Public Refuses To Believe That House Prices Have Gone Down

[rantnrave]

Public refuses to believe that house prices have gone down

Monday 5th December 2011

Consumers have given a decisive clue as to why asking prices have been slow to register any decline – most simply do not believe that house prices will go down.

Indeed, more than one in five confidently expect them to go up.

Whilst Rightmove has finally reported a dip (of 3.1%) in asking prices within the last month, asking prices have still held up remarkably well. They are 1.2% up on a year ago, and at £232,144 are some £70,000 ahead of 'actual' prices reported by the Land Registry.

But while agents have been in the firing line for alleged over-pricing, a new survey –ironically by Rightmove, which frequently tears its hair out over the issue – goes some way towards solving the mystery of the reality gap.

The massive poll, of over 26,300 consumers, shows that two-thirds (63%) do not believe house prices will be lower in a year's time than they are now. They expect them to remain the same or, according to 22%, to be higher.

Less than one-third (three in ten) expect lower prices – unchanged from a year ago.

Despite ongoing economic gloom, the optimism among consumers is almost universal. While Londoners are the most optimistic, with 29% of consumers expecting higher house prices in 12 months' time, in Wales – the most pessimistic regions – only 35% are predicting price drops over the coming year.

A baffled-sounding Miles Shipside, director of Rightmove, said: "The public's belief in the value of bricks and mortar seems to defy the deteriorating economic situation. This is a clear message that the majority of consumers view the property asset class to be as 'safe as houses' in these times of economic uncertainty."

He added: "It should be remembered that in spite of the overall confidence expressed in this survey for property prices, transactions volumes are still well down on historic norms. Economic stability in the UK and Eurozone will be needed before many are willing or able to re-engage with the property market."

The survey did, however, reveal some extremely localised opinions.

For example, in the North-West 26% of respondents in Preston expect prices to be higher in 12 months' time, compared with just 14% in Lancaster only 20 miles away.

Shipside said: "Local variations highlight how patchy confidence can be, depending on an area's housing mix and wealth demographics.

"The wealthier middle-to-upper price brackets may be feeling fairly blast-proof from any further economic eruptions, and see a less turbulent outlook.

"Meanwhile, some of the more cash-strapped terrace and semi dwellers may feel far more exposed to the negative pressures of reduced mortgage availability and job uncertainty."

Sourced from EA Today

Edited December 5, 2011 by rantnrave

[DustyDog]

People aren't getting reposessed.

Mortgage holders cannot afford to lower their asking prices.

The rental market is still good.

Interest rates are not going up.

Stalemate.

More and more people will rent their properties out rather than sell for a loss or enter negative equity.

Should banks decide to reposess then the council will pay the rent of the reposessed to private landlords.

There will always be a rental market and as long as rent is enough to just about cover mortgage payments then the reluctant landlords will simply accept that. They won't think about downtime or repair costs or the place being empty for a few months. As long as the monthly rental is somewhere close to the mortgage level and can keep the bank happy then they will stick it out until prices rise enough to break even. Meanwhile they simply leave the property on Rightmove or wherever, just in case.

Couple of guys at work have recently bought a BTL apiece and easily found private tennents to pay the mortgage for them. It's to boost their pension, of course, what else?

[cashinmattress]

Britain refuses to believe a lot of things, but more important than house prices which we are pulling the ostrich head in the sand about:

We are fast running out of indigenous energy. Your kids are NOT going to enjoy the life that you did, and that is a 100% certainty. Its not going to be much fun unless you have some serous income to cover your energy costs, especially in the winter.

The looming demographic crisis is going to completely break the social welfare system. Can you afford to have today's quality of life in the future, but at your own hand?

Ideology that we hold dear now, as our parents did, such as free public health care and education are being swept away and into the hands of private interests at an astonishing rate, and your elected politicians are helpless to do anything if they aren't already complicit.

[DustyDog]

Politicians and the general public are only looking after their own self-interests.

