 1999 was £27000.

Whilst a 30% loss on a £300000 property is £90000?

Neither sellers or buyers want to make these kind of substantial losses do they? And for buyers there is the threat of a possible further 20% loss, that is just too much loss for most is it not?

It would seem clear that the properties just sat on RM like the ones I have been watching, are NOT going to sell without being reduced considerably. So what will stop the stand off between potential sellers and potential buyers?

Appart from people in negative equity being unable to move or those who have not got enough equity to qualify for a 60% LTV , what are the factors that are stopping people putting property on the market ? And what are the factors that will stop property prices falling as they need to?

I am not convinced about the "supply" issue, many believe that the 147% increase in property prices was not due to supply but due to cheap credit.

If lending levels are down nearly 2/3rds.

If approvals need to double before the market can stabilise .

If it is VERY hard to get a mortgage , and there are 97% fewer mortgage for FTB's.

If interest rates are rising..........

Are we saying the only thing that can stop a HPC is nobody selling , or a few selling to cash rich buyers skewing figures and stopping people reducing?

Edited by Sybil13

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wtf....no quotes ? U feeling ok ?

Oh my god what illness starts with a loss of quotes? I haven't come out in spots yet .....:(

I do occasionally have a few thoughts of my own that come out of repeatedly quoting others.

I prefer to rely on quoting others on HPC as people can't then tell me I am wrong, only that my grammar and spelling is!

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At the moment there's still a lot of money sloshing around the economy. Like on that Sarah Beeny property show - the punters lost a few K on their properties, but they shrugged it off.

As we hit the next leg down of the recession folk are going to become increasingly desparate to make money and will take a hit on their house if need be.

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I believe that the key reasons are

1. Interest rates are artifically low and this has created a rump of zombie owners who will be flushed out over the next three years.

2. The profile of home ownership - family homes are generally owned by 40+ people and many of these are reluctant to give up their "gains" due to the size of the numbers involved and the sharp decline in pension fund values

3. The need for the nation to grasp the fact that the boom is over - 10 years of a sure thing takes a long time to forget.

4. The level of media maniupulation as a result of the fact that there is a whole media industry built up around house prices and property - this will slow the change in mindset needed

Edited by BlackSwan

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I have kept reading on HPC that we need more buyers to drive the market down, so why is a glut of buyers and very few houses driving the market up?

There is a glut of buyers relative to tiny amount of sellers at the moment as far as I can see. These buyers think they are getting a good deal at 20% off.

I started feeling generous myself and offered -30% as cash on one property but now there are multiple bidders way above my offer (although none have sold their own houses yet). I could pay asking price but am just going to go back into sleep mode again (The last sleep mode lasted 6 years, I dont like to rush things!)

There are so few properties coming up in my village that just about everything is SSTC or under offer (many completed). Everything changed in the spring when even old stock started shifting. Some have been selling at close to 2007 prices which is a bit depressing.

VMR.

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Best thread for a long time I too have been monitoring prices in Dorset like Sybil with a view to buying at the right price. I have noticed that there are more buyers than nice properties available. When a new property comes on there is a swarm of prospective buyers who will pay more or less the asking price. I would call the current situation stalemate between the buyers and sellers but something has got to give sooner or later. We will rent as long as we have to here in lovely Sherborne and wait it out, how many sellers will hold on especially when the inevitable rise in interest rates happens!

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The pain won't start (imho) until ..

The copier runs out of toner

unemployment starts to rocket

interest rates go up

Can't see much carnage between now and the GE .. a slow drawn out period of stagnation with low drops and the odd rise

Unemployment hits 3 million , the printing has stopped , interest rates double in 2 months ( 1-2%) and the country eagerly awaiting a GE ( May 2010 ) and the perfect storm will arrive

Those wetting their pants thinking the crash will happen quickly because they're oh so desperate to buy a house need to wake up and smell the coffee.

Was only joking Sybil :P

edit for dodgy keyboard

Edited by Markie6

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I believe that the key reasons are

1. Interest rates are artifically low and this has created a rump of zombie owners who will be flushed out over the next three years.

2. The profile of home ownership - family homes are generally owned by 40+ people and many of these are reluctant to give up their "gains" due to the size of the numbers involved and the sharp decline in pension fund values

3. The need for the nation to grasp the fact that the boom is over - 10 years of a sure thing takes a long time to forget.

