Anecdotal Evidence - Kent

[cartimandua51]

I wonder why EA's are so intent on keeping prices up as it doesn't really matter that much to them if a place sells for 20 k less, at least they would have some commision rather than overpricing and letting stock sit around.Surely their game now is to talk the vendor down after they have it on their books.

It's interesting to see what happens when the EA has a genuine Vested Interest, rather than the just a general occupational one.

We own a student let in Bournemouth - have done for years, ticking along nicely (well, as nicely as student lets ever tick along! ) Bloke next door gives us first refusal on his house, as he knows we looked speculatively at the house on the other side at one stage. We decided it No, as the purchase price / rental figures didn't add up by about £50K, even on student multilet basis.

Next, it's advertised in the local paper at £20K less than the off-the-cuff price he'd quoted us; and a declaration that the estate agent was a connected person - son or son-in-law, I believe.

No movement for about 2 months, then the price is dropped £20K and the property disappears from the listings.

As I read this, the EA was in a position to push the price at which he knew it would sell and get his parents out to the new retirement home they were having built, and did it. I don't know what it actually sold for till it comes up on nethouseprice, but my guess is about the £50k lower price that we had originally reckoned it was adrift.

So where there is a genuine wish to sell and sound advice from a professional, things do move. What is sticking around here is 2 bed flats!

[silver surfer]

What is sticking around here is 2 bed flats!

What I'm seeing (in Richmond, south west London) is just about everything sticking, but the only small evidence of asking price adjustment is coming from 2 bed flats, and there's just not enough adjustment so they're still sticking!

[Mr Yogi]

The stand-off will only come to an end when forced sellers reduce their prices sufficiently to attract buyers.

When someone in a street of similar houses reduces their price by 20% because they need to find a buyer before the bank forecloses then they immediately reduce the value of all their neighbours' houses by a similar amount.

It only needs a few actual sales to reduce values for everyone.

Once these forced sales figures hit the Land Registry database then there goes the neighbourhood!

[eric pebble]

The stand-off will only come to an end when forced sellers reduce their prices sufficiently to attract buyers.

When someone in a street of similar houses reduces their price by 20% because they need to find a buyer before the bank forecloses then they immediately reduce the value of all their neighbours' houses by a similar amount.

It only needs a few actual sales to reduce values for everyone.

Once these forced sales figures hit the Land Registry database then there goes the neighbourhood!

EXACTLY Yogi!

AND - on the way up --- When Person X took out a LIAR LOAN to buy a house in STREET Y -- The same thing happened correspondingly the other way around -- ALL the properties in STREET Y went "up" by a similar amount. THAT IS WHY LIAR LOANS are so poisonous. THAT IS WHY the LIAR LOAN phenomenon is MUCH bigger than many people realise....

i.e It only takes 1 or 2 LIAR LOANS -- and it poisons the ENTIRE AREA - and ends up significantly affecting the WHOLE COUNTRY --- AND THAT IS WHY PROPERTY "PRICES" WENT UP BY 300-400% in TEN YEARS!!!!

Edited February 17, 2008 by eric pebble

[piece of paper]

I'm surprised that there is as much downward pressure as there is this early. YOYs are still positive and there will be an expectation of a spring surge.

I don't know what proportion of the housing stock turns over each year but most homeowners will sit it out unless there are drastic changes in circumstances.

That is not to say that prices won't drop dramatically but we are just passing the peak. Full downward momentum is still some way off.

p-o-p

[piece of paper]

EDIT: Deleted duplicate post

Edited February 17, 2008 by piece of paper

[silver surfer]

The stand-off will only come to an end when forced sellers reduce their prices sufficiently to attract buyers.

When someone in a street of similar houses reduces their price by 20% because they need to find a buyer before the bank forecloses then they immediately reduce the value of all their neighbours' houses by a similar amount.

It only needs a few actual sales to reduce values for everyone.

Once these forced sales figures hit the Land Registry database then there goes the neighbourhood!

You're absolutely right.

