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Bbc: Housing Group Gives Four-Year Negative Equity Warning

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Housing group gives four-year negative equity warning

31 August 2010 Last updated at 00:00

Homeowners who bought at the peak of the market peak may face four more years of negative equity, a housing group has said.

The National Housing Federation (NHF) [/b]said the average buyer paid £216,800 for a home in 2007.

They may now have to wait until 2014 before prices recover enough to make their homes worth more than they paid.

]The organisation, which campaigns for affordable housing, also said prices are still too high for many buyers.

'Locked out'

According to the NHF, house prices will dip again next year by 3%, before steadily climbing thereafter.

They expect prices to rise some 22% by 2014, bringing the average price of a house to £226,900.

According to NHF chief executive David Orr, prices will "inevitably increase in the long term because of the huge under-supply of housing".

But even at current depressed prices, he cautioned that houses remain unaffordable for most low-to-middle income families, thanks in part to tighter mortgage lending standards.

"There's a very real risk that an entire generation will be locked out of the housing market for the foreseeable future," he said.

He criticised government decisions to scrap regional house-building targets and withdraw funding for affordable housing.

"Proposed caps on housing benefit payments could also put nearly a million people on low incomes at risk of losing their home," he added.

Edited by GordonBrownSpentMyFuture

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An odd report that correctly observes that "prices are still too high for many buyers" but then suggests that houses remain unaffordable due to "tighter mortgage lending standards" as well as championing a 22% rise in HPI in just 4 years.

I'd argue prices are too high because of loose mortgage lending standards and that lower prices, not looser lending, is what's required. But then I've been saying that for 7 years...

However, if they foresee 4 years of NE for those who bought in 2007 and think house prices will rise by 22% in 4 years then one can conclude they expect house prices to fall 22% from peak overall. Half nominal falls and half real?

Edited by GordonBrownSpentMyFuture

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The NHF and David Orr are there for one reason: to maximise the supply of building grants and housing benefit to their members, Social Hosuing Providers.

Every report that they produce is aimed at strengthening this messge by saying that houses are unaffordable and will become, despite current evidence to the contrary, increasingly so.

It makes sense, within their role as a trade body, that they do this but their forecasts are to be ignored as they are not remotely objective.

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The NHF and David Orr are there for one reason: to maximise the supply of building grants and housing benefit to their members, Social Hosuing Providers.

Every report that they produce is aimed at strengthening this messge by saying that houses are unaffordable and will become, despite current evidence to the contrary, increasingly so.

It makes sense, within their role as a trade body, that they do this but their forecasts are to be ignored as they are not remotely objective.

This is another "press release" driven piece of 'reporting' from the BBC. However, the underlying trend in msm reports on the economy over the last few months has been to let some more bearish news out than previously - perhaps preparing expectations, but softening any gloom with some longer term reason to remain optimistic.

It is the modern equivalent of the "Keep Calm and Carry On" poster.

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I can't beleieve what David Orr just said!!!!! He just said that mobility is key is key in difficult economic times and that not only does this affect owner occupiers, but it also affects renters because there's.......wait for it....... a shortage of rental accomodation!!

You couldn't make it up! dry.gif

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According to the NHF, house prices will dip again next year by 3%, before steadily climbing thereafter
.

Very difficult to measure such tiny moves on high priced assets. Margin or error is normaly 1.5 to 2% on a YoY basis, at the very least.

I expect to see some MoM falls of between 2% and 3% later this year and next year.

Edited by Realistbear

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The NHF and David Orr are there for one reason: to maximise the supply of building grants and housing benefit to their members, Social Hosuing Providers.

Every report that they produce is aimed at strengthening this messge by saying that houses are unaffordable and will become, despite current evidence to the contrary, increasingly so.

It makes sense, within their role as a trade body, that they do this but their forecasts are to be ignored as they are not remotely objective.

NHF=HA lobby group?

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As someone said before...houses are so expensive that no-body can buy them, so that means that prices will rise.

