Housing Market Is Dead In Swansea

[The Masked Tulip]

To add a little anecdote into the mix. A colleague was talking to an estate agent in my part of the world and he informed her that a house has been languishing on the market at £120k when an offer was put in for 78k. The offer was accepted on the agents recommendation.

The tide does seem to be turning.

Interesting.

I do wonder if it is the so-called middle classes who are perhaps more in MEW debt than the so-called working classes?

Or, to put it another way, whether the higher up the price range you move in housing the greater the need to obtain the ludicrous asking price as you are potentially far more in debt.

For example, someone at the bottom of the ladder may not like it, and it may take some time, to pay off walking away with say 10K in negative equity but it can be done. But when you are 50K in negative equity or even more then it becomes a compound interest thing does it not?

Also, if you are in an area where house prices have risen rapidly and totally out of synch with local wages - i.e. in a public sector place like Swansea - then there is little or not chance to ever repay that debt without a lottery win or some idiot coming along and paying your ludicrous asking price?

[aa3]

Oh yes we have momentum in the inability to even afford loans even at these record low rates.

The UK is ALL LOANED OUT.

ITS ONLY LOANS THAT SUPPORT THESE HOUSE PRICE LEVELS.

And a consequence of being loaned out in both personal, business and government is that there is a reluctance to borrow such amounts. The BoE are trying to encourage real lending in real wealth production, but it appears only the weak are up for it...and banks dont want to know them.

Government is tackling the deficit...so they say, but even this lot are nowhere near tackling the DEBT mountain...which with every month of deficit, just gets larger....then there is the personal spender....petrol up, fares up, food, up, yet wages stagnant.....less to spend on loans.

And lastly, the Pig in the Poke, the Public Sector, bloated, overpaid and over benefitted, is by force of debt and voters, being culled.

Finance on housing is truly Evil. And I mean that in a religious sense. Armageddom has arrived for this blot on humanity, but governments think they can overcome the God of the Market.

Very good post.. people just cannot borrow any more. We've had a 40 year expansion in debt-gdp ratio, and its at the point the society just cannot handle anymore. The unwind could go on for a long, long time.. like 40 years the other way.

You are also right with stagnant wages and rising costs in essentials it leaves less to spend on housing.. even if people want to spend 50% of their income on housing, if they simply can't, they can't.

One of the problems with finance on housing is its not productive capital. So say I borrow 1 million pounds and buy 2 construction cranes. I then use those cranes to pay back the debt. On a bigger scale the same is true of things like railroad construction and power plants. Lending someone say £5 billion to build power plants.. well they use the power plant to pay back the loans.

But on housing its not like that. First off they are usually buying an already built house, so the capital stock is not rising. Secondly they are generally not using the house as a capital asset to use to pay back the loan.

[otters]

In theory this all should have happened 4 years ago, too many false dawns have been and gone. Like most on here I feel that this may be the one but,........... then out of the blue, Nwide and RBS may come out with some convoluted positive figures and set it all back again. Hopefully market forces will take their course this time and we will get things back on a stable footing.

[OMG]

To think we have this, depression & Peek oil...like buses 3 come at once!

Take your pick:

Peak debt, Peak oil, Peak water, Peak food.

I wish I could add peak carbon, but that would be wishful thinking...

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

Just spoke to pal from the Welsh Assembly - they have just started cutting - beginning with 200 voluntary redundancies. It appears they couldn't wait until next year after all

Spoke to someone from one of Wales's largest quangos too - down to 3 day week across the board, with redundancies looming.

Edited September 5, 2010 by gruffydd

[Jonnybegood]

For all those struggling there are still many with lots of cash.

Take Wales for example, probably one of the cheapest places in the uk to buy overall.

Take the last 10 years away and before then you could have a nice public sector job in Wales paying upwards of £25k and buy a decent 3 bed home for less than £60k, so for those with a decent job in Wales property was cheap (I know I have lived through those days).

So many either had nice lifestyles (Holidays, Nice cars) or large families or bought in additional property for buy to let (A typical buy to let back in late 90s £35k) and if it was in Swansea near the universities it would reel in large amounts of cash for little outlay.

There are still large numbers of these people in Wales, 2 or 3 properties under their belts, mortgage free, they have just taken a few years out from buying more property (Prices went silly in Wales 2003 onwards IMO) and just waiting to buy back in.

Many friends of mine who left Wales in the early 90s to work away retained their Welsh properties and now either continue to rent out or have since returned mortgage free.

Then there are those who have their properties on the market for silly money with no intention of moving unless their asking price is met, don't really need to move are mortgage free but would downsize if they got the right money, I know a few of these down Gower way, they all have their properties on the market for £330k plus, quite happy to stay put, in their late 60s, kids keeping telling them to get something smaller.

