House prices 'see first double-digit fall'

Generali

HammersFan wrote: »

And it is possible that lower interest rates are on the way very soon to head off a recession. I would not be suprised to see the base rate around 3.5% next year.

Have you considered that the falls from the Halifax and Nationwide are based on such low volumes - that they reflect very motivated sellers selling to people in strong positions (e.g. someone with not a great house selling to someone who is driving a hard bargain, and ready to 'walk away'). As you know I think Land Registry data at the end of the year will be telling, and may well paint a very different picture.

How can you say it "WILL happen"? There are no certainties. I also don't really get your original comment about people who bought at the peak - they are most likley happy enough where they are, still in work, earning more than last year, on a decent fixed rate deal for another year or two at least - the price of the house is pretty much irrelavant to them...the key issue is forced sellers, and there just aren't enough of them to make loads of nice cheap property available.

I think carolt's post is pretty much spot on. Change 'WILL' to 'very likely' or 'almost certainly' and it's about right.

I suspect someone that has paid 10 or 20% more than they had to is likely to be quite miffed. I would be. Especially if I had negative equity.

carolt

HammersFan wrote: »

And it is possible that lower interest rates are on the way very soon to head off a recession. I would not be suprised to see the base rate around 3.5% next year.

Have you considered that the falls from the Halifax and Nationwide are based on such low volumes - that they reflect very motivated sellers selling to people in strong positions (e.g. someone with not a great house selling to someone who is driving a hard bargain, and ready to 'walk away'). As you know I think Land Registry data at the end of the year will be telling, and may well paint a very different picture.

How can you say it "WILL happen"? There are no certainties. I also don't really get your original comment about people who bought at the peak - they are most likley happy enough where they are, still in work, earning more than last year, on a decent fixed rate deal for another year or two at least - the price of the house is pretty much irrelavant to them...the key issue is forced sellers, and there just aren't enough of them to make loads of nice cheap property available.

Absolutely agree with your second point; it does reflect very low volumes. Personally, I think very low interest rates are unlikely, with runaway inflation, but time will tell. Not sure that low interest rates on their own would be enough to resuscitate the market, as interest rates are only part of the problem. By historical standards, interest rates are pretty low now, as far as I am aware.

My point re people buying at the peak was simple; they stand to lose the most on average as prices fall. Of course, if they were sensible, they ensured they could manage it financially before they bought it, but as we know from Northern Rock figures released this week, not all were that sensible. Some were in negative equity even before prices started falling.

'WILL' is my prediction. I fully agree I could be wrong, though I would be somewhat surprised, to put it mildly, if prices just stopped in mid ski-slope and suddenly headed straight back up again, without a kind of flat bit on the bottom of the graph, if you know what I mean. We shall see. Happy to eat my hat if prices do not continue falling; will you bet yours they won't?

neverdespairgirl

carolt wrote: »

My point re people buying at the peak was simple; they stand to lose the most on average as prices fall. Of course, if they were sensible, they ensured they could manage it financially before they bought it, but as we know from Northern Rock figures released this week, not all were that sensible. Some were in negative equity even before prices started falling.

I agree with you that recent buyers are more likely to be in trouble.

If course, I also agree with you that not all recent buyers will be.

My best mate and her now husband (boyfriend at the time) bought their house in Readin in August 2006. They deliberately picked a house they intended to stay in for a considerably time (3 bedroom, 2 reception, large kitchen, garden) and kept their eyes out for one which needed work, so they could do it how they liked. They put down a large deposit (about 25%) and went for a mortgage they could manage with fine if my mate gave up work to have children, which she intends to do.

They had a 2 year fix, but after the 2 years end this month, it goes on to a base-rate-plus 0.75% tracker, which they are sticking with.

So people like them are fine, it's just a pity more people weren't quite so sensible!

