Jump to content
House Price Crash Forum
Confounded

Welcome To The Fear Phase

Recommended Posts

It is an early call but I believe the fear phase has just started. Of the areas I monitor a dramatic change in the market has occurred in the last month. Several of these markets fall into the hot market category where they nearly erased 2008 falls by early summer.

With the new coalition showing little sign of wanting to falsely support the market it looks like the final phase of the healing process has begun.

25246_353964432594_708492594_4201247_1034388_n.jpg

Share this post


Link to post
Share on other sites

It is an early call but I believe the fear phase has just started. Of the areas I monitor a dramatic change in the market has occurred in the last month. Several of these markets fall into the hot market category where they nearly erased 2008 falls by early summer.

With the new coalition showing little sign of wanting to falsely support the market it looks like the final phase of the healing process has begun.

25246_353964432594_708492594_4201247_1034388_n.jpg

You could well be right. There is certainly A LOT of negative press about house prices lurking around atm and with the increase of properties on the market, it all equates to a very bleak few years. I think reality is starting to dawn on a lot of people. It only takes a few fearful people, then the whole country will go into panic mode!

Share this post


Link to post
Share on other sites

I think this is going to take some real time. I think the idea that property is a solid investment is so ingrained in most peoples minds that it will take more than a few negative stories to kick start any major shift in sentiment.

I agree that this is the beginning but I can see it being a slow grind downwards rather than a steep fall as shown in the graph. To counteract the propaganda of the past 10 years we are going to need the media to really play their part and with so many BBC staff and journalists owning 2,3, 4+ houses I'm not sure we will see the full picture.

The revolution will not be televised

Share this post


Link to post
Share on other sites

I think this is going to take some real time. I think the idea that property is a solid investment is so ingrained in most peoples minds that it will take more than a few negative stories to kick start any major shift in sentiment.

I agree that this is the beginning but I can see it being a slow grind downwards rather than a steep fall as shown in the graph. To counteract the propaganda of the past 10 years we are going to need the media to really play their part and with so many BBC staff and journalists owning 2,3, 4+ houses I'm not sure we will see the full picture.

The revolution will not be televised

And that's the problem. It's no coincidence that the first target of any coup is the radio station. Since 2008 news organisations have been warned by ministers that they could "talk the country into recession" and a form of bullish pact has been struck. There is no way that the BBC will report falling house prices.

Share this post


Link to post
Share on other sites

In a rising market fear = buyers raising offers in fear of not getting an offer accepted today will mean having to offer even more tomorrow.

In a falling market fear = sellers cutting prices today in fear of not getting a sale and having to cut more tomorrow.

Once the selling fear takes hold and sellers realise that selling now means more cash to buy tomorrow it's game on. Signs are that it's game on.

Share this post


Link to post
Share on other sites

Until interest rates go up nothing will change.

Sure a few people have lost their jobs, but for the rest in work they've seen interest rates make housing so stupidly cheap it's a joke.

Share this post


Link to post
Share on other sites

It is an early call but I believe the fear phase has just started. Of the areas I monitor a dramatic change in the market has occurred in the last month. Several of these markets fall into the hot market category where they nearly erased 2008 falls by early summer.

The areas I watch are showing solid signs of real falls and this has been the case now for a number of months.

The market is still infested with fantasy sellers asking 2007 prices but the ones who want/need to sell are reducing appropriately. Sadly (for them) some are simply following the market down by not reducing fast or large enough.

Provided no more government meddling happens then it should be game on for the 'fear' stage.

Share this post


Link to post
Share on other sites

I think this is going to take some real time. I think the idea that property is a solid investment is so ingrained in most peoples minds that it will take more than a few negative stories to kick start any major shift in sentiment.

I agree that this is the beginning but I can see it being a slow grind downwards rather than a steep fall as shown in the graph. To counteract the propaganda of the past 10 years we are going to need the media to really play their part and with so many BBC staff and journalists owning 2,3, 4+ houses I'm not sure we will see the full picture.

The revolution will not be televised

I agree that it will not be a steep decline as depicted by the graph, low interest rates and as you say continued propoganda will temper the falls but I do think once the market picks up it's falls there will be little the media can do because people will start thinking for themselves when they see so many around them being affected in this depression. I believe by 2013 a bulk of the nominal falls will have occurred and then it will be a lot less clear of which is real and which is nominal falls.

