Jump to content
House Price Crash Forum

Why Prices Are Unlikely To Drop Significantly


Recommended Posts

I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I think next year may see stagnation in the market, but the fact is that the City will be seeing another year of huge bonuses and there are no signs of any lay offs. The credit crunch is only affecting a minority of bankers and the rest are still pulling in the dough for their firms and themselves. Not to mention the lawyers who are as busy as ever.

The fact is that most people in London have not really been overstretching themselves to an insane level, so things are under control. A huge number of people are coming to the end of fixed rates, but the rates available now are not to bad and are likely to get better over the next 6 months as the BoE starts to cut rates.

I expect a torrent of abuse for this, but I'm just giving my point of view and hopefully making a few people a little more realistic in their expectations. ;)

Link to post
Share on other sites
  • Replies 52
  • Created
  • Last Reply

Top Posters In This Topic

Hopefully there won't be any abuse - it's always nice to have the opinion of someone who introduces themselves as an EA (as opposed to the plenty here in the past who pretended to be first time buyers for example).

However, I don't think you're being realistic - I disagree with you almost entirely, but ultimately one of us has to be wrong, and only time will tell which one of us that is. In the meantime, we're always interested in the thoughts of people who think the market will not drop.

Link to post
Share on other sites
Guest DissipatedYouthIsValuable

Ah well. It's all too expensive for me.

This GP is off to Canada either as soon as the remaining debt is paid or once significant pound devaluation makes it rational to service the remaining debt from overseas.

I simply can't afford what my working class father would have been able to buy on a single salary.

Perhaps the bankers and property speculators really are able to base an entire economy on

high prices.

Clearly the survivors of the next generation are only going to be those whose parents have sufficient equity to help their children, I suppose the rest can live rough or in tents.

Thanks for the warning.

Edited by DissipatedYouthIsValuable
Link to post
Share on other sites
I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I think next year may see stagnation in the market, but the fact is that the City will be seeing another year of huge bonuses and there are no signs of any lay offs. The credit crunch is only affecting a minority of bankers and the rest are still pulling in the dough for their firms and themselves. Not to mention the lawyers who are as busy as ever.

The fact is that most people in London have not really been overstretching themselves to an insane level, so things are under control. A huge number of people are coming to the end of fixed rates, but the rates available now are not to bad and are likely to get better over the next 6 months as the BoE starts to cut rates.

I expect a torrent of abuse for this, but I'm just giving my point of view and hopefully making a few people a little more realistic in their expectations. ;)

Fancy a bet on it? I'll wager £10k at evens on a 10% or more real terms drop (using RPI) Uk average.

Link to post
Share on other sites
I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I think next year may see stagnation in the market, but the fact is that the City will be seeing another year of huge bonuses and there are no signs of any lay offs. The credit crunch is only affecting a minority of bankers and the rest are still pulling in the dough for their firms and themselves. Not to mention the lawyers who are as busy as ever.

The fact is that most people in London have not really been overstretching themselves to an insane level, so things are under control. A huge number of people are coming to the end of fixed rates, but the rates available now are not to bad and are likely to get better over the next 6 months as the BoE starts to cut rates.

I expect a torrent of abuse for this, but I'm just giving my point of view and hopefully making a few people a little more realistic in their expectations. ;)

You're an Estate Agent, a V. I., so you would say this wouldn't you.

I was checking out A&l's mortgage rates today and they quoted 8.1% APR! And you say thats not a bad rate!

The credit crunch is just starting and has a long way to go.

You only have to watch some of the property porn shows or news bulletins to see just how far people are stretching themselves to get on that mythical, ponzi "Property Ladder"

Link to post
Share on other sites

I dont agree with this view because what turns is sentiment.

People have seen others making absurd amounts of money over the last decade by simply purchasing a property. It seems that purchasing a property is a road to riches. Buy a house, borrow the deposit from Mum & Dad, borrow the repayments even, and be rewarded with tens of thousands of pounds in increased equity the next year.

When people see values stalling, they just see people struggling with increasng repayments, increasing bills, increasing living costs and mounting debts and, to top it all, at the end of the year they have gained nothing, just a lot of stress, a lot of debts and an asset that is worth less than they paid for it.

