Sunday, July 24, 2011

Reviewing the situation

House sales have fallen so why are prices still high?

Why are house prices apparently so resistant to the normal laws of supply and demand? It is one of life's great mysteries. Houses are still expensive, by anyone's reckoning.

Posted by dill @ 06:14 PM (4181 views)
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25 thoughts on “Reviewing the situation

  • because of the pathetically low interest rates, and lack of free market.

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  • House sales have fallen BECAUSE prices are still high.

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  • little professor says:

    There’s a lack of forced sales at the moment – interest rates being held artificially low means that most of those who should have never been granted a mortgage can keep up with their mortgage payments for now, and for the ultralosers that can’t afford tho make their payments even with rates at a 400-year low, the banks are not pursuing repossessions – I commonly come across people that haven’t made a single payment towards their mortgage in over 6 months, and have had no action taken apart from (initially) a couple of stern letters from the bank… then nothing. The banks don’t want to take back the houses and be forced into selling them at massive losses – they’d rather keep the mortgage on their books and play ‘let’s pretend’ it is still at full book value – after all, the government will bail them out as if the mortgages were worth 100p in the pound, even if they should have been written down to a quarter of that.

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  • I am seeing 25% plus off from 2006/2007 peak in my area. You end up in a bizarre situation where nice houses built in 2000’s are selling cheaper than shanty houses built in 70’s. And shanty houses built in 70’s aren’t reducing price! Madness!!!

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  • @6 TC Not bad, detached, jeepers, that price would just about scrape you a reasonable one bed flat in my area. Any idea what the council tax rate would be on a house like that?

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  • Bear Necessities says:

    Ooh TC, there’s lovely!

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  • Look at Sterling for the answer.

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  • @TC thanks for the info, nice to see some fairly sensibly priced houses for a change. Obviously moving well away from my curreunt job is the biggest setback.

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  • Just completed at 15% below asking price. Thought I’d get in now whilst vendors are desperate, before the scramble & EA blind bid b0llocks. Reakon I could have pushed to 20%. Definately a good time to get in, as ther’s a major absense of “other interested parties”. The
    EAs have given up with this trip of late, as they know I know it’s BS and it only serves to annoy, which is one thing EAs can’t be doing to buyers right now.

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  • clockslinger says:

    I’m not sure what articles like this are for. Perhaps the BBC is fulfilling its public service brief by reminding us all that every aspect of living in Britain is a lottery founded on the whim of the market…from buying a house to saving for a pension or going to university…maybe you win, maybe you get shafted. Am I supposed to feel stimulated? Am I supposed to pay attention? The one lesson we have all certainly learnt now is that “doing the right thing”, like saving, certainly never works. Why bother? Just borrow a load you can’t pay back and the banks wil cut you slack, or borrow more and take a punt on rare earths and pay it all back in a week. Fu#k me, I’m converted! Where do I send my “Apprentice” application?

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  • @11 Doomwatch, best of luck. 15% below is not a bad deal in the current environment if you want my opinion.

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  • Novice @13 thanks. Where I live, it really is dead man’s shoes to get a decent house. Totally NIMBYtastic, so had to pounce.Titanic @14. 3 words; FULL STRUCTURAL SURVEY. Beware [e.g. deathwatch beetle in old beams etc].

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  • Cheers TC @15. FYI I still think prices will tank another 25% !! I’m not about to go all bullish !!!

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  • If you are buying with New Zealand dollars UK house prices have fallen by more than 40% since September 2007 (lets see if this embedding thing worls …)

    [URL=http://imageshack.us/photo/my-images/197/ukhousepricesinnzd.jpg/][IMG]http://img197.imageshack.us/img197/3532/ukhousepricesinnzd.th.jpg[/IMG][/URL]

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  • (sorry for the incompetence)

    [url=http://imageshack.us/photo/my-images/197/ukhousepricesinnzd.jpg/][img=http://img197.imageshack.us/img197/3532/ukhousepricesinnzd.th.jpg][/url]

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  • (third time lucky?)

    [img]http://imageshack.us/photo/my-images/197/ukhousepricesinnzd.jpg[/img]

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  • I give up.

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  • mark wadsworth says:

    Doomwatch, 15% off what? The original asking price, we can’t ask you for the address, but tell us the gory details, how much, how long was it on the market, had the price been dropped before you made your cheeky offer etc.

    Greenmind, if it’s any consolation, I’ve never managed to get a picture to show up either, I cheat by posting it on my blog first and then cutting and pasting the html over here.

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  • ontheotherhand says:

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  • stillthinking says:

    How much of the ECB funds ended up in a London property, with a radiating out effect? Probably quite a lot. Euro taxpayers are committed in the future to honour wasted borrowed funds that ended up emigrating.

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  • The banks don’t want to take back the houses and be forced into selling them at massive losses – they’d rather keep the mortgage on their books and play ‘let’s pretend’ it is still at full book value – after all, the government will bail them out as if the mortgages were worth 100p in the pound, even if they should have been written down to a quarter of that.

    Very nicely put. The question is, of course, how much longer can this possibly go on for….

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  • mark wadsworth says:

    HPW, the lesson of Japan shows it can go on almost forever, as land prices sink, the government does QE (very similar to UK QE) whereby if lends the banks money on the condition that the banks lend it back to the government (or the Bank of Japan or whatever). This is why Japanese banks now hold about 200% of one year’s GDP in Japanese govt bonds and in turn the banks owe the government about 200% of one year’s GDP. Meanwhile, land prices have been drifting down for two decades.

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  • HPW, the lesson of Japan shows it can go on almost forever, as land prices sink, the government does QE (very similar to UK QE) whereby if lends the banks money on the condition that the banks lend it back to the government (or the Bank of Japan or whatever). This is why Japanese banks now hold about 200% of one year’s GDP in Japanese govt bonds and in turn the banks owe the government about 200% of one year’s GDP. Meanwhile, land prices have been drifting down for two decades.

    TBH, I was hoping I wasn’t going to hear something like that….Of course, they could do that then because there was a large amount of savings in Japan and the situation in the rest of the world allowed it. But, I think, the situation is rather different today, so many countries are now really struggling – especially the US.

    The only thing worth holding, in my view, is gold – paper money certainly isn’t.

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  • Rich Kightley says:

    The idea of being born into a country, where must must work for 40 years to own a shelter is great for business. Slavery was always profitable, and the great empires of the past used it, from Greeks & Romans onwards.

    Houses in the UK are built of clay (oven cooked) and wood mainly. The current day price is controlled by the restriction of building land with planning permission under the Planning Laws.

    Nowadays with cheap Green technology one can build an ALMOST self-sufficient green house without external power, water or sewage, given an acre of land. However, the government will not permit this. Their main excuse for not granting planning permission is that they cannot let people build without infrastructure. Simply lies and tricks.

    Letting people build their own home would free the slaves-the rats on the wheel-they will never permit this. Better move to other countries where you can put up a home shelter almost anywhere you want. Look at the USA, millions of square miles are free of population. Go to a real democracy.

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  • Away In The Clouds says:

    Who was it that said “Private Home Ownership will be a thing of the past” ?

    Someone on this website posted this a while back. Been reading for over a year now but only just starting posting because I think he was right and this point has gone ignored.

    If they banks won’t lend how you gonna buy, even with a 30% reduction ?

    Simples

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