4. The level of media maniupulation as a result of the fact that there is a whole media industry built up around house prices and property - this will slow the change in mindset needed

Agree 100%. There will be a panic moment for many when they realise that it is not going to work out for them, that the 2007 HPI cannot be brought back, and they have in fact been lied to and screwed over by those running the ponzi scheme ( and their own stupidity of course). I`ve said from the start of the banking collapse that the price drops were already built in as soon as the securitization thing fell apart, it was just a matter of when people would accept their loss. As said on here many times people who could have sold last year, and waited because they wouldn`t drop 40k or something are going to realise their mistake and try to cut the price in a panic. IMO 50% drops across the board were baked in from the start of the crisis, we will have to see how low it goes. The banks are obviously going to turn the screws until they can lend at sustainable levels, and the latest round of bank problems might just burst the dam?

Edited by dances with sheeple

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Pig Flu.

Thatll get the market moving.

Millions dead.

course, buyers are immune.

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So what are the factors feeding into this HPC, and how are they different from last time?

So is a major factor in this crash the size of the losses perceived or otherwise?

In other words for sellers 30% loss on a �90000 property in 1999 was �27000.

Whilst a 30% loss on a �300000 property is �90000?

Yes, interesting, those possible losses are indeed much greater now than in the 90's.

I agree with all of BlackSwan's reasons.

Maybe in addition another factor keeping the stand off going, is the large amount of those sellers now saying "we'll just rent it instead"? Surely saturation of the rental market will finish that off soon?

I suspect rising interest rates on mortgages may be the main factor to eventually force some sellers to reduce prices, until their properties are actually at a sensible sellable price.

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What Will Stop The Stand Off Between Buyers And Sellers ?

Forced sales.

More sales become forced sales and as we all know (apart from the odd perma-moid), prices are set on the margin.

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Pig Flu.

Thatll get the market moving.

Millions dead.

course, buyers are immune.

I prefer it that way round and it makes a lot of sense , sellers are immune to house price falls

buyers are immune to a disease hitting people in denial.

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Agree 100%. There will be a panic moment for many when they realise that it is not going to work out for them, that the 2007 HPI cannot be brought back, and they have in fact been lied to and screwed over by those running the ponzi scheme ( and their own stupidity of course). I`ve said from the start of the banking collapse that the price drops were already built in as soon as the securitization thing fell apart, it was just a matter of when people would accept their loss. As said on here many times people who could have sold last year, and waited because they wouldn`t drop 40k or something are going to realise their mistake and try to cut the price in a panic. IMO 50% drops across the board were baked in from the start of the crisis, we will have to see how low it goes. The banks are obviously going to turn the screws until they can lend at sustainable levels, and the latest round of bank problems might just burst the dam?

Very good summary.

Amazing how simple it all is really. :lol:.

LIAR LOANS/"Securitization" grossly inflated property prices. System INEVITABLY unstable and doomed: Cannot be repeated without more doom. Ergo - house prices decline 50% minimum. Long and drawn out for as long as people don't want to face up to reality.

Edited by eric pebble

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Very good summary.

Amazing how simple it all is really. :lol:.

LIAR LOANS/"Securitization" grossly inflated property prices. System INEVITABLY unstable and doomed: Cannot be repeated without more doom. Ergo - house prices decline 50% minimum. Long and drawn out for as long as people don't want to face up to reality.

Judging by the goings on at BA and elsewhere there is just going to be an explosion of companies going bust and job losses until people are forced to start cutting their outgoings, multiple (empty?) BTL and any second homes or homes that are too big for one or two people being a good starting point? Reality is now starting to take people by the collar, and shake sense into them. Needed to happen five years ago though.

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WHAT HAS KEPT THE MARKET UP (PAST THREE MONTHS) ?

1. Cash buyers

2. Jack and Jill making a spring nest

3. Idiots who think a blip is the start of the next boom

WHAT WILL TOPPLE THE MARKET FURTHER ?

1. Rising IRs

2. Rising Unemployment (3million +)

3. Rising Taxes to pay for the abyss of debt

4. The acceptance of further price drops

WHITHER NEXT ?

The "fear" stage of the bubble curve, when the blip is seen for what it is.

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Whilst I agree with everything said - ie that prices still too high and that its not sustainable, where I live there are still people bidding on £1m houses and thinking they have got a bargain as its 5%-10% less than it would have been in 2007.

Its going to take a long time, and if inflation starts to rise without the increase in increase in interest rates that should accompany it, then perhaps in nominal terms anyway prices will not actually go down that much.

