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sam

How Is This Market Holding Up

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Hi All

I have been a lurker on this board for a while now, although i think this board is very biased(to be expected from a site called housepricecrash) i have found some of the analysis superb.

I myself have been very bearish on property for about 2 years now, there is no fancy facts and figures in my prognosis, i just often look at a typical 3 bedroom house and have concluded that it just is not worth the money at todays prices.

I think when interest rates went as low as 3.75%, the nation went crazy, we could not handle the idea of cheap money, and have now overdone it.

My big concern now is why is this market still holding up, have we missed something, and for all the ancedotes about this and that house being reduced in price, broadly speaking prices are still holding up.

My question to you Guys, is there any doubts in your head.

There is a few of you Guys i am very impressed with, i like Dr Bubbs contribution most of all. I know a lot of you have been through this a number of times, but when do you think this market is going to bottom, and by how much.

Sam

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In terms of precise dates I've been looking more at the combined Australia / UK / US situation rather than specific individual countries since this corresponds with my view that they are ultimately all caused by the same actions of central banks and market cycles.

I expect at least one of the three countries to be experiencing actual nominal price falls starting between August 2005 and the end of March 2006. This is based on calculations that I did back in March 2005.

No guarantees but that is what I am expecting. A range for the crash to start which is an 8 month window of time.

We are only a week into that time period so I'm not concerned about the accuracy of my prediction yet. A bounce to some extent is a normal occurrence after the top in any market and is to be expected. If there's still a bounce going on at Christmas time then I'll be getting a little more concerned about my prediction...

I think the August to end of November period in Australia will be particularly telling since there's quite a lot of pressure to complete sales by the end of that period. As many people say "we want to be in the new house by Christmas" and of course it's also Spring season too.

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I am starting to come around to a the long drawn out correction theory, up until recently i thought sentiment would play a big part in a collapse, that along with the huge debt households now have.

There is no evidence that BTL are rushing to sell either, i thought once the market peaked many of them would start profit taking.

I still think that the housing market is on a knife edge, but sellers are proving a lot tougher than many of us gave them credit for.

Sam

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I've just been on a completely unrelated site that was discussing house prices.

At the moment we have a "mind set" from sellers regarding prices. There were quite a few that were moaning about not selling because they have had their property on the market for "6 weeks" and not sold. How could this be, because when they sold their last property in 2002, they sold in 2 days?

The penny isn't dropping. The media have been hyping up the market, the government too, the only thing that hasn't been focused on is the actuallity.

Other people were on the site advising them to "wait until the market warmed up". Apparently selling is slow at the moment because "the kids are on holiday".

I think they are daft. Everybody knows that September is colder than August!

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Sam,

Look it's pretty simple really. The UK economy = consumer spending = House price inflation. That is it , that is all that has been going on for the last 5 years in the UK. There used to be a time when FTBs used to feed the bottom of the property market but that always was likely to stop as the FTBs priced themselves out. It was not only the FTBs who priced themselves out though, the BTLers were also there. Once the FTBs were exhausted the BTLers continued and the FTBs just watched. The government and money lenders did not care ,everyone was making money. Now the BTLers began to feel the squeeze with increased competition and lower yeilds so the government begins tinkering, trying to get back FTBs with Stamp duty cuts and shared ownership schemes. Does not work. So start banging on about SIPPS , until the BBC exposed it for what it is (ie of no use to most). Note the government still has not pro-actively debunked the SIPPS myth.

Last hope for the market was rates cuts. Now these may seem to be as effective as the rest of the attempts to revive the market. The problem is as the BTLers took over they were happy with the capital appreciation only. Remove capital appreciation and bang, nobody really wants the hassle of being a landlord.

The one bigger problem that has occurred is that since the BOE and government have began to lower the value of pound in an attempt to shore up house prices they run a massive risk. If they had let the market correct and kept the currency strong that would have been ok. We may now enter a situation like in Japan were rates fell and house prices fell more. The one massive difference between us and Japan is that they are manufacturers who can dig themselevs out of a hole. If we do not have a decent currency we virtually have nothing to help us.

