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Public Refuses To Believe That House Prices Have Gone Down


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I've been speaking to people a lot about prices recently and have come to the conclusion that most people don't think about these things as much as we do.... :)

My latest collection of anecdotal:

Friend of mine trying to sell in Colchester. Modern new build small 2 bedder on a vast housing estate. They paid £150k and want £150k but there are at least 10 houses on the same estate which are nicer and £20k less. They've had no viewings but swapped agents and had some more photos done but still not a sniff. It isn't my place to say "reduce the price if you want to sell" but it is obvious to me.

Mother in law having a not so subtle dig about how surely we should be looking to buy a bigger house - you don't want to leave it too late, wouldn't it be nice to have a garage.....She has no concept of how much work it takes to pay off a vast mortgage with high inflation and low wage inflation. I did point out that something bigger would cost about £200k more and that would be £1300 (minimum) a month of post tax income for the next 25 years. When I put it into actual monthly terms she admitted that did seem a lot to spend for a drive and a slightly larger kitchen. I was telling her how I was hoping for HPC but she could not grasp the concept that it didn't matter if my house was worth less if I were moving up the chain.

Relative just moved into a nice enough 3 bed semi. Large mortgage, we were chatting and I said our mortgage rate was 5.5% when we bought which worked out to about £700 a month on a £100k repayment mortgage. She was shocked and said if rates ever went back to that they'd be screwed.

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Ah the faux bears come out to play.

Oh no, someone pointing out the uncomfortable truth that house prices haven't come down much and are still well above their Jan 09 lows. More to the point how dare anyone question that prices may not fall in nominal terms (good job you've got a crystal ball to call him out on this call). Perhaps there should be a forum rule banning anyone who questions the "approved" future that sees BTL slumlords and overleveraged boomers begging on the streets whilst HPC members pick up houses for the odd krugerand.

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Relative just moved into a nice enough 3 bed semi. Large mortgage, we were chatting and I said our mortgage rate was 5.5% when we bought which worked out to about £700 a month on a £100k repayment mortgage. She was shocked and said if rates ever went back to that they'd be screwed.

Did you say when' not 'if'?

It amazes me that people think that these 200 year aberration IR are normal, clearly even within their own recent lifetime they are not. People really do have a six month memory.

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To recycle a good point made by another poster a couple of months ago (sorry can't remember who) - FTBers are generally young and internet savvy. They are comfortable using RM etc, are aware of the dire economic circumstances through having being at work etc. Contrast that with the oldies at the top of the housing pile. News that prices are falling is much slower to reach them. They get updates on house prices by viewing asking numbers in their local rag. They are also, ahem, more set in their ways and stubbornly going to insist that house prices don't go down. Anyone agree with this?

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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?

Does rent fully pay for:

Mortagague Interest

Mortgague Repayment

Insurance

Voids

Repairs

Their time managing

Legals and proffesional fees

(probably more I have not thought of)

If so they have my congratulations, it does not matter if house prices fall. They just need to hold for 25 years and they have done very well. Saavy investors indeed.

If however they have missed anything on the list..... oh dear.....

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To recycle a good point made by another poster a couple of months ago (sorry can't remember who) - FTBers are generally young and internet savvy. They are comfortable using RM etc, are aware of the dire economic circumstances through having being at work etc. Contrast that with the oldies at the top of the housing pile. News that prices are falling is much slower to reach them. They get updates on house prices by viewing asking numbers in their local rag. They are also, ahem, more set in their ways and stubbornly going to insist that house prices don't go down. Anyone agree with this?

Just me and everyone else on the board I should think.

45 seems to be roughly about the cut off point when it comes to internet savviness I would guess.

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To recycle a good point made by another poster a couple of months ago (sorry can't remember who) - FTBers are generally young and internet savvy. They are comfortable using RM etc, are aware of the dire economic circumstances through having being at work etc. Contrast that with the oldies at the top of the housing pile. News that prices are falling is much slower to reach them. They get updates on house prices by viewing asking numbers in their local rag. They are also, ahem, more set in their ways and stubbornly going to insist that house prices don't go down. Anyone agree with this?

Those at the top of the housing pile should have seen more crashes? they are just in denial IMO, because they really need their chips back with interest? younger people IMO just don`t know anything apart from a credit fuelled debt frenzy, and are just genuinely confused. Surely it isn`t too hard to peep behind the curtain, as many on here have done, and work out that things can`t continue like this? average punters seem too thick or lazy to do this though?

