New House Buyers!

[dog]

If you have bought a house within the last 18 months, you have done a very stupid thing.

The housing market is way beyond sustainable values. We now have the prospect of rising interest rates and falling public spending. Worst of all, between 500 and 1000 people are losing their jobs every day.

Even the mortagage lenders know the end is here. If you don't believe me, put your house on the market. When a buyer makes an offer, you will discover that the mortgage valuation will be lower than the agree price (no matter what the agreed price is). Lenders do this to give themselves a lever for mitigating risk.

You were warned but you wouldn't listen. You preferred to take the word of estate agents, women with badly fitting suits in building societies and foolish parents (who convinced themselves that their windfall gains had been the product of shrewd property investment).

Edit (add link)

http://www.thisismoney.co.uk/credit-and-lo...page_id=62&ct=5

Edited May 11, 2006 by dog

[pobby]

If you have bought a house within the last 18 months, you have done a very stupid thing.

The housing market is way beyond sustainable values. We now have the prospect of rising interest rates and falling public spending. Worst of all, between 500 and 1000 people are losing their jobs every day.

Even the mortagage lenders know the end is here. If you don't believe me, put your house on the market. When a buyer makes an offer, you will discover that the mortgage valuation will be lower than the agree price (no matter what the agreed price is). Lenders do this to give themselves a lever for mitigating risk.

You were warned but you wouldn't listen. You preferred to take the word of estate agents, women with badly fitting suits in building societies and foolish parents (who convinced themselves that their windfall gains had been the product of shrewd property investment).

Can`t really argue with that!

[Europa]

If you have bought a house within the last 18 months, you have done a very stupid thing.

The housing market is way beyond sustainable values. We now have the prospect of rising interest rates and falling public spending. Worst of all, between 500 and 1000 people are losing their jobs every day.

Even the mortagage lenders know the end is here. If you don't believe me, put your house on the market. When a buyer makes an offer, you will discover that the mortgage valuation will be lower than the agree price (no matter what the agreed price is). Lenders do this to give themselves a lever for mitigating risk.

You were warned but you wouldn't listen. You preferred to take the word of estate agents, women with badly fitting suits in building societies and foolish parents (who convinced themselves that their windfall gains had been the product of shrewd property investment).

Thank you for your insight Although I have the feeling that you would have said the same thing to purchasers in 2005, 2004 and 2003. Your advice (as things stand today) would have been misleading.

Couple of things to keep in mind; the number of people unemployed has increased, but so has the number of people in work (thank you immigration). Also, the prospect of rising interest rates (on that I agree with you) is an indication that all is not as bad as it seems.

[Rachman]

Riiight,

So all round the country, every house is going to go down, everyone is going to be living in an area with rising unemployment, every single person who bought has bought a financial pup.

I despair, I really do.

This sort of stuff undermines the credibility of a crash in certain areas for certain houses for the entire site - prices will fall/are falling for lots of properties, but lots of others are stable and/or will rise slowly (some may even rise quickly !).

You can't make such wide dramatic statements and expect the message to be taken seriously - it's a series of micromarkets as much as one macro.

[woody]

Riiight,

So all round the country, every house is going to go down, everyone is going to be living in an area with rising unemployment, every single person who bought has bought a financial pup.

I despair, I really do.

This sort of stuff undermines the credibility of a crash in certain areas for certain houses for the entire site - prices will fall/are falling for lots of properties, but lots of others are stable and/or will rise slowly (some may even rise quickly !).

You can't make such wide dramatic statements and expect the message to be taken seriously - it's a series of micromarkets as much as one macro.

I agree it is a bit wild - whilst I am an uberbear and agree that the peak was reached some while ago, I am still seeing people attain asking prices in all sorts of places. Until there has been a widely accepted drop in prices, you should hold fire on these statements.

[since the beginning]

Thank you for your insight Although I have the feeling that you would have said the same thing to purchasers in 2005, 2004 and 2003. Your advice (as things stand today) would have been misleading.

Couple of things to keep in mind; the number of people unemployed has increased, but so has the number of people in work (thank you immigration). Also, the prospect of rising interest rates (on that I agree with you) is an indication that all is not as bad as it seems.

On the last point about IR I would disagree. Interest rate are a blunt tool i.e. they decreased them to such a low rate that they can't really go much lower. A huge bubble has been created in housing while other inflation is raging. Typical of this Government the relationship between IR and inflation only means something if the statistics are correct i.e. this government has tried to fool the BOE and the public with low inflation figures - this will be off the determent of the economy.

[frugalista]

If you have bought a house within the last 18 months, you have done a very stupid thing.

[....]

What's the point of this taunting of new homeowners? It's just as bad as the taunting of renters by trolls.

