Guardian - Uk Property Prices Could Fall 10%.........

[Daz]

Hi

I posted this as a news post yesterday but I haven't see it linked yet. I think that 10% is a very consertvative figure, but at least its yet more bearish news from MSM.

UK property prices could fall 10% as banks report fewer mortgage approvalsBritain's housing market may be on the brink of double-dip recession, warn analysts

http://www.guardian.co.uk/business/2010/sep/23/house-prices-mortgage-approvals-recession

[Kazuya]

10% drop in house prices?

Yeah, that'll sort everything out...

[thecrashingisles]

UK property prices could fall 10% as banks report fewer mortgage approvals Britain's housing market may be on the brink of double-dip recession, warn analysts

http://www.guardian.co.uk/business/2010/sep/23/house-prices-mortgage-approvals-recession

It's amazing how many people seem to think that the definition of recession is falling house prices.

[Mega]

It baked in now, just sit back & watch round one..............round 2 is when the repo's hit the market.........round 3 is when rates rise to cover a collasped £.....round 4 is round 2 again....

Mike

[Kazuya]

It baked in now, just sit back & watch round one..............round 2 is when the repo's hit the market.........round 3 is when rates rise to cover a collasped £.....round 4 is round 2 again....

Mike

What is? Beans, gold, ammo or all of the aforementioned?

[jplevene]

Hi

I posted this as a news post yesterday but I haven't see it linked yet. I think that 10% is a very consertvative figure, but at least its yet more bearish news from MSM.

UK property prices could fall 10% as banks report fewer mortgage approvalsBritain's housing market may be on the brink of double-dip recession, warn analysts

http://www.guardian.co.uk/business/2010/sep/23/house-prices-mortgage-approvals-recession

One huge factor for low mortgage approvals is greedy vendors who are only going to make things worse for themselves.

I have just seen a standard small 5 bed for sale asking £900,000 in an average road, yet in a really prestigious road round the corner, a large 5 bed with lots of land has just had a sale agreed and was asking £1,000,000. The moderate house would sell if they marketed it at £550,000, and they should expect to get £500,000 (a friend who is an agent confirmed this) if they are lucky (http://www.rightmove.co.uk/property-for-sale/property-27856594.html).

Now even if a complete mug agreed to buy this £900,000 small house, no surveyor would agree the price considering the most expensive house to sell in the road was at the height for £740,000 and nearly twice the size, yet the latest house at this size and style to sell was for £450,000 in the height.

Here we have as usually a vendor asking over twice the price. This is going to have a huge negative impact on other houses all over the country as the press could use this to have a field day. When it finally does sell, and lets say it does sell for the height price of £450,000, the newspapers could use this house to show that house prices have crashed 50%, citing this property as an example, which would of course have a very negative impact on other houses all over the country.

To all journalists reading this forum, this house is your future headline !!!

[fellow]

Sentiment has well and truly turned negative for house prices. These kind of headlines will have quite an impact on peoples' buying and selling decisions.

[fellow]

Hi

Welcome to HPC

[lets get it right]

The market now looks set to collapse on its own weight. When people realise that the markets is falling, and all the bullets have already been fired by the BofE, the panic will really set in.

I have to say that sort of language is terribly misleading - because it just isn't what happens. I've been an adult through the 70s onwards - saw the oil crisis in the 70s which led to a 3 day week and various house price corrections and recessions throughout the decades.

I have yet to see PANIC in the housing market.

People, for whatever reason, decide to sell. If they don't get an offer they move their price down GRADUALLY - if they NEED to sell. If they get an offer and sell, the market price for that type of property in that area is (temporarily) set. That is used as a benchmark when estate agents value other properties and, as we all know, lenders' surveyors ask estate agents for comparables when they value a property for a lender.

The only real driver is repossessions as a result of unemployment. Repossessions are still relatively low. Unemployment whilst bad, is not terrible. Interest rates are low and look as though they will stay that way for a long time.

The housing market is still functioning on very low transaction levels.

Which suggest to me that PANIC will not set it.

Edited September 26, 2010 by Let's get it right

[lets get it right]

10% drop in house prices?

Yeah, that'll sort everything out...

