Hpcni Sentiment October 09

[Reraise]

What do you all think of the current state of the NI market and prospects for FTBs?

I have mixed views at the minute. I'm really hoping that prices fall further so that I can get a better place when I do decide to buy, and for the past 18 months I had not doubted my decision to rent and wait. Things have been changing recently though, and I'm quite confused by some of it. I used to think that things were clear: credit boom -> HPI ->bubble -> bubble burst -> falling prices for 5 years or more. Recent HP news from across the water appears to indicate that things may be changing. Can it last? How is it happening? Only a small proportion of FTBs in NI can afford to buy at present, and so things should continue to fall. But locally (East Belfast) I see 2 major housing projects underway and some smaller developments being announced. Prices for these developments are maybe 30% below peak. Some of the bigger developments have major bank and government support, so I find it hard to believe that things will nosedive and the VIs will lose money. What's going on?

[redprince]

What do you all think of the current state of the NI market and prospects for FTBs?

I have mixed views at the minute. I'm really hoping that prices fall further so that I can get a better place when I do decide to buy, and for the past 18 months I had not doubted my decision to rent and wait. Things have been changing recently though, and I'm quite confused by some of it. I used to think that things were clear: credit boom -> HPI ->bubble -> bubble burst -> falling prices for 5 years or more. Recent HP news from across the water appears to indicate that things may be changing. Can it last? How is it happening? Only a small proportion of FTBs in NI can afford to buy at present, and so things should continue to fall. But locally (East Belfast) I see 2 major housing projects underway and some smaller developments being announced. Prices for these developments are maybe 30% below peak. Some of the bigger developments have major bank and government support, so I find it hard to believe that things will nosedive and the VIs will lose money. What's going on?

My take on things right now is that we are halfway into where all this economical woe will end up.Banks are in a terrible state eg witness First Trust selling some of their buidings and leasing them back!!!Govt cutbacks have not yet started in earnest and the unemployment figures are getting higher and will continue to do so for some time to come.Recovery?Dream on.When we get to x 3.5 salary for average hp then its over as far as falls are concerned.In Ballymena we are a long way from that point.At least 20% more to come off them yet so i am renting for at least 6-9 months.

Edited October 15, 2009 by redprince

[Malthus]

What do you all think of the current state of the NI market and prospects for FTBs?

I have mixed views at the minute. I'm really hoping that prices fall further so that I can get a better place when I do decide to buy, and for the past 18 months I had not doubted my decision to rent and wait. Things have been changing recently though, and I'm quite confused by some of it. I used to think that things were clear: credit boom -> HPI ->bubble -> bubble burst -> falling prices for 5 years or more. Recent HP news from across the water appears to indicate that things may be changing. Can it last? How is it happening? Only a small proportion of FTBs in NI can afford to buy at present, and so things should continue to fall. But locally (East Belfast) I see 2 major housing projects underway and some smaller developments being announced. Prices for these developments are maybe 30% below peak. Some of the bigger developments have major bank and government support, so I find it hard to believe that things will nosedive and the VIs will lose money. What's going on?

Half time break

Government cuts and interest rises planned for second half.

A double dip recession / HPC unavoidable imo

[polythene pam]

Yes, it looks like this is going to be a double dip recession. However, it is a bit depressing when things start to pick up with house prices this high. It would seem like madness to borrow the the max on offer (6 times salary) to buy a half decent gaff when interest rates are this low. Part of me fears that I have become a permanent bear and will end up living in some housing estate in my dotage, still muttering about house prices being too high.

Anyway, it's all academic. Unless we want to live in a house half the size of what we rent, for the same money, then we're staying put until I return to the workforce and add to our buying power.

Edited October 15, 2009 by polythene pam

[Belfast Boy]

Funny I was thinking of starting a similar thread entitled - "What keeps the bears going, what thoughts do you hold onto that makes you know that the crash is not over."

I always said that this crash would take 3-7 years. Don't forget that we are still only at year 2.

Read my signature and look at the Nationwide graph. House prices are still off the scale of that graph.

Ignore the current market, it is simply a bull trap.

[Reraise]

Funny I was thinking of starting a similar thread entitled - "What keeps the bears going, what thoughts do you hold onto that makes you know that the crash is not over."

I always said that this crash would take 3-7 years. Don't forget that we are still only at year 2.

Read my signature and look at the Nationwide graph. House prices are still off the scale of that graph.

Ignore the current market, it is simply a bull trap.

What if it isn't as simple as price/earnings ratio? And as BVI points out, double income households are more common and this could push the long term ratio up. Also, this is not the same as the 90's crash in England, we have seen much more government intervention. They might be happy to inject the banks until inflation filters through and we end up with more realistic ratios. I'm not saying that this is the case, but it is certainly a possibility.