But so far there's precious little evidence of family homes being marked down by 20%. The only distress sellers at the moment seem to be recent BTL landlords, caught out by the credit crunch, and dumping two bed, new build flats in the centre of Northern and Midland cities. As of today there's not many owners of three and four bed family houses being forced to find a sale quickly at whatever price the market will bear.

I believe a more wide-scale house price adjustment will come, but it will be an agonizingly slow affair, drawn out across the next two or three years at the very least.

[gravity always wins]

The stand-off will only come to an end when forced sellers reduce their prices sufficiently to attract buyers.

When someone in a street of similar houses reduces their price by 20% because they need to find a buyer before the bank forecloses then they immediately reduce the value of all their neighbours' houses by a similar amount.

It only needs a few actual sales to reduce values for everyone.

Once these forced sales figures hit the Land Registry database then there goes the neighbourhood!

Well put street by street.

[eric pebble]

[As Mr Yogi said] - The stand-off will only come to an end when forced sellers reduce their prices sufficiently to attract buyers.

When someone in a street of similar houses reduces their price by 20% because they need to find a buyer before the bank forecloses then they immediately reduce the value of all their neighbours' houses by a similar amount.

It only needs a few actual sales to reduce values for everyone.

Once these forced sales figures hit the Land Registry database then there goes the neighbourhood!

Well put street by street.

I RE-ITERATE --- THIS THE KEY KEY THING TO UNDERSTAND: THIS IS THE BIGGEST FACTOR TO THE MAMMOTH House Price Inflation of the last 10-12 years: -

On the way up --- When Person X took out a LIAR LOAN to buy a house in STREET Y -- The same thing happened correspondingly the other way around -- ALL the properties in STREET Y went "up" by a similar amount. THAT IS WHY LIAR LOANS are so poisonous. THAT IS WHY the LIAR LOAN phenomenon is MUCH bigger than many people realise....

i.e It only takes 1 or 2 LIAR LOANS -- and it poisons the ENTIRE AREA - and ends up significantly affecting the WHOLE COUNTRY --- AND THAT IS WHY PROPERTY "PRICES" WENT UP BY 300-400% in TEN YEARS!!!!

Edited February 17, 2008 by eric pebble

[Mr Yogi]

You're absolutely right.

But so far there's precious little evidence of family homes being marked down by 20%. The only distress sellers at the moment seem to be recent BTL landlords, caught out by the credit crunch, and dumping two bed, new build flats in the centre of Northern and Midland cities. As of today there's not many owners of three and four bed family houses being forced to find a sale quickly at whatever price the market will bear.

I believe a more wide-scale house price adjustment will come, but it will be an agonizingly slow affair, drawn out across the next two or three years at the very least.

You too, are absolutely right.

It's going to take some time before there are forced sales across semi-detatched suburbia; but they will come.

As I said in my post, it only needs a few actual sales to reduce values for everyone.

Edited February 17, 2008 by Mr Yogi

[kagiso]

I'm surprised that there is as much downward pressure as there is this early. YOYs are still positive and there will be an expectation of a spring surge.

I don't know what proportion of the housing stock turns over each year but most homeowners will sit it out unless there are drastic changes in circumstances.

That is not to say that prices won't drop dramatically but we are just passing the peak. Full downward momentum is still some way off.

p-o-p

I agree that there is more downward pressure than I personally expected so early.

While most people are waiting for a spring bounce, some are already cracking, and the more fragile bits of the market are already crashing.

I think the stand off will end late April / early May, for two reasons.

Firstly, all the main indices will have turned YoY -ve by this point.

Secondly, the people who have to sell will realise that spring is almost finished, the bounce has not materialised, and inventories of everything have gone through the roof.

At this point there will be a race to the bottom for the distressed sellers, and complete carnage through to the spring of 2010, where just maybe prices will be roughly realigned with rents.

Prices of more desirable properties could move down surprisingly quickly. Partly because they will be dragged down by the general crash, but mostly because an awful lot of foolish early middle aged folks have mewed up to the hilt to buy portfolios of BTL's.

Unlike the last crash, I predict a lot of repo's / distress sales in some very green and leafy suburbs.

[Mr Yogi]

EXACTLY Yogi!

