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http://www.mortgagesolutions-online.com/pu...tml?page=746038

News: Research

18 March 2008

Breaking News

House prices to fall, say experts

Leading figures in the property market believe house prices will fall in the next year.

At the Great Housing Market Debate held in London today, just one of 150 delegates believed house prices will increase this year. David Miles, chief economist of Morgan Stanley, predicted prices would fall by 20% in real terms in the next two years. He said: “Any housing market correction will not impinge on the wider economy. GDP growth is expected to increase by 1%-2% in the next year and although unemployment levels may rise, it would not be by much. I am not anticipating a recession in the UK.”

Commenting on the growing affordability constraints, Miles Shipside, commercial director of Rightmove, said: “There is a large gap between sellers’ expectations and buyers’ ability to pay. The market needs to openly accept a 10% reduction in house prices to achieve an orderly correction to affordability.”

A drop in the number of house sales so far this year was also a concern across the panellists. Richard Donnell, Director of Research of Hometrack, said: “Transaction levels keep going down and at the current level, homeowners on average would be moving every 20 years.”

If you have any comments you would like to add to this story or would like to speak to Mortgage Solutions about a similar subject, telephone Ben Marquand, on 020 7484 9981 or email ben.marquand@incisivemedia.com

Edited by Buffer Bear

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Guest Charlie The Tramp

Very large fonts IMO are insulting.

Are the members of HPC classed as being partially sited, or it is just a matter of being pissed or over excitement by the poster, I really don`t know. :rolleyes:

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Very large fonts IMO are insulting.

Are the members of HPC classed as being partially sited, or it is just a matter of being pissed or over excitement by the poster, I really don`t know. :rolleyes:

I noticed Sir Eric Pebble has been very moderate in his fontage recently. Must be the credit crunch.

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Very large fonts IMO are insulting.

Are the members of HPC classed as being partially sited, or it is just a matter of being pissed or over excitement by the poster, I really don`t know. :rolleyes:

Some members on this site may find reading easier if they run their finger over the screen reading the words outloud.

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...Miles Shipside, commercial director of Rightmove, said: “There is a large gap between sellers’ expectations and buyers’ ability to pay. The market needs to openly accept a 10% reduction in house prices to achieve an orderly correction to affordability.”

Then why do Rightmove waste so much time and energy publishing and promoting 9 pages of largely irrelevant, bullish data on 'asking prices'.

http://www.rightmove.co.uk/pdf/p/hpi/House...ebruary2008.pdf

BTW, I think 10% is a little off the mark for any kind of 'correction to affordabilty'...

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Are the members of HPC classed as being partially sited. :rolleyes:

The members of HPC are increasingly multi sited. ;)

Edited by Timm

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Such falls are already achieved in asking prices.

http://www.propertysnake.co.uk/site/postcode/pe32

On sale nearly a year, reduced 20%

Agreed. An awful lot of properties that I have been monitoring are down by 10%, this is now the baseline reduction suggested by agents to sellers who are not having any luck. The trouble is for those sellers, as 2MB points out, an awful lot of other sellers are making 20% reductions. If a prospective buyer sees individual prices in an area having fallen by 20% will they think 10% is good enough? Of course these are just asking prices, I assume any sensible buyer (oxymoron at the moment) looking to get one of these already discounted properties might offer as a maximum 5 to 10% less than the asking price. So those that sell having reduced the asking price by 20%, may well eventually show as sold for 25% or even 30% less than what the seller may have originally perceived the market priceto be.

The other observation is that a 20% fall is sufficient to undo a previous 25% rise. So a house that was worth £80k goes to £100k, ie up 25%, then falls by 20% it goes back to £80k. If 30% reductions start appearing on the books, then that wipes out a previous 43% rise. In some areas, that is back to 2002 prices.

Edited by mikelivingstone

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Has anybody read the Times yesterday about selling your house? Their advise was to put your property on the market at 10% less than the valuation from an EA.

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http://www.mortgagestrategy.co.uk/cgi-bin/...h=401&f=402

But Miles says: “Any housing market correction will not impinge on the wider economy. GDP growth is expected to increase by 1% to 2% in the next year and although unemployment levels may rise, it would not be by much. I am not anticipating a recession in the UK.”

Presumably GDP growth will be being driven by public sector spending, and export growth once pound decline gets going.

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The "experts" were wrong when they said we were in a new paradigm where house prices only go up due to never ending demand through mass immigration and ever shortening supply. They were wrong when they started preaching the Lereahan Scenario (flat market) and they are wrong again when they tell us house prices are going down 10-20% over the course of the next couple of years.

20-30% this year. Maybe another 20% in 2009 and much the same in 2010. And that is if we avoid a depression. IMo, of course. :)

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I dont understand the maths they are using.

At the support level, the FTB puts down 10% say 10K is what they can afford, they earn a good 25K, banks are tight so will lend say 90k at best with 90% LTV ( even that is hard to find now)

That makes the FTB two bed flat about 90K.

