Saturday, September 15, 2007
When Will Prices Start To Drop
Gloomy house price survey adds to mortgage woes
Now we have all waited for this moment, how long will it be before things start getting tasty?
Posted by speculatorone @ 08:32 AM (1153 views)
16 thoughts on “When Will Prices Start To Drop”
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planning4acrash says:
It shouldn’t be too long now till we have a HPC party at Trafalgar Square!!
uncle chris says:
Where we can present Krusty with a very unappetising hat …
speculatorone says:
Judging by what Krusty looks like, I don’t think eating that hat will pose any problems……..
wiltshire says:
I reckon we’ll be able to buy Trafalgar Square by March next year!
As for Krusty, I think it’s gone beyond the hat now. If she has a shred of self respect she will be exiling herself to somewhere very isolated – like the middle of the Amazon!
By the way, have you noticed how difficult it is to keep up with the News Blog as there is such an avalanche of stuff being posted now? I would be interested if the traffic statistics for the site could be put somewhere easily accessible because I think it would be really interesting to see how the traffic is (presumably) increasing.
David 20040_0 says:
Prices will never drop, I wont allow it!!
talking rot says:
Steady on Chaps; let’s not start counting chicks until the eggs have hatched. Has there been a decline in house prices? No, not really. Have the risks to the housing market suddenly increased? Yes. When I start seeing numerous “For Sale” signs for months on end, then, and only then will it be safe to say UK house prices are declining. It STILL hasn’t happened and, as with all risks, it MIGHT NOT happen.
House prices may decline a little but unless a large number of people are FORCED to sell, and accept a lower price then they would otherwise accept, then there will not be a decline in house prices. Unemployment is still relatively low. (OK, the figures from the Office of Notional Statistics are highly debatable.) Interest rates will cease to rise and there will be cuts in the new year, if not before. (No, I won’t be smug.) The credit crunch has yet to lead to anything other then a few “sensationalist” headlines. Northern Rock is still trading and, by all accounts, has assets on which to draw. What happens if today’s “credit crunch” turns out to be a repeat of the 1987 stock market crash or the 1998 collapse of the LTCM hedge fund – the stock market recovered. Are BTL-ers crying into their hankerchiefs and are foreign property investors dumping their properties and running. No they are not. I believe a 5% decline in UK house prices is as useless as tits on a fish.
speculatorone says:
Talking the rot..
Good point. I must mention an interesting phone I received from an estate agent yesterday about 4pm. At the beginning of July we looked at an old converted stable in need of work with a large paddock, it was offered for sale as a guide price, offerers to be submitted by a deadline date. I am not interested in that arrangement and left well alone as you usually end up pay over the odds. The agents called me to confirm it’s back on market and would I consider an offer below the guide price?
I smelt a rat striaght away. Either the property has problems or the original purchaser got cold feet yesterday realising he/she will not be able to make a quick buck anymore.
This has cemented my position of staying in rented for the foreseeable future.
planning4acrash says:
TR, I won’t be smug when rates are still 5.75 or higher as far forward as Valentines :p
wiltshire says:
Admittedly as highlighted by TR there is still a lot of water to flow under the bridge BUT I do believe the current climate will change sentiment dramatically and it’s sentiment that has keep this bubble going this far. This could be another false dawn but if it is and the sheeple aren’t given pause for thought in their endless spending then basically I think there is no hope whatsoever for this country.
david20040_0 says:
We will soon see if this is yet another false dawn. If this really isn’t the start of the crash then I will completely lose hope.
The BoE should stop bailing out reckless lenders like Northern Rock, let them crash and burn and the market decide.
I agree with talking rot that a 5% drop is useless. We need 30% as a minimum. Here’s hoping 🙂
tyrellcorporation says:
TR. When people realise they are heading towards Negative Equity then that sentiment alone drives sales at stressed prices. I remember the last one! I particularly remember looking around a 3 bed house in Surrey Quays (London Docklands) in about 1994. The EA would take any offers around £90k and let me know that a few years earlier it was on for £270k. Imagine getting caught out like that?
I walked away (in retrospect this wasn’t a good idea! 😉 )
Cheekie Charlie says:
If IR do drop it can surely be by a small nominal amount inflation is permanently rooted on the upside and with the pound due for a battering net week I think this will compound problems. David have you seen them long queues outside NR? I see you can get 7.05% interest on a 1 yr bond with stroud and swindon this is to try and fund there lending with LIBOR so high. This will only increase the cost of all borrowing more. 50 to 70% drop in house prices IMHO.
