Is The Crash Is Over In Northern Ireland? Have We Have Reached (And Passed) The Bottom?

[JoeDavola]

It seems to me that the crash is over in NI; based on reports that I'm hearing.

Prices seem to be going up a bit; or at the very least certainly aren't dropping. I think that I've definitely missed the 'bottom' in terms of prices.

Houses still seem too expensive to me however, especially in relation to what people actually earn, but it seems people will still happily get into eye watering debt to own a house and what with governments taking steps to prop up the market via co-ownership, it seems prices won't be allowed to fall any further.

What do my fellow posters think? Has the crash been and gone?

[Sour Mash]

It seems to me that the crash is over in NI; based on reports that I'm hearing.

Prices seem to be going up a bit; or at the very least certainly aren't dropping. I think that I've definitely missed the 'bottom' in terms of prices.

Houses still seem too expensive to me however, especially in relation to what people actually earn, but it seems people will still happily get into eye watering debt to own a house and what with governments taking steps to prop up the market via co-ownership, it seems prices won't be allowed to fall any further.

What do my fellow posters think? Has the crash been and gone?

I wouldn't worry too much about 'missing the bottom' as trying to exactly time the top or bottom of markets is a hiding to nowhere.

I would say that NI seems to have bottomed out to a level where there is now support for prices and to be honest, prices seem reasonable for most types of properties. Bear in mind that there has been an approx 50% fall from 2007 so the market has shaken out a lot of the excess.

[Bergy100]

Hi Joe, I watch 3 postcodes all in North Belfast/Newtownabbey so I haven't got a great awareness of what is going on in other areas of Belfast or further afield. In these areas entry level houses are most probably at, or very close to the bottom imo.

However, larger family homes, mainly in the Belfast 15 area - around Cavehill, are still in bubble territory imo, with a genuine lack of supply also being a factor. In many cases vendors are still pricing their property over RV. It seems to me some may be achieving sales at a highish price - though I don't know what they are selling for. Homes that are in great condition and well finished seem to go pretty quickly.....but a refreshing opinion proffered from an EA in recent months - there was still a potential 20% drop yet to occur in the area. Fingers crossed he is right.

The last few RPI reports indicated approx 33% of properties sold at under £90K with not many sales above £150k - so a continuation of an improving FTB market. Still a "sluggish" second step market in evidence.

So, to answer your question, my opinion would be that FTB houses probably don't have too much further (if any) to fall - however, second step homes have a bit of air to come out of the asking prices yet. The quicker a lot of these houses come down to the £150K mark, the quicker this will all resolve itself.

Undoubtedly though there is much better mortgage availability and as the bank of mum and dad is still in play, some are prepared to take on huge debts as you say. However, everyones circumstances are different.

[2buyornot2buy]

Its a tough one.

I'd say repos account for 40% of the market, co-ownership another 5-6%. Rates are the lowest they've ever been.

Do I think there will be further falls? Yes.

Are repos going to stop anytime soon. No.

Will rates rise eventually. Yes.

Is N.I. spending going to increase. No.

There really is nothing going for the house market.

[Wurzel Of Highbridge]

Here in ROI the chickens are coming home to roost.

There was a lot of reports saying that the market had turned, thus agents and sellers getting carried away with pricing. Since buyers here do not have any more money sales are drying up and agents are not selling anything. I have seen prices here in some areas lower than last year and not shifting.

It's a bit difference from up north the land of government interference, but excluding that interference the fundamentals are similar.

Real incomes declining.

[2buyornot2buy]

I would add also that it will be interesting what happens if Ulster is given the heave ho by RBS.

I think Ulster, even in its reduced state is lending something like 40% of all resi mortgages here.

A few hundred million annual lending isn't much to worry about when you are attached to the one time biggest bank in the world, but with billion pound losses, you start to get noticed.

It was impossible to sell First Trust, I doubt Ulster would have too many perspective buyers but the treasury could easily request the bank cut lending or break it off to make a public float of RBS more plausible.

[yadayada]

And then what? Close ulster selling off its loan book at pence on the pound? That's what you might expect, as that's what's happening to Anglo irish, but I suspect it'll just be kept on life support for another few years.

Edited September 23, 2013 by yadayada

[BelfastVI]

All cycles turn. And I guess the question is has our housing cycle finally turned. The evidence would indicate it has but you need 3 or 4 quarters of growth to start to confirm this.

Whilst the reports are indicating price rises we have not seen it on the ground, nor feel that we could put up prices any time soon.

However, sentiment has changed, of that there can be no doubt and mortgage availability is improving (northern announced a 95% mortgage last week).

Those are the two main factors that drive real demand and eventually price changes.

[2buyornot2buy]

All cycles turn. And I guess the question is has our housing cycle finally turned. The evidence would indicate it has but you need 3 or 4 quarters of growth to start to confirm this.

