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The unavoidability of a UK house price crash goes increasingly mainstream:

Property market: Word on the street

Last Updated: 12:01am GMT 15/03/2008

Daily Telegraph

It's hard to get to grips with the scale of the US crash. Here are the facts... By Edmund Conway

'So how bad could it really get?" It's telling that I'm asked the question more and more these days - both about the housing market and the broader British economy. Sadly, my answer isn't always what people want to hear.

Now, bear in mind that I've been pretty gloomy about house prices for some time, and I predicted at the start of the year that prices would probably fall during 2008 - perhaps by as much as 10 per cent. I'm afraid my pessimism hasn't wavered. Far from it - in the past two and a half months, I have seen little to inspire optimism and much that has filled me with gloom.

The prospects for the housing market are as bad as they have been for almost two decades. It's not merely that house prices are already falling (though they are - if the past few months are anything to go by, we are looking at a drop of more than 5 per cent across the UK this year), or that most of the straws in the wind by which economists work out where things will go in the coming months look even grimmer (they do - the Royal Institution of Chartered Surveyors warned this week that prices are now falling at the fastest rate since the early 1990s crash).

What concerns me more than figures on our domestic housing market is what's happening across the Atlantic. It's difficult to get your head round the scale of the US housing crash, but if it helps, here are a few facts and figures. Prices in most cities are falling at about 10 per cent. Millions of homes have now been repossessed. And - my favourite - there are now nearly 8.8 million homeowners, or 10.3 per cent of the total, in negative equity, where their mortgage is now worth more than their home itself. This is as bad, if not worse, as it got in our last property crash, and we are still only halfway through the American version.

Right now, it is the so-called sub-prime families who are suffering as they are suddenly thwacked with a huge increase in mortgage costs. But in the next step, with many thousands losing their jobs, many middle-class families will face repossession.

What's to prevent us following in America's wake? Very little, as it happens. Our house prices are, in fact, even more overvalued; we are more highly indebted; our interest rates are even higher than in the US.

One section of the market - the buy-to-let landlords who bought in new-build developments in places such as Manchester and Leeds in recent years - is already facing a price crash.

Even leaving aside our home-grown problems, America's current recession will serve only to depress our economy even further, as American firms cut jobs and our transatlantic exports suffer.

Yet there are some thin silver linings. The first is that a collapse in the buy-to-let sector may not be as painful economically and socially as a collapse in sub-prime because, quite simply, BTL investors can sell up rather than being evicted (though not if they are in negative equity). The second - and I can't emphasise this enough - is that while millions of families here face a sharp increase in their mortgage bills, it is as nothing compared with what many US households experienced.

I don't buy the argument that the chronic shortage of new housing will stop prices from plummeting. Even taking this into account, our property market is significantly overvalued. Prices will continue to fall, and it won't be pretty. The best we can hope for is that it is not as ugly a denouement as in the US.

Telegraph

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Well RB is predciting higher than 50% falls now. I still think the mark down will arrive at 50% on all properties by 2011. On top of that the evaporation of the banking sector (yes!) as trust completely disappears, to another country such as Dubai. I think (if there is any hope of education in the UK) that these lowered prices could be extended for a longer period in the financial hinterland to come.

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now they are all jumping on i predicted bandwagon.

i nailed my cross to the post here at HPc about two years ago and said prices would drop 40% and few would beleive me even after may years of prices going up 20% pa.

now i'm exspecting something close to a total meltdown as the debt has been allowed to continue to grow unchecked and goverment is hell bent on keeping the party going just that little bit longer.

has all the charatristics of a mad man who's knows tomorrow he will comit suicide.

One day a few gallons of petrol, a sack of rice and a 12 bore would be fair payment for your average property with a gold earing thrown in as compensation for the water still left in the tank.

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Yet there are some thin silver linings. The first is that a collapse in the buy-to-let sector may not be as painful economically and socially as a collapse in sub-prime because, quite simply, BTL investors can sell up rather than being evicted (though not if they are in negative equity). The second - and I can't emphasise this enough - is that while millions of families here face a sharp increase in their mortgage bills, it is as nothing compared with what many US households experienced.

????

Someone who is oblivious to the rapid deterioration of the lending criteria and the impact on the UK debtors.

It would be boring if he hit the nail on the head completely, not a bad attempt to dumb down the severity of our current situation to allow it to slowly sink in to the previously oblivious.

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and I predicted at the start of the year that prices would probably fall during 2008 - perhaps by as much as 10 %.

Some one better have a word in Edmunds ear and tell him that many sellers are having to take 10% or more off advertised prices already just to get the sale , SOLD prices will be at least 20% down by the end of 2008 imo , it's all just so obvious .

Edited by grey shark

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The unavoidability of a UK house price crash goes increasingly mainstream:

Telegraph

yes very interesting , just would like to know who the buy -to -lets are going to sell to ( and only if they are not in negative equity ) i think loads of them are.especially the ones who have bought overpriced flats in the last few years.

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  • 295 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%



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