Could The Rise In Prices Be More Than Just A Blip?

[boo]

Hello

I understand that at the moment prices are rising due to very low supply of good housing, and buyers with larger deposits. My worry is that there is such an effort to talk this up as a sign the market is stabilising.

Do you think that if we see another 2 months of positive growth the banks will start offering high ltv mortgages again? If this happens then I think we will be right back in boom and bust again

I don't see any positive news on the economy, lots of jobs being lost, companies asking staff to take longer holiday and even work for free. The fundamentals for a recovery just aren't there but I fear in a weird way we could see the property market keep rising

I hope I am wrong though

Edited July 4, 2009 by boo

[Warwick Yellow]

Hello

I understand that at the moment prices are rising due to very low supply of good housing, and buyers with larger deposits. My worry is that there is such an effort to talk this up as a sign the market is stabilising.

Do you think that if we see another 2 months of positive growth the banks will start offering high ltv mortgages again? If this happens then I think we will be right back in boom and bust again

I don't see any positive news on the economy, lots of jobs being lost, companies asking staff to take longer holiday and even work for free. The fundamentals for a recovery just aren't there but I fear in a weird way we could see the property market keep rising

I hope I am wrong though

Very much a blip I think anybody who sees what is happening in the real economy would say............rising unemployment, debt, political paralysis, the unaffordable cost of UK government and the public sector are all only heading UK plc and housing in one directon medium term. All those and a host of other factors will restart the downturn soon.

[Number79]

I had a similar discussion with catflap who provided the following figures

"Peaks and troughs of previous crashes

Main (on 18-year cycle)

Q4 1973 peak

Q2 1977 bottom 3.5 years

Mini-boom

Q4 1979 peak

Q2 1982 bottom 2.5 years

Main (on 18-year cycle)

Q2 1989 peak

Q4 1995 bottom 6.5 years

Main (on 18-year cycle)

Q3 2007 peak

????

If you add the 2.5 year fall that occurred after the late 70's mini boom to the main cycle fall of 3.5 years, then you get 6 downward years in that peak to peak cycle (Q4 1973 to Q2 1989) which is similar to the 6.5 downward years we had in the last peak to peak cycle (Q2 1989 to Q3 2007). It could be we get a similar mini-boom this time around where the housing market makes two bottoms in the cycle if high inflation returns in a few years time, if not then house prices could just slide for 6-7 continuous years into 2013/2014. Either way, I'm not expecting a low before Q3 2011 as it's a bigger bubble this time."

[DownsizingDiva]

Hello

I understand that at the moment prices are rising due to very low supply of good housing, and buyers with larger deposits. My worry is that there is such an effort to talk this up as a sign the market is stabilising.

Do you think that if we see another 2 months of positive growth the banks will start offering high ltv mortgages again? If this happens then I think we will be right back in boom and bust again

I don't see any positive news on the economy, lots of jobs being lost, companies asking staff to take longer holiday and even work for free. The fundamentals for a recovery just aren't there but I fear in a weird way we could see the property market keep rising

I hope I am wrong though

I think what we are experiencing is a very concerted effort by the government, the media and the VIs to talk the market up. Yes, prices have risen SLIGHTLY over the last few months, but it is spring, the sun is shining and this is the peak season for buying.

With unemployment continuing to rise, the economy sinking faster than anyone expected, and the lack of mortgage funding available, prices will not rise like they did before. I think we will see further falls starting around September/October.

[Harry Monk]

I think we will see further falls starting around September/October.

Yup, as soon as the Stamp Duty holiday ends and the nights start drawing in, the market will start crashing again bigtime.

We wil start seeing the forced sales hit the market in droves. After the election there will be redundancies in the bloated public sector. It's all looking very good for bears.

[SarahBell]

Two downsizers have both reduced prices in the last two weeks.

Makes me smile.

Is that a blip?

[Chuffy Chuffnell]

Rising unemployment, rising interest rates, rising taxes, falling wages, swine flu and deteriorating hours of light & weather will all conspire to the next steady and continuous fall in house prices. I think it has already begun, at least here in Shropshire, with quite a few of the asking prices coming down recently. I predict month-on-month falls in England from this August or September to next February or March.

Edited July 4, 2009 by Mr Deflation

[headmelter]

Was QE employed in the seventies and if it was'nt does anyone think its current employment will have a significant effect on a stabiisation or rise recovery in prices?

[yellerkat]

Was QE employed in the seventies and if it was'nt does anyone think its current employment will have a significant effect on a stabiisation or rise recovery in prices?

The government's finances are in such dreadful shape that gilt sales + QE are barely enough to keep it functioning.

[Sybil13]

Asked A Similar Q Here

[loginandtonic]

gordon has put the bills away unopened, if he doesnt open them they will go away, at least until post election, sshhhhhhhhhhhh dont mention the debt! keep smilin', positive thinking and all that lol

[cockrobin]

I think what we are experiencing is a very concerted effort by the government, the media and the VIs to talk the market up.