Indeed. A 10% drop seems meaningless to me. Estate agent comes round and arbitrarily prices a property 5% higher than the last similar one that sold a few months ago, and it sells for 10% less than asking. So, 5% drop.

It really is a war of attrition trying to get house prices down.

[wealthy]

It really is a war of attrition trying to get house prices down.

No not really, if the cost of living is too high there's too much wastage in the economy. Eventually this ends up correcting itself. Nothing to do with attrition. High property prices have never held up anywhere in the world for a sustained period of time, and never will.

[fellow]

Indeed. A 10% drop seems meaningless to me. Estate agent comes round and arbitrarily prices a property 5% higher than the last similar one that sold a few months ago, and it sells for 10% less than asking. So, 5% drop.

It really is a war of attrition trying to get house prices down.

Why stop there? Why not price it at 10% higher and then get full price, or better yet, double the price and get 80% more than you wanted. These price falls are going to make homeowners a fortune.

[Mega]

Dr B

I hear Goldman sac, JP Morgan & the rest are 42,000 contracts short & they due on Monday......the billion bulls (China) are driving up the price & the looks like there have to be massive short covering?

mike

[MrPin]

Luckily they won't fall where I live, because it's special!

[Redcellar]

People, for whatever reason, decide to sell. If they don't get an offer they move their price down GRADUALLY - if they NEED to sell. If they get an offer and sell, the market price for that type of property in that area is (temporarily) set. That is used as a benchmark when estate agents value other properties and, as we all know, lenders' surveyors ask estate agents for comparables when they value a property for a lender.

The only real driver is repossessions as a result of unemployment. Repossessions are still relatively low. Unemployment whilst bad, is not terrible. Interest rates are low and look as though they will stay that way for a long time.

You are missing the 'elephant in the room' and that is the huge number of people who 'invested' in houses as a retirement fund in the form of BTL or second homes. Retirement, or substantial percieved drop in value can 'panic' these folks into selling. As in shares, panic on sudden drops does ensue. We just haven't had the sudden drops yet. The uptick over the last 12 months has gone some way to calming the masses and making them believe that it was still a good investment.

This country has never been in this position before, so respectfully, your age and experience doesn't mean a thing. It has the potential to be a significant event as it has been in the USA. We shall see if it occurs.

[Georgia O'Keeffe]

You are missing the 'elephant in the room' and that is the huge number of people who 'invested' in houses as a retirement fund in the form of BTL or second homes. Retirement, or substantial percieved drop in value can 'panic' these folks into selling. As in shares, panic on sudden drops does ensue. We just haven't had the sudden drops yet. The uptick over the last 12 months has gone some way to calming the masses and making them believe that it was still a good investment.

This country has never been in this position before, so respectfully, your age and experience doesn't mean a thing. It has the potential to be a significant event as it has been in the USA. We shall see if it occurs.

yep i was going to highlight this earlier but i couldnt be arsed to type it, its only in the last 15 years houses have become a widespread investment"its my pension innit", the market has completely changed, if everyone is buyuing a house to do something radical with such as live in it, yes they may not be panicked, but an investor with a portfolio will, and seeing as they are nearly all purchased with debt you can be damn sure the banks will panic and ask for margin calls as they do on commercial property because btl contracts allow margin calls. The poster needs to realise theyve never experienced a housing market in its current form, you can tell it is an investment class now by the parabolic lift off, it is a fundamental quality of all investment manias

Its not alot different to the tech boom, investors were duped into bidding up prices on phone companies because the paradigm had changed from basic utility to tech/growth, which if so required a rerating up. Of course they were always utilities and obviously returned back to this rating

Edited September 26, 2010 by Tamara De Lempicka

[MrPin]

You are missing the 'elephant in the room' and that is the huge number of people who 'invested' in houses as a retirement fund in the form of BTL or second homes.

You are correct I think! People will try to unload this shit all at the same time!

[SarahBell]

You are missing the 'elephant in the room' and that is the huge number of people who 'invested' in houses as a retirement fund in the form of BTL or second homes. Retirement, or substantial percieved drop in value can 'panic' these folks into selling.

But if you're planning a retirement surely you're looking longterm?

[thecrashingisles]

But if you're planning a retirement surely you're looking longterm?

