Jump to content
House Price Crash Forum
Sign in to follow this  
Bearfacts

Don't Panic

Recommended Posts

DON’T PANIC

That’s the Headline in the Times Property Section anyway– article by Graham Norwood.

Extracted highlights follow:

‘Wait until the autumn to bag a cheaper property’

Market analysts say the really shrewd buyers are those that sit on their hands

‘Wait until the Autumn to buy’ says Richard Donell of Hometrack ‘ If you join the pack now you’ll just end up paying a premium. We’re seeing a short term spike in prices because of a temporary lack of supply – wait a few months and there will be more homes on sale and you’ll pay less’

Tim Crawford of Halifax bank agrees. ‘The market was unusually quiet in early 2005, making year on year comparisons not as significant as they appear’ ‘We predict annual house price inflation will rise to 8% in the next couple of months and then drop back to 3% by the year end’ he says.

‘ Gradually, house prices will have to ease to allow first time buyers back in and we think that will happen this autumn’ he says.

‘More homes have come on to the market so prices may be at or just past their peak’

‘EAs are reporting increased supply’

Fionnuala Earley of Nationwide warns that higher petrol costs, council tax rises, and as string of job losses will weaken confidence in the housing market adding up to ‘weakening house price growth’ for the rest of the year’

Glut of homes predicted for coming onto the market to beat HIPS is mentioned.

Personally I don’t get the HIPS theory – is someone really going to fret over forking out £1k when the average sale price is £200k ?! Not to mention the fact that in theory at least they will probably save themselves that amount of money on surveys for their next purchase – doesn’t make sense to me. Having said that My Father in Law is doing just that !

So there we have it – The VIs think we are at or just past the peak of a mini spike .. they are expecting a glut of new property and prices to fall back this Autumn – happily this looks like coinciding with a rate rise plus, possibly all the other global imbalances coming undone – that should really set the ball rolling. ! Bring it on !

Share this post


Link to post
Share on other sites

Glut of homes predicted for coming onto the market to beat HIPS is mentioned.

Personally I don’t get the HIPS theory – is someone really going to fret over forking out £1k when the average sale price is £200k ?! Not to mention the fact that in theory at least they will probably save themselves that amount of money on surveys for their next purchase – doesn’t make sense to me. Having said that My Father in Law is doing just that !

My personal view is that HIP's could be the trigger to a Housing slump. House prices (by early next year) will already be on the slide due to higher IR's. People will stick their Houses on the market to avoid the deadline and the slump will start. I've penciled in a 10% drop next year - lets see if I'm right?

Regarding cost - yes it dosen't make sense - but people will want to save that extra £1,000 :rolleyes:

Share this post


Link to post
Share on other sites

My personal view is that HIP's could be the trigger to a Housing slump. House prices (by early next year) will already be on the slide due to higher IR's. People will stick their Houses on the market to avoid the deadline and the slump will start. I've penciled in a 10% drop next year - lets see if I'm right?

As I recall during the last crash the drop was not consistent across the country, rather a percentage of how far the prices had risen in that area.

I seem to recall the Midlands not suffering too much while the East Coast area had devastating drops resulting in huge swathes of negative equity.

Do you reckon the country may experience a blanket drop this time?

Share this post


Link to post
Share on other sites

"Gradually, house prices will have to ease to allow first time buyers back in and we think that will happen this autumn’ he says."

When I see comments like that I have to wonder if people truely realise how much house prices have moved out of reach of people like me. It's going to take more than house prices to ease to make a house affordable. I'd need a full blown meltdown, something I wouldn't really wish on the UK population.

Share this post


Link to post
Share on other sites

(More from Graham Norwood, pg.62 of today's Sunday Times):

"Property prices in prime Central London- including the West End, Nottinghill, and Mayfair - rose by 5.6% in the first three months of this year, according to D&GAM, an asset-management firm. But it says that prime areas of the capital have risen just 16% since June 2003, well below the 28% average rise acroos the whole UK. The firm warns that apartments in Chelsea and Hampstead haver performed even less well, increasing just 14% and 11% respectively over the past three years."

SO doesnt that agree with the summary, "Boring at Best" since mid-2003?

Who are you arguing with Dr Bubb? I don't think anyone would argue that prime London has risen much in the last few years. Most would say it has been fairly stagnant - if anything I'm surprised by even 16% over that period.

However I do think that the original STR calculation over the last few years was based on an assumption that nominal prices would fall fairly quickly (as was the decision of some FTBs to wait). I think that was a brave risk, although thus far it looks as though it was a bit premature, possibly even plain wrong (though that of course remains to be seen). When the quick falls didn't happen it seems to me that you adapted your argument to the "property is boring, look how well I'm doing with other investments" angle.

Now that is fair enough, but given a cast-iron promise of 4/5% a year on London property 3 years ago wouldn't it have been better to mortgage the property back up to 90% or so to raise cash to invest - thus winning both ways on the investments and the heavily geared equity growth? In a recent post you divided STRs into "STR winners" (ie people like you who have done well from investments) and "STR sheeple" who had made the foolish error of selling to rent without doing well enough in investments to keep ahead of the property market. I thought that, apart from being an iniquitous division, that showed a fundamental shift towards saying that STR only made any sense at all over the last few years if you did pretty well in the SM and elsewhere - thus the original expectations of it had so far been unfulfilled.

I think that when you say "property is boring" you're rationalising your personal decision, and the advice you've given, rather than admitting that actually the property market is taking a lot longer to turn than you expected and that that makes it all the more important for someone in your position to maximise the growth in their STR fund in the meantime.