[shipbuilder]

What if it isn't as simple as price/earnings ratio? And as BVI points out, double income households are more common and this could push the long term ratio up. Also, this is not the same as the 90's crash in England, we have seen much more government intervention. They might be happy to inject the banks until inflation filters through and we end up with more realistic ratios. I'm not saying that this is the case, but it is certainly a possibility.

Two points there - houses were reasonably priced around 2002 in my opinion - I'm pretty sure double income households aren't that new. Also, house price inflation cannot happen without wage inflation and I only see wage deflation at the moment.

[Ride_on]

I am getting quite p**d off with the speed, and partial recovery, who is supporting this??. Prices should be dropping. I feel there is something insidious going on, banks have not reduced their affordability criteria, and there are stories that they are hoarding up housing stock in auction circles of non-sale or slow sales. I've got to hand it to them, they have done a good job on the gov't and the public and are still reeling it in with talk of bonus handouts again.

Of course all this is very hard to prove, are we missing some rich niche not recorded in average salary statistics, that is supporting prices? Do we not understand the pressure to go to high interest rates, can people afford the mortgages that are being given out now. Can the gov't just go on borrowing ad infinitum, can banks just lend more and more from the future. Do we not each need 20 young people to fund our old age if we survive?

In answer to myself, I think it is just my impatience, a year or 2 is a short time in finance, especially when the tax payer has bailed them out. However when something does happen it maybe very bad, tin hat and bunker at the ready. BOE is already showing signs of releasing the interest rate, wait for the pop.

[Malthus]

Where I live the prices were astronomical for oversized houses with loads of ensuites and fancy kitchens.

Nothing much is selling here and prices are starting to drop at last. Nowhere near enough yet but I think some builders are getting caught short with the McMansions not selling. Since I only want a very simple plain house with a decent garden I can afford to wait a bit for that.

I think that winter is going to be hard for selling houses and I predict that estate agents are going to have a tight Christmas.

This McMansion appeared on TDGTTS this week , a particularly funny example What were they thinking

http://www.propertypal.com/1b-ballyvannon-road-ballinderry-upper-lisburn/53806

[paul65]

This McMansion appeared on TDGTTS this week , a particularly funny example What were they thinking

http://www.propertypal.com/1b-ballyvannon-road-ballinderry-upper-lisburn/53806

11 (eleven) bedrooms - WTF!

[ratatat]

I am actually considering whether buying now might just be a better option for me. There have been decent falls and although I expect to see the same again and prices are still stupidly high I wonder whether it may be better to just spend 5 years paying off the overpriced part of property and living in it during that period than waiting 5 years for it to be at a more appropriate price. Really think its going to be that drawn out from here depressingly enough, other options are moving to Scotland or out of the UK, both of which I'm considering however if prices were normal here I wouldn't consider moving but I've had it with living in a semi in a town, need to move on so I either suck it up here or go somewhere more sane. So the mood here is pretty resigned, if things don't take a tumble this winter I fear it never will.

[Daenad]

What if it isn't as simple as price/earnings ratio? And as BVI points out, double income households are more common and this could push the long term ratio up. Also, this is not the same as the 90's crash in England, we have seen much more government intervention. They might be happy to inject the banks until inflation filters through and we end up with more realistic ratios. I'm not saying that this is the case, but it is certainly a possibility.

It could push the ratio up, but it if your mortgage is based on the sum of 2 incomes, chances are you will be in a bit of trouble even if only one of you get's made redundant. This in my opinion increases your exposure to any downturn and so increases the number of families in trouble. The result of which, in my opinion, is that dual incomes shouldn't affect the long term average but that it will affect the amplitude of the swings either side.

As for the government intervention, excluding the stuff they're getting out of the Xerox machine, it has to come from the taxpayers, meaning tax increases could be a nice little christmas present. This may hamper peoples desire to go out an buy overpriced houses.

Just my 2 cents (or 20 μ oz of gold, for you survivalist folks).