The BOE and government should have let the housing market crash and kept it's currency value.With its current attitude we will lose BOTH on house prices and the value of the pound.

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Sam,

Look it's pretty simple really. The UK economy = consumer spending = House price inflation. That is it , that is all that has been going on for the last 5 years in the UK.  There used to be a time when FTBs used to feed the bottom of the property market but that always was likely to stop as the FTBs priced themselves out. It was not only the FTBs who priced themselves out though, the BTLers were also there. Once the FTBs were exhausted the BTLers continued and the FTBs just watched. The government and money lenders did not care ,everyone was making money. Now the BTLers began to feel the squeeze with increased competition and lower yeilds so the government begins tinkering, trying to get back FTBs with Stamp duty cuts and shared ownership schemes. Does not work. So start banging on about SIPPS , until the BBC exposed it for what it is (ie of no use to most). Note the government still has not pro-actively debunked the SIPPS myth.

Last hope for the market was rates cuts. Now these may seem to be as effective as the rest of the attempts to revive the market. The problem is as the BTLers took over they were happy with the capital appreciation only. Remove capital appreciation and bang, nobody really wants the hassle of being a landlord.

The one bigger problem that has occurred is that since the BOE and government have began to lower the value of pound in an attempt to shore up house prices they run a massive risk. If they had let the market correct and kept the currency strong that would have been ok. We may now enter a situation like in Japan were rates fell and house prices fell more. The one massive difference between us and Japan is that they are manufacturers who can dig themselevs out of a hole. If we do not have a decent currency we virtually have nothing to help us.

The BOE and government should have let the housing market crash and kept it's currency value.With its current attitude we will lose BOTH on house prices and the value of the pound.

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I am starting to come around to a the long drawn out correction theory, up until recently i thought sentiment would play a big part in a collapse, that along with the huge debt households now have.

There is no evidence that BTL are rushing to sell either, i thought once the market peaked  many of them would start profit taking.

I still think that the housing market is on a knife edge, but sellers are proving a lot tougher than many of us gave them credit  for.

Sam

Interest rate cut and now land registry figures +5%, thats all they need to be convinced to hold.

P.S and None of this is directed at you sam, its just a add-on.

The bit that gets me is how people change there mind at the drop of a hat all the time uber bear one minute then bull the next, bascially going off what the media tells them to think , therefore they are neither bull nor bear they are sheep.

People change thier minds literally day to day about the market, if you cant think any futher than a day ahead when it comes to housing then do yourself a favour and dont think.

Edited by theChuz

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Hi Delite

All very technical stuff, and much of it i agree with, but the fact is that the UK homeowner is holding up.

In my view, the property market is a good 30% overvalued, i dare say many of you agree with me.

What we think though does not matter, Joe Public has a home worth £xyz, and he is not budging, yet.

The big question really should be, how long can Joe Public soldier on.

Sam

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Well before we all abandon HPC,and go off to get one of those 'Move in for 99 quid' deals, it is instructive to browse the FAQ regarding headlines during the 199-1994 crash.

http://www.housepricecrash.co.uk/FAQ-1989-...papers-said.php

In particular, the Halifax, every December released preictions that 'House prices coudl go up by x% next year, where x is a biggish number.

By the following June/July, the Halifax were reoporting further falls.

Looks like they have been indulging in paid for journalism for longer than we oroginally assumed

ABB

The Times

THU 06 DEC 1990

House price inflation up

THE annual rate of house price inflation rose in November. The 0.2 per cent year-on-year increase in prices was the first recorded since February by the Halifax Building Society. In October, prices had fallen 0.4 per cent compared with a year earli...

The Times

THU 08 AUG 1991

Halifax building society revises its forecast on house prices

The Halifax building society yesterday revised its forecast of a 5 per cent increase in house prices this year. Britain's biggest building society said it now expected prices to rise by less than 3 per cent this year due to the

recession and soaring...