Disclaimer: I've already admitted elsewhere that to some degree I'm jealous of anyone who can STR as they are probably in a much healthier financial position than me. So no doubt I'm justifying myself in a similar way to what I'm implying about Dr Bubb - but I do reserve the right to take issue with the whole "property is boring" argument nonetheless.

Edited by Magpie

Share this post


Link to post
Share on other sites

However I do think that the original STR calculation over the last few years was based on an assumption that nominal prices would fall fairly quickly (as was the decision of some FTBs to wait).

Yes, it was.

I think that was a brave risk, although thus far it looks as though it was a bit premature,

Indeed.

Share this post


Link to post
Share on other sites
Guest wrongmove

Now that is fair enough, but given a cast-iron promise of 4/5% a year on London property 3 years ago wouldn't it have been better to mortgage the property back up to 90% or so to raise cash to invest - thus winning both ways on the investments and the heavily geared equity growth? In a recent post you divided STRs into "STR winners" (ie people like you who have done well from investments) and "STR sheeple" who had made the foolish error of selling to rent without doing well enough in investments to keep ahead of the property market. I thought that, apart from being an iniquitous division, that showed a fundamental shift towards saying that STR only made any sense at all over the last few years if you did pretty well in the SM and elsewhere - thus the original expectations of it had so far been unfulfilled.

I agree Magpie. I made this point a while back, but got no replies. 5% with 90% gearing gives you 50% return - good as gold. Plus you have all that capital to punt on the markets as well. Plus you save a small fortune in property transaction costs. Surely STR only makes sense if you can buy back cheaper ? You still have to pay rent. :unsure:

Share this post


Link to post
Share on other sites

For me the scene is set.

We have another boom in prices, 2% rises last month, and property is selling fast, very fast.

I have seen this scenario before.

Property inflation takes off again, and the BofE step in with rate hikes to kill it off, it is the straw that breaks the camels back or in this case the miracle economy.

Lest we forget, our Government are in serious hock, rate rises hit them where it hurts too.

I seriously now see my prediction is on target, Serious rate rises in last quarter of 2007 and subsequent price drops.

I predicted drops of 35% max a few months ago, however on reflection and having travelled recently our problem is not in Global isolation.

I think a drop of 50% is now on the cards returning properties to the 3x1 multiples when set against average earnings.

Share this post


Link to post
Share on other sites

The thing is the government will go to any lengths to avoid raising Irs in the way they were raised in 1990.

They'll tighten fiscal policy....

Share this post


Link to post
Share on other sites

I agree Magpie. I made this point a while back, but got no replies. 5% with 90% gearing gives you 50% return - good as gold. Plus you have all that capital to punt on the markets as well. Plus you save a small fortune in property transaction costs. Surely STR only makes sense if you can buy back cheaper ? You still have to pay rent. :unsure:

Exactly. And my point isn't so much whether STR was right or not (it's a gamble either way). Just that it's shameless to claim that the decision has already proved wise because "property is boring". Making pots of money elsewhere may have salvaged a questionable decision, but thus far it certainly hasn't vindicated it.

PS. While I'm at it, I notice that Rightmove has Kensington & Chelsea up 8.4% on the month and back in positive YOY. Boring to even mention it though...

Edited by Magpie

Share this post


Link to post
Share on other sites

DON’T PANIC

That’s the Headline in the Times Property Section anyway– article by Graham Norwood.

Extracted highlights follow:

‘Wait until the autumn to bag a cheaper property’

Market analysts say the really shrewd buyers are those that sit on their hands

‘Wait until the Autumn to buy’ says Richard Donell of Hometrack ‘ If you join the pack now you’ll just end up paying a premium. We’re seeing a short term spike in prices because of a temporary lack of supply – wait a few months and there will be more homes on sale and you’ll pay less’

Tim Crawford of Halifax bank agrees. ‘The market was unusually quiet in early 2005, making year on year comparisons not as significant as they appear’ ‘We predict annual house price inflation will rise to 8% in the next couple of months and then drop back to 3% by the year end’ he says.

‘ Gradually, house prices will have to ease to allow first time buyers back in and we think that will happen this autumn’ he says.

‘More homes have come on to the market so prices may be at or just past their peak’

‘EAs are reporting increased supply’

Fionnuala Earley of Nationwide warns that higher petrol costs, council tax rises, and as string of job losses will weaken confidence in the housing market adding up to ‘weakening house price growth’ for the rest of the year’

Glut of homes predicted for coming onto the market to beat HIPS is mentioned.

Personally I don’t get the HIPS theory – is someone really going to fret over forking out £1k when the average sale price is £200k ?! Not to mention the fact that in theory at least they will probably save themselves that amount of money on surveys for their next purchase – doesn’t make sense to me. Having said that My Father in Law is doing just that !

So there we have it – The VIs think we are at or just past the peak of a mini spike .. they are expecting a glut of new property and prices to fall back this Autumn – happily this looks like coinciding with a rate rise plus, possibly all the other global imbalances coming undone – that should really set the ball rolling. ! Bring it on !

Would have loved to have waited, but that was just not practical... and does one wait to buy until this Autumn? Or until Q3 2007 for a putative rate rise as has been suggested on this thread? At least my deal was struck in January so I've had a bit of capital growth to offset against any drop according to ODPM ;)

Edited by aussieboy

Share this post


Link to post
Share on other sites

Property is boring though (somewhere to sleep and watch tv), it is only the price making it the talking point that it is.....

If sleeping and watching tv all you get up to at your home, then yes, it probably is a bit boring! ;)

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.