People will not buy into this. They will rent, keep their freedom and wait for a better market.

Link to post
Share on other sites
And the same can STILL be said for the US market yet thats been crashing for 2 years. Plus Im sure most of the UK market doesn't consist of rich Londoners. So yes your getting slated.

Sure prices are dropping in Detroit and other economically bombed-out places, but I haven't heard of the Manhattan house price crash, have you??

Link to post
Share on other sites

I think your points might be valid for the top end of the London market, but the majority of house owners aren't bankers or lawyers so I'm not sure how they apply to the rest of the market? Given yields on property are so low and capital gains prospects are a fraction of what they used to be, I can't see many top earners investing in property in 2008.

The fact is that most people in London have not really been overstretching themselves to an insane level, so things are under control.

Presumably you have some evidence of this fact? Recently published CML figures show that affordability for FTBers is as bad as it was in the early 90s before the last crash.

A huge number of people are coming to the end of fixed rates, but the rates available now are not to bad

Going from, say, 4.5% to 6.5% (I've pulled these out of the air but I think they're in the right ballpark) might not sound "too bad" but that's a 40% increase and I suspect that's more than many will be comfortable with.

Link to post
Share on other sites
I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I think next year may see stagnation in the market, but the fact is that the City will be seeing another year of huge bonuses and there are no signs of any lay offs. The credit crunch is only affecting a minority of bankers and the rest are still pulling in the dough for their firms and themselves. Not to mention the lawyers who are as busy as ever.

The fact is that most people in London have not really been overstretching themselves to an insane level, so things are under control. A huge number of people are coming to the end of fixed rates, but the rates available now are not to bad and are likely to get better over the next 6 months as the BoE starts to cut rates.

I expect a torrent of abuse for this, but I'm just giving my point of view and hopefully making a few people a little more realistic in their expectations. ;)

Not going to abuse you for posting, but I don't quite understand the parallel between your predicted city bonuses and house prices, unless you think the UK is just confined to a square mile. The vast majority of house buyers, in London and the rest of the UK, do not work in the City of London, are not getting any bonuses and do not have the inflated salaries of the few thousand that do. In other words, city bonuses are nationally not even statistically relevant.

Of course you are entitled to your views, but you seem to be regurgitating the received wisdom of those in your profession, but it's refreshing to see you are honest at least about how you make your living.

VP

Link to post
Share on other sites

I can't speak for London, but that argument has already been proved wrong around here in Manchester. There have in the last few weeks been quite substantial falls in prices and still people don't want to buy. My dad when to a well publicised auction on Monday. Many houses there with substantial discounts e.g. Houses that had been on the market at £125-130,000 that could not even reach their reserve of £90,000. By easter you will know what I mean!!

Link to post
Share on other sites
I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I expect a torrent of abuse for this, but I'm just giving my point of view and hopefully making a few people a little more realistic in their expectations. ;)

You are clearly not reading the same threads on this site as me!

I don't find people are abusive on this site to EA, especially if the post in the way you have done. Your opinion is a very valid one, and is probably based on very sound evidence that you are surrounded by in London atm. However I do not feel you can judge the effects of the credit crunch just as the whistle has blown to kick it all off. The City are hiding huge losses and getting away with it. Mainly due to the incredible performance of the DOW, because the Americans know how serious this could get if they allowed the markets to crash as well with everything else. The markets are being protected and have not even begun to fall so as you say the inept greedy buffoons that caused this will probably feel little pain this year.

I can not see a positive outcome from this mess and believe London could be one of the worst hit areas. I hope you are right as I would love to continue the dream we seem to be living at the moment. :rolleyes:

Link to post
Share on other sites
Sure prices are dropping in Detroit and other economically bombed-out places, but I haven't heard of the Manhattan house price crash, have you??

California and Florida are econmically bombed out??? No s**t didnt realise it was a 3rd world country,

Link to post
Share on other sites
I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I think next year may see stagnation in the market, but the fact is that the City will be seeing another year of huge bonuses and there are no signs of any lay offs. The credit crunch is only affecting a minority of bankers and the rest are still pulling in the dough for their firms and themselves. Not to mention the lawyers who are as busy as ever.

