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MORE MORTGAGE MISERY

Property crash warning as families struggle to pay

By James Coney Deputy Business Editor James.Coney@Mirror.Co.Uk 13/06/2007

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Not only that, but on www.orange.co.uk as well (remember, it's a lot of people's homepage)

Alison Cork: The truth about house prices

From ITV’s Homes & Property and Don’t Move, Improve, property expert Alison Cork reveals why house prices could finally be set to fall, in our exclusive column

You read it here first – I’ve detected the first ripples of unease among estate agents and it gives me no small crumb of satisfaction. It also spells good news for those people set to take their first steps on the property ladder – if they’re prepared to wait.

Estate agents have been having a ball recently and – simply because it suits their purpose – have refused to recognise the chance of any potential downturn in the market. Talk to any agent, and they’ll say prices can never do anything except go up – which is why you must buy now and pay over the asking price, didn't you know?

Force of gravity

But that ain’t necessarily so – and, me, I'm with Isaac Newton on this one: what goes up must come down. Prices simply cannot keep rising out of all proportion to people's ability to earn, and thus pay their debt. I haven’t checked, but I’m confident that salaries at the Royal Brompton, Chelsea didn’t rise by 24%.

Something somewhere has to give. And I'm happy to tell you, that it is.

My last piece was written in the midst of what we now know was the sunset of the rising market – only you wouldn't have known it if you had just listened to “professional” advice. I really did feel like a lone voice, expressing my own very real doubts about the stability of the market.

Now, only a few weeks later, things are very different – but don't expect estate agents to admit this. They’re still clinging steadfastly to what appears to be the mast of the wreckage. But far more interestingly, it's the subtle editorial shift of the newspapers that we should be looking at.

Now the hysteria of rising house prices is calming down, it's easier to see the facts for what they are – and equally easy to see that we were all being a little silly to believe house prices had been rising at a uniform rate throughout the country for the past year or so. Prices have risen in some places and not in others, simple as that.

London is a different matter, and it is the market there which has undoubtedly coloured editorial everywhere. Everyone loves a sensational story, a bit of gossip, and what better than to be able to shout about the first ever £3m one-bedroom flat, in Eaton Square, Belgravia? Makes a great headline. But Eaton Square is not Tottenham (with the greatest of respect to the latter), and clearly, there are no £3m one-bed flats to be found there.

Plunging prices

And while we are on the subject of Eaton Square, even there I have detected a distinct softening of prices in the last few weeks. That is to say, not so many people foaming at the mouth to give money away, and a few more properties available. And that's all it takes: just a tiny bit of movement, and you have a 5-10% price differential staring you in the face.

And if that wasn't enough, Governor of the Bank of England Mervyn King has waded in, threatening to keep putting interest rates up – just as a little slap to remind us all that he’s the boss and will be obeyed. Good for you Mervyn, I say: that's telling us. Now that's one form of penalty I don't mind paying, because it will bring back some sanity to the market place – and if 6% is the bucket of cold water we all need, then so be it. For the first time in more than a year, newspapers are beginning to change their editorial tack – prices are still rising in some areas, but outside London the picture is somewhat different. Far from achieving more than the asking price, homeowners in some areas are now acknowledging that for the past several months, they have been unable to shift their properties.

The unreal market

Hang on a minute – for the past several months? Surely that was in the midst of the so-called property boom? Ah yes: there are lies, dammed lies and editorial. We should all have learned by now that what we read in the papers is what the powers-that-be want us to believe: it's information presented in a particular way. If political campaigns have been fought and won this way, why should it be any different with regard to property?

This is especially pertinent when you remember that newspapers only survive if they have advertisers, and property-related advertisers would not be especially happy if the message was all doom and gloom. I am not for one moment suggesting that advertisers call the shots editorially, but you can see how there might be an occasional subtle shift in emphasis, just to keep everyone happy.

:D

Edited by A Fool & His Borrowed Money

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lol - the Mirror.

such a quality paper :lol:

you're right - it's tabloid tatt most of the time, but the sheeple buy it and believe what they read.

I have maintained that sentiment will turn more rapidly when the red-tops print stories like this...

The figures also highlight the plight of overstretched first-time buyers who are pushing budgets to record levels.

They are borrowing an average 3.3 times their salary.

In some parts of the country, they are taking five or six times. A decade ago it was little more than twice salary.

3.3 times salary for FTBs? What are these FTBs earning, ffs?!

Edited by red

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I see you don't dispute the content of the article then? :lol::lol:

Raging Bull? Raging Fool more like! :lol:

lol - its a article from the Mirror - there's no need to dispute anything it reports :)

ragingfool?

Yeah right, "fool" as in "I am on target to pay off my mortgage in the next 5 years (brought 2 years ago) while allot of "fools" warned people not to buy - nice one :rolleyes:

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Guest portwinestain
you're right - it's tabloid tatt most of the time, but the sheeple buy it and believe what they read.