Whilst the reports are indicating price rises we have not seen it on the ground, nor feel that we could put up prices any time soon.

However, sentiment has changed, of that there can be no doubt and mortgage availability is improving (northern announced a 95% mortgage last week).

Those are the two main factors that drive real demand and eventually price changes.

Unfortunately it really is "different this time", rates have never been this low, saving rates have never been so low, the country has never been in so much debt.

You’re right in that it could be a cycle, but it’s probably a multi-generational one.

Funny, I do all my business banking with Northern Bank.

They never stopped offering 100% mortgages, the 95% is a new product, but there was a 95% product before that.

[BelfastVI]

Unfortunately it really is "different this time", rates have never been this low, saving rates have never been so low, the country has never been in so much debt.

You’re right in that it could be a cycle, but it’s probably a multi-generational one.

Funny, I do all my business banking with Northern Bank.

They never stopped offering 100% mortgages, the 95% is a new product, but there was a 95% product before that.

Indeed they did. No one that I know, or sold a house to ever obtained it. As someone in the Northern told me you needed to be able to prove that you didnt need it. However, this new one appears to be genuine. As you say, if they already had it why launch one.

Saving rates are indeed low and non existent when you take inflation into consideration.

[2buyornot2buy]

Indeed they did. No one that I know, or sold a house to ever obtained it. As someone in the Northern told me you needed to be able to prove that you didnt need it. However, this new one appears to be genuine. As you say, if they already had it why launch one.

Saving rates are indeed low and non existent when you take inflation into consideration.

Northern must be using the FLS scheme. Progressive have also offered a 95% for some time. They are in the scheme.

Funny you should mention the not need it. In 2011 there were 13, 100% mortgage products.

10 were offered by Northern Banks.

Northern have forever offered 95% mortgages. There's nothing new about this one, apart from the £500 cashback.

You sound like a marketers dream BVI.

Did you see the new Iphone just out?

I see they added an "S". Must be "new". Must be better.

[BelfastVI]

Northern must be using the FLS scheme. Progressive have also offered a 95% for some time. They are in the scheme.

Funny you should mention the not need it. In 2011 there were 13, 100% mortgage products.

10 were offered by Northern Banks.

Northern have forever offered 95% mortgages. There's nothing new about this one, apart from the £500 cashback.

You sound like a marketers dream BVI.

Did you see the new Iphone just out?

I see they added an "S". Must be "new". Must be better.

I have never bought any of the I phones, their $millions was completely wasted on me.

Banks can have all the 95% or crazy 100% products they want.

Its the products they are willing to use to lend that interests me.

By all accounts Danske Bank are going to push lending with this new 95% product. The interest rate is 4.8%, which I guess is OK.

[2buyornot2buy]

I have never bought any of the I phones, their $millions was completely wasted on me.

Banks can have all the 95% or crazy 100% products they want.

Its the products they are willing to use to lend that interests me.

By all accounts Danske Bank are going to push lending with this new 95% product. The interest rate is 4.8%, which I guess is OK.

They are trying to push this product for some reason.

Their 2 year fix is 5.98%

Their 5 year fix is 6.38%

This 3 year fix is 4.48%. It doesn't make sense to me. Unless they are signing up to FLS.

It hasn't seem to have done much for the progressive, even with every bus stop and telephone box covered in their 95% advertising.

It'll be interesting to see, could have an effect on the low end of the market. Can’t see it doing anything to lower-middle, or middle of the market.

[BelfastVI]

They are trying to push this product for some reason.

Their 2 year fix is 5.98%

Their 5 year fix is 6.38%

This 3 year fix is 4.48%. It doesn't make sense to me. Unless they are signing up to FLS.

It hasn't seem to have done much for the progressive, even with every bus stop and telephone box covered in their 95% advertising.

It'll be interesting to see, could have an effect on the low end of the market. Can’t see it doing anything to lower-middle, or middle of the market.

I understoon the FLS (Funding for Lending Scheme) was for SME's. Have they managed to get that into mortgages?

[2buyornot2buy]

I understoon the FLS (Funding for Lending Scheme) was for SME's. Have they managed to get that into mortgages?

It was always for mortgages.

The point of the scheme is to enable higher LTV lending.

Edited September 23, 2013 by 2buyornot2buy

[BelfastVI]

It was always for mortgages.

The point of the scheme is to enable higher LTV lending.

Seams you are right it was for business and households. I was at a talk about it a few years ago and SME's appeared to be what they were pushing. However I have looked at the Gov's website on this: It does indeed mention mortages however refers to lower loan to value products rather than 'enabling higher loan to Value products'

Funding for Lending scheme

In July 2012, with our support, the Bank of England launched Funding for Lending, a scheme which allows banks and building societies to borrow from the Bank of England at cheaper than market rates for up to four years. This helps them to increase lending to businesses by lowering interest rates and increasing access to credit.

The scheme creates incentives for banks to increase their lending to UK households. Businesses and banks are free to pass on the benefit in different ways.