Thats about 40% down from the current flat prices here (new builds).

That means 40% drops across the board roughly. NOW.

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Are the members of HPC classed as being partially sited,

"Partially sited" - That has to be the most Freudian of spelling/typographic errors of all time.

Partially sighted, or partially sited? Blinkered in their new media appreciation, or maybe still nomadic living in rented accommodation?

(Quite funny when you think about it.) :D

Edited by A.steve

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20-30% this year. Maybe another 20% in 2009 and much the same in 2010. And that is if we avoid a depression. IMo, of course. :)

I want that to be right - a lot... but I do find it difficult to envisage.

I'm content, at the moment, at my "Steve index" - where I use rightmove to search in areas I'd consider for houses I'd like to own... (as opposed to a short-term "ladder" investment) - I trust my taste not to change too rapidly.

In August 2007, the cheapest properties were asking about £325K to £350K; By January 2008 this had changed to £300K to £320K; By March 2008 we'd seen 5% reductions on the same houses I liked in January, and a (very few) new properties on the market... price range now £285K-£300K. So, I've seen a 15% correction myself in about 6 months.

I find it interesting, however, that for houses I'd not like to own, but would house me, the falls have been far more modest. I presume that this means that the "average" house price will fall by less than the "Steve Index".

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Very large fonts IMO are insulting.

Are the members of HPC classed as being partially sited, or it is just a matter of being pissed or over excitement by the poster, I really don`t know. :rolleyes:

I don't drink and am not overexcited and have more important things to be insulted about. :rolleyes:

In colour !

Nice.

*puts away her glasses and wishes everyone would make their fonts bigger :lol:

:lol:

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I dont understand the maths they are using.

At the support level, the FTB puts down 10% say 10K is what they can afford, they earn a good 25K, banks are tight so will lend say 90k at best with 90% LTV ( even that is hard to find now)

That makes the FTB two bed flat about 90K.

Thats about 40% down from the current flat prices here (new builds).

That means 40% drops across the board roughly. NOW.

... or a multi-year standoff of low turnover while prices slowly adjust

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The other observation is that a 20% fall is sufficient to undo a previous 25% rise. So a house that was worth £80k goes to £100k, ie up 25%, then falls by 20% it goes back to £80k. If 30% reductions start appearing on the books, then that wipes out a previous 43% rise. In some areas, that is back to 2002 prices.

Good observation never thought of it that way a good bear analysis.

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I am already seeing 10-15% cuts in asking prices.

What occurred to me when I was looking through Rightmove using property bee was that these price cuts

are futile because the problem is that potential buyers still wont be able to get a mortgage.

If a bank wont lend say 150K it makes no difference if the seller cuts the price to 120K, the lender is still not going to lend

if it doesn't have the funds.

Sellers may cotton on that to just keep on cutting the price is not going to make any difference so they may as well keep

the prices the same until the lenders go back to lending silly money.

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I am already seeing 10-15% cuts in asking prices.

What occurred to me when I was looking through Rightmove using property bee was that these price cuts

are futile because the problem is that potential buyers still wont be able to get a mortgage.

If a bank wont lend say 150K it makes no difference if the seller cuts the price to 120K, the lender is still not going to lend

if it doesn't have the funds.

Sellers may cotton on that to just keep on cutting the price is not going to make any difference so they may as well keep

the prices the same until the lenders go back to lending silly money.

Some people will HAVE to sell though. People become distressed sellers. People die. People move.

Those sales will set the new benchmark for a development or a street.

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Very large fonts IMO are insulting.

Are the members of HPC classed as being partially sited, or it is just a matter of being pissed or over excitement by the poster, I really don`t know. :rolleyes:

Well, judging by the number of priced out youngsters, I would say it is fair to desribe them as 'partially sited' - i.e. they do not have a site to call their own yet but are, presumably, living at someone else's site.

As for their eyesight - if they can read the standard font sizes on here, I think it is fair to say they are not partially sighted.

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Some people will HAVE to sell though. People become distressed sellers. People die. People move.

Those sales will set the new benchmark for a development or a street.

Indeed. Beginning to see more and more of this now. A place near us has been on the market for about 6 months now. Dropped 45k from 375k to 330k. We are registered with all the local agents because, you never know, the right property might come up. My wife had an email about the property today - vendors are top of chain - make an offer!

Others are going down too. A nice, fairly big detached place (with a decent garden) that flooded last year came on the market recently, completely refurbished downstairs. Cheap at 375k due to the flooding - it's just had a sale fall through and is now £335k. When you think people still want £235k for flats around here - it's beginning to look a bargain.

Others are sticking. The odd one is selling. Fall throughs seem commonplace. I know a couple of the local agents quite well - they are close to desperate and will admit frankly that they desperately need to get vendors to drop prices so they can earn a few bob. But, vendors are sticking it out - apart from the desperate ones.

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  • 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%



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