E As Say Rise In House Prices Is Grinding To A Halt

[NEO72]

Another poster has just alerted me to the prices in Potters Bar - ordinary refurbished semis fetching money that I would not believe possible although the one he highlighted went cheaply it seems http://www.housepricecrash.co.uk/forum/index.php?showtopic=134507&st=0&gopid=2341364&

Having not looked at prices round that way that regularly, I can see the prices have shot up there.

It really is beyond belief. I just do not understand where the money is coming from. How many banks of mum and dad are there, how many people are earning enough to pay for these - or are they again on high multiples and generally negligent lenders?

It is completely out of control. AGAIN. (Although the poster's anecdotal on the selling price gives some hope I grant you.)

TLB

The thing is, as we have discovered, there are enough 'cash-rich' buyers to prop up a low volume market temporarily - particularly since they (mistakenly) think they are getting a bargain. However there aren't enough of these to support the market long-term, particularly as volumes increase, and besides as prices/interest rates creep up (contrary to media reports it's pretty much only in the south east where this has been happening btw) those remaining will be less motivated to jump in. Sit on your hands and enjoy the ride - it's closing time at the free-money bar...

[0q0]

The thing is, as we have discovered, there are enough 'cash-rich' buyers to prop up a low volume market temporarily - particularly since they (mistakenly) think they are getting a bargain. However there aren't enough of these to support the market long-term, particularly as volumes increase, and besides as prices/interest rates creep up (contrary to media reports it's pretty much only in the south east where this has been happening btw) those remaining will be less motivated to jump in. Sit on your hands and enjoy the ride - it's closing time at the free-money bar...

Yes this is the SE. It is surprising how credit-rich or genuinely minted so many people seem to be. Those that have the dosh really have the dosh. Some did get a bargain, however. In particular that detached I keep mentioning - £225K they paid - now similars are up for at least £280K just a staggering 11 months after sale agreed or 4 months since LR shows the transaction date last Oct. Very nice inside it was, structurally I've no idea.

Edited January 12, 2010 by The Last Bear

[ebob]

"The number of houses coming on the market is increasing, while the number of people looking to buy is falling, which will lead to a stagnation in the rise of prices. "

Hmmnm, now according to my GCSE economics, when supply increases and demand decreases, what happens to prices? The answer isn't 'a stagnation in the rise of prices'.

Pablo, the UK government financially depends upon HPI. They will do all they can to maintain HPI, many on this board have underestimated the extent to which government will go to rig the game. I have been lurking here for circa five years and have seen house prices constantly increase NOT fall in London and the South East.

Quoting economic models now becomes irrelevant. Many economic, financial and common sense models have been breached.

One should consider the recent bailout for what it is. The poor bailing out the rich. Once upon a time there were riots in the street as the government tried to introduce a poll tax. But this recent 'banker tax' passed without incident.

So the moral of the story is that the government can rig the game, knowing they can get away with it.

Keep Smiling.

Ebob

[MississippiJohnHurt]

Pablo, the UK government financially depends upon HPI. They will do all they can to maintain HPI, many on this board have underestimated the extent to which government will go to rig the game. I have been lurking here for circa five years and have seen house prices constantly increase NOT fall in London and the South East.

Quoting economic models now becomes irrelevant. Many economic, financial and common sense models have been breached.

One should consider the recent bailout for what it is. The poor bailing out the rich. Once upon a time there were riots in the street as the government tried to introduce a poll tax. But this recent 'banker tax' passed without incident.

So the moral of the story is that the government can rig the game, knowing they can get away with it.

Keep Smiling.

Ebob

I bring you good news: the government can't actually rig a game this big.

[Bobajobbob]

I'll add my perspective to this, as fingers, crossed I will exchange on the sale of my place this week. My place sold in about month after we dropped the price by 4% from the original asking. It is a good house and we priced it quite fairly to start with. Certainly it would have sold for more a couple of years ago but it was not a difficult transaction and we received offers from 3 of the 7 or so viewers.

Our reasons for selling are that we are moving area and the lack of choice in the new area means that we are going to be renting for a year or so as we get to know the town and exactly where we want to live. Having said that there is nothing on the market there so we could not have bought even if we wanted to. Those few houses that are on the market are in my opinion overpriced.

I'm happy with the timing of the sale and happy to be renting next year as in my view prices should head lower next year and rates up. Having said that it is an enormous headache dealing with the surplus cash at this time. In the perfect world the money would be invested and gaining interest to offset the rent however no matter where you look even with a chunk of change interest is hard to come by without risk. Put it in the bank and you have to split it umpteen times to avoid the bank going under and there simply aren't enough banks around to do it and most pay negligible rates. Give it to the government who pay even less but do I trust them? No. Short gilts yield nothing. I'm not going to bet my house on gold. Stocks are too risky and due a correction. It is a huge PITA and I can see why prefer not to rent at the moment.