Why is not obvious to these morons that if they talk the market up and not let it take it's natural course, eventually things will get worse. Lending will never return to 2007 levels so property price rises will just render houses more unaffordable and sales will eventually slow again. What is the point in postponing the inevitable?

[DownsizingDiva]

Why is not obvious to these morons that if they talk the market up and not let it take it's natural course, eventually things will get worse. Lending will never return to 2007 levels so property price rises will just render houses more unaffordable and sales will eventually slow again. What is the point in postponing the inevitable?

Because it postpones their pain...

[cockrobin]

Because it postpones their pain...

and prolongs ours!

[DownsizingDiva]

and prolongs ours!

Yes, but no pain = no gain. The pain we suffer will be worth the gain!!!

Edited July 4, 2009 by DownsizingDiva

[Guest KingCharles1st]

Was in a Ea's in the high street this morning. Had a long chat- guy is a proper EA.

basically TWo EA's already gone in high street. Nobody came in or out for the 30 minutes I was in there, and only one telephone call from a mate.

As I said in an earlier post today, the expensive places are fast coming on to the market now, its flatlining.

How anyone could possibly think there is a resurgence is totally and utterly beyond me

[DownsizingDiva]

A quasi "resurgence" has been created by a) spring, government, c) media, d) VIs. It is FALSE.

sorry about the emoticon - everytime I try to enter a b with bracket, it puts the damn thing in.

Edited July 4, 2009 by DownsizingDiva

[Giordano Bruno]

'Could The Rise In Prices Be More Than Just A Blip?'

I suppose pigs could fly. But considering this is the most ridiculously large bubble, I very much doubt it.

[babesagainstmachines]

Was QE employed in the seventies and if it was'nt does anyone think its current employment will have a significant effect on a stabiisation or rise recovery in prices?

The magic money experiment began in 1971. That's when the bankers became almost completely free to create money from nothing.

The dollar is now worth approximately 1/30th of what it was just 38 years ago. Impressive, eh?

[Horridbloke]

Hello

I understand that at the moment prices are rising due to very low supply of good housing, and buyers with larger deposits. My worry is that there is such an effort to talk this up as a sign the market is stabilising.

Do you think that if we see another 2 months of positive growth the banks will start offering high ltv mortgages again? If this happens then I think we will be right back in boom and bust again

I don't see any positive news on the economy, lots of jobs being lost, companies asking staff to take longer holiday and even work for free. The fundamentals for a recovery just aren't there but I fear in a weird way we could see the property market keep rising

I hope I am wrong though

Firstly, thanks for raising that question in this forum. We bears do get a bit foamy about the chops at times.

I live in Bournemouth ("Bournemouth is special") and three months ago started talking to estate agents and receiving property emails from them. I'm not looking in earnest yet, just trying to suss out the strange local housing stock and strange EA behaviour. I specified a price limit that I thought would just encompass two-bedroom houses that aren't gutted and aren't in the crack whore parts of town.

This week I received the first property details for an honest-to-goodness actual house. It's a rubbish one (a new build apparently designed for dwarves - the larger bedroom is 2m*2.7m), but given the single bedroom converted lofts punted to me over the last few weeks I consider it an important milestone.

It's only anecdotal but my vote is "Nah! Prices are goin' daaaahhnn!!!".

[tinker]

Why is not obvious to these morons that if they talk the market up and not let it take it's natural course, eventually things will get worse. Lending will never return to 2007 levels so property price rises will just render houses more unaffordable and sales will eventually slow again. What is the point in postponing the inevitable?

We have a government that doesn't give a damn about the people; they will do 'whatever it takes' to delay the inevitable until after the election.... to try to give some illusion of control. Scorched earth policy, I'm afraid. Dishonest, immoral and a complete betrayal of generations to come.

Bankrupting the country is small potatoes so long as they make it impossible for the Tories. This is all about the liar who will lie and lie and lie, looking more ridiculous every time. You can always fool some of the people some of the time.

Can't find the thread but the former HPCer Jonathan Davis BBC Radio Ulster interview is worth a listen.

[juvenal]

Firstly, thanks for raising that question in this forum. We bears do get a bit foamy about the chops at times.

I live in Bournemouth ("Bournemouth is special") and three months ago started talking to estate agents and receiving property emails from them. I'm not looking in earnest yet, just trying to suss out the strange local housing stock and strange EA behaviour. I specified a price limit that I thought would just encompass two-bedroom houses that aren't gutted and aren't in the crack whore parts of town.

This week I received the first property details for an honest-to-goodness actual house. It's a rubbish one (a new build apparently designed for dwarves - the larger bedroom is 2m*2.7m), but given the single bedroom converted lofts punted to me over the last few weeks I consider it an important milestone.

It's only anecdotal but my vote is "Nah! Prices are goin' daaaahhnn!!!".

I'm in Poole. The very few houses which are actually selling in the area I watch are going at increasingly substantial drops from initial asking price. Top drop so far is 29%.