Edited by dances with sheeple
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To recycle a good point made by another poster a couple of months ago (sorry can't remember who) - FTBers are generally young and internet savvy. They are comfortable using RM etc, are aware of the dire economic circumstances through having being at work etc. Contrast that with the oldies at the top of the housing pile. News that prices are falling is much slower to reach them. They get updates on house prices by viewing asking numbers in their local rag. They are also, ahem, more set in their ways and stubbornly going to insist that house prices don't go down. Anyone agree with this?

But my mother-in-law lives in a house now "worth" £600k which they paid £150k for in about 1990.

They moved into it after in had been empty for a year because the owners couldn't sell it.

Her own family had been split up because her husbands job moved and they couldn't sell their own house and was only reunited after 18 months.

Yet she still thinks house prices are a one way bet!

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Those at the top of the housing pile should have seen more crashes? they are just in denial IMO, because they really need their chips back with interest? younger people IMO just don`t know anything apart from a credit fuelled debt frenzy, and are just genuinely confused. Surely it isn`t too hard to peep behind the curtain, as many on here have done, and work out that things can`t continue like this? average punters seem too thick or lazy to do this though?

Most people just used the internet for celeb gossip and sourcing the biggest f*uck off LIAR LOAN they could get. That is why we are where we are.

Yeah, actually your right.

The saavy ones that rant was describing do exist, but make up less than 5% of the population, if that.....

Must rememeber, when on these boards, that we are the abnormal ones that shunned by society. Everyone else 'knows' better.

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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?

I have met a large amount of people (professionally) who have funded their lifestyle over and above their earnings through loans against the equity of their properties.

Their perception of the value of the property against the 'real' value also takes into account any credit debt etc, plus unless they are downsizing they need their property to achieve their asking price in order to move into another home.

I do agree with rantnrave it's why so many properties simply sit on the market for months on end.

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To recycle a good point made by another poster a couple of months ago (sorry can't remember who) - FTBers are generally young and internet savvy. They are comfortable using RM etc, are aware of the dire economic circumstances through having being at work etc. Contrast that with the oldies at the top of the housing pile. News that prices are falling is much slower to reach them. They get updates on house prices by viewing asking numbers in their local rag. They are also, ahem, more set in their ways and stubbornly going to insist that house prices don't go down. Anyone agree with this?

I think there is some truth in what you say. How else do you explain the Property Bee records of a house sitting on the market for years with its price going up or down by £1,000 every other month or some minor change to the description?

Do the owners/sellers of these houses not know that we see what they are doing and that we all think they're all d!cks!

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I think there is some truth in what you say. How else do you explain the Property Bee records of a house sitting on the market for years with its price going up or down by £1,000 every other month or some minor change to the description?

Do the owners/sellers of these houses not know that we see what they are doing and that we all think they're all d!cks!

To quote Susan Boyle on her famous clip attracting 100 million views.

'I'd never heard of You Tube before - a tube of smarties was all I'd heard of"

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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.

Exactly. The public aren't as stupid as we'd perhaps like to believe. Home "owners" know very well they're protected by the Govt, whatever the cost. And there's no turning back now.

I heard an ad on the radio this morning for BTL. They had the nerve to use inflation as a selling tactic. The line was something like "let inflation erode your mortgage debt". But that's the reality of the situation.

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Exactly. The public aren't as stupid as we'd perhaps like to believe. Home "owners" know very well they're protected by the Govt, whatever the cost. And there's no turning back now.

I heard an ad on the radio this morning for BTL. They had the nerve to use inflation as a selling tactic. The line was something like "let inflation erode your mortgage debt". But that's the reality of the situation.

I don`t buy the bit in bold, and I don`t think the UK government has as much control over these events as you think, even though they can print, they have to keep some appearance of prudence for the "markets"? Also I don`t see any wage inflation just now, mortgage repayments are being helped by low base rate, but the debt just sits there?

To be honest, my last few visits to a supermarket scream out deflation, am I correct to think this, or is the inflation just waiting to bite us? Is it just that so many "products" today are easily done without, leading to desperate price cuts to shift them?

