Thursday, May 1, 2008

No Sh#t Sherlock!

House prices could keep falling for three years

On Tuesday, David Blanchflower of the Bank of England's rate-setting monetary policy committee (MPC) said house prices could fall by a third over the next few years, with the UK repeating the recent experience of the US. City analysts said the Nationwide data marked the start of a long period of decline until the last possible date for the next election, particularly since lenders were taking a hard line with borrowers. A report yesterday showed that four out of 10 lenders had not passed on last month's cut in base rates. When Mr B is sacked from the MPC for telling the truth (however obvious) - can I have his job?

Posted by rental john @ 03:05 PM (623 views)
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3 thoughts on “No Sh#t Sherlock!

  • “A report yesterday showed that four out of 10 lenders had not passed on last month’s cut in base rates.”

    I can’t believe Alistair Darling hasn’t had a word with the lenders about this. Oh, that’s right, he has and they completely ignored him as they were so busy trying to trouser 50 billion quid.

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  • I doubt it will take as long as three years for the market to reach it’s lowest point.

    At the moment we are about nine months into the downturn, and at the present time those on the front line are coming to terms with prices having dropped up to 10% to date.

    My best guess is that it will take about half that length of time for a further 10% fall, so by the end of September we will probably be contemplating prices 20% off peak.

    At that point, the bluster and denial in the speculative sector will evaporate, and we will see very large numbers of properties sent to auction and agents in the run up to Xmas, with vendors ready to accept very low bids as they desperately attempt to get out of the market. Despite that, relatively few will actually sell

    By the close of the year, the talk may well be of 30% off peak, but activity will still be very low.

    As we enter 2009, the banks will probably be refusing FTB’s LTV’s of more than 75%, and the market will be awash with property for sale.

    At the first auctions of the new year, few properties will meet their reserve, with the bidding stopping at around half peak value or less. Some will be sold without reserve, and the prices will hit the headlines, along with stories of BTL’s being wiped out, mass defaults, negative equity and developers going to the wall.

    – I anticipate doing a little buying around this time next year…

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  • I reckon so too UT. i can’t see things taking three years to bottom out. EAs will start aggressively lowering seller expectations to the point that any significant reductions will be advertised “REDUCED”, thus feeding back into the transaction loop.

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