Welcome To The Fear Phase

[NEO72]

I thought the fear stage was def here last month when my LL put his 4 BTL

for sale (SE near Windsor) was told we could stay in the house until sold.

Up for 289k brought for 150k in 2000 I thought we would be safe for at least

a few months only had about 6 viewings in last few weeks but just been told

today offer accepted no chain on your bike son.

I would say this house needs about 30k spent on it Victorian, sash windows

falling apart , bricks crumbling in places etc.

Not interested in buying it but I am shocked to be honest

obviously don't know how much the offer is but would imagine no less than

250k I have some explaining to do to the Mrs. tonight as we have a young

bambino, she has faith in HPC but it's starting to get a bit depressing

moving again just as we got everything sorted.

seriously f*cked off , will look for another 6 month rental with a view to buy after

but the dice do look loaded to me.

Was in exactly the same situation as you three months back - LL sold up from under me (he even said he was selling because this is pretty much as good as he was expecting prices to get) and even had a wobble about buying at the time. Although its tough moving with little uns in tow, glad I held off now though since the dam is finally starting to break and new LL bought fairly recently so unlikely to be cashing in any time soon! Also happens the new place is a lot better than the last for pretty much the same money (and a few hundred quid a month cheaper than an equivalent IO mortgage too!)

[Maddog21]

Was in exactly the same situation as you three months back - LL sold up from under me (he even said he was selling because this is pretty much as good as he was expecting prices to get) and even had a wobble about buying at the time. Although its tough moving with little uns in tow, glad I held off now though since the dam is finally starting to break and new LL bought fairly recently so unlikely to be cashing in any time soon! Also happens the new place is a lot better than the last for pretty much the same money (and a few hundred quid a month cheaper than an equivalent IO mortgage too!)

cheers

Just spoke to the Mrs. fair play to her all she said was " Oh well didn't want to spend

another winter in there anyway ,it was freezing can we get somewhere with better heating

next time and the neighbours are snobs!"

Just not looking forward to taking them sofas apart again and moving all the gear, she tends

to be in a more supervisory role when we are moving!!

But hey ho ,here we go again.

Edited July 22, 2010 by Maddog21

[Gigantic Purple Slug]

Nah, no fear phase yet, or at least not in my area.

There was a wave of reductions a month or so ago. Few properties have been sold that I can see. The fact that everyone has reduced their prices but nowt has sold is still slowly sinking in.

My prediction is it will need at least one more round of negative indices before we enter the fear phase. If Haliwide and RICs are all strongly negative next month then I reckon the fear phase will begin.

[Bosh]

Nah, no fear phase yet, or at least not in my area.

There was a wave of reductions a month or so ago. Few properties have been sold that I can see. The fact that everyone has reduced their prices but nowt has sold is still slowly sinking in.

My prediction is it will need at least one more round of negative indices before we enter the fear phase. If Haliwide and RICs are all strongly negative next month then I reckon the fear phase will begin.

I think the fear stage has started and the fear stays through capitulation.

[deflation]

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

Wrong scheme you're on about.

SMI is claimed by 100s of thousands. It's the HMS (homeowners mortgage support) that's only helped 600 or so.

Edited July 22, 2010 by deflation

[winkie]

IMO we are not quite yet in the fear stage...houses are coming onto the market and staying on the market, vendors not moving on prices yet unless they can or have to...agents can see a demand but affordability is not there so they will not sell...costs to buy and sell moving just sideways not unusual to be upwards of £15k not including decorating and furniture etc...the credit is not there.

A friend I saw today that rents said acquaintances of theirs keep asking why they have not got onto the market yet aged 40 paying £900 per month rent 3 bed small terraced semi....they asked me what I thought of interest only mortgage, I said don't touch it, stay doing what you are doing, free and mobile no responsibility with the freedom of choice....the mortgage IO on the house they are living in 5% interest worth approx £300k is £1250 per month plus all their savings would have to be put down as a deposit....they would be well and truly shafted IMO.