... and on it went, right through the crash. :)

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I'd say the reason alot of the sellers are not budging is because most of them cannot afford to. If you have mewed up to the hilt then you really cannot afford to drop your price. Therefore I think the stagnation will probably draw out alot longer than expected (barring a serious economic shock), where only the forced sellers are selling and everyone else sits on their hands doing nothing.

Don't forget the BTLers favourite tactic was remortgaging properties up to the hilt so they could use the $ for deposits elsewhere, this is probably the reason why alot of them are holding for now.

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Hi Sam,

Its not often the Tickle posts these days, but thought I'd find a little time to respond as its a position I find myself in as an STR.

We have been renting fo 6 months now, at first I was consumed by information gathering, HPC ....... its very unhealthy :lol:

I have been getting on with life in general, enjoying my Hobby's, putting effort in to work, and generally trying to put house prices on the backburner, sure take interest, but just try to see the bigger picture.

On Friday I bobbed my head in the EA's and picked up the property rag, first time for at least a couple of months.

We sold for 170K in Feb a 3 bed detached, in a mediocre street.

I can now buy one in a nicer location at an asking of £159,950, and this property is not a one off, many of this type of house (average family pad in my opinion) are asking the same price, yes some are still trying for more ........... but they LOOK overpriced.

And thats all I need to know, i've saved at least 10K from the sale of my house, and I've made 5K in interest on my savings in general ...... if that continues i'm 30K a year better off ...... and that'll do nicely ta!

Cheers

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this is probably the reason why alot of them are holding for now.

Yeah, I suspect a lot of BTL-ers simply cannot afford to sell. But equally, if they're mortgaged to 2004 prices by buying late or MEW-ing, they can't afford to keep the place at rents which won't pay the mortgage.

Must be an exciting position to be in: you can't cover the interest on your debts from the yield, but also can't afford to get rid of the properties that are sucking you dry.

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I would agree with Mr Tickle here. Where I live (Exeter) I would say price drops are already showing themselves - evening out at perhaps 5% since the peak.

I fully expect another 10% to come off by this time next year.

A lot of it depends on where you live - the drops will ripple out everywhere over time.

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Hi Sam,

Yes, I agree that the market is holding up quite well and the slow correction theory is looking plausible. But really, the main point is that to service the debt, the economy needs jobs. The recent set of news regarding inflation, unemployment and growth do not suggest that the economy can service this debt, let alone more debts. Already this is evident in banks reporting bad debt write-offs and credit crunch.[barclays are refusing 50% of credit applications]. If the news on employment, growth in consumer spending and business confidence continue to be like they have been for a few months, then sellers will give in and the market drop sharply. If these pointers go in the opposite direction then the market won't crash.

Personally, I feel that the downward momentum has not yet started, but it will, with a devastating crash, more than 30% off current prices. But when? My guesstimate is by September 2006, nobody will ask that question!

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Yeah, I suspect a lot of BTL-ers simply cannot afford to sell. But equally, if they're mortgaged to 2004 prices by buying late or MEW-ing, they can't afford to keep the place at rents which won't pay the mortgage.

Must be an exciting position to be in: you can't cover the interest on your debts from the yield, but also can't afford to get rid of the properties that are sucking you dry.

Poor old TTRTR. Still, he can just walk away from the bad debts and start back up again in Oz with an unblemished credit history, ready to snap up some more lovely BTL flats in their crash-auction rooms. Thank god for that Aussie passport huh? And stupid british mortgage-lenders, huh?

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I am starting to come around to a the long drawn out correction theory, up until recently i thought sentiment would play a big part in a collapse, that along with the huge debt households now have.

There is no evidence that BTL are rushing to sell either, i thought once the market peaked  many of them would start profit taking.

The trouble is that regionally property varies so much there is no such thing as a national trend.

Here's my bit of anecdotal bull from East Berkshire.