Sold Out says:
Wiltshire
Agree with you 100%.The damage that is being done to SENTIMENT is going to be dramatic.This Northern Rock situation has brought the Credit crunch,american subprime problems and general economic health of the UK finally to the Sheeple.The newspapers,and tv news coverage is everywhere.The other point is that we are still not feeling the full impact of this years IR rises on fixed rate morgage borrowors,When that plays out theres gonna be carnage.And What of the CITY?The hub of uk plc,this crisis has only just begun and only time will tell what damage its gonna do to city jobs and bonuses.As for Boe interest rates i really dont see how they can cut them because of all the inflationairy pressure which is going to increase.The government no that we are heading for a downturn in the economy and they just dont have the power to stop it because its out of there hands.The only thing they can do is distance themselves from any voter backlash by Pinning the blame on others,Northern Rock,The banks,the general public for their panic, the global economy,anyone will do.
A 5% drop will be a start and once prices start going in the wrong direction,Its just the same as the Boom but in reverse.I dont expect to buy a house for another 3 years,i reckon it will have hit rock bottom by then.
Anyway when are we gonna have this HPC party in Trafallger square.Someone let me know i cant wait.
talking rot says:
P4AC
I believe the upside threats to inflation are: oil price rises about $80 per barrel; increased food costs; declining Pound. Oil is slowly creeping up but the major, repeat major, oil gains have already fallen out of the inflation equation. Should oil reach $90 per barrel, there could be greater additional effects. What is The Oildrum saying at the moment please? Weather and biofuel production might force up food costs. If so, I believe we could see the return of the European agriculture subsidies that resulted in the butter mountains and wine lakes of a few years ago. France is regaining its political potency and I wonder how long it will be before that highly effective French diplomatic machine causes a return to the older agriculture policies. The Pound might decline a little or it might drop. The effects will be determined by the manner of the decline and by the relative strengths of other currencies. On the down-side, there remains the disinflation effects of migration; the reduced public spending by Gordon Broone (sorry, his puppet Ali), less access to credit and a degree of political pressure where they should not be any political pressure.
Net result: Max interest rates this year 6%, but more likely 5.75% with cuts in the New Year. (And when the facts change, I’ll change my mind!) I agree real inflation would necessitate higher interest rates but the CPI is hardly an effective measure of the inflation experienced by many within the UK. If UK interest rates are 5.75% or higher on Valentine’s Day, I’ll admit the facts have change!
Tyrellcorporation
Uuuugh. What an unpleasent situation to be in. Potentially a drop from GBP270K to GBP90K. Getting caught out like that is not pleasent. However, even if a person is trapped in negative equity, does it matter if they do not have to sell their house? Probably not. They can still live in their house and enjoy the pleasure of home ownership (aka renting from the Bank.) Negative equity does not mean you are banned from using some of your rooms or banned from entering the garden. If you keep up the mortgage payments, you can still live in the house as if you had positive equity. As long as you are not FORCED to sell, negative equity is pretty meaningless. Of course, if some one is FORCED to sell while in negative equity, they are in an unpleasent situation. Do you think this more or less unpleasent then the embittered saver who is priced out of the market?
planning4acrash says:
TR, Oil prices do not figure directly in CPI. Consumers do not buy oil!! They feed through slowly into food prices, increased fuel costs and fertiliser costs (most are synthetic from oil), higher manufacturing costs, shipping costs, higher cost of plastic, etc. If manufacturers were expecting a fall in prices they may have absorbed high oil in margins up till now. The only main direct effect on CPI is from petrol and to a lesser extent heating oil, and petrol is set to go right up, to £1 +. I think that it takes over a year for high oil prices to feed through to CPI fully, so we probably aren’t seeing the full effect yet and we all know that we will feel it strongly if our currency is hammered. I reckon 6.25% IR’s by April because I reckon that the BOE can’t avoid CPI going up again during the autumn.
Interesting, scary post on oil drum at the moment talking about how countries tend to cease exports about 7-9yrs after peak exports, as their consumption rises at the same time as production going down. Quite apocalyptic that places like Iran, Russia and Saudi will cease being net exporters in the not so distant future. I think the consensus is that we are heading towards £85/barrel because this period is usually a low for prices, and they will go up as demand rises in the winter.
wiltshire says:
TR, hopefully someone will be able to confirm this but I read recently that if you are in negative equity the mortgage lender can force you to pay the difference between what you have borrowed and what your property is worth whenever they like. Something to do with them protecting their investment in some way. Obviously this could be a problem for people who anticipate just riding out the storm.