Double Whammy Could Send House Prices Plunging

[Guest Charlie The Tramp]

Rising interest rates and the introduction this summer of Home Information Packs could finally trigger the long-predicted crash in the property market, experts are warning.

The cost of buying a home has outpaced wage rises to such a degree that a price fall - or correction - is now said to be inevitable.

The Bank of England has increased interest rates, which are currently 5.25 per cent, three times since August.

There are fears it will add another quarter point to the base rate as early as Thursday, hitting homeowners further.

Double whammy could send house prices plunging

Industry leaders also believe that when HIPs - effectively a logbook for the home - come into effect from June 1, the market could flounder.

[It is different this time]

Double whammy could send house prices plunging

I am now considering to buy dailymail if they keep up the good work I like the following

" The cost of buying a home has outpaced wage rises to such a degree that a price fall - or correction - is now said to be inevitable. "

Lets hope that Jo public can read the small print!

[Garry AKA Pod]

I am now considering to buy dailymail if they keep up the good work I like the following

" The cost of buying a home has outpaced wage rises to such a degree that a price fall - or correction - is now said to be inevitable. "

Lets hope that Jo public can read the small print!

I think Joe Public has trouble reading the big print sadly.

[Broken Fan]

I am now considering to buy dailymail if they keep up the good work I like the following

" The cost of buying a home has outpaced wage rises to such a degree that a price fall - or correction - is now said to be inevitable. "

Lets hope that Jo public can read the small print!

Love the daily mail, always have done- keeps my spleen plump and healthy.

But for those of you who detest the mail/express for their constnt ramping, forgive them they are only trying to sell papers. And the precise moment it becomes official that house prices are dropping they will do exactly the same anti ramping. The headlines will be nothing but Housing Crash for a good disaster sells papers too. The headlines every other day will tell you exactly how much they have dropped, how much out of pocket you are per week, with lashings of job loss stories to top it off. And those of you who can stomach it after a year you will read endless articles on 'how due to demographic changes that property will NEVER be worth any thing again EVER'. **

** Of course these headlines wont matter one jot to the BTL brigade or those 'In Property' because they have balls of steel and Are in it for the long term! as property only ever goes up. ( They're not making any more of it you know)

[lulu]

Double whammy could send house prices plunging

Right I am probably being thick I know but can someone explain to me how/why HIPS are going to have such an alledged big impact on property prices?

[expatowner]

Double whammy could send house prices plunging

So its back to interest rates and A.N. Other factor then?

Does this mean thats its definately not going to be caused by:

Not tightening credit.

Not NuLab.

Not repossession statistics.

Not Gordon and his bogeys

Not the sub prime market in the USA.

Not the baby boomers.

Not religion.

Not BTL's

Not immigration

Not a massive stock market sell off.

Not estate agents

etc

???????????????????

Edit: to say that was an RB'esque opening post if ever there was one

Edited April 3, 2007 by expatowner

[dogbox]

Double whammy could send house prices plunging

The last crash followed a double whammy, first Tax relief (MIRAS) being withdrawn then interest rate rises.

The big question is whether the BOE have the guts, indeed foresight to administer the painful medicine now.

On the other hand............ my submarine hypothesis may yet prove watertight (gentle valve adjustments by the BOE will keep the sub more or less on a steady course. In other words has Mankind tamed economic cycles just as they tamed the land?)

[expatowner]

On the other hand............ my submarine hypothesis may yet prove watertight (gentle valve adjustments by the BOE will keep the sub more or less on a steady course. In other words has Mankind tamed economic cycles just as they tamed the land?)

Can I join you in your submarine?

P.S. Is it yellow?

[Peter & The Wolf]

On the other hand............ my submarine hypothesis may yet prove watertight (gentle valve adjustments by the BOE will keep the sub more or less on a steady course. In other words has Mankind tamed economic cycles just as they tamed the land?)

Dogbox, your posts always make sense. I agree with most of what you say.........................but you're having a laugh with this one aren't you?