[azogar]

the last quarterly natwide figures surprised me - shook me out of my cosy bears outfit

the figures should have been flat, but in this post QE and weaker £ environment, a bounce occurred that was surprising to say the least

house prices should go down from here; they have declined in the US (and continue to do so in many states), the tories in all probability will win the next election and try and tighten up on Labours loose spending / debt fueled binge (= stronger £ = most likely house price depreciation). However, if the BoE decide to re-embark on the QE train, sterling continues to weaken, who knows what may occur?

fwiw, i think we will have another deflationary bust next year akin to Oct/Nov 2008, which in turn will undoubtedly turn HP's south again. However, rather than trust sentiment, I will watch the data, and therefore until the data turns south again my opinion is neutral (but certainly not bullish)

the elephant in the room

[Vespasian]

Asking prices are consistently falling on TDGTTS (albeit slower than 18mths ago) - This is important to remember, the market is still declining

However, government policy is fully directed at supporting the housing market, which is simply a continuation of what it has been doing since gaining office - now reduced to the desperation of unsustainable borrowing, 300year low interest rates, stamp duty waiving and printing money

Add to this, the whole NI property VI brigade working together (local finance, developers and media), the bulltrap has certainly been sprung

All they have done is drawn the whole thing out, prolonging the time to when, ordinary people can afford property. A pity really.

When I started my current job in December 2007, people asked where I was buying a house. When I told them I was renting, waiting for the crash, they thought I was quite unwise and I should buy because there would be no crash.

I am sometimes still asked when I'm going to buy as the crash is over, I just now say "gonna look in about six months"

Brown disgusts me, borrowing to get out of a mess creating due to overborrowing, now trying to pawn off a few token heirlooms to raise about enough to pay for a few weeks more borrowing. He knows his only vague hope for re-election is to keep spending what we don't have. When the Tories get in, its game over for the housing market.....I hope

Edited October 17, 2009 by Vespasian

[paul65]

What do you all think of the current state of the NI market and prospects for FTBs?

Reraise, I think it is only a matter of time before the banks and lenders have to offload repossessed assets ...at bargain basement values ... and auction will be where its at. I'm not just saying that because of my auction watching here in NI. I've been following the unfolding foreclosure stories on the other side of the Atlanic and if the UK and ROI follow that auction approach eventually (we always seem to be 6 - 9 months behind the USA on everything) FTB's will have quite a choice.

Take a look at the article entitled "At foreclosure auctions, broken dreams on sale" from Reuters this Thursday

CHICAGO (Reuters) - The seven-bedroom, three-bath house in this city's West Garfield Park neighborhood had once been someone's American Dream.

But at a recent auction of about 100 foreclosed houses and condos, it was just Property No. 20 -- and drawing no bids from a roomful of buyers despite its bargain-basement price.

"Any interest in this home at $7,000?" fast-talking auctioneer Renee Jones asked the crowd. "If not, we'll move on."

Saddled with swollen portfolios of foreclosed and unsold properties in the housing crisis, U.S. lenders and builders are turning to professional auctioneers to help them unload the unwanted real estate in a hurry.

It is an open question whether the auctions indicate that the U.S. real-estate market is recuperating or is still in intensive care.

But the rapid-fire, under-the-hammer sales -- usually resorted to only after every other effort to market a property has failed -- are on the rise across the United States, providing a colorful burst of activity in a corner of the weak economy that needs all the life it can get.

[nemesis]

What do you all think of the current state of the NI market and prospects for FTBs?

I'm just about old enough to remember three previous recessions. This current one is like the others - you always expect something dramatic to happen but of course it never does - just the drip, drip, drip of things steadily getting worse. Of course, building still goes on, people still shop and most still have a job - but it doesn't mean house prices won't continue to fall, interest rates won't soon rise and public spending won't soon be dramatically cut.

Don't worry about missing the boat - be very, very grateful you won't be on it when it sinks! As for FTB's - their prospects have never been better, provided they have the patience to wait! Sure, they'll probably miss the bottom of the market - but that's certainly better than being routed half-way from the top.

[BelfastVI]

Asking prices are consistently falling on TDGTTS (albeit slower than 18mths ago) - This is important to remember, the market is still declining

However, government policy is fully directed at supporting the housing market, which is simply a continuation of what it has been doing since gaining office - now reduced to the desperation of unsustainable borrowing, 300year low interest rates, stamp duty waiving and printing money

Add to this, the whole NI property VI brigade working together (local finance, developers and media), the bulltrap has certainly been sprung

All they have done is drawn the whole thing out, prolonging the time to when, ordinary people can afford property. A pity really.

When I started my current job in December 2007, people asked where I was buying a house. When I told them I was renting, waiting for the crash, they thought I was quite unwise and I should buy because there would be no crash.