The fact is that most people in London have not really been overstretching themselves to an insane level, so things are under control. A huge number of people are coming to the end of fixed rates, but the rates available now are not to bad and are likely to get better over the next 6 months as the BoE starts to cut rates.

I expect a torrent of abuse for this, but I'm just giving my point of view and hopefully making a few people a little more realistic in their expectations. ;)

Hello, welcome...

I do not agree with your view what drove the market up will drive it back down again, city bonuses are not being paid in cash this year more like shares which they can not sell for a period of time, as for people overstretching yes they have and are, however they dont like to report it.

If the BOE cut rates and the pound drops inflation rises and the estimated GDP is now 2.5% or less meaning the UK economy is on it tip toes and at this position is difficult for the government and BOE because teh wrong move would be Devastating.

Link to post
Share on other sites

Out of interest LondonEA - how long have you been in the business? Obviously on an internet forum you could give any answer you want to lend weight to your views, but if you are a relative newcomer, then maybe we can help to make your expectations a little more realistic? :P

Edit to correct wrongworditis.

Edited by Crash Gordon
Link to post
Share on other sites
Sure prices are dropping in Detroit and other economically bombed-out places, but I haven't heard of the Manhattan house price crash, have you??

Hi.

Good to have an EA on here. It would be good if you stuck around as then we would be getting some good anecdotal evidence on both sides rather than the bear picture that can be rather overpowering here.

I am not sure Manhattan is relevant though to most people here, in the same way that Kensington And Chelsea aren't either.

London is a large city and I suspect that what will happen there is similar to what happened last time, in that some areas will fare better than others over the next few years.

The ones that I think will do badly are going to be the places that used to be downmarket but are now "desirable". You would probably know those better than me, but I am thinking of places that were obviously cheaper 8-10 years ago and people came to because that's all they could afford at the time.

People here have said that it is turnover that will suffer first. Obviously a few months aren't necessarily an indicator, but have you noticed sales falling off at all recently?

We have been hearing of broken chains and some distressed sales of BTL portfolios.

Have those increased at all round your way?

Obviously in most places it is now a buyers market. Are you seeing that change at the moment?

It would be good to know.

Regards

Bob

Link to post
Share on other sites
I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I think next year may see stagnation in the market, but the fact is that the City will be seeing another year of huge bonuses and there are no signs of any lay offs. The credit crunch is only affecting a minority of bankers and the rest are still pulling in the dough for their firms and themselves. Not to mention the lawyers who are as busy as ever.

Are you suggesting the property market in the UK, in its entirety, is driven purely by the size of City bonuses?

Link to post
Share on other sites

I think this EA is partly right, but I still hold my view that I'll be able to afford in a year's time with the same savings that leave me with no options today.

You see, the linchpin is this: The system can't afford individual properties to drop in price... but a property bought in 1997 and sold in 2008 has 10 years of preposterous claimed house price inflation before the property price drops. This means a 60% drop in today's assumed price would not represent a loss for the vendor.

I think the "average" house price can remain fairly stable at around £200K, but (and this is important) the house that is sold for £200K will be substantially better than the one on offer at that price point today.

I think that the people buying above average quality homes will have substantially larger deposits - 40%, say, in cash - and this will (in future) find them favourable mortgage rates relative to skint but spendthrift competitors.

Houses are not equal - some houses are more average than others.

I believe this is why, in the last crash (199x) the public perceived far bigger reductions than were recognised by the statistics. The statistics could not appreciate the difference in worth of the homes that were sold - only the difference in value. Much of the rubbish will be sub-prime mortgaged - and, hence, with negative equity anticipated, will not be brought to market... and, if it is, it won't sell. These owners will be priced-in and unable to escape their debts.

The good news is that, once the credit industry has worked out how to sensibly price risk, estate agents will have a flurry of customers - all be it, likely, customers who are more careful in negotiation and unlikely to be won-over by house-dressing; the smell of freshly baked bread or the colour of the emulsion. These are the buyers who have, in recent years, simply given up as they can't compete with sentiment driven numpties with recklessly large lines of credit.