[liquid]

On the other hand............ my submarine hypothesis may yet prove watertight (gentle valve adjustments by the BOE will keep the sub more or less on a steady course. In other words has Mankind tamed economic cycles just as they tamed the land?)

Credit to you DB and your unfettered optimism. If it’s any consolation if I was on a limping submarine about to be torpedoed, I’d much rather spend my last moments in your company. I’m sure we’d go down laughing.

[lets get it right]

Right I am probably being thick I know but can someone explain to me how/why HIPS are going to have such an alledged big impact on property prices?

(After 1st June 2007)

Mr Vendor.

Hello Mr Estate Agent, thanks for coming around to value my home.

Mr Estate Agent

Blah, blah, blah, we would market this property for £225k.

Mr Vendor

What are your fees?

Mr Estate Agent

They are the amount we charge! Ba boom!

It is now law that you must have prepare a Home Information Pack before you can put a house on the market. This has to be provided by you but we will prepare it and include it in our fees. So, we'll charge you 2%. But, if you decide not to sell, or the property does not sell, for whatever reason, if you take it off the market or instruct another estate agent instead of us, you will be liable for the cost of the HIP which is £695.00 - because it has cost us money to prepare it and we're not prepared to be bigger mugs than we already are.

Mr Vendor

FECK THAT! Are you telling me if I just want to try my property on the market and it doesn't sell, it's going to cost me £695

Mr Estate Agent

Yes

Mr Vendor

Well, feck that for a game of soldiers. I and the estimated 20% to 30% of vendors who put their properties on the market on a whim, to 'test the market', to find out 'what it's really worth', to see if 'we'll get enough for it to allow us to trade up' etc will not put our house on the market.

Mr Estate Agent

We've been telling the daft government ever since they came up with the idea of HIPs that that is what would happen. And we told them that it will restrict supply further and either cause the whole market to stagnate and crash, or it will put prices up even further. Either way, it is not good news.

[defecis]

yesterday the express was going on about how there was about to be a housing boom as a result of loads of people putting their houses on the market this spring.

wonder if there's any connection between that and the mail's "crash" story.

we've had these same mixed messages for a while now.

have to say though asking prices are quite ridicoulous now. seem to be 20% up yoy in my area of london in a year, even at the bottom end. i expect that froth to come off pretty quick as the market has ground to a standstill pretty much and very few can afford to trade up within their own areas. good if you want to MEW though, party time.

[Johnny Cash]

The last crash followed a double whammy, first Tax relief (MIRAS) being withdrawn then interest rate rises.

The big question is whether the BOE have the guts, indeed foresight to administer the painful medicine now.

On the other hand............ my submarine hypothesis may yet prove watertight (gentle valve adjustments by the BOE will keep the sub more or less on a steady course. In other words has Mankind tamed economic cycles just as they tamed the land?)

What?

if anyhthing economic cycles are becoming more extreme.

As for "taming the land", to what bit were you referring?

Melting Polar ice caps?, Gulf stream threatening to shut down? Increasingly violent hurricanes in a longer season? Increasing desertification? Record droughts in Australia? Need I go on?

[stuckmojo]

...and, when the EAS think that they could give "free HIP" just by sticking those £700 on top of the already inflated price and get away with it, it's wehere they will go wrong. badly

[TTID]

Right I am probably being thick I know but can someone explain to me how/why HIPS are going to have such an alledged big impact on property prices?

State of the market today, it won't need HIPS. Fish and chips could do it.

[music man]

What a year it's been, Champagne anyone.

I'm gonna celebrate. (actually with blackcurrant flavoured water.)

Cheers - chin chin...

[karen1000]

The 'last crash' that would be the one 1990-1996 approx? MIRAS was withdrawn in 1999-2000.

The last crash followed a double whammy, first Tax relief (MIRAS) being withdrawn then interest rate rises.

The big question is whether the BOE have the guts, indeed foresight to administer the painful medicine now.

On the other hand............ my submarine hypothesis may yet prove watertight (gentle valve adjustments by the BOE will keep the sub more or less on a steady course. In other words has Mankind tamed economic cycles just as they tamed the land?)