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More evidence of quality journalism from the beeb - its a housing group' so they must be able to predict future house price movements even though no one else can. Also love that its not 'in the region of' but a specific figure (to add credibility, see).

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There were probably a few cups of coffee spat out this morning when BBC News (TELEVISION) ran this piece and led with "Home owners who bought at the peak of the market in 2007 are likely to be in negative equity until 2014".

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This is why I like to copy/paste the entire "report"/press release with the time stamp because the BBC have now "updated" the article.

Pertinent changes indicated.

Last updated at 08:11

Homeowners who bought at the peak of the market may face four more years of negative equity, a housing group has said warned.

The National Housing Federation (NHF) said the average buyer paid £216,800 for a home in 2007.

They may now have to wait until 2014 before prices recover enough to make their homes worth more than they paid.

The organisation, which campaigns for affordable housing, also said prices are still too high for many buyers.

'Locked out' 'Perfect storm'

According to the NHF, house prices will dip again next year by 3%, before steadily climbing thereafter.

The federation expects prices to be 22% higher by 2014 2015 than they were in 2009, bringing the average price of a house to £226,900.

"A combination of circumstances in the market have made it very, very difficult for house prices to recover," NHF chief executive David Orr told the BBC.

"But actually the big problem that we have is that we've created a kind of perfect storm where there is negative equity for some people and they're trapped and can't move, but prices haven't come down enough to make buying a home a realistic option for people in their 20s and 30s in ordinary jobs.

"We really are in danger of pricing people out of owner-occupation."

He also criticised government decisions to scrap regional house-building targets and withdraw funding for affordable housing.

"Proposed caps on housing benefit payments could also put nearly a million people on low incomes at risk of losing their home," he added.

And "ordinary jobs"? You mean people who aren't bankers, footballers and vacuous TV celebs? You don't say. <_<

Edited by GordonBrownSpentMyFuture

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The same report is quoted in the Daily Mail, and you can make comments at the end of the article.

http://www.dailymail.co.uk/news/article-1307557/Negative-equity-curse-2014.html

Negative equity curse 'will last until 2014'

Tens of thousands of people who bought a home at the peak of the market will remain trapped in negative equity until 2014, a devastating report warns today.

Official figures show around 1.3million bought a property in England in 2007 when prices reached an all-time high.

Their home is worth less than they paid for it and will remain so for another four years according to the report from the Nationa Housing Federation.

It says a significant minority are in negative equity, with a mortgage bigger than the value of their property, giving them problems if they have to sell. The report warns that Britain is 'in the midst of the worst housing crisis for generations' and that house prices will fall again next year.

The federation, which represents England's housing associations, raises fears that 'an entire generation of people will be locked out of the housing market as a result of high house prices'.

The number of first-time buyers slumped to just 199,000 last year, compared with nearly 600,000 in 1999. Only the rich, the well-paid or those with generous parents are able to get on today's property ladder.

The plight of those who bought in 2007 is highlighted in figures showing that the average house price in England then of £216,800 has fallen to £210,500.

The figures, compiled by the consultancy Oxford Economics for the federation, predict it will drop to £204,200 in 2011, rising to £206,400 in 2012 and £214,900 in 2013.

It will not be higher than the 2007 price until 2014, when it will hit £226,900.

The situation is even worse in some parts of the country. In the North-East, the peak price of £148,100 will not return until 2015. In places such as London, the East and the South-East, where demand for housing is more intense, prices will be back to peak levels by 2013.

David Orr, the federation's chief executive, said: 'For those who bought at the peak of the housing boom, there is a strong possibility they will have to wait another four years before their home is worth what they paid for it.

'For a significant minority in negative equity the consequences are devastating. They have a major problem if they need to sell.'

The report, Home Truths, says the problems facing people who bought in 2007 are overshadowed by the greater crisis in the housing market.

House prices are around 120 per cent higher than they were a decade ago, which is keeping a growing number of people off the ladder.