Share this post


Link to post
Share on other sites

Until interest rates go up nothing will change.

Sure a few people have lost their jobs, but for the rest in work they've seen interest rates make housing so stupidly cheap it's a joke.

You confuse Push factors (the need to sell through economic circumstances) and Pull factors ( the attraction of making money by selling and pocketing the cash to buy later at a lower price). Edit:

Fear sets in when people see the success of others who follow the latter and feel that they will miss out if they do'nt follow.

Edited by campervanman

Share this post


Link to post
Share on other sites

Until interest rates go up nothing will change.

Sure a few people have lost their jobs, but for the rest in work they've seen interest rates make housing so stupidly cheap it's a joke.

Low interest rates don't make the house cheap. It makes the interest on the motgage relatively cheap but that doesn't make many houses other than ridiculously expensive still.

The OP suggests ".. the new coalition showing little sign of wanting to falsely support the market..."

Well they are maintaining the mortgae support brought in by Labour and the reductions in housing benefit don't come in properly until Oct 2011. I agree with the idea of a slow, real terms grind down. We don't have many big firms like the 80s that will suddenly lay off 10, 000 etc. creating real shocks. A railway franchise, or a whole hospital complex maybe?

Edited by deflation

Share this post


Link to post
Share on other sites

Until interest rates go up nothing will change.

Sure a few people have lost their jobs, but for the rest in work they've seen interest rates make housing so stupidly cheap it's a joke.

?

Things are changing and changing significantly, that is the point of the thread.

Share this post


Link to post
Share on other sites

Very few falls in my area but more and more property coming on the market and just sitting there.

When there are drops they are mostly pathetic - just 5K or 10K off a house with an asking price of 400K but which should be 250K tops.

But every now and then something odd happens - there is a 25K fall here, maybe a 50K drop. Still ludicrously over-priced but I am hoping it is like the first cracks forming in a dam.

Share this post


Link to post
Share on other sites

?

Things are changing and changing significantly, that is the point of the thread.

It's less to do with people losing their jobs and being forced to sell. The fear comes from realisation that incomes will not be high enough to support current price levels and if I can sell now to a sucker that will pay something like 2007 prices I can make money and That if I wait, I'll be stuck with the other mugs who paid 50% more than my house is worth.

Share this post


Link to post
Share on other sites

It's less to do with people losing their jobs and being forced to sell. The fear comes from realisation that incomes will not be high enough to support current price levels and if I can sell now to a sucker that will pay something like 2007 prices I can make money and That if I wait, I'll be stuck with the other mugs who paid 50% more than my house is worth.

Yes, it is the realisation that the game is up. As many people recount the time to by in the mid 90's was when people were telling you prices would never rise again and the previous bubble was aberration.

Share this post


Link to post
Share on other sites

Low interest rates don't make the house cheap. It makes the interest on the motgage relatively cheap but that doesn't make many houses other than ridiculously expensive still.

Sure, by "housing" I meant the cost of the mortgage, rather than the house price itself.

Hey, I'm a bear, I want things to plummet, but while interest rates are low there are plenty of people out there in good jobs who have seen their housing costs fall through the floor, are now cash rich and still see housing as a place to put that money.

Until interest rates discourage those people I don't see things changing as fast as I would like.

Share this post


Link to post
Share on other sites

Until interest rates go up nothing will change.

Sure a few people have lost their jobs, but for the rest in work they've seen interest rates make housing so stupidly cheap it's a joke.

Wrong. First, 00s of 000s have lost their jobs. Second, 00s of 000s will lose their job. 00s of 000s will go bankrupt or IVA. 00s of 000s will have 'their' home repo'd. 'Buyers' will still need higher and higher deposits.

It is no longer about IRs but unemployment.

Share this post


Link to post
Share on other sites

The OP suggests ".. the new coalition showing little sign of wanting to falsely support the market..."

Well they are maintaining the mortgae support brought in by Labour

Yes and this particualr bribe helped all of 600 or so houeholds. Behave!