Having said that with a bit of luck the market will turn down next year and rates will head up so that the gap between income/rent and eventual house purchase price will work in my favour but it isn't something that I feel very comfortable with.

[lets get it right]

I bring you good news: the government can't actually rig a game this big.

I bring you bad news. They can and have.

Instead of losing faith in property, people have lost faith in banks. As property prices started to fall, people took their money out of banks and bought property - stopping the falling prices.

What can you do?

[MississippiJohnHurt]

I bring you bad news. They can and have.

Instead of losing faith in property, people have lost faith in banks. As property prices started to fall, people took their money out of banks and bought property - stopping the falling prices.

What can you do?

Fair enough, we differ. The key thing for me is bank balance sheets. They are the providers of capital and they will continue to be very conservative for a number of years. I think the rest is just fluff really. (Don't get me wrong, I accept that stimulus has softened the landing a bit, I think this was all it was ever intended to do. But it won't save the housing market from the necessary correction, IMO).

Re your point about banks, I don't think there are enough people capable of buying in cash to make a significant difference. I don't even think it was the main factor in the recent rises in the indices.

[the flying pig]

Pablo, the UK government financially depends upon HPI. They will do all they can to maintain HPI, many on this board have underestimated the extent to which government will go to rig the game. I have been lurking here for circa five years and have seen house prices constantly increase NOT fall in London and the South East...

that's not true. whilst the majority of initial asking prices, and indeed a few sold prices, remained as high as or higher than in mid 07 or whenever the peak was supposed to have been, prices overall fell somewhat. this is supported by every source imaginable, including estate agents, published indices, anecdotals, the lot. half or more of the initial losses appear to have been recovered but it would be a nonsense to suggest that london house prices are not now lower than at peak, and even sillier to suggest that they did not drop at all in 2008.

[ebob]

that's not true. whilst the majority of initial asking prices, and indeed a few sold prices, remained as high as or higher than in mid 07 or whenever the peak was supposed to have been, prices overall fell somewhat. this is supported by every source imaginable, including estate agents, published indices, anecdotals, the lot. half or more of the initial losses appear to have been recovered but it would be a nonsense to suggest that london house prices are not now lower than at peak, and even sillier to suggest that they did not drop at all in 2008.

The silliest are those that cannot see the reality of the 'make believe economics'. They are here now. The incumbent government has been practicing 'make believe economics' since it won power.

In this rigged game the house ALWAYS wins.

Look at the 'make believe economics' of using central banks (mostly an extension of the government) socialising bankers losses.

I too once believed that HPI would reverse but now fear that barring some sort of miracle or divine intervention etc; HPI will continue to be rigged upwards.

And after five years of passive involvement on this site, I believe that an area like SE England (inc London), will generally trend upwards in line with real inflation. In the absence of HPI, the government will not be able to inflate aways its debts; which in time would lead bankruptcy with ensuing chaos and civil unrest.

I think areas outside SE England will experience real house price losses, due to the absence of real jobs that enable stupid multiples supporting ludicrously high house prices.

[Gone baby gone]

I bring you bad news. They can and have.

Instead of losing faith in property, people have lost faith in banks. As property prices started to fall, people took their money out of banks and bought property - stopping the falling prices.

What can you do?

Wait. In fact, that's all you need to do.

[Bloo Loo]

i must admit there were loads of people that i talked to over the christmas period that were saying money is no good in the bank, and property is where you want to put your money, and that they were buying houses for their kids, as it will always be good, and a few that were even thinking about BTL as their money was not getting anything in the bank,

so if we have a few good IR rises, this would also stop people thinking about property, as another thread said , if they are thinking of IR rises then, this will / could be the massive falls in house prices,

all this talk, yet lenders are careful who they lend to, flats arent selling, and sales are half what they were.

people are full of it.

[Byron]

"The number of houses coming on the market is increasing, while the number of people looking to buy is falling, which will lead to a stagnation in the rise of prices. "

Hmmnm, now according to my GCSE economics, when supply increases and demand decreases, what happens to prices? The answer isn't 'a stagnation in the rise of prices'.

You really must pay attention at the back there and learn NuLabour Newspeak properly.

Rises and falls are two entirely separate things.

If prices stop rising, then there is stagnation in price rises. Even if they are falling, this does not mean a negative rise, a fall is a totally separate thing.

It is not necessary to employ doublethink, just understand that rises and falls have nothing to do with each other.

Remember, if prices fall, you owe more. That makes you better off because:-

DEBT IS WEALTH

Signed,

G. Brown

Director

Minitruth

[Realistbear]

Pablo, the UK government financially depends upon HPI. They will do all they can to maintain HPI, many on this board have underestimated the extent to which government will go to rig the game. I have been lurking here for circa five years and have seen house prices constantly increase NOT fall in London and the South East.

