Jump to content
House Price Crash Forum
Lander

Us: House Prices Dropped Like A Brick In 2007 Compared To The 90's Recesssion

Recommended Posts

According to the Case-Shiller index of housing, prices in 20 of the country's biggest cities dropped at the fastest rate on record in December, and fell by over 9pc on the year. To put this in perspective, during the early 1990s housing recession annual price falls only hit 2.8pc at the worst point.

http://www.telegraph.co.uk/money/main.jhtm...subprime103.xml

Wow. If prices are falling this hard in the US, what % declines can we expect here? :ph34r:

Share this post


Link to post
Share on other sites
According to the Case-Shiller index of housing, prices in 20 of the country's biggest cities dropped at the fastest rate on record in December, and fell by over 9pc on the year. To put this in perspective, during the early 1990s housing recession annual price falls only hit 2.8pc at the worst point.

http://www.telegraph.co.uk/money/main.jhtm...subprime103.xml

Wow. If prices are falling this hard in the US, what % declines can we expect here? :ph34r:

anyone remember the trolls who used to come on and say "but there's no crash in the US!" :lol:

Share this post


Link to post
Share on other sites
anyone remember the trolls who used to come on and say "but there's no crash in the US!" :lol:

Those were good days, as far as we knew

Share this post


Link to post
Share on other sites

same article also says

With such strife facing the US property market, British homeowners may be reassured. After all, while Britain has a sub-prime sector, it is proportionally smaller than America’s and seems not to have suffered from quite the same degree of cynical or fraudulent behaviour by mortgage lenders.

Does anyone know the true extent of subprime lending here in the UK? I thought fraudulent lending was rampant here?

Edited by Lander

Share this post


Link to post
Share on other sites
same article also says

With such strife facing the US property market, British homeowners may be reassured. After all, while Britain has a sub-prime sector, it is proportionally smaller than America’s and seems not to have suffered from quite the same degree of cynical or fraudulent behaviour by mortgage lenders.

Does anyone know the true extent of subprime lending here in the UK? I thought fraudulent lending was rampant here?

as someone who lived in the States all the way through the nineties up until a couple of years ago (I purchased two houses there) I can say it was a lot more difficult to obtain a mortgage there (at least a competitive one) than it appeared to be here. When I first came back I went to see an IFA who also happened to be a mortgage broker (is that an oxymoron or what??) and he basically asked me how much I wanted and said he could fudge all of the salary and credit histroy requirements. When I actually started looking at houses and finding out what they were going to cost me, I decided to stay rental...

But anyway, my opinion is that there is proportionately greater number of sub-prime loans floating around the UK than in the States, simply because at least up until 2-3 years ago, you still had to have a clean credit history to be considered for a mortgage over there, whereas here it didn't seem to be too important.

Share this post


Link to post
Share on other sites

"Sub-prime" has a very specific meaning in the US. Subprime mortgages are those whose credit quality isn't high enough to be sold on to Freddie Mac or Sallie Mae, the US gov't sponsored entities that buy and repackage mortgage loans. Sallie Mae and Freddie Mac don't operate in the UK, and so describing mortgages in the UK as "sub-prime" is nothing but a subjective guess as to their quality. Saying that there are fewer sub-prime mortgages here is meaningless because it's based solely on conjecture. The British might scoff at NINJA loans, but ask any American about 125% mortgages and they'd think you'd have to be insane to either offer or borrow a loan like that.

Share this post


Link to post
Share on other sites
same article also says

With such strife facing the US property market, British homeowners may be reassured. After all, while Britain has a sub-prime sector, it is proportionally smaller than America’s and seems not to have suffered from quite the same degree of cynical or fraudulent behaviour by mortgage lenders.

Does anyone know the true extent of subprime lending here in the UK? I thought fraudulent lending was rampant here?

This is the pathetic "Neither" Conway. Ever noticed his pieces do not make it to the "most read" column on the Torygraph online page? as I have said on a number of occasions - he clearly has a materialistic wife and very large mortgage, which means he is utterly compromised as an objective journalist.

Share this post


Link to post
Share on other sites

http://www.telegraph.co.uk/money/main.jhtm...C-mostviewedbox

'Ninja' loans explode on sub-prime frontline

By Edmund Conway, in San Francisco

Last Updated: 7:45am GMT 03/03/2008Page 1 of 2

Have your say Read comments

Comments

Dear Mr Conway

Thank you for the interesting article - I note that you suggest it may be different in the UK - not least because of "too few new homes being built in recent years" - this suggests that you have fallend for the "shortage of housing" theory (as spun by mortgage lenders and builders).

There are three facts that seem to undermine this theory:

1) Rents have not kept pace with house price inflation (recent slight increases don't come close to narrowing the gap) - it's therefore cheaper to rent than to buy a like for like property (in terms of imputed rents).

2) Despite complaints about the planning process - all the major house builders have landbanks with the equivalent of 4-5 years supply of plots (that's plots with permissions granted) - the Royal Town Planning Institute also reported last year a similar number of additional plots already allocated in local area plans - Cynics argue that staged releases by developers are not down to slow builders but to companies restricting supply so as not to swamp a saturated market.

3) "I want" is not the same type of demand as "I can afford" - the latter is the only demand that matters in any market. People are paying more for their housing costs out of disposable income than at any time since the last crash - so limited affordability means limited demand, means big back log of properties to sell, means little support for prices.

In a recent speech to the Association of British Insurers, Professor David Miles of Imperial College London (who is also an economist with Morgan Stanley) said his own calculations suggested that: "little more than half of the three-fold rise in house prices over the past 10 years can be explained by fundamental factors – for example increasing population, limited supply, rising income and cheaper debt. The rest is more difficult to explain."

However the FT's John Authers offered a possible explanation last week from Tim Bond of Barclays Capital, who said that “After a period of strongly rising prices, the expectational component comes to the fore and becomes the key factor determining real house prices.” - or as John Authers translated "If people see house prices rising, greed trumps everything else. In the short- term, this is a self-fulfilling prophecy."

He went on to point out that this forward momentum can eventually turn - as it has done already in the USA - and can be just as powerful in reverse.

One further point - aside from the 5-years supply in the developer's landbanks - there are also somewhere in the region of 800,000 to 1m empty properties in the UK - that's long term empty not just vacant while new renters or owners are found - and that's not taking account of second homes that are empty most of the week. So there would seem to be plenty of hidden capacity as well as weak demand.

Posted by Huw Sayer on March 3, 2008 10:10 AM

I thought this was a wonderfully cogent argument about how the UK market will fare.

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.

  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • 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.