Who cares what happens when we die as long as our own children can get a head start. No one cares about anyone else or anyone elses children. And the terrible thing is that everyone is doing the same thing.

As much as I feel for the younger generation, my priority is for my own family. I would love house prices to come down to affordable levels so that my kids can have a place of their own as I have. Of course, it's easier to want that HPC knowing that it isn't going to affect me. I'm not moving anywhere (I hope).

[Si1]

People aren't getting reposessed.

Mortgage holders cannot afford to lower their asking prices.

The rental market is still good.

Interest rates are not going up.

Stalemate.

More and more people will rent their properties out rather than sell for a loss or enter negative equity.

Should banks decide to reposess then the council will pay the rent of the reposessed to private landlords.

There will always be a rental market and as long as rent is enough to just about cover mortgage payments then the reluctant landlords will simply accept that. They won't think about downtime or repair costs or the place being empty for a few months. As long as the monthly rental is somewhere close to the mortgage level and can keep the bank happy then they will stick it out until prices rise enough to break even. Meanwhile they simply leave the property on Rightmove or wherever, just in case.

Couple of guys at work have recently bought a BTL apiece and easily found private tennents to pay the mortgage for them. It's to boost their pension, of course, what else?

I am sure this is a well intended post however your logic ultimately fails, the props to the market cannot last indefinitely and the bottom will be so much lower as a result of them existing in the first place

[trippytinker]

The asking price of houses are not dropping in my area but there again not much is selling and what does goes for considerably less than the original asking price.

What is 'cheap' round here are BTL properties where overextended landlords are desperate to get out.

[leicestersq]

I am part of the public that refuse to believe that prices have gone down. They havent where I live. I guess someone from the North East might give a different answer.

[DustyDog]

I am sure this is a well intended post however your logic ultimately fails, the props to the market cannot last indefinitely and the bottom will be so much lower as a result of them existing in the first place

I've been reading this forum for a good few years now and, like many others, have believed all the arguments as to why prices must fall. But they haven't.

[rantnrave]

I've been reading this forum for a good few years now and, like many others, have believed all the arguments as to why prices must fall. But they haven't.

Try telling that to the residents of Hartlepool. -20% YoY according to the last Land Reg.

[RufflesTheGuineaPig]

30 days.

Tha's how long I believe we have before the new LOWER LHA limits apply to existing tennants as well as new tennants.

Checkmate.

[Caveat Mortgagor]

I am sure this is a well intended post however your logic ultimately fails, the props to the market cannot last indefinitely and the bottom will be so much lower as a result of them existing in the first place

Nailed it! Numerous temporary supports for a failing market.

They dont solve the problem. They delay the pain.

Edited December 5, 2011 by Caveat Mortgagor

[rantnrave]

30 days.

Tha's how long I believe we have before the new LOWER LHA limits apply to existing tennants as well as new tennants.

Checkmate.

And the end of new applicants to SMI at that time too?

Aren't the banks supposed to be repaying lots of money back into the public coffers around now too?

[TwoWolves]

Do you have a link to the original post article?

[Si1]

I've been reading this forum for a good few years now and, like many others, have believed all the arguments as to why prices must fall. But they haven't.

nice chap

but you haven't addressed my point

[rantnrave]

Do you have a link to the original post article?

Yes, but it's better if the EAs on that site discuss these points rather than enter a slanging match with HPCers who have waded in with aggressive posts. I'm not saying you were necessarily going to do that, but it's why I've stopped posting the links to pages over there.

[Small Potatoes]

[it's not that people believe that house prices aren't going down, it's that they believe that their own, special, unique property is immune to any drops as it is the best on the street, they've MEWed to "improve" it, and they deserve to get the highest price ever achieved.

(Though in my village, no house has gone under offer for six months and the motivated buyers are dropping and dropping their prices with still no buyers!. Another year of these drops and I may start considering buying).

[The Masked Tulip]

Sourced from EA Today

Where did they source it from?

[The Matador]

I've been reading this forum for a good few years now and, like many others, have believed all the arguments as to why prices must fall. But they haven't.

