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Guest wrongmove

House Prices Are 'starting To Fall'

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Guest wrongmove

I can't believe this hasn't already been posted, but I can't find it. Please delete mods if I have missed it.

House prices are 'starting to fall'

"Fears that the credit crisis has spilled over into the housing market will be heightened by the publication today of a report suggesting house prices were falling for the first time in two years.

The Royal Institution of Chartered Surveyors said more of its members reported a fall in prices last month than reported a rise. August was the first month this has occurred since October 2005.

In addition, the RICS said the number of new buyer inquiries had declined for the ninth consecutive month and at the fastest pace since August 2004.

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"Demand continued to weaken as rising interest rates weighed on buyer affordability," the RICS said, noting the largest price falls occurred in the West Midlands, the North West and East Anglia.

However, London is still seeing prices go up and momentum in the capital's housing market has abated only slightly since the beginning of the year.

The survey comes just as a host of major mortgage lenders seek to raise their rates, even though the Bank of England has kept the cost of borrowing steady. The bank said earlier this week that mortgage rates had soared to their highest levels in nine years.

However, there were signs that the UK economy was holding up well amid the storm in the global financial markets, as the Office for National Statistics said average UK wages experienced stronger than expected growth between May and July as unemployment fell again........."

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Guest wrongmove

And in The Times

Homeowners facing rise in loan costs as property looks headed for a fall

"Homeowners can expect a double whammy of higher mortgage bills and falling property prices this autumn after turmoil in the financial markets and interest rate rises.

Halifax, the biggest mortgage lender, will shortly announce higher variable rates for many borrowers and remortgagers, The Times has learnt.

The lender, which has a fifth of all mortgage business in Britain, will withdraw a big part of its mortgage range at 8pm today. It will increase the rates on many of its variable tracker deals by between 0.1 and 0.2 percentage points tomorrow.

The misery for homeowners will be compounded by news that a majority of property market professionals now believe that house prices are falling. A survey by the Royal Institution of Chartered Surveyors (RICS) today indicates the fastest drop in prices for two years.

Experts fear that Halifax’s move will be copied across the mortgage industry, bringing more pain for borrowers who have faced five base rate rises since August last year. Melanie Bien, of Savills Private Finance, a mortgage broker, said: “Once the big lenders move, others are bound to follow.”

Abbey, the second-biggest lender, has already raised the rates on its variable tracker loans by up to 0.2 percentage points and Standard Life Bank is expected to increase all the rates on its home loans tomorrow.

Experts say that the turmoil in credit markets has forced lenders to increase their variable rates as the cost of borrowing short-term money has soared in the past month. ......"

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"Demand continued to weaken as rising interest rates weighed on buyer affordability," the RICS said, noting the largest price falls occurred in the West Midlands, the North West and East Anglia.

WHAT?!!! House prices falling because DEMAND is falling! WEIRD. Many on here think house prices can only fall if SUPPLY increases.

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WHAT?!!! House prices falling because DEMAND is falling! WEIRD. Many on here think house prices can only fall if SUPPLY increases.

As interest rates rise, buying a house is more costly therefore demand drops and so do house prices eventually. People see that houses dont always go up in value and speculative purchases wane. Once those prices stop going up, the proverbial hits the fan. Unless BOE bails everyone out again. Somehow though, I dont think thats going to happen this time.

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And in The Times

Homeowners facing rise in loan costs as property looks headed for a fall

"Homeowners can expect a double whammy of higher mortgage bills and falling property prices this autumn after turmoil in the financial markets and interest rate rises.

Halifax, the biggest mortgage lender, will shortly announce higher variable rates for many borrowers and remortgagers, The Times has learnt.

The lender, which has a fifth of all mortgage business in Britain, will withdraw a big part of its mortgage range at 8pm today. It will increase the rates on many of its variable tracker deals by between 0.1 and 0.2 percentage points tomorrow.

The misery for homeowners will be compounded by news that a majority of property market professionals now believe that house prices are falling. A survey by the Royal Institution of Chartered Surveyors (RICS) today indicates the fastest drop in prices for two years.

Experts fear that Halifax’s move will be copied across the mortgage industry, bringing more pain for borrowers who have faced five base rate rises since August last year. Melanie Bien, of Savills Private Finance, a mortgage broker, said: “Once the big lenders move, others are bound to follow.”

Abbey, the second-biggest lender, has already raised the rates on its variable tracker loans by up to 0.2 percentage points and Standard Life Bank is expected to increase all the rates on its home loans tomorrow.

Experts say that the turmoil in credit markets has forced lenders to increase their variable rates as the cost of borrowing short-term money has soared in the past month. ......"

That's a trivial increase - 0.2% on a 200k mortgage is only 30 quid a month. The good news is that since CPI excludes mortgages (and uses rents as a proxy for housing costs) this won't appear to be inflationary, but it will be affecting the economy as households will have less to spend on discretionary purchases.

The real issue is repayment of debt, not servicign the interest payments. Until everyone starts ot worry about this there's no crash in the offing.

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1585269.jpg

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The Independent, Daily Mail now Telegraph.! I can't take that much bear porn first thing in the morning :lol: Mods can you please enforce 'watershed' regulations :lol:

The only problem is that the reality won't sink in until it is on Sun's front page!

The Sun isn't usually shy to report about big busts. :)

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The press makes me laugh - only a couple of days ago the headlines were screaming that house prices were roaring ahead, and today it's all doom and disaster.

Does anybody have any thoughts on which metrics can actually be trusted to tell the truth about house prices in the UK?

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The press makes me laugh - only a couple of days ago the headlines were screaming that house prices were roaring ahead, and today it's all doom and disaster.

Does anybody have any thoughts on which metrics can actually be trusted to tell the truth about house prices in the UK?

Anyone have the link to the rics report please?

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All these threads really need to be merged... mods?

Something that strikes me though. Certainly we are now entering correction territory. One of the assumptions I've read time and again on this site is that once prices start to drop all the BTL home will be dumped onto the market en mass. So since emplyment is up, and therefore we aren't going to see mass unemployment and repossesions to force prices down, for this correction to enter crash scenario we need to start seeing plenty of BTLs going up for sale.

Now that price drops are front page news, if we don't see a marked jump in BTL sell offs in say the next month or so I believe we will only have a gently correction rather than crash.

Edited by bearbullfence

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Guest pioneer31
"Demand continued to weaken as rising interest rates weighed on buyer affordability," the RICS said, noting the largest price falls occurred in the West Midlands, the North West and East Anglia.

How can demand be falling? Surely the shortage of homes keeps prices ramping indefinitely? <_<

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So since emplyment is up, and therefore we aren't going to see mass unemployment and repossesions to force prices down, for this correction to enter crash scenario we need to start seeing plenty of BTLs going up for sale.

Erm.. do you know how many repos are kicking in at the moment?

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