Jump to content
House Price Crash Forum
1632656

House Prices 'will Fall In August'

Recommended Posts

http://www.ifaonline.co.uk/public/showPage...PageName=459811

House prices will begin to fall in August as interest rates give homebuyers the upper hand in the negotiating process, according to Your Move.

The estate agent's "predictor", based on the Land Registry Index, claims that average house prices will peak at £182,748 in July and will fall to £182,134 by the end of August.

Your Move also predicts that month on month growth will fall to -0.34% and year on year growth will fall to 8.83%, down from 9.46% this month.

Your Move also states that the percentage of asking price to agreed prices is expected to ease, from 92.7% in July, to 19.1% in August, giving buyers an advantage when negotiating a purchase.

The estate agent’s actual agreed prices, which are typically reached 11 weeks before exchange, fell by 0.47% on average in July.

Edited by studdymx

Share this post


Link to post
Share on other sites
“Now that many borrowers are coming off those cheap fixed rate deals and having to pay a higher rate of interest, the MPC’s rate rises are starting to have an effect by cooling price rises which is exactly what they wanted to achieve.”

Sorry, I understood that rate rises were intended to control inflation and what happened to house prices as a result was not the BOE's primary concern?

Share this post


Link to post
Share on other sites
Your Move also states that the percentage of asking price to agreed prices is expected to ease, from 92.7% in July, to 19.1% in August, giving buyers an advantage when negotiating a purchase.

Whoa, cant wait for that to happen. My landlord is trying to get me to buy her house, its valued at £250k, so I reckon I'll put in an 19.1% offer of £47,750 in August! Actually, £47k seems like a resonable figure for a 2 bed house. Maybe prices will actually fall to 19.1% of asking price. :blink:

Share this post


Link to post
Share on other sites
How does people coming off their fixed rates cause house prices to fall? They're not moving, so it doesn't cause prices to fall unless they become forced sellers. Is that what they're saying is happening?

You could take the view that overstretched borrowers coming off their fixed rate may be unable to fix at the current higher rates and are forced to attempt to sell thereby increasing the volume of properties on the market....

...probably. ;)

Share this post


Link to post
Share on other sites
How does people coming off their fixed rates cause house prices to fall? They're not moving, so it doesn't cause prices to fall unless they become forced sellers. Is that what they're saying is happening?

......if this is the case have they MEWed to the point where they have little equity left in their houses and their monthly outgoings>monthly income? If this is the case many will look to the rental market and see rental costs approx half of mortgage costs and conclude that if they sell now and rent this will ease their cash-flow problem. If the housing market drops and they end up in negative equity this will not be an option.

Share this post


Link to post
Share on other sites
How does people coming off their fixed rates cause house prices to fall? They're not moving, so it doesn't cause prices to fall unless they become forced sellers. Is that what they're saying is happening?

That's one part of it. People who are coming to the end of a fix and whose finances are already stretched to the limit may find themselves forced to sell when their fix expires. The other is the broader effect on the economy caused by the reduction in discretionary spending by people who do manage to maintain their mortgage. Let's say for argument's sake that Tony and Pat Numptyson have a combined take-home pay of £2,500 and are currently paying £800 a month on the 4% fix they took out in autumn 2005, which expires in a couple of months' time. When that happens, the best new fix they can get is 6.5%, which sends their monthly payments up to £1,200. By cutting back on other areas of spending, they can just about absorb that increase. But in order to do that, they stop eating out once a week: it's only once a month now. They abandon plans to buy a new car, and decide to run their old one for a few more years. Their two, fortnight-long foreign holidays now becomes one week in a B & B in Cornwall. That's £400 a month which is no longer paying the salaries of the restaurateurs, car dealers, airline pilots etc. etc. If a significant number of consumers find themselves in a similar situation, then the restaurateurs, car dealers and pilots will eventually find themselves on the dole or in a lower-paying job. Therefore, they won't have as much money to spend on their flats and houses, and if people don't have the buying power, house prices will come down. That, IMO, is going to be the real significance of the mortgage resets.

Share this post


Link to post
Share on other sites
How does people coming off their fixed rates cause house prices to fall? They're not moving, so it doesn't cause prices to fall unless they become forced sellers. Is that what they're saying is happening?

As another poster suggested, the knock-on effect on discretionary spending, but also market sentiment/confidence.

Most people don't live in a bubble, they have friends, family they talk to - and when they're being squeezed till the pips squeak they shout and moan about it. Some people listen and learn, and at least some of them put off their FTB for a couple of years because there's nothing like hearing mortgage misery from those that are experiencing it.

I saw exactly that process happening in the workplace in the early nineties and it'll happen again.

Share this post


Link to post
Share on other sites
Guest Yeahbutnocrash
I think they mean the percentage of houses that are being sold for their asking price.

So just now 9 out of 10 gets asking price. That will fall to 2.

Good news anyway :rolleyes:

Looks like it's the average sold price as a % of the total asking price

So buyers should expect to nock around 8% or 9% off the asking price

Share this post


Link to post
Share on other sites
That's one part of it. People who are coming to the end of a fix and whose finances are already stretched to the limit may find themselves forced to sell when their fix expires. The other is the broader effect on the economy caused by the reduction in discretionary spending by people who do manage to maintain their mortgage. Let's say for argument's sake that Tony and Pat Numptyson have a combined take-home pay of £2,500 and are currently paying £800 a month on the 4% fix they took out in autumn 2005, which expires in a couple of months' time. When that happens, the best new fix they can get is 6.5%, which sends their monthly payments up to £1,200. By cutting back on other areas of spending, they can just about absorb that increase. But in order to do that, they stop eating out once a week: it's only once a month now. They abandon plans to buy a new car, and decide to run their old one for a few more years. Their two, fortnight-long foreign holidays now becomes one week in a B & B in Cornwall. That's £400 a month which is no longer paying the salaries of the restaurateurs, car dealers, airline pilots etc. etc. If a significant number of consumers find themselves in a similar situation, then the restaurateurs, car dealers and pilots will eventually find themselves on the dole or in a lower-paying job. Therefore, they won't have as much money to spend on their flats and houses, and if people don't have the buying power, house prices will come down. That, IMO, is going to be the real significance of the mortgage resets.

In other words the collapse of the miracle economy.

Share this post


Link to post
Share on other sites
As another poster suggested, the knock-on effect on discretionary spending, but also market sentiment/confidence.

Most people don't live in a bubble, they have friends, family they talk to - and when they're being squeezed till the pips squeak they shout and moan about it. Some people listen and learn, and at least some of them put off their FTB for a couple of years because there's nothing like hearing mortgage misery from those that are experiencing it.

I saw exactly that process happening in the workplace in the early nineties and it'll happen again.

This is the key.

Economic factors are already beginning to take effect and will continue to worsen the situation.

A widespread change in sentiment/confidence is all that is needed now to send the market into reverse.

IMHO...

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...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 356 The Prime Minister stated that there were three Brexit options available to the UK:

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal



×
×
  • 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.