Jump to content
House Price Crash Forum

Somebody Explain What Is Happening


Recommended Posts

So, house prices are on the up again - and 'experts' look forward to a period of sustained growth.

Transaction levels are still lowish.

Mortgages are still hard to come by with big deposits required.

Even at low interest rates, the sheer size of the mortgages needed by First Time Buyers makes the repayments prohibitive.

Everyone knows hard times are coming:

  • government spending will be slashed
  • unemployment will rise
  • taxes will rise

Yet, house prices are rising. Where I live, a month ago one got the impression the market had stalled again - boards had been sticking at 'For Sale' for a few weeks - now they're all showing 'Sold'

I met a local agent I know at a friend's place yesterday, she told me that they were really busy and looking to recruit weekend staff (having closed a local office and laid staff off about a year ago).

So, parallel universe theory apart, what the hell is going on? Can somebody explain?

This must be getting beyond 'they're all cash buyers buying property rather than earning little interest in the bank'. My wife is getting a bit fed up with renting and keeps looking at the local market - everything is selling - usually quite quickly.

So, what's a house worth? Whatever anyone will pay for it. And for bog standard 4 bed estate houses around here, they'll pay 400k. Nice houses are 600k or more. That's what they seem to be worth.

And, after a hiatus in new build starts - they are starting up again - all over the place. The ubiquitous 'knock house down, build small block of 2 bed flats', is with us again.

It seems nothing can stop the relentless rise in house prices. Not a banking crisis. Not a recession. Not a mortgage famine. Nothing.

Link to comment
Share on other sites

  • Replies 97
  • Created
  • Last Reply

Top Posters In This Topic

The new 'increase' in house prices seem to be in asking prices. Sellers are still delusional. As you said, reduced governemnent spending (fewer jobs) and a sluggish recovery(?) will not bolister prices. Interest rates can go no lower. What can drive this market up? I think these are the last desperate calls of the VIs and their media chums.

Link to comment
Share on other sites

Seriously though I think low volumes are causing high volatility. Just wait to the oversupply kicks in.

There is still a lot of cash and latent demand - this will insure there is no freefall if there is a correction. If prices drop 15-20% people will pile back in.

I think we'll see 2 or 3 more rallies like the current one before there is final capitulation - but that won't be for years.

Edited by slacker
Link to comment
Share on other sites

Yup. Noticed it myself. The 'for sale' signs ae disappearing in my area and some of the housebuilding projects that seemed to be on permanent hold have now started up.

I guess if prices are still rising (or at least not falling significantly), people are getting access to the funds to make this happen. Speaking to people, they have renewed confidence in the housing market so maybe the potential buyers who were indecisive when prices were falling are now piling in at full speed. I would also imagine banks lending has increased with the security of govts printing press behind them.

This can only be temporary as there is no way the ever increasing debt can be serviced. One final push before the big collapse?

Link to comment
Share on other sites

So, parallel universe theory apart, what the hell is going on? Can somebody explain?

1. Too much free money from the Bank of England.

2. Base rate too low.

3. 60 million people with blinkers on not realising the implications of a £70bn structural budget deficit.

I could go on, but I've run out of Prozac :(

Link to comment
Share on other sites

So, house prices are on the up again - and 'experts' look forward to a period of sustained growth.

Transaction levels are still lowish.

Mortgages are still hard to come by with big deposits required.

Even at low interest rates, the sheer size of the mortgages needed by First Time Buyers makes the repayments prohibitive.

Everyone knows hard times are coming:

  • government spending will be slashed
  • unemployment will rise
  • taxes will rise

Yet, house prices are rising. Where I live, a month ago one got the impression the market had stalled again - boards had been sticking at 'For Sale' for a few weeks - now they're all showing 'Sold'

I met a local agent I know at a friend's place yesterday, she told me that they were really busy and looking to recruit weekend staff (having closed a local office and laid staff off about a year ago).

So, parallel universe theory apart, what the hell is going on? Can somebody explain?

This must be getting beyond 'they're all cash buyers buying property rather than earning little interest in the bank'. My wife is getting a bit fed up with renting and keeps looking at the local market - everything is selling - usually quite quickly.

So, what's a house worth? Whatever anyone will pay for it. And for bog standard 4 bed estate houses around here, they'll pay 400k. Nice houses are 600k or more. That's what they seem to be worth.

And, after a hiatus in new build starts - they are starting up again - all over the place. The ubiquitous 'knock house down, build small block of 2 bed flats', is with us again.

It seems nothing can stop the relentless rise in house prices. Not a banking crisis. Not a recession. Not a mortgage famine. Nothing.

Where are you exactly? I've been looking around Sussex / Kent and I would say the opposite is true here. Things are just not selling - unless they are keenly priced and in the right place. We are not that far from London here.