[Confounded]

I think the fear stage has started and the fear stays through capitulation.

Exactly, this post was not about reaching a point where people are all agreeing the property market is a disaster, this about the turn in the market to the final phase of the investment bubble as illustrated by the graph.

If this is not the fear phase then the housing bubble is not following the classic investment cycle and many bears including myself will have re-evaluate their stance.

[SavingBear]

I am deffinately starting to see some fear.

http://www.rightmove.co.uk/property-for-sale/property-26096965.html

property bee required

The bloke selling this seems pretty scared (or desperate) to me!

[peakoil]

I thought the fear stage was def here last month when my LL put his 4 BTL

for sale (SE near Windsor) was told we could stay in the house until sold.

Up for 289k brought for 150k in 2000 I thought we would be safe for at least

a few months only had about 6 viewings in last few weeks but just been told

today offer accepted no chain on your bike son.

I would say this house needs about 30k spent on it Victorian, sash windows

falling apart , bricks crumbling in places etc.

Not interested in buying it but I am shocked to be honest

obviously don't know how much the offer is but would imagine no less than

250k I have some explaining to do to the Mrs. tonight as we have a young

bambino, she has faith in HPC but it's starting to get a bit depressing

moving again just as we got everything sorted.

seriously f*cked off , will look for another 6 month rental with a view to buy after

but the dice do look loaded to me.

same thing (ish) happened to me. The house I rented was owned by a derivatives trader who "promised" (not it writing) that I could rent it for at least 5 years. I signed a 1 years contract because I figured I'd find a house I liked in that time. Couldn't believe the market ROSE during that period, then had to tell the wife that SHE would be showing prospective buyers around. Hmmm. didn't go down well. Two kids (one born whilst in the rental). Anyway, turns out the new place we've rented is gorgeous, the older child LOVES it far more - no regrets and we don't miss the old place at all. it was a nightmare to move (it always is) and it was NOT part of my game plan (even less my wifes) but it's worked out well, and I hope the same is true for you. This time however I can only get a three month rolling - so I do have that constant fear of being kicked down the road. The very thing we all talk about on here is how daft BTL landlords are for holding on to their properties.... but I bet very few of us want to constantly move...

good luck with it all.

[eric pebble]

........./

But for a real wipeout, we need interest rates at 10%. Then we will see fear.

Can't wait.

[Bruce Banner]

Yes that psychology is well understood.

However I'm a little surprised people won't pay £200k for a house likely to bottom at £170k, especially if they have a £150k flat which will fall by a similar proportion making the real loss less than £10k. Its an amount I'd happily pay to be in appropriate accomodation.

Its not like I really care, more that I'm startled by how unmoved buyers are becoming by substantial reductions. It must be really frightening for highly indebted people facing redundancy in the budget cuts whose only 'ace' is their house.

If it's £200K now it's more likely to bottom at £130K, perhaps less.

[catmandu]

But for real fear, and I mean butt-clenching, night-sweating, screaming-panic like fear, just wait until the BoE base rate goes up the first month. The reaction from the banks will be swift and brutal... most will raise their rates by AT LEAST the rise in the base rate, some more.

I wonder if this part is true. Given the enormous profit margin being taken by banks in loans at present, it is conceivable that some may decide not to raise their mortgages by the same amount.

At least is ordinary times this would be a possibility, though admittedly in these days where banks are not exactly competing to lend money, you could be right.

[Maddog21]

same thing (ish) happened to me. The house I rented was owned by a derivatives trader who "promised" (not it writing) that I could rent it for at least 5 years. I signed a 1 years contract because I figured I'd find a house I liked in that time. Couldn't believe the market ROSE during that period, then had to tell the wife that SHE would be showing prospective buyers around. Hmmm. didn't go down well. Two kids (one born whilst in the rental). Anyway, turns out the new place we've rented is gorgeous, the older child LOVES it far more - no regrets and we don't miss the old place at all. it was a nightmare to move (it always is) and it was NOT part of my game plan (even less my wifes) but it's worked out well, and I hope the same is true for you. This time however I can only get a three month rolling - so I do have that constant fear of being kicked down the road. The very thing we all talk about on here is how daft BTL landlords are for holding on to their properties.... but I bet very few of us want to constantly move...

good luck with it all.