But ideally before you're dead, or retired.

[lets get it right]

No not really, if the cost of living is too high there's too much wastage in the economy. Eventually this ends up correcting itself. Nothing to do with attrition. High property prices have never held up anywhere in the world for a sustained period of time, and never will.

Seem to have managed it here for 10 years now. Property prices where I live were already nuts by 2000.

[lets get it right]

yep i was going to highlight this earlier but i couldnt be arsed to type it, its only in the last 15 years houses have become a widespread investment"its my pension innit"

A bit delusional? There's been plenty of private landlords and private property to rent for as long as I can remember. Dividing big houses up into bedsits to rent was all the rage in 1950s and 1960s. Like Rigsby.

... but an investor with a portfolio will, and seeing as they are nearly all purchased with debt you can be damn sure the banks will panic and ask for margin calls as they do on commercial property because btl contracts allow margin calls ...

A few BTL mortgages allow margin calls. They are NOT nearly all purchased with debt. Lots of properties have been bought over the last two years - since the credit crunch - with cash, or mostly cash. These people really are in it for the long term. Looked at a house the other day, bloke lives in Spain. For some reason he decided to tell us he had two other BTL properties and, if he sold the one we were looking at, was going to go into the market, with cash, and buy two more (at the lower end of the market as he thought these were more effiicient at generating rent.) The rental income is his pension and he was outraged that having just had a problem tenant, he had 'missed out on 7k of my pension!' The rent is his pension. Simple as that. As long as people pay him daft amounts to rent - he is not going to sell. Why should he?

Its not alot different to the tech boom, investors were duped into bidding up prices on phone companies because the paradigm had changed from basic utility to tech/growth, which if so required a rerating up. Of course they were always utilities and obviously returned back to this rating

It's nothing like the tech boom. Nothing like it at all.

[Redcellar]

But ideally before you're dead, or retired.

Yup. If you are in your 50's then you would want out whilst the market is seen to be at a high. Not risk having to wait ten years and 'pray' the market recovers in time, which you have no clue it will or won't. You would simply not risk it would you? In fact would anyone risk it or would all investors want to pull out at a high.

[The Masked Tulip]

Saw my first 10% off asking price in Swansea West today - came on the market originally in August and just over a month later they have taken 10% off the asking price.

Well, I have seen a few 100K off 1.1 million houses in the past month but they don't count IMPO.

[lulu]

Luckily they won't fall where I live, because it's special!

Here too, just been away with friends at the weekend who are all convinced that where we live is special and there is no way prices will drop. One is desperate to blow £250K on a flat just now, only problem is no one wants to buy his current place....

[lets get it right]

You are missing the 'elephant in the room' and that is the huge number of people who 'invested' in houses as a retirement fund in the form of BTL or second homes. Retirement, or substantial percieved drop in value can 'panic' these folks into selling.

I see that as being exactly the opposite - the elephant not in the room. First - people who 'invested' in BTL are not all leveraged up to the eyeballs. Secondly - their game plan is that the rent pays off the mortgage and, at the end of a mortgage term, they own the property outright - tenants having paid the mortgage for them.

In fact, they are the last people that are going to panic and sell when the market goes down. They may panic - but they will hang on for the market to go back up again - for as long as people pay the daft rents they ask. This is the BIG FACTOR - the rents they get. As long as they get the rent, they won't sell, in a panic or otherwise.

The massive BTL market is, as I see it, a bloody nuisance because it is a stabilising factor in the housing market.

This country has never been in this position before, so respectfully, your age and experience doesn't mean a thing. It has the potential to be a significant event as it has been in the USA. We shall see if it occurs.

To coin a phrase, 'there is nothing new under the sun'. You'd be rash to compare the US housing market with the UK housing market. I really can't see a comparison. A vast country with a gung-ho attitude to property development, where new development ran riot - compared to a relatively tiny place (Texas is 7 times bigger than the UK I seem to remember from childhood geography lessons) with utterly restrictive planning laws, rife with nimbyism where new houses are like shoe boxes - meaning decent houses in decent areas always command a premium.

Same with Ireland - went crazy with new developments - in an island with a population of 4 million (I think).

Edited September 26, 2010 by Let's get it right