Thursday, March 20, 2008

Housing market not looking good

Triple whammy for homebuyers as three experts deliver devastating verdict on housing market

A series of leading experts have delivered dire warnings on Britain's housing market as the credit crisis takes its toll on lenders and leaves first-time buyers struggling to get on the property ladder.

Posted by fools @ 04:58 PM (2413 views)
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16 thoughts on “Housing market not looking good

  • Where were they 6 months to a year ago?

    Experts?

    Latecomers.

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  • Daily Mail ???

    Must be bad then. Still we did try to help. Having personally expressed my views to many people over the last 3 years only to be ignored. I came across this site shall we say : “By accident,” (or maybe for some reason I was guided here) through my concerned efforts to find out why I couldn’t get any accurate news.
    Here I found views and statements that at last I could believe,that is, apart from the odd ‘plant’ screaming fear from every orifice at the very idea of truth.
    Still : “All Sins stem from Cowardism.” I was once told. Remember this oh frightened ones.

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  • They are just going along with the flow to appear knowledgeable. Once the plunge starts they’ll be saying that house prices only ever go down. True experts buck the trend and speak their minds.

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  • Good.

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  • Paranoiablue says:

    Plato
    May I, also, suggest: “most sins – with their consequences – arise from covetousness”

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  • I notice there’s another link on this article entitled ‘Homeowners with interest-only mortgages ‘heading for disaster’. I think this could be the next crisis on a par with the mis-selling of endowments. I was amazed when I enquired about a new mortgage a couple of years back that not only were the lenders only to happy to lend me an amount that I thought ludicrous (and refused to borrow I’m pleased to say) but also they didn’t want any proof of some method to pay back capital. This I believe has been another significabntly contributory factor in pushing house prices to absurd levels. At least with poorly performing endowments there was some attempt to repay the capital but with interest only mortgages and no repayment method in place goodness knows what the future is.

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  • Inbreda, my sentiment exactly.
    I refuse to believe that finance graduates with experience couldn’t see the oncoming slaughter. The truth is that any financial correspondent of almost any newspaper knew he/she would become a professional pariah amongst their colleagues/ Editors and that their carreers would be in jeopardy. No one liked a “doomster” in those days.

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  • uncle chris says:

    When it comes to the views of experts, I always chuckle when I think back to this “expert” view on the US housing market –

    Click HERE for link.

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  • dohousescrashinthewoods says:

    Bilko, I think you make a ringing point there.

    IO mortgages were predicated on the market always rising – “get in now, cheaper than repayment, and use the equity to help pay it off later”. Looking back, it was based on houses doubling in value, the imperative to get in while you still could, and good old “buy now pay later”.

    Doesn’t look so clever now and I can see a mass of disenfranchised borrowers closing in on the banks, whilst the employees who took their sales bonuses are long gone (probably to another bank..)

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  • voiceofreason says:

    Experts … extrapolators more like !

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  • Matt_the_hat says:

    This expert crap its the same with global warming. Concensus is not science!

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  • @titaniccaptain said “…hey you get 50% of the bloggers from this site together after this crash and boy have you got a board of directors…”…

    That’s a beautiful thought – post 2012 maybe 😉

    @Plato – I thought the whole pack of cards would implode in 2001-02, but then I wasn’t privvy to the bank of England’s decision to drive down interest rates to stimulate the ecomony – otherwise I would have held onto our flat in East London, and it would have been paid off by now! Still, timing’s a bitch.

    And yes is truly a great site that I could too could relate to – proof I wasn’t insane!

    But back to the article. How can the editor(s) of the Dailymail look themselves in the mirror each day? Or are they soooo slow to realise what’s actually going on? Exercise your rights and don’t buy a daily mail ever again – tell your friends and family too!!

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  • Re: this site. If you ask me this site should become a legend in it’s own lifetime. For a few years a small number of people visited this site and discussed the potential problems which could arise from the cheap credit binge that most of the western world was on. Up to Sept 2007 (Northern Rock week) they were generally considered to be cranks and doom-sayers. Then hey presto! the rest of the world suddenly realised that maybe all wasn’t well with seemingly endless cheap credit.

    Obviously there is a long way to go for the current economic cycle (whether it crashes or soars is yet to be revealed) but so far I have found the users of this site to be incredibly perceptive in terms of general economic direction. The things being written here made sense to me and I STR’d about 18 months ago and I’m extremely glad I did because I think the likelihood is that the posters here are likely to be proved more accurate predictors than most of those being paid handsomely to predict such things. I pointed various family and friends in this site’s direction and none were that interested (including my sister who bought a new build in the Welsh valleys in September!!) but then you can lead a horse to water.

    Anyway, this site should be a shining example for the future. Don’t just follow the herd because the herd normally end up losing out.

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  • Yeah, Bilko’s point is a great one, and a reason why it will be worse this time than last.

    However, I can’t help thinking that we were wrong 5 years ago. Yes, we saw the irrational exuberance, but what we didn’t see was how big this bubble would get, and in the meantime we have lost out big time on some huge price rises (could’ve doubled my money if I’d bought…not that I could have not having a stable job at the time, but thats another story!), Now, the only way that I can justify my stance of several years ago is for prices to drop something like 50 – 60%, and as much as I see that as feasable, I think we’ll end up with high inflation before then, so that actual price drops may be nothing more then 25 – 30%. And of course I could have still bought 5 years ago, kept hold for 3 and then sold, and still made a profit…and if I’d done it Interest Only, it wouldn’t have mattered.

    I have learnt a lot from this bubble. I have learnt to trust my instincts that a bubble is in formation, but I have also learnt which graphs to trust and that I need to hold my nerve that bubbles will grow to extreme proportions before bursting, and also that House Prices will never drop overnight. We have had a real 5% decline from prices of last summer according to the Halifax Non-seasonally adjusted prices, so holding on till the peak is not a problem, as long as you are willing to let the house go for less than anyone else at the time thinks its worth. Those who will be stung the most are the ones who refused to believe that the writing was on the wall when it was clear that the financial institution itself was against the wall!

    As for the idea that prices will not fall because people will not lose their jobs, well firstly, people are going to lose their jobs, but also house prices are set by the houses that actually sell, which will be primarily those which are forced into sales and therefore most likely to accept lower offers because they have no time to hang around! This is a long grind down now! 4 or 5 years more of renting yet guys!

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  • Topher Bear

    Agreed. Remember last time prices peaked in 1988 and fell significantly until 1992. Thereafter there was an overcorrection down to 1995, when prices started to recover. Arguably, anyone who bought in 1992 should not have incurred a loss, because, even though prices still fell therafter, they would have saved on paying rent, and prices did recover to 1992 levels by early 1997 *before * Crash Gordon became Chancellor. Add 20 years on and 2012 should be the time to buy.

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