AND - on the way up --- When Person X took out a LIAR LOAN to buy a house in STREET Y -- The same thing happened correspondingly the other way around -- ALL the properties in STREET Y went "up" by a similar amount. THAT IS WHY LIAR LOANS are so poisonous. THAT IS WHY the LIAR LOAN phenomenon is MUCH bigger than many people realise....

i.e It only takes 1 or 2 LIAR LOANS -- and it poisons the ENTIRE AREA - and ends up significantly affecting the WHOLE COUNTRY --- AND THAT IS WHY PROPERTY "PRICES" WENT UP BY 300-400% in TEN YEARS!!!!

I'd not actually thought of my analysis as being the mirror image of your liar loans scenario, but you know what, Eric...

... you're absolutely right!

There's an almost beautiful symmetry to it all.

It's just a pity that the people who get fcuked over on the way down won't neccesarily be the same people who shafted everyone else on the way up.

Edited February 17, 2008 by Mr Yogi

[eric pebble]

I'd not actually thought of my analysis as being the mirror image of your liar loans scenario, but you know what, Eric...

... you're absolutely right!

There's an almost beautiful symmetry to it all.

It's just a pity that the people who get fcuked over on the way down won't neccesarily be the same people who shafted everyone else on the way up.

Thanks Yogi -- Jeez..... I feel SO passionately about this -as many HPCiers will know -- IT IS ABSOLUTELY THE KEY IMHO TO THE HPI PHENOMENON. Just read my links below all my posts [in my "signature" bit]. The MAIN explanation for the last decade of insanity lies there - I am SURE about this....

AND - It was all POSSIBLE BECAUSE THE CDO/SIV/Northern Crock of Shit phenomenon was THERE to HOLD IT ALL UP!!........... [sigh...]

Edited February 17, 2008 by eric pebble

[Guest barebear]

Thanks Yogi -- Jeez..... I feel SO passionately about this -as many HPCiers will know -- IT IS ABSOLUTELY THE KEY IMHO TO THE HPI PHENOMENON. Just read my links below all my posts [in my "signature" bit]. The MAIN explanation for the last decade of insanity lies there - I am SURE about this....

AND - It was all POSSIBLE BECAUSE THE CDO/SIV/Northern Crock of Shit phenomenon was THERE to HOLD IT ALL UP!!........... [sigh...]

The trouble is Mr Pebble you haven't found a way of getting through to the colour blind and as everyone knows they are the ones most likely to lie on their mortgage applications.

[rabbithole]

LOL!

Yeah! A bit of a spoiler coz I wasn't actually referring to Tunbridge Wells

hehehe!

The Weald?

[Pindar]

Thanet West

[dandare500]

I was reading something about the herd instinct the other day from somewhere or another. They had 200 people walk around in no particular order. It only took 5% of people to know where they were supposed to walk to get the other 95% to follow them around as well. We have a subconscious herding disability(ability).

this will kick in soon, when they realise nothing is selling and will get the message - then whoosh!

[IP Newcomer]

I imagine it's going to be like a game of chicken for all the EA's in a particular locality; if they counsel their clients to drop, those same clients will just go down the High Street to the next outfit, if the valuation there suits them better.

Yes, but as an EA was saying to me a couple of days ago (after the ego was massaged about them being "hard headed" in valuations) it's better to have ten houses that sell rather than 100 that don't. Sellers who won't drop prices in a bust are like buyers who make cheeky offers in a boom - more trouble than they're worth.

I suspect that a good proportion of the pricey sellers will go to the realistic agents when they drop the price the second time, any way. Already we're seeing problem houses being lowballed to drum up interest, so far succesfully.

The agents who win business with high valuations are gambling on housing taking off again, because if they can't shif the stock they won't make the targets.

[piece of paper]

The agents who win business with high valuations are gambling on housing taking off again, because if they can't shif the stock they won't make the targets.

That's a bit of a public sector phrase. If they can't shift the stock they can't pay the wages/leases on premises/loans from banks etc.

p-o-p

[redwing]

One thing that adds to the lagging effect is the time it takes for sale prices to get through the Land Registry and onto Nethouseprices etc.