[bTW - Londonea... What is the current price (rental and purchase) for a 2 double-bed flat with parking (in an area where you wouldn't worry about leaving the car parked) within half an hour's travel from Canary Wharf? Do you think these prices are sustainable? ]

Edited by A.steve
Link to post
Share on other sites
I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I think next year may see stagnation in the market, but the fact is that the City will be seeing another year of huge bonuses and there are no signs of any lay offs. The credit crunch is only affecting a minority of bankers and the rest are still pulling in the dough for their firms and themselves. Not to mention the lawyers who are as busy as ever.

The fact is that most people in London have not really been overstretching themselves to an insane level, so things are under control. A huge number of people are coming to the end of fixed rates, but the rates available now are not to bad and are likely to get better over the next 6 months as the BoE starts to cut rates.

I expect a torrent of abuse for this, but I'm just giving my point of view and hopefully making a few people a little more realistic in their expectations. ;)

Yesterday, the two most authoritative "City" newspapers, The FT and the Telegraph ran big stories on how city bonuses will be slashed this year and job losses were already underway. I have a friend who works for Bank of America and they are laying off WHOLE DEPARTMENTS. I passed on the names of some lawyers to them.

You sound like a nice innocent enough guy, but don't believe what the manager tells you - as you know your industry is known for incredible spin, and ultimately total denial..... Along with politicians you guys are seen as the worst bluffers ou there, and the public is starting to cut right through the "supply/demand/city bonuses/ HP can only go up, Government will step in b%%ll which has been peddled for too long now.....

Link to post
Share on other sites
I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I think next year may see stagnation in the market, but the fact is that the City will be seeing another year of huge bonuses and there are no signs of any lay offs. The credit crunch is only affecting a minority of bankers and the rest are still pulling in the dough for their firms and themselves. Not to mention the lawyers who are as busy as ever.

The fact is that most people in London have not really been overstretching themselves to an insane level, so things are under control. A huge number of people are coming to the end of fixed rates, but the rates available now are not to bad and are likely to get better over the next 6 months as the BoE starts to cut rates.

I expect a torrent of abuse for this, but I'm just giving my point of view and hopefully making a few people a little more realistic in their expectations. ;)

Looking at your post there is not much to argue about. No thought or research has gone into it, its just spin. There have been some very clever and amusing bulls on this site. Sadly you are not one of them.

With reference to some of your opinions, you might like to read this:

Thousands of job cuts expected in UK’s financial sector due to volatile equity and credit markets

Link to post
Share on other sites
I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I think next year may see stagnation in the market, but the fact is that the City will be seeing another year of huge bonuses and there are no signs of any lay offs. The credit crunch is only affecting a minority of bankers and the rest are still pulling in the dough for their firms and themselves. Not to mention the lawyers who are as busy as ever.

The fact is that most people in London have not really been overstretching themselves to an insane level, so things are under control. A huge number of people are coming to the end of fixed rates, but the rates available now are not to bad and are likely to get better over the next 6 months as the BoE starts to cut rates.

I expect a torrent of abuse for this, but I'm just giving my point of view and hopefully making a few people a little more realistic in their expectations. ;)

Your argument ignores the fact that most of the UK isn't london.

The effects of the credit crunch are yet to be felt.

If people aren't being stretched explain why retail sales aren't rising.

Lending for new properties is down 20% - Think about how this affects house prices.

If people aren't being stretched explain the predicted rise in repos.

"The rates available now are not too bad" - This statement may lack the rigour of scientific research.

Link to post
Share on other sites

Hi and nice to have an EA, and always healthy to get alternative perspective.

I know you can't give obvious clues as to what area you work in London, but I do have a couple of questions.

If you see stagnation coming and thus expect the market to level rather than drop. Do most the people you meet that are selling still expect the growth gains of the last few years or are most already aware the market is slowing and 2x digit growth in prices is un-realistic?

Also be nice to get a gauge of what the average buyer is opting in at, this time last year people where banging in offers at asking price, is it the same this year or are some trying it on with a 3-5% reduction and haggling up?

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.

×
×
  • 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.