What Do You Really Think Will Happen This Year?

[whatnow?]

I have STR because we simply have found the mortgage too high for the house we have which has been a money pit and always needs something doing. I am in Brighton and have noticed that lots of houses we liked which had sold are re available and many others have been on for what seems like months but no buyers. We are completing in 2 weeks and are planning to rent as in the time it took us to find a buyer houses which were around the 225k mark jumped to well over the stamp duty threshold almost overnight. Does anyone really see any actual price reductions by xmas/early next year? And if you saw a house which was 275 but had been 230 last year how much would you offer now?

[ryanb741]

I have STR because we simply have found the mortgage too high for the house we have which has been a money pit and always needs something doing. I am in Brighton and have noticed that lots of houses we liked which had sold are re available and many others have been on for what seems like months but no buyers. We are completing in 2 weeks and are planning to rent as in the time it took us to find a buyer houses which were around the 225k mark jumped to well over the stamp duty threshold almost overnight. Does anyone really see any actual price reductions by xmas/early next year? And if you saw a house which was 275 but had been 230 last year how much would you offer now?

I would like to see prices come down.....

BUT.......

IMHO interest rates are nearing (or are already at) their peak, this has had minimal impact on the housing market. If anything prices will continue to rise and therefore if a house is priced at £275k now, it is unlikely to come down any time soon (dons flak jacket). I would however offer £250k as £275 is near enough the £250k stamp duty threshold to warrant this. If the buyer sticks to their guns, offer £250k for the house and £15-20k for the fittings etc to avoid paying the stamp duty. However if it is a decent property prepare to be outbid.

I would avoid listening to all the bears who have a vested interest - sure houses will at some time drop but I don't see it happening any time soon and most certainly NOT in Brighton.

[Bushy Tail]

I doubt much will happen this year.. I reckon 2008 will see the beginning of the end.

The end is nigh.

[Bearfacts]

I have STR because we simply have found the mortgage too high for the house we have which has been a money pit and always needs something doing. I am in Brighton and have noticed that lots of houses we liked which had sold are re available and many others have been on for what seems like months but no buyers. We are completing in 2 weeks and are planning to rent as in the time it took us to find a buyer houses which were around the 225k mark jumped to well over the stamp duty threshold almost overnight. Does anyone really see any actual price reductions by xmas/early next year? And if you saw a house which was 275 but had been 230 last year how much would you offer now?

I expect the lead indicators of prices to turn next month / September and to be followed by all the others through the autumn. MOM falls throughout autumn and into next year . YOY turning negative by about Feb next year. My wife works in an EAs on the south coast - she says the market is dead, a sentiment echoed by all the other local EAs. Anecdotals are reflecting this trend excepting of course the golden city of London.

Real prices will fall far faster than the indices reflect. I am going to wait until sentiment has turned and fear is in the air - then I shall strike - hope to take the keys off an investor - I want to see the tears in his eyes as he hands over the keys.

[The Ayatollah Buggeri]

IMHO interest rates are nearing (or are already at) their peak...

Given recent developments with oil and food prices (not to mention inflation in China), the indicators I'm seeing suggest that the long-term trend is up.

...this has had minimal impact on the housing market.

Largely because a far higher proportion of recently started mortgages are on a fixed-term fixed rate than has been the case with other HP cycles. I understand that about 1.5 million of them will reset between now and November: it'll be interesting to see what effect that has.

I would avoid listening to all the bears who have a vested interest

Admittedly we've got a habit of jumping on any bearish news and looking for arguments against bullish indicators, but the fact remains that several factors are present which history suggests will result in a significant, across-the-board reduction in HPs within the next year or two. M4 is growing at a very high rate, inflationary factors are clearly present and the earnings multiples going into a typical mortgage are at unsustainably high levels (i.e. when they've been this high in the past, that has not been sustained).

[The Matador]

I would avoid listening to all the bears who have a vested interest - sure houses will at some time drop but I don't see it happening any time soon and most certainly NOT in Brighton.

Your profile states you are a bear.

Ole!

[OurDayWillCome]

IMHO interest rates are nearing (or are already at) their peak, this has had minimal impact on the housing market.

Firstly, you say interest rates are at their peak – many people will disagree with you so unless you are using some form of crystal ball please give your reasons why interest rates are at their peak? Secondly, with a lag in both LR data and the last two interest rate rises you can not claim they have had minimal impact on the housing market as we do not know that yet.

[Guest d23]

I have STR because we simply have found the mortgage too high for the house we have which has been a money pit and always needs something doing. I am in Brighton and have noticed that lots of houses we liked which had sold are re available and many others have been on for what seems like months but no buyers. We are completing in 2 weeks and are planning to rent as in the time it took us to find a buyer houses which were around the 225k mark jumped to well over the stamp duty threshold almost overnight. Does anyone really see any actual price reductions by xmas/early next year? And if you saw a house which was 275 but had been 230 last year how much would you offer now?

