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silver surfer

Prices Falling Faster Than Halifax/nationwide Say?

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I'm a STR, I've recently been registering my interest with EA's, saying I'm a cash buyer, but only at 30% or less below peak prices.

Initially the response was fairly frosty, but recently the attitude of EA's has been changing dramatically.

In fact it's difficult to reconcile the Halifax and Nationwide statistics, suggesting falls of only about 5 or 6% from peak prices, with the reality that I'm seeing, and I'm talking about four or five bed family homes in the south-east rather than new-build apartments. I'm not saying I'm being offered firm properties at 30% below the asking price yet, but there's no doubt that for a cash buyer there's now significant room to negotiate, and with the EA smelling a commission they're very much on the side of the buyer in talking the seller down. My conclusion is that right now I'd be confident of getting a property at 20% below peak 2007 prices.

But even 20% off is a lot different to the Hallifax/Nationwide figures. So why the difference?

It could be that they're both lagging indicators, looking backwards at May and June when it's only really in July that I've sensed the big change in EA attitudes.

Alternatively (and please correct me if 've got this wrong) it could be that both the Halifax and Nationwide are capturing only mortgage based sales, and cash buyers are able to get significantly better deals. Although I'd have thought that anyone with a firm mortgage offer, or with a substantial deposit, would have been in virtually the same position.

I went into this simply to make initial contact with EA's, thinking it'd be at least 12 months before I seriously think about buying. It probably will be (because if 20% price cuts are available now then 30-40% cuts are surely in prospect), but I'm still struggling to rationalise what's being reported by the "Halliwide" market indices with what I'm experiencing first hand.

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Yes, there is clear evidence that some places are already selling for 25% off peak.

For example this poster.

http://boards.fool.co.uk/Message.asp?mid=11136031

But the indices are about averages, and these mask a heck of a lot of variation.

Personally I feel that if a property has already lost 25% off peak then a 50% nominal drop is possible in that area and section of the market before we see the end to the downturn.

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I was asked this afternoon to witness a document relating to my next-door neighbours' sale of a 'spare' property. Apparently, it sold in 6 weeks at its asking price.

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I thought it was 6% YOY, we have a few months to go before YOY is at the Sept/Oct peak

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as y'all say - 'tis the averages wot does it.

on my property bee the discounts are always at least 10%, often 20%, but there's also many on there that have been for sale for donkey's that just aren't budging on the price - probably still the majority on my searches.

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One thing that can have an effect is the spread of property types selling. In Northern Ireland our crash started about 9 months before the UK as a whole. It was totally masked at the beginning during 2007 because small properties stopped selling first, increasing the average size of a sold property. Some indices were showing that 'average' prices were rising while in the same period estate agents were witnessing transaction numbers falling off a cliff.

But then it meant that later on (in 2008) when some of the cheaper properties started to sell at lower prices, we have been seeing huge falls in the indices. The Nationwide has registered 18.6% down in the first six months of 2008.

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It's not only Location Location Location

It's also:-

Auctions Auctions Auctions.

* www.barnardmarcusauctions.co.uk

* Tel: 0208 741 9990

* For sale by auction on the 29th July 2008

* The auction will be held at The Café Royal, 68 Regent Street, London, W1B 5EL

but it certainly isn't high st EA & vendor in denial

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I thought it was 6% YOY, we have a few months to go before YOY is at the Sept/Oct peak

Good point, you're absolutely right, but realistically I can't see the declines jumping more than threefold in the next couple of months.

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Yes. last year's 300K property is now 250K. Savills sent me some printed details with a not too subtle sticky label over the previous price (299,950), now 249,950. This is the pattern I have seen in East Midlands, in that price bracket. The stats will take time to catch up with reality on the ground.

Gordon did say in March that his priority would be to get house prices moving again. He's delivered exactlly as promised.

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But even 20% off is a lot different to the Hallifax/Nationwide figures. So why the difference?

Simple. THEY ARE LYING. I don't understand why people imagine that just because a corporation is large, it wouldn't lie. After all, they are all in the soup through lying, either directly, or by proxy, through manipulation of income multiples on mortgage applications, so why would they not lie about anything else? I think we tend to be a bit precious and over cautious about stating the fact that most banking business lie constantly about everything PR related. Lying includes wilful manipulation of otherwise sound statistics in order to massage the true picture.

Monthly lenders' stats are always lagging way behind the real current position, but in addition they (knowingly) report skewed statistics for their own convenience, which do not account for back handers, "cash back" dealing, and other anomolies like transactions which are distorted in favour of the market of essentially swapping properties through re-location. The tougher the lower end of the market becomes, the less it influences the transaction reports further up the pyramid.

If you examine all the official stats about the 90's crash, the same occured then, and it is clear that nearly all lenders' reports and PR spin then was blatant lying.

VP

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It should be no surprise that people feel the correction has started but the bulk of asking prices have not moved... it always happens this way. I have kept an eye on the areas I own in and they don't seem to have moved much from an asking point perspective... but my personal view for instance on my property in London is that IF I were to find a buyer now vs say last july the price difference is going to be something like £200k... Maybe more.. the peak in london was truly massive... and this property moved from around £650k in 2004 to around £1.1 in 2007... crazy really. I am sitting it out as I want to keep it long term and it pays me about £40k in rent.... I've owned it for ages so the price is kind of irrelevant and I know we probably won't see last years levels again for the next seven to ten years probably.