Generali

As an addition to the above, someone that sells an overpriced house and buys an overpriced place is unlikely to be too miffed either unless it was a huge step up.

carolt

Of course. And conversely, we have friends who bought back in 2002, I was working out recently, who told us last week they were in negative equity. They had a Northern Rock 100%+ mortgage at some point, and just kept MEWing the equity. They now have a lovely new kitchen and bathroom, a newish posh car, and a new baby on top of the older child, all crammed into a 2 bed house in a slightly undesirable area. But can't move. They should have no problems meeting the repayments - they're in good jobs - but are going to have to work hard on living within their means, on a day-to-day basis.

Generali

carolt wrote: »

Of course. And conversely, we have friends who bought back in 2002, I was working out recently, who told us last week they were in negative equity. They had a Northern Rock 100%+ mortgage at some point, and just kept MEWing the equity. They now have a lovely new kitchen and bathroom, a newish posh car, and a new baby on top of the older child, all crammed into a 2 bed house in a slightly undesirable area. But can't move. They should have no problems meeting the repayments - they're in good jobs - but are going to have to work hard on living within their means, on a day-to-day basis.

It's when kids come along that the whole negative equity thing becomes a big problem. In the early 90s, the news often had a piece about some poor woman trying to bring up twins in a studio in Streatham who couldn't move because the flat was worth less than the mortgage. She couldn't even sell and rent somewhere else.

formulaonefan

spark1 wrote: »

Only problem is houses near me are just being withdrawn from the market, sellers who dont need to sell wont drop their prices

They may pull out now but will soon come back to the market. Why did they put the property on the market in the first place?

1. They want to move up the ladder
2. Sell up and go renting and then buy a place when property prices go down
3. They got bored in the same house. Need more space, kids growing up or new baby etc. So they put the property on the market to buy another place
4. Financial problems forcing them to put the property on the market
5. New job, change in situation etc
6. Don't like the area or want to move to a better area etc
7. Want to move to near school catchment
8. Release equity and move abroad or scale down
...
There are so many reasons why people put the property on the market. Not just for the sake of it...they don't. If they have decided, its not the right time to sell and we will wait for the right time to sell. Then It won't be long before they realise it they can't stand it anymore and make the move. I will give it 6-18 months before they change their minds and put the property on the market.

I have a friend, who has a property which he can't sell. Its on the market for months now. New job forced him to put the property for sale or rent and he moved to rented apartment. He hates the rented apartment, he wants to buy another place but it will be a stretch for them. They have to sell the property or rent it before they can even think of buying another place. Even if he rents out his old property, he still needs to pay extra to meet the mortgage.

Its a buyer market now. Sellers would have to realise it sooner rather then later. They may pull their property of the market now. But sooner rather then later it will be back! The need to move will be greater! I know how I feel driving my crappy car which I can't get rid of. Imagine a property. It will be extremely stressful.

PasturesNew

mr.broderick wrote: »

Also the reason str'ers and ftb'ers are getting tetchy, sellers not reducing just pulling off (oh er), stuck in rented for longer than hoped...

I planned for 3-5 years, so one down, 2-4 to go.

trulysaintly

Just a quickie...

The Halifax Index is based SOLELY on the mortgages that Halifax has approved - doesn't include information from other lenders, so isn't a good reflection of the whole market.....

Also, the 11% is based on average prices across the UK...so dependent on where you live it might be quite different...

There is a government department that releases figures based on data from 65% of lenders - much more relevant than one lender's figures....it could be based from a lender that has less competitive deals, and therefore lower take up of their loans...

Worth bearing in mind before anyone takes the figures as gospel..

WTF?_2

spark1 wrote: »

Only problem is houses near me are just being withdrawn from the market, sellers who dont need to sell wont drop their prices

Wow, I wish I was in a position where I could sell expensive possessions like houses for a hobby and could just hold on to the asset if I didn't like what the market was offering.

Never mind, things should have recovered by 2017 if historical trends repeat themselves.