Cheers

had a bit of a wobble last night but had a good chat with the Mrs. no way we

are buying now, agreed to get cheapest place to rent we could for our needs and save

more each month.

Im not even that bothered about buying full stop to be honest, just want a bit more

security for my family renting ,tenants rights are disgusting in this country, the

thing that p1sses me off the most is we just signed what I thought was a another

years contract in April only to be told this was just an extension so they could

put the rent up and the 2 month clause was still valid, nice of them to explain

that to me at the time.

Going down to the mother-in laws in August that should be fun , she has got every

cliche in the book having a go about us not buying.

I still have friends buying/selling

as if nothing has happened

When will the levee break?

[xux42]

If it's £200K now it's more likely to bottom at £130K, perhaps less.

Different numbers same principle.

The place they are chopping in will fall the same %.

Can anyone else see what I'm banging on about?

Maybe the problem is 1st time buyers and their lenders not liking the thought of a 35% drop?

Anyway 130k would be nearly 50% off peak. Very unlikely given the devaluation of sterling since peak.

Edited July 23, 2010 by xux42

[Confounded]

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.

I see Norfolk is 24 hours late in arriving to the fear stage.

CLICK

On this page alone I see the following drops:

£95k drop (from £795)

£95k drop (now £500k from £625k)

£75k drop

£25k drop

All showing in the last 48hrs

And that's before negotiation

[Lepista]

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?

THe Government / councils / public bodies...

[SarahBell]

Fear triggers will be:-

massive public sector "possibility of redundency" notices going out (Like Durham police today)

massive actual redundencies

a tiny rates rise.

[Saver]

you say your a bear but talk like a bull

a few folk have lost their job; have you been on Mars the last 5 weeks ?

real unemployment is 30% of working age pop, 30% are now part time !

of the rest 50% are public sector of which 40% chop chop over the next 4-5 years.

"Sure a few people have lost their jobs"

A lot of people I know bought when houses were far cheaper, 5-10 years ago (e.g one paid 30k, where now you would be paying 100k+ - if I could pay 30k I could buy for cash, now it I would be looking at minimum of 10 years to pay it off if I massively overpay each month and dont' save any money into isa's etc). Many of them have therefore overpaid these much smaller costs to get it paid off quickly. So they can afford to work part time and certainly will not be forced into selling as easily as some think.

[munkee]

I think one of the issues that does need to be realised throughout all of this is the ignorance of the general public. Considering we have so many ways to find out information about what is going on out there on the market joe bloggs doesnt overly care. The only people to reach the "fear" phase are those that are being directly affected. I would say to be directly affected you need something along the same proportions of:

Losing your job

People you talk to regularily losing their job and within the same sector (even then they would go home to the wife and just say oh yea blah blah lost their job, with the wife response of oh my thats terrible, so what do you want for tea)

Rising interest rates "tightening the belt" (affecting what they can eat for tea)

A reduction in your pay

etc

What I am trying to get at with the above is people dont give a crap about the guy in the newspaper who lost his job. They dont care about the news reporter who suggests 600k jobs will be gone in the public sector. What the public care about is whats in their pocket right now or atleast, what isn't in their pocket. This selfish ignorance is exaclty why the fear phase will be prolonged and to be honest, not realised by quite a few. I feel the level of intellect may surpass some and the crash could be here and gone with a "house prices did what 10 years ago? I didnt know that".