It would be better for the site if people could rise above this kind of playground attitude.

frugalista

[dog]

Riiight,

So all round the country, every house is going to go down, everyone is going to be living in an area with rising unemployment, every single person who bought has bought a financial pup.

I despair, I really do.

This sort of stuff undermines the credibility of a crash in certain areas for certain houses for the entire site - prices will fall/are falling for lots of properties, but lots of others are stable and/or will rise slowly (some may even rise quickly !).

You can't make such wide dramatic statements and expect the message to be taken seriously - it's a series of micromarkets as much as one macro.

The effect was very widespread in the last crash. Why should it be different this time?

The fact is that the average income is about £23K and the average house price is creeping towards £200K. When things get that far out of kilter, the effect will be serious.

Thank you for your insight Although I have the feeling that you would have said the same thing to purchasers in 2005, 2004 and 2003. Your advice (as things stand today) would have been misleading.

Couple of things to keep in mind; the number of people unemployed has increased, but so has the number of people in work (thank you immigration). Also, the prospect of rising interest rates (on that I agree with you) is an indication that all is not as bad as it seems.

I wouldn't have said the same thing in 2005. If you read my post, the message was aimed at people who have purchased within the last 18 months. I would not have said the same thing in 2003 or 2004 because interest rates were falling and unemployment was not rising by 500 to 1000 a day. I would however have said that I thought house prices were precariously high.

What's the point of this taunting of new homeowners? It's just as bad as the taunting of renters by trolls. It would be better for the site if people could rise above this kind of playground attitude. frugalista

No taunt is intended. It is important to make an example of these foolish people however so that others might learn by their mistakes. I hope that prospective house purchasers will reflect on the stupidity of buying at the peak of a bubble.

On a general point, I get the feeling that my original message is unearthing some closet bulls.

[munimula]

Although I have the feeling that you would have said the same thing to purchasers in 2005, 2004 and 2003. Your advice (as things stand today) would have been misleading.

Why? In many areas property has not gone up since mid 2004, probably down in real terms.

The advice would have been valid 2003 onwards.

Very few areas, mostly Scotland, NI and some northern counties have kept HPI measurement by Halifax, Nationwide etc positive since mid 2004

As far as I'm concerned in the South HPI has been negative since mid 2004 (in real terms)

[Rachman]

The effect was very widespread in the last crash. Why should it be different this time?

the better bits of London have not really moved since about late 2001 early 2002. They are showing signs of life as the people who deserted it for higher returns elsewhere come back to feed on their old lesser protein postcodes.

The prime stockbroker belt has not really moved either.

The high retirement centres won't fall much, their incomes will rise with higher interest rates so they won't sell. The best bits of the country will become refuges for the money, so they won't fall much - they on the whole started higher and have risen least.

The effect was widespread last time - I did not see any nominal falls in the 1990s in the bit of the NW I knew (Bolton) - I saw big falls in the SE and not much elsewhere - and where had prices rocketed, oh, yes.... - and unless we get big rises in interest rates, it won't be house prices and mortgages that do for people, it will be unsecured debt and no way to meet it as HPI won't be happening much - that's not the same as a crash - it will just mean tighter wallets for those who spent most. Is that a bad thing ?

[of course, some people will lose jobs, others will go to the wall, but I think the rabble rousing is OTT]

[dog]

the better bits of London have not really moved since about late 2001 early 2002. They are showing signs of life as the people who deserted it for higher returns elsewhere come back to feed on their old lesser protein postcodes.

The prime stockbroker belt has not really moved either.

The high retirement centres won't fall much, their incomes will rise with higher interest rates so they won't sell. The best bits of the country will become refuges for the money, so they won't fall much - they on the whole started higher and have risen least.

The effect was widespread last time - I did not see any nominal falls in the 1990s in the bit of the NW I knew (Bolton) - I saw big falls in the SE and not much elsewhere - and where had prices rocketed, oh, yes.... - and unless we get big rises in interest rates, it won't be house prices and mortgages that do for people, it will be unsecured debt and no way to meet it as HPI won't be happening much - that's not the same as a crash - it will just mean tighter wallets for those who spent most. Is that a bad thing ?

[of course, some people will lose jobs, others will go to the wall, but I think the rabble rousing is OTT]

Nicely rationalised. But wrong! The feature of bubbles is that prices end up being irrationally high and the feature of crashes is that houses end up being irrationally cheap. When the crash gets into full swing, people see propertys at giveaway prices and refuse to buy.

[FTB1]

On a general point, I get the feeling that my original message is unearthing some closet bulls.

I think what has been unearthed is a lot of people that agree with the sentiment of your original message, but think that it is to simplistic/generalised.