Quoting economic models now becomes irrelevant. Many economic, financial and common sense models have been breached.

One should consider the recent bailout for what it is. The poor bailing out the rich. Once upon a time there were riots in the street as the government tried to introduce a poll tax. But this recent 'banker tax' passed without incident.

So the moral of the story is that the government can rig the game, knowing they can get away with it.

Keep Smiling.

Ebob

I am in the SE--near the hot spot in fact (Brighton), and have observed 20% off the average house over last 2 years. Even the Bovis estate had to cut there 4 bed detached's from 329 to 279 in the last 12 months--and that was the advertised prices.

LR data for the last 12 months:

Annual change in house price

-12.9%

ALL PROPERTIES: Click headings to re-order table AREA AV PRICE QUARTER ANNUAL SALES

Wealden £266,001 -4.4% -11.7% 454

Brighton and Hove £243,168 4.4% -12.9% 803

Lewes £232,774 1.9% -9.4% 309

Rother £225,897 4.4% -16.0% 297

Eastbourne £176,799 0.2% -15.0% 368

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/ml.stm

The government can rig the game for awhile and then comes the bond market. With so much government debt, IR will rise to avoid a cut in our credit rating. Brown's decade of HPI imprudence will be paid for and any further attempts to inflate it away will be met with commensuarte IR hikes. The property market is doomed to return to below affordable levels for awhile. The bottom feeders are still unable to buy and the chains cannot move until house prices return to 3 times average income. As of today they are still around 6 times average household income. They have another 50% to fall.

Edited January 12, 2010 by Realistbear

[ebob]

I am in the SE--near the hot spot in fact (Brighton), and have observed 20% off the average house over last 2 years. Even the Bovis estate had to cut there 4 bed detached's from 329 to 279 in the last 12 months--and that was the advertised prices.

LR data for the last 12 months:

Annual change in house price

-12.9%

ALL PROPERTIES: Click headings to re-order table AREA AV PRICE QUARTER ANNUAL SALES

Wealden £266,001 -4.4% -11.7% 454

Brighton and Hove £243,168 4.4% -12.9% 803

Lewes £232,774 1.9% -9.4% 309

Rother £225,897 4.4% -16.0% 297

Eastbourne £176,799 0.2% -15.0% 368

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/ml.stm

The government can rig the game for awhile and then comes the bond market. With so much government debt, IR will rise to avoid a cut in our credit rating. Brown's decade of HPI imprudence will be paid for and any further attempts to inflate it away will be met with commensuarte IR hikes. The property market is doomed to return to below affordable levels for awhile. The bottom feeders are still unable to buy and the chains cannot move until house prices return to 3 times average income. As of today they are still around 6 times average household income. They have another 50% to fall.

RealisticBear

You have quoted the theory. I agree with the theory. The reality may transpire to be different.

Governments should have been hammered for QE. They got away with it for a while. Will they continue to get away with it? Possibly, as they could launch a war to get the dumb electorate to rally behind them; they always do;

They could 'permit' another terrorist attack on UK ground; perhaps a more vicious one. The US could experience another '9/11', whoever flew the planes. This way the could introduce some sort of military law.

Anything could happen in these extreme times. So I am less sure about conventional practice, let alone conventional economic rules.

Let's see what actually happens.

[geoffk]

The time it is taking to sell tells me all i need to know...

from jan09 to jan 10

4 Bedrooms 222 days 305 days +37%

3 Bedrooms 217 days 260 days +20%

2 Bedrooms 194 days 257 days +32%

1 Bedroom 206 days 284 days +38%

All 212 days 264 days +25%

http://www.home.co.uk/

[the flying pig]

The silliest are those that cannot see the reality of the 'make believe economics'. They are here now. The incumbent government has been practicing 'make believe economics' since it won power.

In this rigged game the house ALWAYS wins.

Look at the 'make believe economics' of using central banks (mostly an extension of the government) socialising bankers losses.

I too once believed that HPI would reverse but now fear that barring some sort of miracle or divine intervention etc; HPI will continue to be rigged upwards.

And after five years of passive involvement on this site, I believe that an area like SE England (inc London), will generally trend upwards in line with real inflation. In the absence of HPI, the government will not be able to inflate aways its debts; which in time would lead bankruptcy with ensuing chaos and civil unrest.

I think areas outside SE England will experience real house price losses, due to the absence of real jobs that enable stupid multiples supporting ludicrously high house prices.

I just think that's wrong. even estate agents, literally all of the ones i've spoken to, have admitted to price falls in the reasonably nice areas of London and its surrounds that I've been looking at over the past 12 months. Have prices fallen as far as I'd like them to? Nowhere near. Have all sellers accepted that prices have fallen? Certainly not. But I find it a bit odd for someone on this forum to essentially be more bullish than any estate agent I've ever spoken to. Well, extremely odd to be honest.