I don't see any meaningfull falls in the South until the middle of next year and from then it'll be a long drawn out fall to the bottom

i think it's a bit misguided expecting to make a quick killing in the next 2 years; are you going to buy into a falling market? I thought general consensus on here is that people on the whole won't 'catch a falling knife' and will wait it out for however long it takes

heres hoping it doesn't go japanese and take nearly 20 years to hit bottom after taking nearly a decade to drop 25%

[pamaris]

Seriously, I doubt it will happen this year.

I think this year will see stagnation and flattening (in many/ most areas but some will still be bubbly)... hopefully the bubble will burst within 12 to 18 months, as the low interest rate mortgages expire and must be fixed again at the higher rate.

It is easy to lose hope though as the madness gets even more... maddening.

At least we are finally starting to see the mainstream press hint that there *might* be a problem.

Edited July 16, 2007 by pamaris

[whatnow?]

I can see that it has definitely slowed here.Many houses which are in areas where they are usually snapped up are sticking as they really have literally gone fron 225-230k to 275-285 since feb!!!What justifies this jump I will never know!All I want is a decent family house which doesn't need rebuilding and it has to be less than 250k.Unbelievable that I can't find one.Several houses I viewed previously have fallen through and become re available but at higher prices if anything Hope things get easier next year

[dstars]

...And if you saw a house which was 275 but had been 230 last year how much would you offer now?

I'd offer to wait until it came down back to 230 then I'd offer not make fun when it went down to 210.

I'd be determined to buy at 185 until I saw it go to 180 then I wouldn't touch it with a bargepole until it went through 160.

I'd hold off though because really, I'm in the market for something around 230.

[ryanb741]

Seriously, I doubt it will happen this year.

I think this year will see stagnation and flattening (in many/ most areas but some will still be bubbly)... hopefully the bubble will burst within 12 to 18 months, as the low interest rate mortgages expire and must be fixed again at the higher rate.

It is easy to lose hope though as the madness gets even more... maddening.

At least we are finally starting to see the mainstream press hint that there *might* be a problem.

I do feel however (and I'll admit I may be wrong) that we are near the peak of this rate cycle - the Government will NOT allow the BOE to put the UK into recession and don't be surprised if we get 'spin' stating that the CPI inflation target may be revised to 2.5% if that gets Brown off the hook. I just think we are pretty much near being as bad as we can get, what will impact the markets more than Interest rates is a tightening of lending criteria.

[AmateurEconomist]

If you visit this website only then you get the feeling it's aorund the corner. If you read the full range of articles across the media, then it is about 2 years away, if ever.

Edited July 16, 2007 by AmateurEconomist

[I Told You So]

One more rate rise is a certainty, and I am inclined to believe that there will be a few more next year as many leading economists are now predicting.

Reasons;

High oil and food prices

End of Chinese deflation

Overall high world growth rates (inflationary)

UK rates are always 1% to 2% higher than US 50 year trend (fact) there are short lived exceptions.

As the realisation that refixing mortgages (2milllion in next 18months) has become unaffordable there will be an even bigger flood of properties to market, repo's will also start to go through the roof - supply and demand. Gradual slowdown in rate of growth in Housing Indices, probably negative monthly figures from Oct/Nov.

Also throw into the mix Gordon Brown doing something silly like changing tax on BTL or actually following through with his mass building plan it could all collapse very quickly.

[AteMoose]

no, we have at least 6 months of rises, im thinking spring 09 , although there is a possibility things could go Japanese first....

Edited July 16, 2007 by moosetea

[dgl1001]

I've seen prices in my area (northampton) rise quite sharply in the first half of the year but are slowing now.

I can't see a housing crash coming but steady rises over the next 2 years at least

[nowthenagain]

i see prices down 10% by january. this week has seen some bizarre renewed confidence both on this forum and in the media generally.

let's not desert the sinking ship!

[Flat Bear]

I, like many other people, would really like to know this as well.

There is a lot of interesting data and information coming out this week the most important being the GDP figure being released on friday. It will be a possibly early indication of recession which is a necessity for price falls throughout the UK.

It seems clear that real inflation will continue to rise with wage inflation edging higher towards the end of the year with the minimum wage increase in october being more significant than thought it will be.

It is possible the BOE will keep hikes down to one but with the ECB and more crucially BoJ raising rates within the next 6 weeks money will become more expensive.

Overall people will not have as much disposable income by christmas with less available money available via MEWing signs will look bleak

The new year could see a much more sombre outlook to the economy with personal prosperity looking bleak. Companies will look to contract and much of the (perceived) wealth creating areas such as HPI and borrowing will be forced into reverse. So 2008 could be the start of a very long downturn but it will be global factors that will, like always, determine this. Check out whats happening or likely to happen in the states, are they looking to be heading for lower GDP? What about Japan? are they coming out of this long recessionary (low GDP growth) cycle? and will they need their money back?