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As we hit the next leg down of the recession folk are going to become increasingly desparate to make money and will take a hit on their house if need be.

There are many who simply can't sell - mainly those in negative equity. Raising interest rates won't help, it just means people will spend less in the economy, as more money's going towards their mortgage, which will mean job losses. People approaching retirement will hang on to their homes hoping they will increase considerably in value before they die.

The stand off will continue unless lending restrictions ease.

You're waiting for the three Ds - death, divorce or desperation - to pick up a bargain.

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Whilst I agree with everything said - ie that prices still too high and that its not sustainable, where I live there are still people bidding on £1m houses and thinking they have got a bargain as its 5%-10% less than it would have been in 2007.

Its going to take a long time, and if inflation starts to rise without the increase in increase in interest rates that should accompany it, then perhaps in nominal terms anyway prices will not actually go down that much.

Where are people going to get the money from?!? WHERE is the money???

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There are many who simply can't sell - mainly those in negative equity. Raising interest rates won't help, it just means people will spend less in the economy, as more money's going towards their mortgage, which will mean job losses. People approaching retirement will hang on to their homes hoping they will increase considerably in value before they die.

The stand off will continue unless lending restrictions ease.

You're waiting for the three Ds - death, divorce or desperation - to pick up a bargain.

When people "hang on to their homes" they do not preserve their price.

It is the homes which sell that dictate the price of everyone else's home.

Those who can't sell will watch their biggest asset erode.

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WHAT HAS KEPT THE MARKET UP (PAST THREE MONTHS) ?

1. Cash buyers

2. Jack and Jill making a spring nest

3. Idiots who think a blip is the start of the next boom

WHAT WILL TOPPLE THE MARKET FURTHER ?

1. Rising IRs

2. Rising Unemployment (3million +)

3. Rising Taxes to pay for the abyss of debt

4. The acceptance of further price drops

WHITHER NEXT ?

The "fear" stage of the bubble curve, when the blip is seen for what it is.

Shouldn`t that be Janet and John?

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Recently we have heard from Nationwide / Halifax etc etc., that the blip in falling property prices is due to instructions being down 60% yoy.

I have kept reading on HPC that we need more buyers to drive the market down, so why is a glut of buyers and very few houses driving the market up?

On the one hand of course I can understand that if you have 10 + people interested in every property it keeps the price high.

I assume more buyers pushing the market down requires more properties is that correct ?

So I assume what is happening is that a VERY small % of properties are selling to cash rich buyers for close to peak skewing the figures , whilst the rest of the properties just sit there doing nothing, is that correct?

I keep an eye on 50+ properties in Dorset (?200000 - ?250000 range), and I have been watching these for months, and have friends who have put in offers on 6 of them (25% off peak but refused), NOTHING has sold. Some went "under offer" "stc" but have come back on again, some still sit with "UO" "STC" on them but nothing has sold, not one.

So what are the factors feeding into this HPC, and how are they different from last time?

We know the factors are all there for house prices falls such as :

1. severely restricted funds for mortgage lending , 60% down yoy

2. mortgage approvals being 50% lower than needed for the market to stabilise

3. unsustainable loan to income ratios

4. rising interest rates

etc etc...

So is a major factor in this crash the size of the losses perceived or otherwise?

In other words for sellers 30% loss on a ?90000 property in 1999 was ?27000.

Whilst a 30% loss on a ?300000 property is ?90000?

Neither sellers or buyers want to make these kind of substantial losses do they? And for buyers there is the threat of a possible further 20% loss, that is just too much loss for most is it not?

It would seem clear that the properties just sat on RM like the ones I have been watching, are NOT going to sell without being reduced considerably. So what will stop the stand off between potential sellers and potential buyers?

Appart from people in negative equity being unable to move or those who have not got enough equity to qualify for a 60% LTV , what are the factors that are stopping people putting property on the market ? And what are the factors that will stop property prices falling as they need to?

I am not convinced about the "supply" issue, many believe that the 147% increase in property prices was not due to supply but due to cheap credit.

If lending levels are down nearly 2/3rds.

If approvals need to double before the market can stabilise .

If it is VERY hard to get a mortgage , and there are 97% fewer mortgage for FTB's.

If interest rates are rising..........

Are we saying the only thing that can stop a HPC is nobody selling , or a few selling to cash rich buyers skewing figures and stopping people reducing?