I am sometimes still asked when I'm going to buy as the crash is over, I just now say "gonna look in about six months"

Brown disgusts me, borrowing to get out of a mess creating due to overborrowing, now trying to pawn off a few token heirlooms to raise about enough to pay for a few weeks more borrowing. He knows his only vague hope for re-election is to keep spending what we don't have. When the Tories get in, its game over for the housing market.....I hope

By making this statement you are assuming that all the 30,000 houses at the market have already adjusted down the 35%-40% to today's prices. We all know this is not the case. They have been dropping at a rate of 300 to 1,00 per week and usually only 10%, of value at that. I would assume many have took several steps down and I guess that the majority are nowhere near the current market price. Even if prices continue to go up (something I strongly doubt) the majority of these prices would still need to drop to meet that new price never mind today's. So the fact that TDGTTS is continuing to show falls is not in itself a indication that average price is falling. This has been proving over the last quarter when the Nationwide, rather surprisingly showed a massive rise, the TDGTTS constantly showed a fall and will continue to do so as particularly the re-sale market adjusts down to selling prices. Remember if they are selling of their own free will they are free to set the price.

[mr slump]

hi everyone

thought I'd nip back for 5mins

been moved in to the new place for about a month

happy to be free of landlords at last

but still telling people to wait if they can

I have no vested interest in the crash any more

other than maybe some day my son might be able to afford a home of his own

just been lurking in every now and again to see how things are going

I was surprised by the nationwide figures, but surely these are still just based on mortgages?

and the lowest prices will be cash sales

like myself the only other person I know who has bought recently bought for cash WELL below what is viewed as current value

and these do not show in those stats

its pretty obvious from the constant stream of price cuts on trees that things are not all that rosey in EA wonderland

low interest rates are the real prop to all this

and they cannot last

this morning the fsa announced a tightnening of rules on mortgage applications

based on affordability

surely this can only tighten things further sales wise

[Belfast Boy]

just been lurking in every now and again to see how things are going

I was surprised by the nationwide figures, but surely these are still just based on mortgages?

and the lowest prices will be cash sales

like myself the only other person I know who has bought recently bought for cash WELL below what is viewed as current value

and these do not show in those stats

Hi m8,

Glad you have gotten the HPC bug (mostly) out of your system Though this new format should help with that Though I am getting used to it.

Yeah, the latest Nationwide report seems to have really spooked some people on here. I guess people were used to getting it all their own way for a while. They forget that a house prices crash doesn't happen in months - it will take years. I have always said the HPC will take 3-7 years. The Nationwide figures are just a blip.

Good luck,

BB

[BelfastVI]

h

low interest rates are the real prop to all this

and they cannot last

this morning the fsa announced a tightnening of rules on mortgage applications

based on affordability

surely this can only tighten things further sales wise

The report released today is the outcome of all the talk that went on in early summer. You may remember the press releases on how L to V was going to be fixed to a max of 70% and the price to income was also going to be fixed. As with all these things they come out as nothing of the sort. The headlines are saying the new rules will bar liar loans and people with poor credit history getting a mortgage. That will show them. Has anybody tried to get a mortgage lately. You need something like 3 years history of constant employment, almost totally clean credit history. All good and proper stuff. This is all too late and quite frankly irrelevant as the mortgage industry, unable to rap and sell on these products have to keep them on balance sheet and are making dam sure they are sound.

"Low interest rates are the real problem to all thi"s. Strange statement Mr. Slump. I took it easy credit was the real problem that caused all this. Would you like to see interest rates rising?

If you are looking for a fixed rate at the moment, bar you have 40% deposit, you are looking at 5 to 6%. Pretty much the same rates as when the base rate was 4.5% and Libor was 5.5%. So the rates have not followed base down. Either the banks are being greedy and pocketing the difference or they are pricing in a return to normal or both. Either way the base rate could go up 8x without it having an effect on the mortgage rates. Recent press releases, if you dare go by them, point at interest rates staying low for the next few years, but these things can change within weeks, in my view.

[Vespasian]

By making this statement you are assuming that all the 30,000 houses at the market have already adjusted down the 35%-40% to today's prices. We all know this is not the case. They have been dropping at a rate of 300 to 1,00 per week and usually only 10%, of value at that. I would assume many have took several steps down and I guess that the majority are nowhere near the current market price. Even if prices continue to go up (something I strongly doubt) the majority of these prices would still need to drop to meet that new price never mind today's. So the fact that TDGTTS is continuing to show falls is not in itself a indication that average price is falling. This has been proving over the last quarter when the Nationwide, rather surprisingly showed a massive rise, the TDGTTS constantly showed a fall and will continue to do so as particularly the re-sale market adjusts down to selling prices. Remember if they are selling of their own free will they are free to set the price.

Your point doesn't make sense. Asking prices are falling because those who actually wish to sell cannot, indicating supply is still outstripping demand at current pricing levels. This indicates a problem in the housing market. Just because Nationwide have agreed mortgages on properties of a higher value in the 3rd quarter than the second doesn't mean house prices are rising.