Edited January 12, 2010 by the flying pig

[tim123]

Ditto here. The flats in many areas will probably drop fastest and farthest, not just the city centre shoeboxes but the rest. ).

I wish I were seeing that where I am looking

Many are still at, or above, 2008 prices.

tim

[dances with sheeple]

Pablo, the UK government financially depends upon HPI. They will do all they can to maintain HPI, many on this board have underestimated the extent to which government will go to rig the game. I have been lurking here for circa five years and have seen house prices constantly increase NOT fall in London and the South East.

Quoting economic models now becomes irrelevant. Many economic, financial and common sense models have been breached.

One should consider the recent bailout for what it is. The poor bailing out the rich. Once upon a time there were riots in the street as the government tried to introduce a poll tax. But this recent 'banker tax' passed without incident.

So the moral of the story is that the government can rig the game, knowing they can get away with it.

Keep Smiling.

Ebob

Keep dreaming, they haven`t collected any taxes yet, just pricked about with QE buying their own debt If the tax screw turns too tightly there may still be some riots. Lets face it the rich and "homeowners" are going to be hammered for tax if the country is to carry on, London will end up like "Day of the Triffids"

[tim123]

I bring you bad news. They can and have.

Instead of losing faith in property, people have lost faith in banks. As property prices started to fall, people took their money out of banks and bought property - stopping the falling prices.

What can you do?

The problem with this analysis is that the biggest rises in the past 12 months have come from data for people who have needed mortgages.

If the banks are giving mortgages on a propery it must have been valued at somthing near the agreed price, even if the purchasor is putting up 25% cash.

tim

[0q0]

I wish I were seeing that where I am looking

Many are still at, or above, 2008 prices.

tim

My observations on the flats here (SE) in the OK but not best area :-

Late 2008 2 x 135K two bed freehold share with gdn converteds sold for £124K-£127K

Mid 2009 £105K two bed leasehold with gdn converted offered £125K, unsold, offered at auction guide £105K unsold, available

Mid 2009 3 flats in same good block near station but noise from railway line, auction two beds £92K to £101K, one bed £89K -

these flats now valued at £135K and £120K retail.

[Jack's Creation]

The linguistic knots the rampers end up in when they are desperately trying NOT to state the obvious are a special kind of comedy... You'd think house prices were only capable of rising slowly, rising quickly, or stagnating. Wait, did I miss one?

Yes, rising negatively.

[Home_To_Roost]

Printy printy .......

[Mr Punter]

I am in the SE--near the hot spot in fact (Brighton), and have observed 20% off the average house over last 2 years. Even the Bovis estate had to cut there 4 bed detached's from 329 to 279 in the last 12 months--and that was the advertised prices.

LR data for the last 12 months:

Annual change in house price

-12.9%

ALL PROPERTIES: Click headings to re-order table AREA AV PRICE QUARTER ANNUAL SALES

Wealden £266,001 -4.4% -11.7% 454

Brighton and Hove £243,168 4.4% -12.9% 803

Lewes £232,774 1.9% -9.4% 309

Rother £225,897 4.4% -16.0% 297

Eastbourne £176,799 0.2% -15.0% 368

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/ml.stm

The government can rig the game for awhile and then comes the bond market. With so much government debt, IR will rise to avoid a cut in our credit rating. Brown's decade of HPI imprudence will be paid for and any further attempts to inflate it away will be met with commensuarte IR hikes. The property market is doomed to return to below affordable levels for awhile. The bottom feeders are still unable to buy and the chains cannot move until house prices return to 3 times average income. As of today they are still around 6 times average household income. They have another 50% to fall.

The stats you posted are out of date. They have clawed back most of those losses in the last six months. If houses fall to 3 times income, put me down for a dozen BTLs.

[tiggerdoo&see]

The problem is, as more properties come on to the market and we, hopefully, get a stagnation then that is what we will get... and how long will that last? 12 months? 18 months? More?

You are still getting house prices are rising stuff in print and on TV - sellers are still brainwashed into believing house prices are rising and they wil lget their full asking price.

I just had a lady from Leeds Building Society ring me up to tell me that they have new products at 3% IR and that my money is earning nothing at the moment... conversation got round to house prices and I got the "Swansea is different" stuff in the same sentence as admitting that house prices were over-priced.... By that, I mean there seems to be this 'mentality', across the UK and not just in my home town, of believing that 'your' area somehow is able to justify the ridiculous asking prices.

Yes, we may get stagnation this year - may - but how long will it go on for?

Who is it that puts the price on the house? Is it the EA's? A bit like the chicken and the egg..

[Hip to be bear]

Yes, rising negatively.

The VIs call it 'negative HPI'....When wrapped up in jargon it is less scary to them and the sheeple!