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Fed Up - Will We Truly See A House Prie Correction

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It just seems like things are starting to go back the other way, the US situation is getting massive baking from gov, oil is dropping in price and morgage lenders are starting to cut rates. I really thought we were goingto see a return to common scence but now it looks like things are getting back to normal.

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It just seems like things are starting to go back the other way, the US situation is getting massive baking from gov, oil is dropping in price and morgage lenders are starting to cut rates. I really thought we were goingto see a return to common scence but now it looks like things are getting back to normal.

Don't worry it is happening, nothing is going back to how it was, they might be cutting interest rates but the big ship hpc has turned , in the early 90's interest rates were only high for a short while , then were drastically cut well below what anyone had paid in the eighties but houses still dropped for years.

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It just seems like things are starting to go back the other way, the US situation is getting massive baking from gov, oil is dropping in price and morgage lenders are starting to cut rates. I really thought we were goingto see a return to common scence but now it looks like things are getting back to normal.

Crazy world we live in when the madness is considered "normal". end of days, methinks.

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Guest Steve Cook
It just seems like things are starting to go back the other way, the US situation is getting massive baking from gov, oil is dropping in price and morgage lenders are starting to cut rates. I really thought we were goingto see a return to common scence but now it looks like things are getting back to normal.

patience grasshopper...

Patience... ;)

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Guest Steve Cook
That reminds me (totally OT) of this from Mad magazine, long ago:

[Master offers ball on the palm of his outstretched hand]

Master: When you can snatch the ball from my still hand grasshoper you will be ready.

[grasshopper instantly snatches the ball from his hand]

Master: Best of three.

:lol:

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patience grasshopper...

Patience... ;)

Steve Cook has it right, IMHO. Inflation, confidence bypass and growing unemployment are in no way suggesting a return to 2006 levels, anytime soon.

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Unemployment is the key, if we have large scale mass unemployment then big house falls. If the employment figures remain constant householders will tough it out and just not move.

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Guest Steve Cook
Unemployment is the key, if we have large scale mass unemployment then big house falls. If the employment figures remain constant householders will tough it out and just not move.

that's it

It will take a large increase in unemployment to push the market into the kind of falls many on here are hoping for.

Unemployment is what we are going to get.

On a massive scale

Edited by Steve Cook

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In a falling market the volume of sales falls until the only sales are from the forced sellers; death, divorce, redundancy, repossession, relocation. Everyone else sits tight (wrongly - because the place they'll move to would also have dropped).

These will drive the market price. Prices are defined at the margins, as someone on here said last week.

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It just seems like things are starting to go back the other way, the US situation is getting massive baking from gov, oil is dropping in price and morgage lenders are starting to cut rates. I really thought we were goingto see a return to common scence but now it looks like things are getting back to normal.

Baking is probably the right word, as in cooking the books.

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In a falling market the volume of sales falls until the only sales are from the forced sellers; death, divorce, redundancy, repossession, relocation. Everyone else sits tight (wrongly - because the place they'll move to would also have dropped).

Not entirely wrongly - in this market many sellers are unrealistic and so they won't easily be able to find a realistically priced house to move to. They could rent, of course.

These will drive the market price. Prices are defined at the margins, as someone on here said last week.
True. I don't even think you need mass unemployment. The margins define the price, whether most people are forced to sell or not. Edited by mirage

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It just seems like things are starting to go back the other way, the US situation is getting massive baking from gov, oil is dropping in price and morgage lenders are starting to cut rates. I really thought we were goingto see a return to common scence but now it looks like things are getting back to normal.

Urm, what planet are you on? Prices are falling at their fastest rates ever. 2008 is going to turn out to be the 'worst' year ever with prices down well over 10%. If you're expected 40% drops in a quarter you're dreaming, what we do have is already record breaking.

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It just seems like things are starting to go back the other way, the US situation is getting massive baking from gov, oil is dropping in price and morgage lenders are starting to cut rates. I really thought we were goingto see a return to common scence but now it looks like things are getting back to normal.

This is a classic relief rally. The avalanche of bad news just slows for a second and there is a bounce.

Don't worry, there is no way houses are going to bounce any time soon. Mortgage approvals down by two thirds year on year.

Two thirds.