Some banks may offer specific business loans and mortgages linked to the scheme, such as fee-free, or lower loan-to-value products, whereas others may reduce interest rates or change the terms and conditions on existing products.

My link

[2buyornot2buy]

Seams you are right it was for business and households. I was at a talk about it a few years ago and SME's appeared to be what they were pushing. However I have looked at the Gov's website on this: It does indeed mention mortages however refers to lower loan to value products rather than 'enabling higher loan to Value products'

Google "funding for lending LTV". I suspect some researcher got confused.

[BelfastVI]

My link

US house prices in biggest annual rise for seven years

US house prices rose 12.4% over the 12 months to the end of July, the biggest annual increase since February 2006, according to a closely-watched measure.

I posted on this about a year ago when the US started to show that it was coming out of the property crash and show signs of growth. As I stated then I believed we were 12 to 18 months behing the US in going into the crash and I believed there was an argument that we would show the same lag going out. Whilst there is nothing to say that we will continue to follow the US in this cycle it is encourgaging that the US has continued on its part of growth.

[Ausdave]

Question

Does higher petrol prices make you happy?

Does higher energy prices make you happy?

Does higher food prices make you happy?

Petrol - consumable resource

Energy - consumable resource

Food- consumable resource

Housing?

It's like comparing apples and oranges.

[2buyornot2buy]

Petrol - consumable resource

Energy - consumable resource

Food- consumable resource

Housing?

It's like comparing apples and oranges.

Eh a house is "consumable" over its lifetime. It has to be maintained and eventually rebuilt.

Willie is saying why does one form of price inflation make you "happy" when most other do not.

Answer = Inherent selfishness. If I can see myself getting relatively richer, screw the rest of you and the long-term competitiveness of NI PLC. Short-term selfish profit over long-term survival.

I think we even despised the banks for such thinking.

[yadayada]

Eh a house is "consumable" over its lifetime. It has to be maintained and eventually rebuilt.

Willie is saying why does one form of price inflation make you "happy" when most other do not.

Answer = Inherent selfishness. If I can see myself getting relatively richer, screw the rest of you and the long-term competitiveness of NI PLC. Short-term selfish profit over long-term survival.

I think we even despised the banks for such thinking.

Let's compare apples and oranges. Expensive apples make me happy because I grow and sell them. Expensive oranges don't because I buy them.

So you are completely correct.

[2buyornot2buy]

Let's compare apples and oranges. Expensive apples make me happy because I grow and sell them. Expensive oranges don't because I buy them.

So you are completely correct.

Very well put.

[getdoon_weebobby]

i am going to put my neck on the line and say the bottom/middle of the market is sitting along the bottom. whether it sits here for a long time or starts to move up with inflation i am not sure. the top end of the market still has a lot of overpriced properties one would imagine

[BelfastVI]

Question

Does higher petrol prices make you happy?

Does higher energy prices make you happy?

Does higher food prices make you happy?

Then why on earth should higher house prices make anyone happy but the salesmen who sell them? Shelter is a basic need - pricing it out of the reach of many is self defeating.

High house prices mean high wages to pay for them mean high costs for business mean business wants to go to cheaper areas.

I don't think the salesman cares as long as he sells the house. yes he gets a fraction more if he sells the house for a few thousand more but at the moment he is a broker man between a buyer and seller and trying to get agreement on both sides.

But yos the economy seams to measure itself, in an increasing way by house prices. I guess a large part of the equity of the country is tied up in houses. the RoI, for example, has performed very well as a nation, if you exclude the banking losses that the country under writ.

The other thing you have to look at is FTBers, who are the people who benefit from falling house prices. I cant remember the numbers but thats probably 4,000 or 5,000 people in Ni per year. That has to be balanced by the other 500,000 people who own their own houses. many of this people will not be happy with continuing falling house prices. You can disagree with that but I would consider that most are happier that house price falls have appeared to have stopped.

The banks, who appear to run the country can perhaps stare to breath again when house prices stop falling.

I myself am happier selling houses at £130k than £200k. As land prices rise to absorb the surplus there is no real benefit to me for prices to rise anywhere near where they were.

[BelfastVI]

Eh a house is "consumable" over its lifetime. It has to be maintained and eventually rebuilt.

Willie is saying why does one form of price inflation make you "happy" when most other do not.

Answer = Inherent selfishness. If I can see myself getting relatively richer, screw the rest of you and the long-term competitiveness of NI PLC. Short-term selfish profit over long-term survival.

I think we even despised the banks for such thinking.

I think that is harsh. whether we like it or not a house is an asset, if maintained will last quite a while and can be passed on to the next generation. therefore a fall in the value of this asset is, to the owner unwelcome.

A house price that covers today's building costs and a fair value for the land, and then rising with inflation is the ideal. however, as we know they then to overshoot, fall and then undershoot before rising again.