Wednesday, October 27, 2010

Reducing house prices; squeal vendors squeal

Secret new rules set to reduce house prices

It all adds up to a fairly grim image of the mortgage market. Indeed, in the words of the trade body’s director general, Michael Coogan: “The golden age of home-ownership is over, for the moment."

Posted by doomwatch @ 04:56 PM (2551 views)
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11 thoughts on “Reducing house prices; squeal vendors squeal

  • astonishing really to think an fsa think tank has come up with the radical idea,people should prove they can afford repayments before a loan can be granted.

    This I thought should have been normal but reiterates just what a disaster is about to unfold and why boe reduced interest rates to practically zero

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  • Sound advice. If you’re going to buy a house buy it now because mortgages will be more expensive and difficult to obtain in the future – which will make the value of you newly bought house go, er, down.

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  • he was doing well until the end

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  • mark wadsworth says:

    Icarus, well spotted. What he actually says is this:

    “With all that in mind, if I knew I was going to be buying a property in the short-term I’d be tempted to get on with it, rather than wait for the market to contract still further – while house prices might fall in the future, my own equity would likely fall too, and I’d find it tougher to actually get a mortgage!”

    Er… if you just have a deposit, then how can your equity fall?

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  • @3 yes he’s a silly billy saying that. A hidden agenda to re-fuel the house market, me thinks.
    The longer we wait, the cheaper the houses get, and this will lower the overall cost of the mortgage.

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  • mark w – puzzling indeed, unless he means the equity in a house he currently owns and he’s selling in order to buy.

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  • mark wadsworth says:

    Ic, if he’s thinking of selling and buying, it makes sense.

    But if he owns somewhere and is correct with house prices and mortage availability and so on, then surely the sensible course of action is to sell-to-rent?

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  • If you just have a deposit, then Mark, your equity would definately fall (in value) with rampant inflation. Looks like someone just gave the game away…. oh wait, we’ve known all along,

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  • fallingbuzzard says:

    @7, isn’t rampant inflation the familar theme of the past decade rather than the future one? Or are you hoping for a late 80s/90s replay?

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  • mark wadsworth says:

    TBT 7, that’s sounds a bit Home-Owner-Ist to me.

    If you have “equity”, you are highly leveraged. Let’s say twenty per cent equity and eighty per cent mortgage. If prices fall by ten per cent, you have lost half your “equity”.

    If you have £20,000 in cash for a deposit, then inflation would have to be very high indeed, say 10% for seven years, for you to lost half your deposit.

    You tell me, which scenario is more likely: house prices fall ten per cent or inflation is 10% for the next seven years?

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  • “You tell me, which scenario is more likely: house prices fall ten per cent or inflation is 10% for the next seven years?”

    if Merv stays in charge, and they throw another pile of QE at the fire, then i recon 10% real inflation, not the fiddled figures we get.

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