'50% drops'

WTF?_2

50% drops are already a reality in some places:

http://www.ft.com/cms/s/0/1235fb4e-8f5f-11dd-946c-0000779fd18c.html?nclick_check=1

Prices were falling even before the credit crunch hit, and have since slumped. Nationally, house prices have declined by about 3 per cent over the past two years, according to the Halifax survey. For new-build flats it is closer to 50 per cent in London, and even more elsewhere.

mymatebob

Last year a friend of my parents put his 3 bed property on the market at offers over £180k
Got an offer of £200 and seemed happy, but EA advised that much better was to come.
Has now been on the market at fixed price of £140 for over 11 months.

Conversely.....

Friend of mine bough a house in December for £600k.
Gutted it completely, with a view to converting into flats, changed his mind and sold it for £820k last week.

dopester

johnycoldears wrote: »

did you see that house (more of a shack really) on the news last week that sold in America for $1.75 ?

It had something like $6,000 property taxes to pay on it.

What could that land/shack be used for to generate any revenue in next few years?

Not a lot in my opinion - looked uninhabitable and like it needed demolishing, and probably in an area full of such rubbish properties.

Looked worthless to me. You are destroying the opportunity to do something more worthwhile with your $6001.75c over the next few years, which brings about proper investment returns.

Dithering_Dad

!!!!!!? wrote: »

50% drops are already a reality in some places:

http://www.ft.com/cms/s/0/1235fb4e-8f5f-11dd-946c-0000779fd18c.html?nclick_check=1

Lol, this never fails to make me laugh. It's a bit like Sharps Bedrooms & MFI have 50% off sales throughout the year, except for that 1 week where they charge double what their product is worth (they have to do this by law). For the same reason as Sharps & MFI (and Dolphin bathrooms), builders are making up crazy sale prices so they can 'slash' them and make it look like someone is getting a bargain. Only feeble minded people fall for this scam, surely?

I might put my house up for sale at £100M then drop it to £1M and say that it's been price reduced by 99%!!!!!!

What a bargain! I can see then queuing around the corner to grab such a good deal :rotfl:

StevieJ

macaque wrote: »

People can comfort themselves fairy tales or they can face reality.

Over the past few months house pricing has been taken out of the hands of home sellers. Although people are free to advertise at whatever price they like, the actual selling price is being rapidly driven down by the lender's lack of appetite for risk. Some of this process is happening by stealth. The lenders are relying on the buyers to bid the price down, then they send in the valuer to knock another 10% off. Finally they reserve their best offers for 60% loans. In other words, they are already factoring in price falls of upto 60%.

Banks are pushing lending ratios back down to 3 to 3.5 times income. The other factor relates to what is happening to incomes. Truck loads of highly paid city jobs are going to vanish. Elsewhere in the economy, unemployment is rising rapidly. These factors are driving down average incomes rapidly. Its a double whammy.

There will still be a few stubborn souls who will go on advertising their properties at 2003 prices (forget 2007) but that is just window dressing for estate agents.

Like it or not home owners have missed the boat.

Will prices fall by by 50%? Unlikely. More like 60 or 70%.

So you are saying that the lenders want to reduce the value of the security on their current loan book by 70% Mmmm.

neas

true.. but most likely due to the recession and people losing their jobs... your pay won't have risen with inflation... because if you complain there are 15 well-qualified people willing to work for less than you.

Recession.... increases prices.... and drives down income ... due to typical supply and demand rules.

If they pay you 100k for a job... that someone is willing to do for 20k... and is qualified and experienced to do... then they will get 5 of the guys at 20k :P.

Itll be interesting how this all pans out, i'd say get in a profession that can't immediately be in threat from other professions.

I.e City bankers are retraining as maths teachers... because they understand some maths.

Examples:

Doctors,
Scientists
Engineers

Would be good professions.. you cant just get 5 years experience in these professions... and that means they arent at threat so much from other professions.

Oh and im prob biased cause Im an engineer :P

Max_Headroom_3

DD, you're spot on, however there is an argument that ALL house prices have been double what they should be recently, driven there by loose lending, masses of credit and sentiment (buy regardless of price, it'll be more next month).

All those things have now gone so house prices will return to their "real" value, based on genuine affordibility.

If house prices were at double what they should be, then it's entirely possible they'll halve back to reality.

It's your "Sharps/MFI" example, but countrywide and it could happen.

The mistake people make is looking at the peak (last years) prices as "correct" and saying that the depression couldn't halve them. Last years proces weren't correct, they were massively massively hyped. It's only by trying to figure out how over hyped one can try and work out what they should fall back to.

Looking at my own modest house and what it would sell for last year, and the sort of person (earnings) that should be living in it, I have to conclude that it was probably double what was sensibly affordable. The vast majority of people in my road (myself included) could not aford the houses we live in at last years prices. We all afforded them at pre 2000 pricesand they will have to go back there.

The question is, how pre 2000?

skap7309

horseinhatman wrote: »

You make the point really, but all this 25% this, or 50% that is mainly a load of old balls because there is little to no decent stock on the market, and when a decent property does come on the market there is enough interest to get asking.

Forget the buyers and the lack of mortgage, the only people selling will be those who for whatever reason have no other option.

Wow, impressed by your sensible answer. Have we turned a corner?

skap7309

zappahey wrote: »

I rather suspect that estate agents' main interest is getting something sold at all. In these times, maximising the income is going to take second place to ensuring that there is an income in the first place.

I actually agree with heyman, judging by the drivel that EA are spouting off to potential customers who post on here - talking about ''loads of interest'', laughing at seemingly realistic offers etc...:rolleyes:

macaque_2

StevieJ wrote: »

So you are saying that the lenders want to reduce the value of the security on their current loan book by 70% Mmmm.

Yup. And you don't need to be Einstein to work out why.