In order for the fear factor to take grip we really needed big lay offs within big companies. When people talk about "the public sector" no one really understands where excactly the cuts will be, infact I expect you could ask anyone how many people are currently employed within the sector and they wouldn't be able to tell you. Without joe bloggs knowing where the exact cuts will be, when they will be AND seeing them happen right infront of their eyes.. fear will never take hold as a nation.. we are FAR FAR FAR too ignorant to ever think it's me next.

Sorry for the morbid example but, all of this is the exact same thing as when little boy racer passes his driving test. Does his 90mph in a 30mph zone and loves life. Totally clueless to the real dangers until they stack it in to a building and kill their girlfriend in the passenger seat. Thats the type of realisation some people need and I really do think its the realisation people will need to face in order to hit the housing market enough. They need to lose their job, lose out on income or be taken so close to the breadline that they have no other choice. They need their life impacted by something which they can not control.

[dances with sheeple]

Fear triggers will be:-

massive public sector "possibility of redundency" notices going out (Like Durham police today)

massive actual redundencies

a tiny rates rise.

That will make the ripples of panic start to become waves.

[piece of paper]

That will make the ripples of panic start to become waves.

Would it culminate in a panic orgasm?

p-o-p

[abharrisson]

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.

I have never bought into this bear trap nonsense. It makes for pretty charts etc but I think as we move forward it's simply not relevant. To be relevant you'd have to be expecting a precipitous fall just around the corner, while the small upswing has now stopped, it's been pretty flat for quite a few months now and I'm afraid as the months drag by and falls are 0.1%, 0.3%, 0.6% rather than 2.6% the whole bear trap story looks more false by the day.... theres no broadly falt period if you believe the chart.... so I don't share your view and don't believe the fear phase has started.

What I do think we'll see is a reduction in prices but over a long period of time, typified by periods of rises and periods of falls... inflation will do a lot of the work, there won't be falls everywhere and in some instances nominal prices at the very bottom might well be the same or higher than today. i don't think we'll see the bottom for another five years.

People generally are not frightened by real prices falls , its the nominal prices which they fear... you can't have negative equity if the nominal prices don't change, the banks won't enforce repossessions if nominal price falls don't force it on them etc etc.

The chart you quote is all very nice and of course many like to see their lives predicted for them and will happilly sign up to it without thinking too hard, but I just personally don't buy into it at all. apart from anything else to get the type of steep falls the chart predicts you'd need a pretty big trigger and I just cannot see one coming ( and just for the record I don't buy into interest rates rising while the economy stays weak either).

I don't share your fear.

[Dave Spart]

I have never bought into this bear trap nonsense. It makes for pretty charts etc but I think as we move forward it's simply not relevant. To be relevant you'd have to be expecting a precipitous fall just around the corner, while the small upswing has now stopped, it's been pretty flat for quite a few months now and I'm afraid as the months drag by and falls are 0.1%, 0.3%, 0.6% rather than 2.6% the whole bear trap story looks more false by the day.... theres no broadly falt period if you believe the chart.... so I don't share your view and don't believe the fear phase has started.

What I do think we'll see is a reduction in prices but over a long period of time, typified by periods of rises and periods of falls... inflation will do a lot of the work, there won't be falls everywhere and in some instances nominal prices at the very bottom might well be the same or higher than today. i don't think we'll see the bottom for another five years.

People generally are not frightened by real prices falls , its the nominal prices which they fear... you can't have negative equity if the nominal prices don't change, the banks won't enforce repossessions if nominal price falls don't force it on them etc etc.

The chart you quote is all very nice and of course many like to see their lives predicted for them and will happilly sign up to it without thinking too hard, but I just personally don't buy into it at all. apart from anything else to get the type of steep falls the chart predicts you'd need a pretty big trigger and I just cannot see one coming ( and just for the record I don't buy into interest rates rising while the economy stays weak either).

I don't share your fear.

To me the graph was always just an academic exercise; reality is far more complex.

Having said that there are good reasons to believe property prices will fall, but whether that occurs as a long sequence of small decrements or a short sharp cliff-fall remains to be seen. I think it depends on the extent to which governments etc will intervene to prop things up.