Construction began on just 87,360 new homes in England in 2009/10, a third of the number of new households which are forming."

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I can't beleieve what David Orr just said!!!!! He just said that mobility is key is key in difficult economic times and that not only does this affect owner occupiers, but it also affects renters because there's.......wait for it....... a shortage of rental accomodation!!

You couldn't make it up!

Direct experience suggests that, at least in some locations, there is indeed a shortage of rental accommodation.

My daughter just spent most of August trying to find somewhere to rent in London. Compared to Bristol, where she lived, the available rental accomodation was much smaller, much less pleasant and in less desirable locations - for at least 50% more money. (An equivalent flat would have been completely unaffordable at well over double.) Even then there was precious little available to view. The agents simply had next to nothing on their books at (or below) what was historically a perfectly normal price point.

A glut would have been very welcome indeed.

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As someone said before...houses are so expensive that no-body can buy them, so that means that prices will rise.

But, funnily enough, that can be true. I've seen markets before where nothing is selling and prices rise. Because, when nothing is selling, people eventually give up and take their houses off the market. Then, with little on the market, the few buyers that can proceed have to pay what's asked and more - as there is so little choice.

What is needed, to push prices down, is forced sellers.

So far, they are few and far between.

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In that reported article it says:

"Proposed caps on housing benefit payments could also put nearly a million people on low incomes at risk of losing their home," he added.

Errr, million empty houses ... wonder what will happen to rents.

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But, funnily enough, that can be true. I've seen markets before where nothing is selling and prices rise. Because, when nothing is selling, people eventually give up and take their houses off the market. Then, with little on the market, the few buyers that can proceed have to pay what's asked and more - as there is so little choice.

What is needed, to push prices down, is forced sellers.

So far, they are few and far between.

this is one of the causes of the Bull trap...I think we've had that....now with fresh falls, maybe things will be a little clearer.

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Direct experience suggests that, at least in some locations, there is indeed a shortage of rental accommodation.

My daughter just spent most of August trying to find somewhere to rent in London. Compared to Bristol, where she lived, the available rental accomodation was much smaller, much less pleasant and in less desirable locations - for at least 50% more money. (An equivalent flat would have been completely unaffordable at well over double.) Even then there was precious little available to view. The agents simply had next to nothing on their books at (or below) what was historically a perfectly normal price point.

A glut would have been very welcome indeed.

With all due respect, what a complete and utter vacuous statement. Of course you are going to have to pay more to rent in London than you would in Bristol. A shortage of rental accomodation this does not make. dry.gif

What London postcode was she looking at and we'll have a look on Rightmove for availabilty, shall we?

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With all due respect, what a complete and utter vacuous statement. Of course you are going to have to pay more to rent in London than you would in Bristol. A shortage of rental accomodation this does not make. dry.gif

What London postcode was she looking at and we'll have a look on Rightmove for availabilty, shall we?

"With all due respect" oh dear me.

I stated that, acknowledging the requisite adjustments for London prices a person had difficulty finding a place to rent in August. The response you make is to pretent I wasn't aware that London costs more. Straw man. Not impressive. Little prospect of meaningful discourse.

Lets try again. At an appropriate higher London price, one at which rentals are typically available, there were few available at the given time. End of. Either people's world view can cope with that fact, or they can't. P1ssing competitions are of no interest to me. Bye.

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The NHF are not always right. Here is an article from three years ago:

In fairness, they called a 40% rise from 2008 to 2013. We aren't in 2013 yet, but we have seen plenty of Quantitative Easing.....

(Of course, their reasoning was a load of rubbish)

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Jeremy Vine will be discussing negative equity and this report at around 1.30pm today on Radio 2. Might be worth a listen to see what the great unwashed make of it.

Sounds to me like it's going to be an attempt to calm the "fear".

This is being discussed NOW.

http://www.bbc.co.uk/radio2/shows/jeremy-vine/

... and it's BS.

Edited by GordonBrownSpentMyFuture

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  • 259 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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