Interest rates at this point are largely immaterial to whether a serious crash will play out. Sentiment has reversed. Lending criteria have permanently tightened. The economy is screwed. The crash is locked in for some time to come. It's just a matter of how far and how fast. And every factor you can look at is about as bad as it could get.

Edited by mirage

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I am no expert , I am just commenting on what I see .

Looking on rightmove (with the help of propertybee ,of course ) I am seeing houses that would have been priced at around £170-180,000 a year ago , beong advertised for £120-130,000 . They are still not selling .

I reckon that the property market will fall further than we thought possible .

In my opinion , this is just the start .

See where it is in a years time

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It just seems like things are starting to go back the other way, the US situation is getting massive baking from gov, oil is dropping in price and morgage lenders are starting to cut rates. I really thought we were goingto see a return to common scence but now it looks like things are getting back to normal.

Oil's dropping a bit (2p off a litre of petrol at the local garage... oooh missus!), but my leccy bill's just gone up 17%. Nothing to write home about.

When it comes to the mortgage rates, look at it like this...

A flat-buying FTB around my neck o' the woods would have had to have mustered up little more than a signature this time last year, plus some hefty repayments. Now, they'll probably have to find a couple of grand stamp duty, and about £20k as a deposit (minimum), plus quite possibly a couple of grand as an arrangement fee... and the repayments themselves with be noticeably higher.

For what it's worth, the important bit of that lot is the deposit. Plucking £20k out of your ass isn't that easy for the vaste bulk of potential FTBs, and probably isn't even necessarily all that simple for a fair few of the general prudent types we have on here.

As others have said, patience is the game now one of patience (okay, it was before, but it's Happy Patience now). For a nice, easy to visualise model of economic growth and shrinkage... picture this...

You walk past an office block on the way home from work every night. When you walk past it at night, about half the lights are on. When things are 'booming', every other week another light comes on. You don't notice it at the time, but if you were to take a couple of photos, years apart, you'd see it had gone from partially lit to a blaze of colour. The same applies to shrinkage. You don't just walk past it one day and it's in darkness, but every few weeks another light fails to come on.

I use the lights-in-office-windows analogy for what I consider to a Bloody Good Reason. Quite simply it illustrates the "collectively fuzzy, individually boolean" nature of economic shrinkage really, really well. When things go tits up (in the normal, Western, cyclical kinda tits up way), not everyone suffers at the same time. Some lose jobs at the start, some lose jobs later on, some just aren't affected at all, so there's never a huge "all the lights go out" moment. What there is is a series of horrible personal "my light's just gone out" moments over a number of years. Whilst the effects of light outage are terrible for the individuals, the general darkening effect is actually pretty slow, and very difficult to spot from one day to the next.

Forget hyperinflation, forget peak oil, forget Israel nuking Iran, forget any of that stuff. It's just not happening right here, right now. What is happening is the bloke a few doors down is sweating on his mortgage reset and cutting back on retail spend, the brickie who's been coining it in is now hunting around for a new job, the 40-somethings over the road who were thinking of MEWing £10k for that Dream Kitchen next year are eyeing up their current kitchen and thinking £20 worth of emulsion instead, and the pensioner at no. 22 has decided to give the Bingo a miss for a bit to save up for the winter's fuel.

Think the little cutbacks don't matter? Think again. The difference between Boom and Bust is a few percent.

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Oil's dropping a bit (2p off a litre of petrol at the local garage... oooh missus!), but my leccy bill's just gone up 17%. Nothing to write home about.

When it comes to the mortgage rates, look at it like this...

A flat-buying FTB around my neck o' the woods would have had to have mustered up little more than a signature this time last year, plus some hefty repayments. Now, they'll probably have to find a couple of grand stamp duty, and about £20k as a deposit (minimum), plus quite possibly a couple of grand as an arrangement fee... and the repayments themselves with be noticeably higher.

For what it's worth, the important bit of that lot is the deposit. Plucking £20k out of your ass isn't that easy for the vaste bulk of potential FTBs, and probably isn't even necessarily all that simple for a fair few of the general prudent types we have on here.

As others have said, patience is the game now one of patience (okay, it was before, but it's Happy Patience now). For a nice, easy to visualise model of economic growth and shrinkage... picture this...