The headline on the cover of today's Telegraph suggests the governments willingness and ability to intervene is running out.

Few if any would have predicted the events of 911, few if any were aware of the looming credit crunch back in 2007 so who knows what's going to happen.

We live in interesting telegraphs times.

[LuckyOne]

I have never bought into this bear trap nonsense. It makes for pretty charts etc but I think as we move forward it's simply not relevant. To be relevant you'd have to be expecting a precipitous fall just around the corner, while the small upswing has now stopped, it's been pretty flat for quite a few months now and I'm afraid as the months drag by and falls are 0.1%, 0.3%, 0.6% rather than 2.6% the whole bear trap story looks more false by the day.... theres no broadly falt period if you believe the chart.... so I don't share your view and don't believe the fear phase has started.

What I do think we'll see is a reduction in prices but over a long period of time, typified by periods of rises and periods of falls... inflation will do a lot of the work, there won't be falls everywhere and in some instances nominal prices at the very bottom might well be the same or higher than today. i don't think we'll see the bottom for another five years.

People generally are not frightened by real prices falls , its the nominal prices which they fear... you can't have negative equity if the nominal prices don't change, the banks won't enforce repossessions if nominal price falls don't force it on them etc etc.

The chart you quote is all very nice and of course many like to see their lives predicted for them and will happilly sign up to it without thinking too hard, but I just personally don't buy into it at all. apart from anything else to get the type of steep falls the chart predicts you'd need a pretty big trigger and I just cannot see one coming ( and just for the record I don't buy into interest rates rising while the economy stays weak either).

I don't share your fear.

I think that the chart is slightly oversimplified and "oversmoothed" without showing the distributions of outcomes around each point (some sort of "fan chart" might actually make sense for once) compared to the way that speculative markets actually operate but I think that the general message is about right.

Overlaying volumes would also make the price action easier to understand.

The partial recovery after an initial sell-off on low volumes is classic market behaviour after a specualtive top. The price / volume action that we have seen since the top is has been repeated so many times in so many speculative markets that it is impossible to ignore the fact that "dead cat bounces" do often occur.

Dr B called this one correctly.

[Brave New World]

I have never bought into this bear trap nonsense. It makes for pretty charts etc but I think as we move forward it's simply not relevant. To be relevant you'd have to be expecting a precipitous fall just around the corner, while the small upswing has now stopped, it's been pretty flat for quite a few months now and I'm afraid as the months drag by and falls are 0.1%, 0.3%, 0.6% rather than 2.6% the whole bear trap story looks more false by the day.... theres no broadly falt period if you believe the chart.... so I don't share your view and don't believe the fear phase has started.

What I do think we'll see is a reduction in prices but over a long period of time, typified by periods of rises and periods of falls... inflation will do a lot of the work, there won't be falls everywhere and in some instances nominal prices at the very bottom might well be the same or higher than today. i don't think we'll see the bottom for another five years.

People generally are not frightened by real prices falls , its the nominal prices which they fear... you can't have negative equity if the nominal prices don't change, the banks won't enforce repossessions if nominal price falls don't force it on them etc etc.

The chart you quote is all very nice and of course many like to see their lives predicted for them and will happilly sign up to it without thinking too hard, but I just personally don't buy into it at all. apart from anything else to get the type of steep falls the chart predicts you'd need a pretty big trigger and I just cannot see one coming ( and just for the record I don't buy into interest rates rising while the economy stays weak either).

I don't share your fear.

Yes and we are in recovereh aren’t we?!!

I would expect upto 1million public sector and masses of associated private sector job losses to be a pretty big sentiment changer, especially that the only growth of the liebour years was public sector which drove everything from gdp to credit consumption and house prices.

The sheeple and seemingly you seem to think we have had the recession; sadly the proper recession was only put on hold by a desperate b&stard, the main course is on its way. I see more triggers than a LA gun range.