Don't Panic..

[apom]

Over the last few months every convincing argument or report in the news about the state of the housing market has been pointing toward a Price drop.

Indicators of prices are showing that accross the board prices are starting to head down.

The Estate Agencies are trying to stay positive, but their revenues (based on volume of sales, not selling price) have been slashed. They are however pushing prices to be more "Competitive in a buyers market" Their websites show massive concerna and predict years for the cycle to recover..

We see Houses in the papers not selling and having their prices slashed.

We see the reports of the massive debt burden society is in and we thank our stars we are not involved. We see the effect this debt is having on the high street and we feel a little afraid.

We see all the signs that the market is turning, that the Economy is struggling with the debt burden and that mewers and recent buyers in our own experiences are starting to look a little scared.

Remember that as debilitating as the house prices are to us, as bad as it is to not be in a position where we can own a home.. I am less concerend at this than if I was looking down the barrel of a 25 year repayment on a loan that is begining to look like a the biggest unsustainable burden...

For we have seen that the percentage of take home pay supporting mortgage repayments now (at less than 5%) is less then it was at the time of the last crash (more than 13%) but less by only just over 1.5%.. and we know that a small rise in interest rates will hurt people who have massivly overstretched themselves so badly.. and that a rise looks likely, not this time, but next.

We know that 8% of the market is first time buyers, the lowest in history.. and that the market needs this to be over 25% at least to self sustain.

We know that 1/3 of all mortages are using loop holes so that the customer never has to verify their income and that 1/5 of all current lending out there was taken out using these loop holes..

We see that any Buy To Let landlord can't break even at todays prices with an 85% interest only mortgage.. and that the landlord is having to subsidise his costs above any rent garnered..

We see that BTL Landlords on new builds bought of plan at massive discounts.. Still not covering their costs.. But giving massive profits to the builders.. Properties bought at a price more accuratly reflecting current values.

We see new devlopments stood empty as the properties are not selling and we see these empty properties being heavily discounted.

We see these builders... massive firms.. struggling financially..

We see that the "Baby Boomers" are getting old... and our generation.. the new first time buyers... we see that there are fewer of us then at any time before..

We see small properties built on mass.. First Time Buyer homes being built in such numbers that supplies outstrip demand..

We see our crash..

But then we see the halifax figures.. and we feel a surge of panic..

Trust hometrack.. trust halifax.. hell statistics can say anything..

So trust what you see about you..

Be patient..

This has been an awful time for so many and will be a terrible time now for many more over the next few years.

We will have our crash.

Gordon Brown and Tony Blair will never get a Christmas Card from me.

Edited September 8, 2005 by apom

[delite1]

An excellent summary. As a slightly older member (late thirties) than most on this board I can say I witnessed the last crash day by day and this one is no different. The market will be "stabilising" and "bouncing back" all the way to the bottom, just as it did last time. My interest in the UK market is investment and timing that investment correctly, if however you are an ftb let me ask you this:

If you are finding renting a place cheaper than you could buy it a difficult position to be in , how would you feel about buying the place and having to watch the market like a hawk or even being your landlord and subsidising your lifestyle?

[apom]

Delite...

Thank you.. its nice to see a true investor confirm or agree with the way I see things..

I have believed that true investors saw this maket as speculative and stepped out toward the peak..

Currently the market is made up of FTB's lying about their salary..

(They all have to be..) or BTL less experienced investors who have been left holding a financial lemon.. Every speculative market needs investors who missed the time to get out.. Every speculative market has had them..

Money can only be made quicly in such fast moving market which outstrip true value if money is pumped in.. this means that the profit made by true investors came from the investors who stayed at the party to long.. and have been left with the clean up

[delite1]

I had been buying since 1991 and stopped in late 2001 because I thought it was going too far. I read 9-11 incorrectly, I expected house prices to fall as a result and did not take into account the US slashing rates to bolster confidence, but then again who did?

The truth is that 9-11 has finally played out and the world has made its mental adjustments.The world has learned to live with terrorism , much like we did with the IRA.Did you see how the average Londoner reacted to the London bombings? Water off a duck's back, went back to work on the first opportunity. The fed know its policy was a flawed and hence Greenspan talking house crash last week. Now that the Fed are putting rates right in America (and Katrina at best may make them pause for a month) Brown's scope for claiming an economic miracle is shrinking rapidly. The trend is up for interest rates in the world and the goose is cooked for the UK debt junkies.

[right_freds_dead]

please dont mention gordon brown.

[apom]

please dont mention gordon brown.

<{POST_SNAPBACK}>

Why... Are you a good big fan of his..?

Personally its the hair.. I think you should always trust the countries economic future to someone with such well coifered hair..

I had a conversation with a mewer last night...

£35,000 mortage 7 years ago..

Now over £100,000

welcome to the devon boom..

She considered her flat to be worth £140,000

Highest inflation in the uk.. seriously..

Anyway.. she had no idea about the personal debt in the country being so high..

and that interest only repayments at the lowest possible interest rates leaves us paying £30,000,000,000 a year.. Extra..

Moeny that MFI and Dixons seems to be missing..

lah.. oh.. lah.. sing about recession..... lah de lah..

Thank you.. to thoses who thought that a 1 bed flat is worth £140,000..

Thank you for that.. thank you for the recession..

Gordon Brown.. a round of applause.. the worst and biggest boom in history..

and we are all doomed..

Unless you have no debt.. your job seems recession proof and hell.. thats me..

Gordon.. to make some wealthy.. don't sacrifice others..

[aclwalker]

Gordon Brown.. a round of applause.. the worst and biggest boom in history..

and we are all doomed..

Unless you have no debt.. your job seems recession proof and hell.. thats me..

<{POST_SNAPBACK}>

I totally agree. Has there ever been such an inaccurate statement as "no more boom and bust"? The man is a complete fool.

[Culpability Brown]

Great post apom.

You've covered it all.

[lowrentyieldmakessense(honest!)]

A friend of mine recently purchased a new build property and the developer reduced the price by £35,000. This was done by way of a gift from the developer. Sale price £245k - actual price paid £210k - guess which figure will be on the land registry and mortgage valuation - but prices aren't falling!