Guardian: Proportion of UK house sellers cutting asking price reaches ‘highest in over a decade

[scottbeard]

6 minutes ago, sta100 said:

They ought to but the housing market as we know does not work with reason like this. Once houses start going up you get a spiral of paper wealth creation which drives more bullishness, once they start going down you get a spiral of people losing paper wealth and real wealth.

My feeling is this is a full blown crash and it could get nasty.

Again, my post was just the maths of where I think it would end up based on what I know.  Yes prices could go down more as an undershoot and then come back up, that's what they did in the nineties.

All I was saying is - if you apply a typical sort of multiple to a typical sort of salary for a typical sort of housebuying couple that's where the maths leads you.

[Casual-observer]

1 minute ago, 70PC said:

Experts declared no crash, just a modest correction. I'm not so sure. Reductions on Rightmove are starting to look crashy. Reductions are everywhere and some sellers are dropping prices after only a few days of going on the market. Sentiment matters. The more price drops that buyers see the more they hold back. If sellers hadn't started with ridiculous price expectations, sentiment would be in a better place. 

Agreed, we have to view this through herd tactics. 

The BOE, the Govt and the media VI's have been consistently alluding to the idea it's a temporary blip and soon lower rates will swoop in and save the day. I see no signs of this on the horizon. 

The herd though have been operating under this idea, the problem is similar storing up flood waters behind a dam. At some point a controlled release has to happen or the Dam will simply be overwhelmed. 

Both unemployment and mortgage arrears just took a significant jump this month, these are early indicators distressed sellers are running out of road. As I said on another thread earlier, single parent households are likely to be the first to be overwhelmed when unemployment really creeps up. 

A plethora of low wage job availability is not going to be enough to maintain these high prices and frankly the average single mother with kids has minimal savings cushion to rely on.  

 

[70PC]

11 minutes ago, Casual-observer said:

Agreed, we have to view this through herd tactics. 

The BOE, the Govt and the media VI's have been consistently alluding to the idea it's a temporary blip and soon lower rates will swoop in and save the day. I see no signs of this on the horizon. 

The herd though have been operating under this idea, the problem is similar storing up flood waters behind a dam. At some point a controlled release has to happen or the Dam will simply be overwhelmed. 

Both unemployment and mortgage arrears just took a significant jump this month, these are early indicators distressed sellers are running out of road. As I said on another thread earlier, single parent households are likely to be the first to be overwhelmed when unemployment really creeps up. 

A plethora of low wage job availability is not going to be enough to maintain these high prices and frankly the average single mother with kids has minimal savings cushion to rely on.  

 

Cracks in a dam was an image in my mind as well. Dam collapses are prevented by dropping the water level before it breaks. HMG and property interests did everything in the power to keep the water level high.

[TenYearToGetMyMoneyBack]

18 hours ago, Jinxed said:

 Building societies in the 1980s typically would only lend 3.5x individual salary.

My personal memory was 3x. Something I remember more clearly was in 1989 or 1990 the large company I worked for doing a deal with one of the building societies (Halifax) to allow employees to take out 4x salary mortgages "to help them get on the housing ladder". The reaction in the office was mainly negative. "How is anyone supposed to afford that ?". 

Looking back a bit further most people had mortgages from building societies, who until 1986 were only allowed to lend out what they took in in retail savings. In a TV programme in the wake of the 2008 financial "crisis" they interviewed a retired building society manager who said that his branch only got enough money to lend out four typical size mortgages a week so Monday to Thursday the main part of his job was deciding who got that days mortgage "and Friday was for Golf". 

Some more information on the history of Mortgages

https://www.boverket.se/globalassets/publikationer/dokument/2008/the-nature-role-building-societies-uk.pdf  

17 hours ago, Jinxed said:

In 1989 the base rate had risen to around 15%, and the average house price was close to 5x individual salary?

(I believe that 5x individual salary was also the highest ratio, that the average house price rose to in relation to the individual salary, throughout the twentieth century?)

Thankfully we had an ex bus conductor in charge, and from 1990, under Major, house prices began to fall, along with the base rate, dropping from 14% in 1990, back down to 7%, over seven years, and the average house price fell from around 5x salary in 1989, to around 3.3x salary by 1997. This is a good example of how IR control house prices.

In 1997 the average house cost 55k, average salary 16.6k = 3.3x salary.

Then we had a total **** take office, who wanted to be a rockstar.

 

The only problem I have with that is that you imply that John Major knew what he was doing. Lurching from crisis to crisis like Black (White ?) Wednesday I'm not sure if house prices were even on his radar. 

However, I think every Prime Minister since has thought about what happened in the 1997 General Election.

Worth watching to see the look on Neil "We're Alright" Kinnock's face. 

[Jinxed]

Agreed on all points. 

Generally speaking your parents, told you oooohh, you should never borrow more than 3x salary, 4x salary was like touching a hot stove, Major was fighting inflation, but perhaps we had more frugal, provident, less profligate people in the treasury with an eye on house prices? I cant watch your video with Blair in it. He's such a divisive destructive figure.  The berlin wall fell, followed by a quiet lull,  people born in the 60,s 70s 80s had all been promised this utopia, usually via American TV shows, and we got histories biggest credit bubble, instead. 

Edited September 20, 2023 by Jinxed