You walk past an office block on the way home from work every night. When you walk past it at night, about half the lights are on. When things are 'booming', every other week another light comes on. You don't notice it at the time, but if you were to take a couple of photos, years apart, you'd see it had gone from partially lit to a blaze of colour. The same applies to shrinkage. You don't just walk past it one day and it's in darkness, but every few weeks another light fails to come on.

I use the lights-in-office-windows analogy for what I consider to a Bloody Good Reason. Quite simply it illustrates the "collectively fuzzy, individually boolean" nature of economic shrinkage really, really well. When things go tits up (in the normal, Western, cyclical kinda tits up way), not everyone suffers at the same time. Some lose jobs at the start, some lose jobs later on, some just aren't affected at all, so there's never a huge "all the lights go out" moment. What there is is a series of horrible personal "my light's just gone out" moments over a number of years. Whilst the effects of light outage are terrible for the individuals, the general darkening effect is actually pretty slow, and very difficult to spot from one day to the next.

Forget hyperinflation, forget peak oil, forget Israel nuking Iran, forget any of that stuff. It's just not happening right here, right now. What is happening is the bloke a few doors down is sweating on his mortgage reset and cutting back on retail spend, the brickie who's been coining it in is now hunting around for a new job, the 40-somethings over the road who were thinking of MEWing £10k for that Dream Kitchen next year are eyeing up their current kitchen and thinking £20 worth of emulsion instead, and the pensioner at no. 22 has decided to give the Bingo a miss for a bit to save up for the winter's fuel.

Think the little cutbacks don't matter? Think again. The difference between Boom and Bust is a few percent.

bump..

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I reckon the major falls in prices will happen once there is mass repossessions, with the repossessed properties flooding the market and driving prices through the floor.

The number of people in 3 months arrears is currently well up, and will increase further. A lot of the banks at the moment will be waiting, trying to hold off taking extreme action (repo) as it is bad PR, with pressure from government & other organisations saying give people a chance to keep their house etc. After a while the banks will start to lose patience & say "I'm sorry mr borrower that we're kicking you out on the street, but you owe me money and the only way I'm getting it back is by selling your house now before the house market drops any more"

CML stats....

In 1991 75,500 properties were taken into possession which was 0.77% of all home loans (the peak of the repo rate).

Today if numbers peak at 0.77% of all loans repossessed that means about 91,000 properties. As the income multiples are much worse now than in early 1990s I'd say it is a pretty safe assumption that more people have borrowed more than they can afford, meaning the total percentage will be more than 0.77% and our annual repo rate will exceed 100,000.

The effect of this amount of repossessed properties on the market will be hugely negative for the average house price

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It just seems like things are starting to go back the other way, the US situation is getting massive baking from gov, oil is dropping in price and morgage lenders are starting to cut rates. I really thought we were goingto see a return to common scence but now it looks like things are getting back to normal.

It's all happening as I predicted, this is the calm before the storm - shares are rising again, commodities falling - wait until the second quarter 2009, that's when the storm hits - share prices will fall, commodity prices will rise steadily, house price will drop like stones!

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After a while the banks will start to lose patience & say "I'm sorry mr borrower that we're kicking you out on the street, but you owe me money and the only way I'm getting it back is by selling your house now before the house market drops any more"

The governement have made this even more difficult for themselves by buying one of the most risky loan portfolios going.

If prices really do drop as dramatically as people are suggesting, the banks may well think they are better off renegotiating the loans down as this would still get them a better return than repossession if the repossessee was in serious negative equity.

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The effect of this amount of repossessed properties on the market will be hugely negative for the average house price

That would kick the old 'supply and demand' routine into the long grass for a bit.

the banks may well think they are better off renegotiating the loans down

I think they will go for repossesion, rather than get involved with their borrowers on a case by case basis- the admin cost would be pretty high to do this- and they will go for the quick fix option.

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Guest DissipatedYouthIsValuable
It just seems like things are starting to go back the other way, the US situation is getting massive baking from gov, oil is dropping in price and morgage lenders are starting to cut rates. I really thought we were goingto see a return to common scence but now it looks like things are getting back to normal.

********.

The fun is just beginning.

AWOOGA.

Give it up. There is a limit to how much can be nicked from the next generation before you've completely cored out the economy.

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  • 399 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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