TMT Wales is not like it was 20 years ago, west wales used to be dirt cheap to buy, now with the internet and better transport you can be earning London wages whilst living in a cottage surrounded by beautiful scenery of the West Wales coastline.

Friends of ours live just outside Saundersfoot, he's an electrician and she works for Lloyds TSB in London 3 days a week and from home the other 2, between them they earn well over £100k a year whilst their home in Saundersfoot they bought 9 years ago cost just under £150k, 5 bed, 2 bathroom etc etc.

Other friends now living in Derwen Fawr Swansea can't believe the house they have for £380k (Bought around mid 2005 after selling up in Brighton), she's a Dental hygienist (£35 per hour) covering 3 practices in Swansea and he just day trades shares and part time financial advising from home after quitting his banking job in 2006.

I could go on, surprisingly the Wales of 20 years ago is not as unattractive these days, its only when you have been away for some time that you realise what you have in Wales and compared to other places what you get for your money.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

For all those struggling there are still many with lots of cash.

Take Wales for example, probably one of the cheapest places in the uk to buy overall.

Take the last 10 years away and before then you could have a nice public sector job in Wales paying upwards of £25k and buy a decent 3 bed home for less than £60k, so for those with a decent job in Wales property was cheap (I know I have lived through those days).

So many either had nice lifestyles (Holidays, Nice cars) or large families or bought in additional property for buy to let (A typical buy to let back in late 90s £35k) and if it was in Swansea near the universities it would reel in large amounts of cash for little outlay.

There are still large numbers of these people in Wales, 2 or 3 properties under their belts, mortgage free, they have just taken a few years out from buying more property (Prices went silly in Wales 2003 onwards IMO) and just waiting to buy back in.

Many friends of mine who left Wales in the early 90s to work away retained their Welsh properties and now either continue to rent out or have since returned mortgage free.

Then there are those who have their properties on the market for silly money with no intention of moving unless their asking price is met, don't really need to move are mortgage free but would downsize if they got the right money, I know a few of these down Gower way, they all have their properties on the market for £330k plus, quite happy to stay put, in their late 60s, kids keeping telling them to get something smaller.

TMT Wales is not like it was 20 years ago, west wales used to be dirt cheap to buy, now with the internet and better transport you can be earning London wages whilst living in a cottage surrounded by beautiful scenery of the West Wales coastline.

Friends of ours live just outside Saundersfoot, he's an electrician and she works for Lloyds TSB in London 3 days a week and from home the other 2, between them they earn well over £100k a year whilst their home in Saundersfoot they bought 9 years ago cost just under £150k, 5 bed, 2 bathroom etc etc.

Other friends now living in Derwen Fawr Swansea can't believe the house they have for £380k (Bought around mid 2005 after selling up in Brighton), she's a Dental hygienist (£35 per hour) covering 3 practices in Swansea and he just day trades shares and part time financial advising from home after quitting his banking job in 2006.

I could go on, surprisingly the Wales of 20 years ago is not as unattractive these days, its only when you have been away for some time that you realise what you have in Wales and compared to other places what you get for your money.

Complete and utter nonsense - and I'm a West Walian - I know virtually nobody who earns London money down here (I used to work down the M4 myself!). As for the 100k you mention - I suspect they're in the top 0.1% of earners. Also, are you aware of the broadband issues (v slow broadband) over much of rural West Wales?

Most people who live here earn very low wages, be they Londoners or Welsh people - average wage info is freely available and Wales offers the lowest salaries in Britain. Check the stats. It's an uncomfortable and expensive commute, unlike, say the Cotswolds.

I'm also an ex EA and can tell you it ain't pretty - and many of those BTL guys are Mewed up to their eyeballs in debt.

70% of our economy is public sector. Need I say more.

I know of no BTL investor looking to buy back in. Not one. Even if they wanted to, most can't access mortgages or justify paying the BTL premium for mortgages. BTL was only worthwhile when there were large annual increases in property prices. Those days are long gone. Anybody with half a brain knows that.

Edited September 5, 2010 by gruffydd

[The Masked Tulip]

I used to earn a 100K plus working out of Swansea for various global IT companies - it is possible but very, very few do it.

I have known plenty of people from London who were earning mega bucks but they had to give up those salaries to come and live in West Wales - few are able to maintain the wage and they often return to London within a few years when the choice comes down to money or quality of life.

As for the broadband issues, oddly enough I was having this conversation with some friends yesterday and pointing out that just 3 miles from the city centre of Swansea are no go areas for me because it is like going back to the stone-age in Internet connectivity - so the outskirts of West Swansea, the Gower and the majority of the the areas in Carmarthen, Pembs, Ceredigion, etc, etc, are basically still on dial-up once you get outside the towns. They are even too far from their nearest BT exchange to have ADSL.