I could show you blocks of flats in Reading with a forest of Estate Agents boards outside. Some are 'To Let' - most are 'For Sale'.

A new build development near me (I say new, it was finished before Christmas 2003_ still has 3 flats unsold out of 8. There are 3 'To Let' signs outside.

A new build development near me - 24 flats finished since February this year has a big sign outside that says '60% now sold.' I think this is a lie - I cycled past on Sunday morning at 9.00 and there were 5 cars in the car park. I have never seen more than 5 cars in the car park and, at night, only an odd light is on.

Another new build development near me - 36 2 bed flats and a couple of terraced houses - went in a while ago and pretended to by a buyer - they have rung me and offered me 30k off a price of £199k.

A small block I went past this morning (about 12 flats I would guess) on the way to drop my car in for a service had 5 'For Sale' boards outside.

I would say, round here, BTLers are selling up in a big way.

I still think that the housing market is on a knife edge, but sellers are proving a lot tougher than many of us gave them credit  for.

Tougher? Just not forced to sell that's all. Most people sell and move up because they fancy a bigger house. If they can't sell at what they think is a fair price they'll just sit there. There are hundreds of properties near me with For Sale signs that now have branches growing out of the timber posts. The sector of the market I watch is the 400k to 500k sector. I have seen lots of houses come down by as much as 75k in this sector over the last couple of years. A house up the road from where I used to live was on the market when I sold mine in December 2003. In that time it has been with 4 Estate Agents and the price has gradually moved from £465k to £385k. It has just sold with the 4th agent after a few weeks.

The best is yet to come. Another 42 new build flats are being finished as I write this (scaffold down on first two blocks) and someone else is building another 12 opposite the 24 I mentioned above (where only 5 have sold).

By next Spring the builders will be knocking 50k off these flats.

2 off new 5 bed detacheds near me have got the flags outside, big fancy sign, super landscaping and 2 For Sale signs. Been like that for 3 months now. Up until say 6 months ago they would have been sold before they were finished.

Another small development of 4 off 5 bed detacheds - show home finished over a year ago - still unsold and, bizarrely, despite this not selling they have built 3 more opposite. They stick a Sold sign outside one of them every now and then - and then take it down again. They are all empty. If you had the cash and were interested you could get these for £100k off the asking price of £575k. Even at 475k they seem over-priced to me - back gardens as big as a postage stamp.

Sam

Edited by Marina

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A new build development near me - 24 flats finished since February this year has a big sign outside that says '60% now sold.' I think this is a lie - I cycled past on Sunday morning at 9.00 and there were 5 cars in the car park. I have never seen more than 5 cars in the car park and, at night, only an odd light is on.

Yeah, there's a similar block near me. 12 executive shoeboxes, supposedly '50% sold', but I've never seen a car in the car park or a light on at night.

There's one next door to that block which was built over a year ago. Now they're claiming to be '75% sold', but I was shocked one night last week when I actually saw a car in the car park and a light on in one of the shoeboxes... never have before.

So if they have really, actually, in reality, been sold to BTL-ers, they're sure losing a lot of money with no rent coming in... must be about thirty thousand a month between them. No-one in their right mind would actually buy one as a place to live.

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Guest Time 2 raise Interest Rates
Hi Delite

All very technical  stuff, and much of it i agree with, but the fact is that the UK homeowner is holding up.

In my view, the property market is a good 30% overvalued, i dare say many of you agree with me.

What we think though does not matter, Joe Public has a home worth £xyz, and he is not budging, yet.

The big question really should be, how long can Joe Public soldier on.

Sam

The big question really should be, how long can Joe Public soldier on.

IMO Until the MPC start to raise interest rates in 06

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Yeah, there's a similar block near me. 12 executive shoeboxes, supposedly '50% sold', but I've never seen a car in the car park or a light on at night.

There's one next door to that block which was built over a year ago. Now they're claiming to be '75% sold', but I was shocked one night last week when I actually saw a car in the car park and a light on in one of the shoeboxes... never have before.