I have maintained that sentiment will turn more rapidly when the red-tops print stories like this...

Exactly. :lol:

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lol - its a article from the Mirror - there's no need to dispute anything it reports :)

ragingfool?

Yeah right, "fool" as in "I am on target to pay off my mortgage in the next 5 years (brought 2 years ago) while allot of "fools" warned people not to buy - nice one :rolleyes:

Come back and boast when you actually have paid it off. "On target"? do you work in sales?

And what is with this people who "brought" property? Is it a canal boat you cruised to London in? Or did you bruy it here?

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The point is the majority of the tabloids and most of the media are now extremely bearish, and who reads the media....the masses (or as is said the sheeple).

The other point is that if we get a HPC you may have paid considerably more for your house 2 years ago than it may be purchased for some time in the future.

lol - its a article from the Mirror - there's no need to dispute anything it reports :)

ragingfool?

Yeah right, "fool" as in "I am on target to pay off my mortgage in the next 5 years (brought 2 years ago) while allot of "fools" warned people not to buy - nice one :rolleyes:

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Come back and boast when you actually have paid it off. "On target"? do you work in sales?

And what is with this people who "brought" property? Is it a canal boat you cruised to London in? Or did you bruy it here?

:lol::lol::lol:

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Come back and boast when you actually have paid it off. "On target"? do you work in sales?

Sorry, I did not know that you are so obviously bitter, as is in evidence by the "fool" name calling.

Why "come back when you have paid it off?" I am comfortably doing that at present in my own time, it does not prohibit me from posting here does it? and no I am not in sales.

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Robert Bryant-Pearson, of property firm Allied Surveyors, said yesterday: "Interest rates are already at a dangerously high level, with a repeat of the misery of the 1991-92 property crash only a few rate rises away.

But I thought rates had to go to 15% for a crash :lol:

D :ph34r:

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Sorry, I did not know that you are so obviously bitter, as is in evidence by the "fool" name calling.

Why "come back when you have paid it off?" I am comfortably doing that at present in my own time, it does not prohibit me from posting here does it? and no I am not in sales.

The forum is called housepricecrash, two guesses what its all about.

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Sorry, I did not know that you are so obviously bitter, as is in evidence by the "fool" name calling.

Why "come back when you have paid it off?" I am comfortably doing that at present in my own time, it does not prohibit me from posting here does it? and no I am not in sales.

Marketing then?? Must be something like that for you to bite so hard on his hook.

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The forum is called housepricecrash, two guesses what its all about.

...which encourages debate by allowing both bears and bull's to post. Your point being?

Marketing then?? Must be something like that for you to bite so hard on his hook.

No I don't work in marketing. No idea what you work in? but if you think I was first to "bite" then I don't think I will lose sleep waiting to hear about it.

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I think you will find Jimmy 2 times leans towards the bulls side of the debate :P

...which encourages debate by allowing both bears and bull's to post. Your point being?

No I don't work in marketing. No idea what you work in? but if you think I was first to "bite" then I don't think I will lose sleep waiting to hear about it.

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Marketing then?? Must be something like that for you to bite so hard on his hook.

:lol::lol: Hook, line,sinker and copy of the Angling Times!

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But I thought rates had to go to 15% for a crash :lol:

D :ph34r:

Most on this site will tell you rates of 6% will kill the housing market and cause a crash. Totally not true of course, but i make the observation only in the context of your post.

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But I thought rates had to go to 15% for a crash :lol:

D :ph34r:

During the late 80s boom the average base rates were

1985 14%

1986 12.5%

1987 10.5%

1988 9 %

1989 14 %

The average during the boom would have been 10.6 %

In effect a swing of 3.4 % was a crash tipping point.

15 % to someone in the lates 80s would be like 9 % today. Not including the outrageous car loans, creadit card debt, store debt and student loan debt people have today.

With the added debt 8% would be the psychological barrier. Though property prices are already dropping round the country with a couple of .25 % increases. You aint seen nothing yet.

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During the late 80s boom the average base rates were

1985 14%

1986 12.5%

1987 10.5%

1988 9 %

1989 14 %

The average during the boom would have been 10.6 %

In effect a swing of 3.4 % was a crash tipping point.

15 % to someone in the lates 80s would be like 9 % today. Not including the outrageous car loans, creadit card debt, store debt and student loan debt people have today.

With the added debt 8% would be the psychological barrier. Though property prices are already dropping round the country with a couple of .25 % increases. You aint seen nothing yet.

Apols for replying to my post but was chatting with a yound real estate agent this morning and he said "We will never get to 15 % interest rates like last time" as he was born then it must be on the sales learning pitch (with someone else has an offer in) , deja vu I mentioned that interest rates were nominally high last time. People budgeted for around 10 % - 11 % and the loans were alot less compared to income. Then we had 1% to 2 % increment in rates not the .25% that has put everyone into shellshock. Though with 30K-40K loans 1% to 2 % was quite bearable. I am not quite sure with 170K loans though.

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