Ah the faux bears come out to play.

[dothemaths]

People aren't getting reposessed.

Mortgage holders cannot afford to lower their asking prices.

The rental market is still good.

Interest rates are not going up.

Stalemate.

More and more people will rent their properties out rather than sell for a loss or enter negative equity.

Should banks decide to reposess then the council will pay the rent of the reposessed to private landlords.

There will always be a rental market and as long as rent is enough to just about cover mortgage payments then the reluctant landlords will simply accept that. They won't think about downtime or repair costs or the place being empty for a few months. As long as the monthly rental is somewhere close to the mortgage level and can keep the bank happy then they will stick it out until prices rise enough to break even. Meanwhile they simply leave the property on Rightmove or wherever, just in case.

Couple of guys at work have recently bought a BTL apiece and easily found private tennents to pay the mortgage for them. It's to boost their pension, of course, what else?

This is not a sustainable state of affairs so will eventually end in tears. However it is impossible to predict how long this will take.

My guess is months - a couple of years max.

[inflating]

A question for two of the above posters

Which is the correct spelling to describe the paying occupants of a landlord's premises...?

A Tennants

B Tennents

C Tenants

Anecdote - the two houses I offered on in Northants - neither are sold months later, but no AP reduction either. EA told me they have a better offer and are negotiating with another party. Well, that was BS.

However, ALL the 4 or 5 2-bed flats I offered on - sold or under offer inside of 3 weeks although one may be withdrawn or with ten...oh you can't catch me out

Edited December 5, 2011 by inflating

[trippytinker]

People will not sell at a lower price than their dept allows & will continue to ask higher prices until the interest rates start to go up & they cannot afford the repayments. As has already been mentioned there are not many unfortunate people being re-possessed (yet) unlike the first property crash I remember when the monthly figures of repossessed Homes were reported on the TV News

[inflating]

People will not sell at a lower price than their debt allows & will continue to ask higher prices until the interest rates start to go up & they cannot afford the repayments. As has already been mentioned there are not many unfortunate people being repossessed (yet) unlike the first property crash I remember when the monthly figures of repossessed Homes were reported on the TV News

When there is a repo I am starting to avoid them because they seem to go to a bidding war - you get Public Notice - X has offered £X and anyone wanting to increase on this should notify the agents by X date and about half the time the price climbs up to what is not a repo price at all. Some go to auction I think, not sure, I avoid that too as Guide Price tends to be exceeded by frenzied bidders, probably BTLs pricing us all out time after time

[juvenal]

People will not sell at a lower price than their dept allows & will continue to ask higher prices

Can you explain what this means, please?

[cybernoid]

They've all based their entire financial future on the FACT (to their minds) that house prices always rise, so of course they're reluctant to admit otherwise. But that's all they've ever been told, by the press, the tv shows, the mortgage lender, their own egos, and one another.

The alternative, that they are all royally fked, is too horrific to even consider as a possibility. After all that would mean they aren't all canny investors!

Edited December 5, 2011 by cybernoid

[Diver Dan]

Couple of guys at work have recently bought a BTL apiece and easily found private tennents to pay the mortgage for them. It's to boost their pension, of course, what else?

I thought that the only reason to get into BTL was for the capital appreciation and that the rent is just a bit of icing on the cake.

I can't see capital appreciating very much against inflation for the next few years and unemployment is going to rise whilst LHA is going to fall which puts a squeeze on the amount of rent a landlord can charge.

Also, if the percentage of households which rent their property increases, this also increases the amount of political leverage that tenants have to urge the Politburo for increased tenants' rights such as more secure tenancies, rent controls, better quality safeguards against poor quality accommodation etc.

As a non-sequitur, I have a PT job delivering pizzas in the evenings and I have noticed that the people living in new-build "executive" flats tip the least and order cheaper pizzas than any other neighbourhood. There are always plenty of cars with cardboard "for-sale" signs in the windows parked outside too.

Edited December 5, 2011 by Diver Dan