So if they have really, actually, in reality, been sold to BTL-ers, they're sure losing a lot of money with no rent coming in... must be about thirty thousand a month between them. No-one in their right mind would actually buy one as a place to live.

If I could be bothered I would really delve into what Estate Agents are up to here. To my way of thinking it is fraud to represent that you have sold half of a block of flats - you are by definition trying to convince people that other people have paid the price being asked. Life, however, is too short.

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Yeah, there's a similar block near me. 12 executive shoeboxes, supposedly '50% sold', but I've never seen a car in the car park or a light on at night.

There's one next door to that block which was built over a year ago. Now they're claiming to be '75% sold', but I was shocked one night last week when I actually saw a car in the car park and a light on in one of the shoeboxes... never have before.

So if they have really, actually, in reality, been sold to BTL-ers, they're sure losing a lot of money with no rent coming in... must be about thirty thousand a month between them. No-one in their right mind would actually buy one as a place to live.

I am in the process of renting a house with my girlfriend. We found a 4 bed townhouse for 1k a month. It was perfect, we wanted a 12 month rental term but it turns out the women has the place on the market also. She is an ex pat, lives in the USA. Anyway long story short, the estate agent advised her to rent because she will be lucky to sell it before christmas 2006!!! :blink: Anyway, found the house, started at 300K she reduced it last week to 289K looked on Net house prices, she bought it new build for 275k in sep 2002. Its intriguing how little the price has gone up. Is this true for all new builds? I think she is desperate to sell. Anyway now looking at a 4 bed detached for 1100 a month. Bargain if you ask me!!!!! Prices are dropping, the evidence is there. Renting is much better at the moment.

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What we think though does not matter, Joe Public has a home worth £xyz, and he is not budging, yet.

The big question really should be, how long can Joe Public soldier on.

"Worth"? Don't you mean "priced at"? Market don't exist because of prices, they exist because of sales!

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Sometimes i wish in lived in complete ignorance, but i don't.

If i am honest, i would love to be moving into my new home in the next couple of months, but i have this feeling of knowing that there is going to be a property crash.

Under no circumstances am i going to buy at these over inflated prices, which are sure to come down, but when.

Unlike many on this forum, i would love one of these property bulls to convince me that the market will hold up, but the fact is, i have now heard all the bull arguments, and not once have they come close.

The only thing the Bulls have in their favour, is how long the inevitable can be put off.

Sam

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sam you sound like me, i'm getting more and more impatient waiting for prices to fall significantly - but i know if i don't wait for the trough then the HPC will happen straight after i buy.

maybe i should buy to trigger it all off :rolleyes:

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I am starting to come around to a the long drawn out correction theory, up until recently i thought sentiment would play a big part in a collapse, that along with the huge debt households now have.

There is no evidence that BTL are rushing to sell either, i thought once the market peaked  many of them would start profit taking.

I still think that the housing market is on a knife edge, but sellers are proving a lot tougher than many of us gave them credit  for.

Sam

Professional BTLers got out of the market before last year, only the likes of TTRTR, the inexperienced are still holding on stuck in the belief that prices only go up. If BTLers did rush to sell now they would quickly find that they couldn't sell.

Sellers will only prove tough whilst they don't need to sell. That picture would seem to be on the change, I only see higher unemployment and higher interest rates ahead...

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Professional BTLers got out of the market before last year, only the likes of TTRTR, the inexperienced are still holding on stuck in the belief that prices only go up. If BTLers did rush to sell now they would quickly find that they couldn't sell.

This is true as I know one, not too well, more an aquaintance than friend, Used to be an EA untill about 97, then property tycoon, buying run down places, doing them up (had his own team of fitters etc) sold them all off in 2003-2004 ........ or 57 of them :o

He know has only 3 propertys left and is currently over seeing the build of his mansion ....... quadruple garaging and indoor pool :blink:

And one of the props he has left is a two up two down terrace that he's living in :lol:

But he knows what he's doing ...

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • up 5%



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