By the beginning of 2008

CPI @ 3.2%

RPI @ 6.1%

BOE base rate 6% possibly 6.25%

HPI (Nationwide or Halifax) 6.5%

But more significantly a state of unrest with social problems with many guises coupled with the realisation the economy is taking a dive.

All IMO

[Guest Yeahbutnocrash]

Prices seem to be softening a bit but any which are competitively priced usually get 'snapped up'

So I'd expect prices could be down maybe 5-10% in my part of Beds in a few months time as there do seem to be quite a few similar types of property coming on the market so they may have to compete

However, looking at some areas on rightmove such as Bristol prices are still extremely high so it'll be interesting to see if there's any softening there or Brighton which has also been very high...

[Bearfacts]

i see prices down 10% by january. this week has seen some bizarre renewed confidence both on this forum and in the media generally.

let's not desert the sinking ship!

The truth is the markets gone dead - the VIs are panicking and sending Press Releases right left and centre to try and gee the punters up thats all. The more they shout a crash wont happen here - the more we can believe it is under way. I am optimistic I think we'll see prices falling very soon - infact we are already receiving details for properties that have had their price reduced. Falling national indices may take a little longer but that doesnt mean prices arent falling. There was a big delay between prices falling and it showing up in the indices last time - dont think the Halifax index went negative YOY till 2 years after prices started to fall. Rememebr there are parts of America ( California / Florida ) where prices are tanking yet some indices of Amercian house prices show only very modest falls nationally.

[bugged bunny]

Prices seem to be softening a bit but any which are competitively priced usually get 'snapped up'

So I'd expect prices could be down maybe 5-10% in my part of Beds in a few months time as there do seem to be quite a few similar types of property coming on the market so they may have to compete

However, looking at some areas on rightmove such as Bristol prices are still extremely high so it'll be interesting to see if there's any softening there or Brighton which has also been very high...

They're already softening in many parts of Bristol. Flats and 3-bed+ houses are, anyway. A friend of mine has had her 2-bed flat (in a posh area) on the market for 5 months and reduced it twice (by £10K each time), and it's still not sold. Two agreed sales to FTBs have fallen through because they've not been able to raise the cash they thought they could.

2-bed terraces seem to be holding firm in my area.

[edited for mispelling]

Edited July 16, 2007 by bugged bunny

[Cogs]

I'm with, I think it is, GOM, the second half of this year will be about inconsistency and mixed messages. Lots to argue about, indeed stories on the same page of the same newspaper might contradict each other. A crash may even begin but it will be so localised that it will hard to spot, unfashionable properties in unfashionable postcodes and won't show up anywhere really aside from the odd griping "human interest" article in the papers. I think more typically houses will begin take longer to sell although this won't be reflected directly in prices as most people are so used to the distorted market they will stick on price (10k here or there to no effect) and then wonder why 6 months later nothing has happened. MEW obviously forces people to stick to some extent, so I think falling numbers are years away.

This is the country outside London, god only knows what will happen there. Obviously if it isn't happening in London then the media won't believe it is really happening elsewhere so no crash until London falls, which may never happen (as usual, if you are up to your neck in water in the north its not a big deal, if as the other year it happens to be a bit sunny in London its a national disaster, not the fault of Londoners but the fault of the media to be clear about this).

Sorry if that looks like a "fudged" prediction but I genuinely believe the next six months will be ambivalent on housing.

Edited July 16, 2007 by Cogs

[loafer]

On interest rates, the fact is that the BoE doesn't control them on its own, witness the increase in the spread between LIBOR and base rate, and the increase in Swap rates/ Gilts to reflect higher anticipated inflation.

Even if the inflation target is revised upwards, investors in Gilts still need a decent real return, and that will push up & keep up gilt yields, and therefore fixed rate mortgages.

[bugged bunny]

I'm with, I think it is, GOM, the second half of this year will be about inconsistency and mixed messages. Lots to argue about, indeed stories on the same page of the same newspaper might contradict each other. A crash may even begin but it will be so localised that it will hard to spot, unfashionable properties in unfashionable postcodes and won't show up anywhere really aside from the odd griping "human interest" article in the papers. I think more typically houses will begin take longer to sell although this won't be reflected directly in prices as most people are so used to the distorted market they will stick on price (10k here or there to no effect) and then wonder why 6 months later nothing has happened. MEW obviously forces people to stick to some extent, so I think falling numbers are years away.

This is the country outside London, god only knows what will happen there. Obviously if it isn't happening in London then the media won't believe it is really happening elsewhere so no crash until London falls, which may never happen (as usual, if you are up to your neck in water in the north its not a big deal, if as the other year it happens to be a bit sunny in London its a national disaster, not the fault of Londoners but the fault of the media to be clear about this).

Sorry if that looks like a "fudged" prediction but I genuinely believe the next six months with be ambivalent on housing.

That sounds very plausible to me.

[Sinking Feeling]

No real change until November, then a very slow decline for the next 9 months, followed by further falls.