A friend lives in Three Crosses, which is on the outskirts of Swansea and about 5 minutes drive from where I am right now, and he has appalling internet connectivity. It is a suburb of Swansea for goodness sake! The same for Pennard, parts of Bishopston, Penclawdd, and all the Gower - Cabletel never laid cable there back in the 80s/90s as it was prohibitvely expensive and still is.

Only yesterday the Welsh news were covering the story of a village that asked BT for Broadband and BT quoted them a 550,000 price to get them broadband!

Edit:

Yes, it is a long, uncomfrotable and prohibitively expensive commute to London from West Wales now - to be in London from Swansea by 9AM the last time I looked, a few years back, it was about £200. No idea what it is now.

OK, I used to go first clas but I had to as I would often be the last sod on the train from London by the time it got to Swansea and it was the only way I could be assured of a decent seat and get somewhere to relax and not have chavs with ipods all around me for 4 hours.

Edited September 5, 2010 by The Masked Tulip

[Guest_James Toney_*]

To add a little anecdote into the mix. A colleague was talking to an estate agent in my part of the world and he informed her that a house has been languishing on the market at £120k when an offer was put in for 78k. The offer was accepted on the agents recommendation.

The tide does seem to be turning.

although this is not in wales, but a mate of mine, put an offer in of 75k on a 100k house and it got accepted !!!

i never thought they would sell it for that, tide does seem to be turning

[The Masked Tulip]

although this is not in wales, but a mate of mine, put an offer in of 75k on a 100k house and it got accepted !!!

i never thought they would sell it for that, tide does seem to be turning

That is great - fantastic news. 25% discount! Bet your mate is a happy bunny!

[Johnny Storm]

Playing a long game, the market rewards the prudent eventually

But dont forget, the market can stay irrational longer than you can stay solvent.

[Mr. Miyagi]

although this is not in wales, but a mate of mine, put an offer in of 75k on a 100k house and it got accepted !!!

i never thought they would sell it for that, tide does seem to be turning

Come the new year it may be time to start looking to buy again. For £90 to £100k I will probably get a good 3 bed semi in a nice area. All for less than 3 times my salary. Happy days

[The Masked Tulip]

Come the new year it may be time to start looking to buy again. For £90 to £100k I will probably get a good 3 bed semi in a nice area. All for less than 3 times my salary. Happy days

I would give it a month and begin looking personally - let the 'September rush' go - lol - and you might find what you want in the grey months.

I am firmly of the opinion that any window HPCers have to buy will be brief - a year at most, perhaps 6 months.

[Mr. Miyagi]

I would give it a month and begin looking personally - let the 'September rush' go - lol - and you might find what you want in the grey months.

I am firmly of the opinion that any window HPCers have to buy will be brief - a year at most, perhaps 6 months.

I disagree. I think were in for a long period of falls maybe for the next 2 to 3 years. If I get a house I want for the budget I have set 2, 3 or even 5 years of falls would not bother me in the slightest. Hell, I may even stop visiting HPC 10 times a day. What would I do then?

[The Masked Tulip]

I disagree. I think were in for a long period of falls maybe for the next 2 to 3 years. If I get a house I want for the budget I have set 2, 3 or even 5 years of falls would not bother me in the slightest. Hell, I may even stop visiting HPC 10 times a day. What would I do then?

You will miss me.

We will have meets in pubs and Mrs. Bear will make us cakes and we will talk about the old times. Years from now we will beh honoured by the nation and school kids will ask if we knew Eric.

[Pent Up]

I disagree. I think were in for a long period of falls maybe for the next 2 to 3 years. If I get a house I want for the budget I have set 2, 3 or even 5 years of falls would not bother me in the slightest. Hell, I may even stop visiting HPC 10 times a day. What would I do then?

+1

I think we will have several years of a buying window. No need to rush, wait for the perfect house. If I saw the right house at the right price I'd buy it tomorrow but I doubt that will happen for a good year yet.

[Mr. Miyagi]

You will miss me.

We will have meets in pubs and Mrs. Bear will make us cakes and we will talk about the old times. Years from now we will beh honoured by the nation and school kids will ask if we knew Eric.

Who's Eric?

[The Masked Tulip]

Er, ah. Why?

I believe things are about to get worse economically but I don't believe that we are about to enter 10 years of depression and misery.

I don't believe we are in for years of gradual declines in house prices.

I am more inclined to think that the falls in house prices will be faster than people realise and that the global economy will begin to recover 2 to 3 years from now.

So the cycle will begin again.

I could be wrong. I could be right. I just think it is important for HPCers to keep a close eye on things and be ready to move when they think the time is right for them. If people try and get the absolute bottom then, like shares, they will probably miss it and, unlike shares, most on here are looking for a home for the long-term.

Then again, we could be entering the second great depression.

[Frank Hovis]

Who's Eric?

Very good! Though methinks you are a LIAR