My bet is that the agents that remain will instruct their clients that the game is up and prices will need to be reduced starting in Sept and thats when you'll see asking prices generally reflecting a fall.... lets not forget there are a whole load of late STR'ers trying to sell property priced at peak, many of these guys don't need to sell and I suspect when pushed by their agent to drop the price they may well remove their properties from the listing... I know 4 people doing this now so there must be thousands upon coutless thousands like that.... so from september I suspect we'll see lower asking prices and actually a drop off in total properties on the market (although the figures for properties for agents won't fall becasue such a high proportion of agents are closing their doors)

Whilst the current falls are apparently very steep there are a lot of regional variations clearly, and I am still far from convinced that falls of a huge magnitude will be felt everywhere as I do still feel its going to be certain types of property (new build flats etc) and certain areas (poor) that will lead the way alongside some regions as a whole (northern Ireland as an example)......... it'll be interessting to watch it all happen, even if I suppose on paper I shall feel a little poorer as we go along.

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Simple. THEY ARE LYING. I don't understand why people imagine that just because a corporation is large, it wouldn't lie. After all, they are all in the soup through lying, either directly, or by proxy, through manipulation of income multiples on mortgage applications, so why would they not lie about anything else? I think we tend to be a bit precious and over cautious about stating the fact that most banking business lie constantly about everything PR related.

I don't think that the indices are manipulated.

All the indices are very faulty tools. As such, they are never 'correct' but are only acting as rough indicators as to where things are going. This is why its necessary to weigh up the indicators (hence the term indices) and make a judgement.

The fact that its quite clear than some houses are selling already for 25% off peak doesn't mean the indices are wrong, or fibs. It just shows the inaccuracy of the measurement tools that are available.

I do think that the banks et al. are exceedingly creative with their interpretation of the figures. This is where most of the fibbing comes in. There may even be subtle massaging of figures, or perhaps subtle shifts in interpretations over time. I don't think that this needs to invoke proper lying.

The lying comes in when things get a bit worse, eg: with NR near to the end. Its when the danger of being caught lying is less than the danger of not lying that the higher levels of mendacity kick in.

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The answer to this is that what agents now think is an achievable price for many properties is 25% lower than it was in August.

At the moment only 1 property in 15 properties that is listed for sale actually gets sold. My betting is that the ones that do are much better than average for the price.

The problem for the other vendors who can't sell is their homes are either just above average, average or of below average quality. Right now these are not selling and won't until these vendors drop their price. Some are now doing this and this will feed into the indexes soon. The death slide in the Haliwide chart will get steeper.

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I don't think that the indices are manipulated.

All the indices are very faulty tools. As such, they are never 'correct' but are only acting as rough indicators as to where things are going. This is why its necessary to weigh up the indicators (hence the term indices) and make a judgement.

The fact that its quite clear than some houses are selling already for 25% off peak doesn't mean the indices are wrong, or fibs. It just shows the inaccuracy of the measurement tools that are available.

I do think that the banks et al. are exceedingly creative with their interpretation of the figures. This is where most of the fibbing comes in. There may even be subtle massaging of figures, or perhaps subtle shifts in interpretations over time. I don't think that this needs to invoke proper lying.

The lying comes in when things get a bit worse, eg: with NR near to the end. Its when the danger of being caught lying is less than the danger of not lying that the higher levels of mendacity kick in.

I take on all your points, but we're left with......lying aren't we? If you KNOW that the stats you are dealing with are unreliable, and if you KNOW that indices have built in indicators which imply that the real and current situation is different, then even bothering to publish such flawed stats, is....LYING. Do you wish that we disuss a definition of what lying is? Quite happy to.

VP

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Guest barebear
I take on all your points, but we're left with......lying aren't we? If you KNOW that the stats you are dealing with are unreliable, and if you KNOW that indices have built in indicators which imply that the real and current situation is different, then even bothering to publish such flawed stats, is....LYING. Do you wish that we disuss a definition of what lying is? Quite happy to.

VP

Lying is used to gain an advantage or to avoid an embarrasment.

Everybody does it to a greater or lesser extent,from the white lie to the pshycopath.Then you have all the complimentary lies and the diplomatic lies.

I always used to hate it when my girlfriend asked which skirt her bum looked bigger in. She forced me to lie,so there are forced lies too.

Edited by barebear

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I went into this simply to make initial contact with EA's, thinking it'd be at least 12 months before I seriously think about buying. It probably will be (because if 20% price cuts are available now then 30-40% cuts are surely in prospect), but I'm still struggling to rationalise what's being reported by the "Halliwide" market indices with what I'm experiencing first hand.

I'm not so sure... given the Halliwide is a very averaged out index. For e.g. I was talking to a mate yesterday that lived in a new build in Suffolk town. He was looking to move 5 miles up the road into a bigger house in a small village near to where he works. He got an EA valuation for his existing house and that had significantly dropped, but the houses in the village he was looking to move to had actually risen slightly in the past year. He can no longer afford to move now.

I think there is a danger of looking at a particular house or even a particular area, noticing the big drops and concluding that the trend is repeating accross the country.

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  • 396 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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