[wickywackywoo]

Double whammy could send house prices plunging

Soon the world will be minnnnnnnnnnnnnnnne.

Regards

Somebody with Enormous Wedges of Cash in the Bank and no Property

[Guest Charlie The Tramp]

The 'last crash' that would be the one 1990-1996 approx? MIRAS was withdrawn in 1999-2000.

I believe he was referring to Double Miras but in the heat of the moment it`s the time when typos normally occur.

As for single Miras, with the gradual reduction until its abolition, it was not worth a carrot.

[deus ex machina]

The last crash followed a double whammy, first Tax relief (MIRAS) being withdrawn then interest rate rises.

The big question is whether the BOE have the guts, indeed foresight to administer the painful medicine now.

On the other hand............ my submarine hypothesis may yet prove watertight (gentle valve adjustments by the BOE will keep the sub more or less on a steady course. In other words has Mankind tamed economic cycles just as they tamed the land?)

I rather think a magical mystery tour might be your more likely journey unless that sub of yours is indeed painted yellow.

Either way your appreciation of recent financial history seems a little wonky. The scrapping of MIRAS for joint buyers who hitherto enjoyed relief individually actually precipitated the boom since it was stupidly announced well in advance of its introduction and stoked further an already over heated market. The crash that superseded the boom reflected the recession that afflicted the UK for most of the Nineties and was not directly caused by any single factor such as the abolition of tax relief and/or interest rates.Ultimately, unemployment was the greatest driving force and a static depressed housing market was simply a symptom of that.

When will people get it into their thick skulls that there is no silver bullet likely to deflate house prices. Only a recession can do that but first a significant sustained rise in unemployment must develop.

Careful what you wish for?

[Guest Charlie The Tramp]

In the last boom within 6 years, my property literally tripled in price and what followed in the HM was entirely expected as I saw it at the time. To buy my property in 1990 would have cost 6x my earnings. Today at my last salary only 7x.

[lets get it right]

...and, when the EAS think that they could give "free HIP" just by sticking those £700 on top of the already inflated price and get away with it, it's wehere they will go wrong. badly

I deal with EAs. I have not met one yet who is willing to take the HIP on the chin and regard it as another overhead if a vendor pulls out. They already get stuffed for the price of newspaper adverts, mailings, listings on web portals etc i.e. they believe they take quite enough of a risk already. The best bit about HIPs is the fact that they're out of date the second they are produced. Would you accept the search in a HIP produced say as recently as two months ago. I know I wouldn't. No Home Condition Report. Complete load of toss forced on the house sellers by an imcompetent and arrogant bunch of know-alls in the government.

[Casual Observer]

I deal with EAs. I have not met one yet who is willing to take the HIP on the chin and regard it as another overhead if a vendor pulls out. They already get stuffed for the price of newspaper adverts, mailings, listings on web portals etc i.e. they believe they take quite enough of a risk already. The best bit about HIPs is the fact that they're out of date the second they are produced. Would you accept the search in a HIP produced say as recently as two months ago. I know I wouldn't. No Home Condition Report. Complete load of toss forced on the house sellers by an imcompetent and arrogant bunch of know-alls in the government.

Surely, if HIPS were to have any effect at all it will be to deter vendors from putting their homes on the market. Which will lead to a shortage of houses on the market, which will lead to upward pressure on prices?

[Casual Observer]

I believe he was referring to Double Miras but in the heat of the moment it`s the time when typos normally occur.

As for single Miras, with the gradual reduction until its abolition, it was not worth a carrot.

Yes, double MIRAS was previously available to unmarried couples. The problem was not so much caused by its abolition, but by the fact that its abolition was announced but then deferred for about 6 months. Cue an inevitable rush for unmarried couples to buy a house before the deadline came into effect, and the sudden almost complete drop in activity that followed!

Edited April 3, 2007 by Casual Observer

[Kris]

Surely, if HIPS were to have any effect at all it will be to deter vendors from putting their homes on the market. Which will lead to a shortage of houses on the market, which will lead to upward pressure on prices?

so how will this affect investors?