Sybil: Good post

My opinion is as follows:

Prices are being kept high by a number of factors. Firstly Interest rates are very low so this is reducing the number of defaults. Secondly, sellers have had 6+ years of being 'rich' from their properties whilst still doing traditional working class jobs. They can't bear (pun not intended) to lower their asking prices as it will effectively stick them back into reality.

With regards to market activity, noone is buying anymore simple because they cant afford to: Mortgage lending is back to pre 2001 'sensible' lending multiples (i.e. 3.5 x salary) and people's salaries dont match the asking prices of houses. There is also an affordability problem with the deposits required now: A 20% deposit on an average house in 2000 would be around £12k, whereas now, because of the over inflated asking prices it is around £40k.

The only problem of supply and demand is that there isnt a big enough supply of affordable housing for the demand.

It's the seller's faults. I really do wonder how long this can last.

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Guest DissipatedYouthIsValuable
Shouldn`t that be Janet and John?

Jay and Letisha-Chardonney?

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Where are people going to get the money from?!? WHERE is the money???

Eric, I am not sure where the money is coming from but here are my guesses.

I am sure that these people trying to buy £1m houses are not borrowing anywhere near 90% (or even 75%) of it.

I am guessing that these people have sizeable equity they have made on the property market, and I am guessing that some of these people entered the property market pre 1995. Some of these people will have sold medium sized houses at peak and have rented - not necessarily because they thought prices were falling but because they hadn't found anything suitable at that time.

Others will be trying to sell now, so its a question of where the people buying £600k houses are getting their money from?

I also guess some of the money is inheritance from grandparents or from (still alive) rich parents, and some will be from banking bonuses or very well paid jobs.

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Recently we have heard from Nationwide / Halifax etc etc., that the blip in falling property prices is due to instructions being down 60% yoy.

I have kept reading on HPC that we need more buyers to drive the market down, so why is a glut of buyers and very few houses driving the market up?

On the one hand of course I can understand that if you have 10 + people interested in every property it keeps the price high.

I assume more buyers pushing the market down requires more properties is that correct ?

So I assume what is happening is that a VERY small % of properties are selling to cash rich buyers for close to peak skewing the figures , whilst the rest of the properties just sit there doing nothing, is that correct?

I keep an eye on 50+ properties in Dorset (�200000 - �250000 range), and I have been watching these for months, and have friends who have put in offers on 6 of them (25% off peak but refused), NOTHING has sold. Some went "under offer" "stc" but have come back on again, some still sit with "UO" "STC" on them but nothing has sold, not one.

So what are the factors feeding into this HPC, and how are they different from last time?

We know the factors are all there for house prices falls such as :

1. severely restricted funds for mortgage lending , 60% down yoy

2. mortgage approvals being 50% lower than needed for the market to stabilise

3. unsustainable loan to income ratios

4. rising interest rates

etc etc...

So is a major factor in this crash the size of the losses perceived or otherwise?

In other words for sellers 30% loss on a �90000 property in 1999 was �27000.

Whilst a 30% loss on a �300000 property is �90000?

Neither sellers or buyers want to make these kind of substantial losses do they? And for buyers there is the threat of a possible further 20% loss, that is just too much loss for most is it not?

It would seem clear that the properties just sat on RM like the ones I have been watching, are NOT going to sell without being reduced considerably. So what will stop the stand off between potential sellers and potential buyers?

Appart from people in negative equity being unable to move or those who have not got enough equity to qualify for a 60% LTV , what are the factors that are stopping people putting property on the market ? And what are the factors that will stop property prices falling as they need to?

I am not convinced about the "supply" issue, many believe that the 147% increase in property prices was not due to supply but due to cheap credit.

If lending levels are down nearly 2/3rds.

If approvals need to double before the market can stabilise .

If it is VERY hard to get a mortgage , and there are 97% fewer mortgage for FTB's.

If interest rates are rising..........

Are we saying the only thing that can stop a HPC is nobody selling , or a few selling to cash rich buyers skewing figures and stopping people reducing?

Buyers push the market down by refusing to buy. Sellers push the market up by refusing to sell. Both things are happening at the moment, but in the last month or so, the seller's strike has got the upper hand slightly.

What will push the market down is when the pent up supply comes through. That is all the people who have had their house on the market for more than a year deciding they really must sell now, all the people who have rented out rather than selling deciding they really don't want to be a landlord and increased repossessions when interest rates go up later next year.

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