Edited by dances with sheeple
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I don`t buy the bit in bold, and I don`t think the UK government has as much control over these events as you think, even though they can print, they have to keep some appearance of prudence for the "markets"? Also I don`t see any wage inflation just now, mortgage repayments are being helped by low base rate, but the debt just sits there?

To be honest, my last few visits to a supermarket scream out deflation, am I correct to think this, or is the inflation just waiting to bite us? Is it just that so many "products" today are easily done without, leading to desperate price cuts to shift them?

Come again??? Where is there deflation in the supermarkets? The portions are getting smaller, the prices are rising, some of the offers are psychological ploys that cost the shopper more.

Also see Panorama tonight about supermarket price wars being not what they seem

While loose fruit and veg seems to be priced per kilo, some packaged items are often only priced per pack, with no weight listed.

At Sainsbury's, a pack of five bananas cost £1. Bought loose, the same number cost just 42 pence.

The pre-packed bananas were actually almost 99 pence per kilo more expensive.

At Asda, it was the three red onions in a net bag that cost £2.85 a kilo, compared to just 86 pence a kilo if bought loose.

At Morrisons, it was the other way around, a bag of Empire apples cost £1.82 a kilo, but if you bought them loose it would be £2.99 a kilo.

All the supermarkets told us customers like to have the option to buy by weight or by number.

John Bridgeman, the former head of the Office of Fair Trading, says supermarkets have a responsibility to be straight with their customers.

http://news.bbc.co.uk/panorama/hi/front_page/newsid_9652000/9652944.stm

Edited by inflating
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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.

Yep.

Our future is with the collective - but our survival is with the individual, and the paradox is killing us every day.

John Le Carre'

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Patience. There is true stalemate across the country between buyer and seller, except Northern Ireland (big drops following mass sillyness), isolated aspirational pockets (lack of alternative choice for good schools/lifestyle keeping it up?) and London (foreign money keeping it up, with a bit of immigration thrown in)

The problem is last time it took 6-7 years for house prices to move from peak to bottom. This time, due to ZIRP and other government policy, its going to be more. Thats a lot of days, when you check a daily opinion forum regularly expecting progress.

Chill out, enjoy Xmas, and see what the new year has to offer ! :)

Edited by Diet Cola Addict
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Come again??? Where is there deflation in the supermarkets? The portions are getting smaller, the prices are rising, some of the offers are psychological ploys that cost the shopper more.

Also see Panorama tonight about supermarket price wars being not what they seem

Definitely, but I think the supermarkets (alright, just the Tesco I usually go to) have found the upper limit on what people can pay. Prices on certain things are cheaper now than they were 6 months ago. Not cheaper than 12-24 months ago mind, but still every little helps.

It may just be a ruse to lure people in over Christmas though, I guess I'll have to see what happens in the new year.

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Patience. There is true stalemate across the country between buyer and seller, except Northern Ireland (big drops following mass sillyness), isolated aspirational pockets (lack of alternative choice for good schools/lifestyle keeping it up?) and London (foreign money keeping it up, with a bit of immigration thrown in)

The problem is last time it took 6-7 years for house prices to move from peak to bottom. This time, due to ZIRP and other government policy, its going to be more. Thats a lot of days, when you check a daily opinion forum regularly expecting progress.

Chill out, enjoy Xmas, and see what the new year has to offer ! :)

Have been pondering this recently. If the numbers of years down equals the number of years up (rough guide), then we are four years into an 11 year bear market. In short, we aint seen nothing yet. The last third of that might see prices dip below 3.5 times salary - that might begin around 2015. The bottom in real terms would then be 2018, at which point nominal prices would be circa £130 - £140K (so 50% down since 2007 in real terms). Courtesy of the madness in sustaining the boom on the way up, the current HP cycle is going to be the dominant factor in the working lives of Gen X IMO.

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Definitely, but I think the supermarkets (alright, just the Tesco I usually go to) have found the upper limit on what people can pay. Prices on certain things are cheaper now than they were 6 months ago. Not cheaper than 12-24 months ago mind, but still every little helps.

It may just be a ruse to lure people in over Christmas though, I guess I'll have to see what happens in the new year.

The official rate of inflation will drop by 1.3% ish in Jan when the VAT rise is stripped out. That will leave us at under 4%. Not deflation, but not rampant inflation either.

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