I have been keeping a close eye on my area, and am still seeing some properties purchased in 2005 being 'flipped' and sold for more in 2006. This is not some grimey northern area catching up with its neighbours, neither is it prime central London - far from being either, in fact.

These opportunities are becoming far more rare, and the majority of people who have bought in 2004/5/6 have undoubtedly done the wrong thing, but those who have bought at a good discount to current prices may not all be in that situation.

Edited May 11, 2006 by FTB1

[Ignorant Steve]

If you have bought a house within the last 18 months, you have done a very stupid thing.

The housing market is way beyond sustainable values. We now have the prospect of rising interest rates and falling public spending. Worst of all, between 500 and 1000 people are losing their jobs every day.

Even the mortagage lenders know the end is here. If you don't believe me, put your house on the market. When a buyer makes an offer, you will discover that the mortgage valuation will be lower than the agree price (no matter what the agreed price is). Lenders do this to give themselves a lever for mitigating risk.

You were warned but you wouldn't listen. You preferred to take the word of estate agents, women with badly fitting suits in building societies and foolish parents (who convinced themselves that their windfall gains had been the product of shrewd property investment).

I bought a house less than a month ago.

I'm happy with my decision. I weighed information from many sources (including here). For me the crash will be highly localised to those areas with too many inflated BTLs, public sector workers and no decent housing stock.

I've bought a dream home which I have no intention of selling for many many years.

[Rachman]

Nicely rationalised. But wrong! The feature of bubbles is that prices end up being irrationally high and the feature of crashes is that houses end up being irrationally cheap. When the crash gets into full swing, people see propertys at giveaway prices and refuse to buy.

I am sure that happens in some places. My postcode is full of financial services people in good City jobs, multinational retirees with pots of cash and the odd relative pauper (me). These people don't have debt.

I have 5 immediate neighbours, 1 is the widow of a former Times Rich List entrant, one is a retired banker, one is into hedge funds in a decent way, one is Global Head of Legal for an international Bank and one is a 'rock' (advisedly use this term) star. They won't be forced to sell.

You are assuming that these peple will need to sell, most people will batten down the hatches and sit tight. The sensible people don't have huge extraneous unsecured debts and don't MEW for a new 316i. Which all goes to drive down volumes that will hit the market and will stabilise prices in a lot of areas. Simple equation, more buyers that sellers, price goes up and vice versa. You assume the increase in sellers to be greater than of buyers and you assume same across the entire markets.

Which is further exacerbated by moving costs - I could add a new bedroom suite, snooker room and a pool for the moving costs - why would I move and write off that cash that unless prices were rocketing and I could see opportunity to make ?

If people see irrationally cheap, there is plenty of cash (real cash) sloshing about to hoover it up in desirable areas, which is why for a lot of good places, prices won't fall too far if at all.

[Given Up]

the better bits of London have not really moved since about late 2001 early 2002. They are showing signs of life as the people who deserted it for higher returns elsewhere come back to feed on their old lesser protein postcodes.

The prime stockbroker belt has not really moved either.

The high retirement centres won't fall much, their incomes will rise with higher interest rates so they won't sell. The best bits of the country will become refuges for the money, so they won't fall much - they on the whole started higher and have risen least.

The effect was widespread last time - I did not see any nominal falls in the 1990s in the bit of the NW I knew (Bolton) - I saw big falls in the SE and not much elsewhere - and where had prices rocketed, oh, yes.... - and unless we get big rises in interest rates, it won't be house prices and mortgages that do for people, it will be unsecured debt and no way to meet it as HPI won't be happening much - that's not the same as a crash - it will just mean tighter wallets for those who spent most. Is that a bad thing ?

[of course, some people will lose jobs, others will go to the wall, but I think the rabble rousing is OTT]

I don't think London prices are moving again tehre are loads of people sitting in rented accomodation and buyers are being very picky.

There were 4 houses in our road for sale, since Jan 2005 and only 1 sold (the cheapest). One was withdrawn after 2 price cuts & the other 2 are still on with 8% off the price. Admittedly another house sold for 3 times the average but it has never appeared on the land reg statistics and it was a pretty amazing house.

[dog]

I think what has been unearthed is a lot of people that agree with the sentiment of your original message, but think that it is to simplistic/generalised.

I have been keeping a close eye on my area, and am still seeing some properties purchased in being 'flipped' and sold for more in 2006. This is not some grimey northern area catching up with its neighbours, neither is it prime central London - far from being either, in fact.

These opportunities are becoming far more rare, and the majority of people who have bought in 2004/5/6 have undoubtedly done the wrong thing, but those who have bought at a good discount to current prices may not all be in that situation.

Like some others who have posted on this thread one has to suspect that you are a recent buyer!