Share this post


Link to post
Share on other sites

Wrong. First, 00s of 000s have lost their jobs. Second, 00s of 000s will lose their job. 00s of 000s will go bankrupt or IVA. 00s of 000s will have 'their' home repo'd. 'Buyers' will still need higher and higher deposits.

It is no longer about IRs but unemployment.

Your thinking is wrong. As I pointed out earlier, unemployment is a push factor and until those made unemployed do not get their mortgages paid it will not be a driver of falling prices. What will, and what the fear phase will be driven by, is the fear of losing out by not selling now and having to accept less later. These will be people who can sell not neccessarily people who have to sell. There is a difference.

Share this post


Link to post
Share on other sites

Yes and this particualr bribe helped all of 600 or so houeholds. Behave!

really? i was sat drinking with a guy earlier this week who was having his £1500pm mortgage paid by the govt and he also has a friend who is in the same situation. He was recently made unemployed and biding his time until after the summer to look for a new job.

Share this post


Link to post
Share on other sites

Sure, by "housing" I meant the cost of the mortgage, rather than the house price itself.

Hey, I'm a bear, I want things to plummet, but while interest rates are low there are plenty of people out there in good jobs who have seen their housing costs fall through the floor, are now cash rich and still see housing as a place to put that money.

Until interest rates discourage those people I don't see things changing as fast as I would like.

Low interest rates are not enough to support markets. In 09 governments at the March G20 decided that they had to intervene in asset markets as they had hit the pushing string phenomenon where low interest rates are not enough to encourage people to buy into over valued and falling assets. The US bought their stock markets driving up the global markets (eventually investors reluctantly came on board last summer) the Chinese bought commodities driving up commodity prices and the UK bailed out the banks sufficiently that they did not need to sell repossessions to raise much needed funds.

It was a coordinated effort and worked successfully and pulled us back from the brink but as with any intervention the market wises up to it and prices it in much quicker the next time it is used. If they announce QE2 expect stock markets to add 20-30% in less than 6 months. Central banks have a very tricky job of managed deflation, it is not as easy as many people think.

The impression I get from a UK perspective is the government have decided to let property go and concentrate on keeping interest rates as low as possible so those in jobs can support their debt burden and businesses can borrow and hopefully grow supporting jobs. Falling house prices will be included in CPI and will be the deflationary drag required to allow low interest rates to be used for longer than otherwise.

Share this post


Link to post
Share on other sites

Unemployment is significant in this whole equation. People who are clued up have/ are accepting lower offers & selling, those expecting full price will soon realise how foolish they have been when market crashes, this time it will be mother of all crashes, wait & see.

Share this post


Link to post
Share on other sites

Worth keeping in mind the recent FSA research that found that 46% of households that took out mortgages between 2005 and 2008 have either no money left or face a shortfall every month, after mortgage payments and living costs are deducted. These people will only need a very small mortgage interest rate rise, and/or wage deflation or income erosion, to push them over the edge. Then there are all those mortgages taken out without income checks - i.e. 50% of new mortgages in 2007 and 2008 and 43% last year. Currently 20% of self-certified mortgages have fallen into arrears.

There are very large numbers of mortgage holders that are living on the edge ...... I suspect quite a lot of them are living in fear.

Share this post


Link to post
Share on other sites

Unemployment is significant in this whole equation. People who are clued up have/ are accepting lower offers & selling, those expecting full price will soon realise how foolish they have been when market crashes, this time it will be mother of all crashes, wait & see.

Yes, we really have to see how these public sector cuts work out. I am hearing on the grapevine that middle to senior managers in the local council and DVLA are selling up, putting their houses on the market... but no realistic prices as such yet... but I hear on the grapevine that they know what is coming, that they know they will be losing their jobs so are marketing their homes now...

So I think the next 6 to 12 months will be interesting with possibly a breaking point reached over the Winter. People who have put their houses on the market since the removal of HIPs are doing so in the Summer... so they are still expecting an August rush... and the local EAs in my area love to build up September as their main selling month... but when these come and go... and winter is nearing... and we have the November spending reviews in both London and Cardiff... and the job cuts actually are happening all around...

Check-mate!

Share this post


Link to post
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...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 140 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • 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.