Sunday, Oct 22, 2006

Stuff Like This Is Despressing BUT ...

Times Online: First-time buyers left stranded as house prices rise by 11 per cent

A depressing article for potential FTBs like me. However, the titainium shield of high house prices, economic performance, might have a crack in it afterall. See "The result is record prices but on a low turnover, as fewer homeowners can afford to trade up, which is sustainable unless there is a serious economic downturn meaning when there is a recession, house prices will not be sustainable. Roll on the recession.

Posted by talking rot @ 08:19 PM (553 views)
Add Comment
Report Article

6 Comments

1. little professor said...

It's not so bad news. This is yet another survey looking at ASKING prices - it's a reflection of people's greed, not what houses actually go for. The fact that volumes are low indicates that not many people are buying at those ridiculous prices - thus prices need to come down before buyers will return to the market.

Of course, once prices start to come down, buyers will hold off even longer to see if they can get an even better deal 3, 6 or 12 months down the line. And so the crash begins.

Have faith my friend..... ;)

Monday, October 23, 2006 01:07AM Report Comment
 

2. bidin'matime said...

Little P - I agree entirely - I wrote the following in February this year and it still holds true:-

"Of course, if prices start to fall, speculative investors will keep away completely. But it doesnt necessarily need them to sell just the removal of the buying pressure will reduce prices.

Maybe not enough to cause prices to crash - not on its own, anyway. But add the bunching effect and you get a real slow down. Think of a motorway, with everyone zooming along at full speed. Then something slows someone down and everyone bunches up behind them. Pretty soon, everything grinds to a halt. The only way to avoid stagnation is to slow everyone down to a steady speed, like they do on the M25 in rush hour.

Well, its similar in the property market, which depends on a steady flow of buyers to keep prices stable. The average time spent living in a particular house is around 6 years - if everyone rushes at the same time to climb as far as they can up the property ladder, then shortly afterwards there will be a lull in the market as they all await their next move. However, having overstretched themselves to get on the ladder, some will inevitably find that they can no longer afford their commitments and will have to sell but with no buyers around, they will have to take what offers they can get and market prices will fall to reflect this."

It's just a matter of time.

Monday, October 23, 2006 08:25AM Report Comment
 

3. Bidin'matime said...

Little P - I agree entirely - I wrote the following in February this year and it still holds true:-

"Of course, if prices start to fall, speculative investors will keep away completely. But it doesnt necessarily need them to sell just the removal of the buying pressure will reduce prices.

Maybe not enough to cause prices to crash - not on its own, anyway. But add the bunching effect and you get a real slow down. Think of a motorway, with everyone zooming along at full speed. Then something slows someone down and everyone bunches up behind them. Pretty soon, everything grinds to a halt. The only way to avoid stagnation is to slow everyone down to a steady speed, like they do on the M25 in rush hour.

Well, its similar in the property market, which depends on a steady flow of buyers to keep prices stable. The average time spent living in a particular house is around 6 years - if everyone rushes at the same time to climb as far as they can up the property ladder, then shortly afterwards there will be a lull in the market as they all await their next move. However, having overstretched themselves to get on the ladder, some will inevitably find that they can no longer afford their commitments and will have to sell but with no buyers around, they will have to take what offers they can get and market prices will fall to reflect this."

It's just a matter of time.

Monday, October 23, 2006 08:28AM Report Comment
 

4. Cstanhope707 said...

The other interesting thing to point out is that with the boom in overseas property investment the UK Property market is effectively being outsourced overseas in a similar fashion to what happened with Indian IT outsourcing companies depressing the IT salaries in the West. The smart professional investors "those that know what they are doing " unlike the BTL amatures are already making moves in this direction and selling up in the UK. E.g look at the price increases in Poland. The resultant effect of this will be of course that it will be no longer worth it for Polish plumbers etc to come here to work for minimal wages only to find they can now not get on the property ladder in their own countries. Thus less workers and more Professional Investors moving overseas leaves BTL's with empty houses that they will eventually have to sell. Bingo HPC!!!
Also the boom in China and India now means these countries are getting more and more expensive e.g Indian IT workers used to be around 3000 a year now they are getting 6000 within 3 years..... Inflation is now out of control and the Bank of England can no longer save Crash Gordon and have to put IR's up and up and up....

Trust me this crash is going to be the most spectacular in history... But I think we have about 10 to 12 months more of growth about 8% so not until late 2007 but it will happen.

Monday, October 23, 2006 01:10PM Report Comment
 

5. denzil said...


Sums up my comments on this blog a couple of weeks back and also indicative of what I see in my area. A buoyant spring has left the market noticeably short on property and transaction volumes low. This would normally mean prices rising rapidly but strangely enough they are stagnating or at best rising very slowly. If this continues into next spring I can see prices rising strongly due to normal spring demand
As is pointed out above, due to HPI the number of people that can actually afford to trade up is dropping which I think will lead to long-term stagnation.
One thing that will have to change to slow the market is sentiment. Just talking to people seems to highlight to me that sentiment and the need to get on the property ladder is as strong as when prices were booming 2-3 years back. Just 10 months ago people became very bearish and cautious about property but that caution has completely evaporated maybe due to what TR refers to as house price crash fatigue.

Monday, October 23, 2006 01:23PM Report Comment
 

6. talking rot said...

Cstanhope707

I hope you are right but this Blog identified 2005 as "the interesting year"; and then 2006 was going to be "the interesting year". Eventually a decline will come as economic cycles will always continue but when remains to be seen; how much remains to be seen. A decline from "wholly and totally unaffordable house prices" to merely "very unaffordable house prices" will not help.My property owning friends now chuckle and pull my leg whenever house prices are mentioned; they are immune to cries of impending doom.

Tuesday, October 24, 2006 10:37AM Report Comment
 

Add comment

  • If you do not have an admin password leave the password field blank.
  • If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines
Username  
Admin Password
Email Address
Comments

Main Blog | Archive | Add Article | Blog Policies