Wednesday, December 1, 2010

Guff from Gahbauer

Buyers could face double squeeze as house prices fall again

The article esentially says that he thinks seller could retreat because they think the prices are weak and seller will decide not to sell and wait for the spring. This he assumes will stop the decline in house prices. Concurrent is the fact that lenders are going to lend less due to the miserable state of finances and the less than cheery outlook. All of this means the assumed desparate house buyer will have less to choose from when buying and less money to but it with. My view: The market is poised for a crash since if people find themselves in the position of increased interest rates (for the reasons above) and falling incomes (the upcoming cuts) they will HAVE to sell if they like it or not to reduce debt.

Posted by growler @ 11:29 AM (1855 views)
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14 thoughts on “Guff from Gahbauer

  • sibley's b'stard child says:

    Selective quotations are great aren’t they? When comparing this crash to the 90s (from the NW report) the DT failed to continue with this:

    “The most likely explanation for this is that while real interest rates remained very high throughout the 1990-1992 period, they have fallen
    dramatically into negative territory in the current down cycle, providing more support to mortgage holders.”

    Tell you what; why don’t you pontificate on the effect of rising IRs? What’s that? No, I thought not. Extrapolate that, mo-fo.

    Talk about scare-mongering from the DT. It’s hardly a ‘double-squeeze’ is it; either houses are affordable or they’re not.

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  • I like the way a fall in house prices is used to signal a rise in house prices. By this logic, if they had risen in October, sellers would rush to the market than they’d go down again. D’oh!

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  • Little comment on IRs from Nationwide. I’m surprised nobody blamed the snow!

    Low IRs are what’s propping up prices (as Trichet remarked last week-end).

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  • I reckon the mortgage drought is actually holding prices up. I don’t think it’s the case that people are being offered, say 180K rather than 200K which would push prices down, its that they’re just not getting a mortgage at all so they can’t buy, even at a reduced price. And until people are forced to sell then they’ll just sit on their hands. It’s like Flashman says, only an IR rise or a jump in unemployment will kick-start this crash. What I can’t figure out is why every other country has had a crash and we haven’t.

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  • @ 4, It’s the British love affair with property. They always go up LOL.

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  • sibley's b'stard child says:

    Interesting point Timmy re: mortgage unavailability, I would love to know (although there’s no way of knowing) what proportion of potential buyers can’t pay or won’t pay. I would imagine there’s a lot of numpties currently being saved from themselves but this doesn’t take into account the FTBs like myself that (spousal pressure notwithstanding) refuse to ‘play ball’.

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  • i don’t think the mortgage drought is holding prices up, I think it takes a long time or a lot of pressure to change peoples mindset after 10 years of a massive growth of house prices, people think it will be all ok next week and prices will start to shoot up, this is the mindset that needs changing, what the public don’t realise there is now a new world order and it will take probably over 20 years to recover from this total collapse of the worlds financial systems

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  • Round my way, I’m starting to see the stock of houses slowly dwindle. One estate agent told me that in 2009 when prices began to spring back again – this way because sellers simply would not sell unless they achieved their price and either they didn’t instruct the agent or they didn’t bother putting their house up for sale. The upshot of this was that supply became limited and prices as we know started to rebound. It seems to me that pretty much the same is happening again. One agent a few months ago had around 140 unsold properties and now they only have around 109 available.

    No-one seems to be dropping their price much now and what is left you really wouldn’t want to touch. In my opinion there is a whole new scenario waiting to be played out before we see any signs of a crash.

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  • mark – I wouldn’t mind betting there are a lot of vendors with a house on the market who would be willing to take an offer if they could find a buyer, even if it was for less than they wanted. This would push prices down. I do agree with you re mindset, but there’s not exactly a lot of good news flowing at the moment to reinforce this optimism.

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  • timmy a habit is hard to break though and a 10 year habit is like coming off crack lol

    would be interesting to know what % in a drop the people you know would take

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  • Sorry about all the poor spelling in the lead post…

    The UK is “held up” on paper because of the houses left on the market, these are less large mortgage dependent – there is a larger proportion of true affordability. Because the activity is hugely down, long term no new money is finding itself into the market to build up any kind of HPI. If that were to carry on, we’ll just see a slow decline tempered either way by inflation.

    If we have some “problems” – like some rising interest rates, unemployment or severe cuts – then those electing not to enter the market will be forced to. I simply can’t see such low rates any longer than a year.

    Merv – acting in the interests of the whole of the UK – is doing his best. I have to say he’s avoided the crash in the hope he can soften the blow. Had he have done anything like the rubbish Danny wanted or any of the Balls that former Government ministers were hoping for, we would be in a crash. That crash might have helped us here, but in fairness and looking at it objectively, a better way is to try and soften the blow.

    Trouble is, it’s starting to become to large a pile to hide under the carpet. Where it goes next will be the very interesting question. It’s this uncertainty that drives the market.

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  • Mark – I was speaking generally rather than people I know. I know if I had a house on the market right now I’d be willing to listen to offers. Be interesting to see if Jack C has any thoughts on this if he’s about…

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  • timmy i noticed that after i pressed add comment, sorry mate

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  • timmy t – I’ll hopefully be able to comment fully later – too busy at the moment.

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