[help!!!!]

Can't believe no ones mentioned intrest rates. What will happen when they rise? Which they will!

[Kazuya]

Can't believe no ones mentioned intrest rates. What will happen when they rise? Which they will!

Base rates will rise next year for sure but by how much, I'd say they could reach 2% or so.

Fixed rate mortgages could rise a little more, they are currently around 6%.

The base rate rise will do some damage as it will directly affect SVRs and trackers as its those on the aforementioned who have been saved by the government from repossession with the historically low base rate of 0.5%.

[Sybil13]

I'm in Poole. The very few houses which are actually selling in the area I watch are going at increasingly substantial drops from initial asking price. Top drop so far is 29%.

Out of interest I have been watching 50 + properties Dorset (Poole /Bournemouth mostly + Ringwood {I know Hampshire} ), best of the bunch £200000 - £250000 they have ALL been on for months and months and months nothing selling. Some went Under Offer others went STC then they go back again and others go Under Offer etc but in all the months I have been watching only a couple went Under Offer etc but the past week a large % have gone Sale Agreed.

I have said on the forum before that friends (cash buyers) put in offers of half a dozen properties in the area at 25% under peak, all offers turned down, properties this week have Sale Agreed on after months of nothing happening.

This is a good one, came on last year or early this but despite not selling has gone up £25000 !!

RM Link

I know its traditionally a busy time of year but I do wonder what is driving this bounce given that the NAEA said with regards the budget:

Peter Bolton King, chief executive of the NAEA, says: "In this difficult economic time, Mr Darling could have seized the opportunity to encourage first time buyers to the market and to send a signal of confidence that may have reverberated around the economy.

“Instead he has tried to choose a path to please everyone, which I suspect will please no one.â€

He adds: “The housing market is the engine of the UK economy and it is likely that this Budget will be remembered as largely ineffectual given the magnitude of the problem.

“There is very little here for first time buyers, who need more encouragement to climb onto the property ladder – which will get everything moving.

“Mr Darling has used a water pistol to try to put out a fire.â€

And the BOE said in May 2009 :

No Green Shoots

The Bank of England is concerned that the UK's banking system is heading for a third wave of crisis that could snuff out fragile signs of recovery in the economy.

On Thursday the Bank surprised the City by announcing that it would pump an extra £50bn of new money into the economy despite recent stockmarket rallies.

Now the Guardian has learned that this increase in quantitative easing was driven by fears in Threadneedle Street that the credit crunch is still sucking the life out of the British economy and the banking sector remains in deep trouble.

The new mood of caution chimes with comments from business leaders yesterday, who warned that apparent green shoots in the economy had shallow roots.

Richard Lambert, director general of the CBI, said: "The fact is that for all the injections of taxpayers' money, the credit markets are still not working properly."

Bank of England officials are concerned that big banks now supported by the taxpayer, such as Royal Bank of Scotland and Lloyds Banking Group, are struggling to increase lending volumes, as they had promised in return for help from the government.

The governor, Mervyn King, and several other members of the Bank of England's monetary policy committee are said to be unconvinced by talk of green shoots that has helped propel the FTSE 100 share index up by more than 20% over the last month.

Fears of a false dawn echo the mood at the beginning of the year, when apparent recovery in financial markets was wiped out by a second wave of crisis led by RBS and Lloyds.

This week both banks again warned of sharp increases in bad loans to British business customers. RBS said yesterday it was seeing little sign of green shoots.

Continued weakness at these banks may prevent the increase in lending that ministers are desperate to see, and dash hopes of a pre-election recovery for Labour.

The Bank of England is also worried that continued stresses in the global financial system will suck money out of the UK as cash-starved international banks bring money back home. Foreign banks are thought to be withdrawing funds from Britain once loans expire, rather than roll them over.

So if the lenders are currently lending to the max :

Even if They Wanted to Lend

In 2007, banks made 800,000 mortgage approvals, but only 400,000 were made from their own resources. Banks today are already offering mortgages at an annualised rate of about 375,000 approvals – nearly as much as at the peak of the market.

So, how much more can banks realistically do? Perhaps they can lend another 20%, to reach a total of 450,000 mortgages. Add in the struggling building societies at 100,000 loans (a third of their peak) and 20,000 from specialist lenders (down 75%) and the total may be just 570,000 a year.

What does this mean for house prices? History suggests the balance point lies at about 900,000 approvals; below this, prices fall and above it prices rise. So, there may not be enough money in the system to keep house prices rising.

What is driving this bounce?

Is it the limited supply leading to people offering 2007 values? If it is will it, as Fitch and others have said, be rectified if more people put their propeties on the market driving the prices down? Or are we now in a "Sweet Spot" that will carry on throughout the year resulting in people saying by the winter property will be back to 2007 values by the summer of 2010!?

To be honest, I can't see how the market can't fall, but this is looking convincing and I can see why people are jumping