Convention has it that crashes refer to big events. In that context, any discussion about house price crashes has to be a generalised one. It refers to a shift in sentiment. General shifts in sentiment have a general effect on prices.

The prices in your area are holding up and properties are still being flipped. Well duh! Thats because there is still some confidence in the market (albeit tenuous). This misplaced confidence cannot last indefinitely with such rapidly rising unemployment.

I bought a house less than a month ago.

I'm happy with my decision. I weighed information from many sources (including here). For me the crash will be highly localised to those areas with too many inflated BTLs, public sector workers and no decent housing stock.

I've bought a dream home which I have no intention of selling for many many years.

Your name says it all!

[karen1000]

If you have bought a house within the last 18 months, you have done a very stupid thing.

The housing market is way beyond sustainable values. We now have the prospect of rising interest rates and falling public spending. Worst of all, between 500 and 1000 people are losing their jobs every day.

Even the mortagage lenders know the end is here. If you don't believe me, put your house on the market. When a buyer makes an offer, you will discover that the mortgage valuation will be lower than the agree price (no matter what the agreed price is). Lenders do this to give themselves a lever for mitigating risk.

You were warned but you wouldn't listen. You preferred to take the word of estate agents, women with badly fitting suits in building societies and foolish parents (who convinced themselves that their windfall gains had been the product of shrewd property investment).

Edit (add link)

http://www.thisismoney.co.uk/credit-and-lo...page_id=62&ct=5

Ah thank you genius. I'd better dash round to the estate agents and sell my home straight away! Shall I tell my parents to sell too or is 3 years of current ownership OK for them?

[Rachman]

I don't think London prices are moving again tehre are loads of people sitting in rented accomodation and buyers are being very picky.

There were 4 houses in our road for sale, since Jan 2005 and only 1 sold (the cheapest). One was withdrawn after 2 price cuts & the other 2 are still on with 8% off the price. Admittedly another house sold for 3 times the average but it has never appeared on the land reg statistics and it was a pretty amazing house.

But how greedy were those that did not sell ? Historically what's the trend since about 1998. I agree that buyers are picky, which is what stuns me about sellers, I was spending a lot of money two years ago and I was showed some absolute disgracefully presented properties - not just untidy, but dirty sh1tholes and these people were deluding themselves that they could get top money - I know that you look beyond it, but most people can't so you narrow your market.

The house I bought had 4 20 year old sofas in the lounge, 94 picture hooks on the lounge walls, carpets with holes in them (this was bought from the former chief exec of a high street investment co) - it looked more than tired and they could not get the price they wanted. Not because the house was not worth it, but because they actually devalued it for being a mess (Ann Maurice mode off).

I also agree a lot about renters, what I would like to know is how many are prudent enough to be saving as well though, anecdotally my renting mates are all BSing about sitting tight and waiting for the right property, but are wasting their cash all the time and are not really saving at all...

[FreeFall]

I bought a house less than a month ago.

I'm happy with my decision. I weighed information from many sources (including here). For me the crash will be highly localised to those areas with too many inflated BTLs, public sector workers and no decent housing stock.

I've bought a dream home which I have no intention of selling for many many years.

That's the bit that's always missing in these threads - if people have bought, are happy that they've got a great place to live, and can wear any forthcoming increases in interest rates, then why not buy - it's a home, not an investment, after all. Money is not worth as much as happiness.

On the other hand, if people are buying something sh1tty because it's all they can afford, they stretch themselves to the limit, and will want to move in the near future then maybe the futures not quite so bright....

[Rachman]

deleted in case it gets misconstrued....

Edited May 11, 2006 by Rachman

[Its time to buy]

lets rephase it then

FTB who bought recently - good luck to you, hope you sail through it with no big problems

BTL who bought recently - good luck, even more so

thanks moderators, for the 26megs of photo space

Edited May 11, 2006 by notanewmember

[dog]

Ah thank you genius. I'd better dash round to the estate agents and sell my home straight away! Shall I tell my parents to sell too or is 3 years of current ownership OK for them?

My original comment was aimed at people who have very foolishly purchased within the past 18 months. I was hoping that prospective buyers might learn from their mistake.

As far as your parent's house is concerned, it is difficult to answer your question without more information. My quick answer however is that if your parents think that the property is worth £450K and they want to sell it for more £150K, they might do well to put it on the market sooner rather than later.

[Ignorant Steve]

Your name says it all!

And yours doesn't?

[Rachman]

My quick answer however is that if your parents think that the property is worth £450K and they want to sell it for more £150K, they might do well to put it on the market sooner rather than later.

Heaven help us. So you are now predicting a national 66% drop in prices.....

[dog]

And yours doesn't?

Touché