I wonder whether there will be a 'ripple inwards' towards these last few places where people are buying things still. Here there are loads of sellers now and far too few buyers. I think this is true in many other places looking at the press articles (which are conveniently dressing it up as 'more choice' for the minute, not 'chronic over-supply').

Link to comment
Share on other sites

It seems nothing can stop the relentless rise in house prices. Not a banking crisis. Not a recession. Not a mortgage famine. Nothing.

Don't blame it on the Government

Don't blame it on the Banks

Don't blame it on the boggie

blame it on the rents !!

Yes cos rent is the new buying, gotta live somewhere, so might as well pay some other £uckers mortgage.

Link to comment
Share on other sites

:lol:

Does it work? :blink: I think I might need something to knock me out and stop me thinking any more. Most people seem to be happier that way.

Worked for me the first time. But since trying it a second time, I've decided I don't like its effects as I don't seem to care about anything - which isn't as good as you think it is :unsure:.

Link to comment
Share on other sites

Wealthy people who already have nice houses are cash-buying additional houses, either as investments or to uses as second / third / fourth homes. Despite the poor economy, there are people who are doing well and this is keeping some property hot spots very strong.

Edited by blankster
Link to comment
Share on other sites

I don't like it, but there's no point in denying it. There's no single reason prices have risen/are rising. My girlfriend put her flat on the market last week (bought in 2007 for 250k) and already has an offer for the full asking price (280k). NW London. The vast majority of people have not been hit by the recession (yet) and believe that the worst is over.

Link to comment
Share on other sites

Don't see it here

It's been dead as. since about October, and most of the stuff on Rightmove has been there 2 years now. Much of what "sold" early in the year has come back on again.

It must be very local conditions caused by small sale volumes.

I'm wondering whether it is another regional stratified phenomenon.

You in/near the home counties? Oop north here, where previously we had a crash, sellers are raising their prices again, signs are that there is some speculative buying going on, just from recent sold prices etc.

Link to comment
Share on other sites

So asking prices for an average 200k starter family home in my area rose by 5k in a month eh?

That's more than me and the partner combined get pre-tax in salary each month.

Guess we may as well buy now before we get priced out! <_<

...or rent for so much cheaper and throw the rest into investments, works out so much better imo.

Link to comment
Share on other sites

As long as yield on financial assets remains this low, or the risk remains high with respect to return, the 'normal' price-to-earnings ratio of land will remain at a level which is elevated from historical levels. Its the new store of value, and has been moving into this role for the last 25 or so years.

And it is not government interest rates which are keeping yields low - if it were, raising interest rates would promote growth.

Financial yields are low due to decades of over-investment by pension funds, sovereign wealth funds, high net worth individuals and speculators, all exacerbated by a monstrous income and wealth inequality.

The only yield to be had now is the kind of yield derived from 0% nominal rates and a 15%+ real rate (a.g. severe deflation). Of course this isn't real yield of the type created by a healthy economy, its the kind of yield created by flogging a dead horse.

Link to comment
Share on other sites

(...)

I think low volumes are causing high volatility. Just wait to the oversupply kicks in.

+ 1

Edit to add:

Also, the bank of Mum & Dad may be much bigger than we thought. If this is the case, then "expectations" become a much more important factor.

Banks have no problem lending with a low loan to value, as they are protected from negative equity. If the bank of Mum & Dad puts in 20 or 30% as deposit, the real banks are protected.

That is very bad for us, Tired of Waiting...

The only silver lining is that these silly people may be saving the nation's financial system.

Social Darwinism in action.

But we will have to wait for a little longer for the unavoidable correction.

Edited by Tired of Waiting
Link to comment
Share on other sites

according to LR, all of england & wales is just over 10% down from peak. london is just over 5% down from peak.

what is happening is basically as follows:

(1) prices have been pushed down by lower employment & lower mortgage availability [drying up of the 100%+, celf cert, etc, mortgage deals];

but

(2) they've not been pushed down very much due to interest rates having fallen so much and lending, still, being extremely high by historical standards [3-4 times joint income mortages etc]... and also a few smaller effects at the margins like government support for interest payments.

that's more or less it?

Link to comment
Share on other sites

People are now getting their 12 month interest statements popping through the door and, like me, have probably been horrified by the interest they have got on their savings in the past 12 months as opposed to the previous 12 months.

Then they open the Daily Mail or Express and read about rising HPs and figure out that they would be better off buying a house than saving.

Kind of makes sense to be honest.

Link to comment
Share on other sites

In Edinburgh some things do appear to be selling. However these are mostly family houses, expensive flats etc..

The FTB/FTB+1 areas are almost at a complete standstill. ALmost nothing selling.

Hence - the 'average' sales price for Edinburgh is shooting up. When in reality it is not. I imagine the same applies for most of the UK, with some exceptions possibly in the South East.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    • No registered users viewing this page.




×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.