So the best you can negotiate with as a buyer is that a house down the road sold for less 5 or 6 months ago. That's another reason why I don't think we'll really start to see major reductions to then.

It feels like the top of the rollercoaster ride where time seems to stand still for a moment before the gut-wrenching plummet. Or if you don't like that metaphor: Wylie Coyote and running off cliff.

[runforthehills]

You're absolutely right.

But so far there's precious little evidence of family homes being marked down by 20%. The only distress sellers at the moment seem to be recent BTL landlords, caught out by the credit crunch, and dumping two bed, new build flats in the centre of Northern and Midland cities. As of today there's not many owners of three and four bed family houses being forced to find a sale quickly at whatever price the market will bear.

I believe a more wide-scale house price adjustment will come, but it will be an agonizingly slow affair, drawn out across the next two or three years at the very least.

Are you on the case with property-bee? I have seen some good 10% 15% drops in the last month on good family homes in kent, London and Surrey. Interestingly, once one drops, similar properties are dropping to same price.

Yes, and it is going to be like watching paint dry. But good things come to those who wait (and save up a s**t load of dosh!)

[munimula]

Friend of mine is senior agent of a leading EA in a very wealthy area of Kent

It's completely ground to a halt

Nothing is selling

His conclusion - There's gonna be carnage, worse than 89-92

My nan in Devon has just taken her house off the market. Failed to sell since last august and absolutely no interest. Asking prices was same as 2003 price - no increase in 4 years.

My gfs cousin has just given up trying to sell in Cannock

And house next to gfs mother in Walsall is still on the market....after 18 months

[Fence]

Fear will cause a HPI correction before the typical loss of jobs. Why? Because people are move leveraged now, are running out of cash flow (high cost of living, no more access to debt, end of fixed rate deals), and (with multiple BTL properties) have the luxury to do something about it.

Few will willingly sell until there is no risk of humlitation of being wrong. So the trend first needs to be well established which takes time. This is also the same as saying there needs to be a move from the denial phase to the realisation/anger/bargaining phases. BTL is the first big catalyst followed by a lack of cash flow. BTL sales may well be held up pending the CGT changes next year and the "hold in face of adversity" mentality of the amateur investor (until they accept they weren't really in it for the long term - just for a fast capital gain).

Conclusion, I expect an agonisingly painful slow burn and then a reasonably significant drop, followed by a dead cat bounce (while I enjoy the VI's last stand), followed by a more slower series of falls. I will buy back in when my price points are hit (hopefully after the first big fall), assuming this country is still worth living in (which is under debate).

Edited February 17, 2008 by Fence

[Errol]

One of the estate agents in Fleet, Hampshire seems to have shut up shop. There are far too many though. 5-6 at the last count, I think.

[Fence]

I agree that there is more downward pressure than I personally expected so early.

While most people are waiting for a spring bounce, some are already cracking, and the more fragile bits of the market are already crashing.

I think the stand off will end late April / early May, for two reasons.

Firstly, all the main indices will have turned YoY -ve by this point.

Secondly, the people who have to sell will realise that spring is almost finished, the bounce has not materialised, and inventories of everything have gone through the roof.

At this point there will be a race to the bottom for the distressed sellers, and complete carnage through to the spring of 2010, where just maybe prices will be roughly realigned with rents.

Prices of more desirable properties could move down surprisingly quickly. Partly because they will be dragged down by the general crash, but mostly because an awful lot of foolish early middle aged folks have mewed up to the hilt to buy portfolios of BTL's.

Unlike the last crash, I predict a lot of repo's / distress sales in some very green and leafy suburbs.

A good timeline. You obviously watch the people and how they are behaving, not the house prices and pretences people give off. Things are beginning to smell, you just have to look! The smart and overextended (should never have bought) sell first and set up a trend. The BTLs panic and sell, giving the skids a kick to become a self fearing prophesy on the numbers, a new floor is put in and acceptance follows when the shifters (e.g. those moving up) accept the new, de-facto, prices. And that's without loss of jobs, recession, etc. Add that in and it'll be even worse and quicker. The trend is your friend.

Edited February 17, 2008 by Fence