50% drops by 2011

Yoshua

Do many others agree with this?

http://jp.youtube.com/watch?v=QzvuS22HnSY

Obviously many don't WANT to believe it so will try to justify somehow, but It makes sense to me.

I`m waiting for them to bottom out and finally get on the ladder, better start saving for 2011.

envelopes

I can't believe that it lost my post:mad:

Ok, I can't hear that clip cause my speakers are broken but i get the gist.

Not sure why 2011 is the set year but hopefully the government will have plenty of time in the mean time to work their mess out.

Firstly there are loads of variations here cause different areas have different house prices- eg a home that costs 6000K in Wimbledon would only be worth 3000K in a similar suburb of Manchester and i think that at some stage, house prices will need to be brought more into line so I am not sure that falling prices will be universal.

Also, if you shop around now, you may find a row of terraced homes and I will quote approx North West prices, with the home on the end being worth £99k, the house on the other end £140K and one in the middle £120K - they all have the potential to sell at £140 but if the one at the end valued at £99K (needs modernising) happens to be reposessed, it's value then may drop to £70K - ah a half price house.

WE have a friend who is an estate agent - bought end of terrace that needed remodernising, he bought started work - we have several friends actually that this has happened to and then the market changed and he knew that his prospective market just couldn't get a mortgage so all these friedns have had to rent - one of them is loosing £100 a month on the mortgage and if mortgage prices start to rise he will have to sell at a loss of have it taken back by the bank - this will essentially throw a "cheaper" house onto the market - yep, some houses will become a lot cheaper but houses will only be cheaper if people HAVE to sell them.

Back in 1987 an average terrace may have cost approx 15K ( North west town) then house prices rocketed but there were mass reposessions - the empty terraced houses doubled in price and i think must have made the mortgage companies a decent bit of money - it appeared at that time that a lopt of people jumped onto the property ladder because prices were rising so much they daren't not get on in case they couldn't afford to - getting a mortgage was a doddle and of course the lenders wanted their money back for the repos. The interest rates started to rocket further and because people a) could no longer easily afford to buy due to house prices and Due to the massive rise in interest rates the house market fell pretty stagnant and lots of people had negative equity BUT that 1987 15K house that had risen to 30K as a repo in 1989 only dropped to around 25K - so the market didn't half. Those who could held onto their homes and managed to recover rather nicely.

The saving grace right now is that the interest rates haven't hiked right up - if the reposessions can be avoided this time round then i can't see why house prices should fall so low.

Lenders aren't lending so its not all that easy for FTB to get onto the ladder anyway although i know that some lenders have relaxed a little now, back in may no one was able to lend anything and as a result no one could sell lower down the market - property is stagnant and that is a worry.

Also as far as i can see, homes aren't being valued at any less but there are lots of people sat waiting for the bottom to fall out - understandably FTB's but the private landlords and anyone in property/development who manages to stay afloat are waiting and watching for the kill -there will be drops on all property across the board but dropping by 50%, no, some property unfortunately yes.

Yoshua

envelopes wrote: »

Lenders aren't lending so its not all that easy for FTB to get onto the ladder anyway although i know that some lenders have relaxed a little now, back in may no one was able to lend anything and as a result no one could sell lower down the market - property is stagnant and that is a worry.

Also as far as i can see, homes aren't being valued at any less but there are lots of people sat waiting for the bottom to fall out - understandably FTB's but the private landlords and anyone in property/development who manages to stay afloat are waiting and watching for the kill -there will be drops on all property across the board but dropping by 50%, no, some property unfortunately yes.

Where did you get that from that lenders are relaxed a little now?

As I see it the oposite is true. Where is the money going to come from? Why would banks lend more money to buy something they know will be worth 50% in a few years?

Anyone in property development will lose half their money and thats why they are desperately trying to sell now, the only places being sold at the moment are the very very cheap offers being accepted, and the buyer will regret it in a few years when they see its only worth half what they paid.

The demand for houses isn't about what we want. It isn't about wishful thinking. It's about the availability of credit – the actual ability of people who want houses to buy houses. And the current lack of availability of credit – there are many fewer mortgage products out there than before, and the remaining ones are pretty pricey - means there is very little demand for houses.
That's why mortgage approvals are at record lows. And that's why house prices have fallen 20% in the last year. It is also why they are going to keep falling, fast. Not long now and that lack of demand is going to be met by a huge flood of supply on to the market. And this will be no ordinary supply. It will be desperate supply. The unemployment numbers are beginning to tick up and as we move into recession, they are going to soar. And as the newly unemployed move into default on their mortgages, so their houses will move on to the market.

vigesimal

Nationwide mortgages are going up today. Another bank put its tracker rate up on the day the BofE dropped the rate. Even our own bank Northern Rock is only dropping it's rates by .15% in response to the .5% BofE drop.

Banks want their money back from some customers and are aware of the ever increasing reality of more house price falls yet to come. They are reluctant to loan too much of the current value of a house as they quite rightly want the house owner to lose their own money in further house price falls.

stevetodd

I am focused on the London market, sorry but 50% just aint going to happen (ignoring overpriced new builds which will of course drop probably by 50% or more from their unrealistic original price tag).

You don't need to look further than the spread betting prices for the best information as you can actually trade on these prices now, buying or selling so the market makers would lose a fortune if they get it wrong badly. Of course yes it might turn out different to the mid spread price but what I am saying is this is the best info and they are indicating approximately 37% drop from summer 2007 for london prices.

I do agree with the timing of the bottom though, I think the market will be dire for 2 years then scape along at that level for a while before picking up

RDB

stevetodd wrote: »

I am focused on the London market, sorry but 50% just aint going to happen (ignoring overpriced new builds which will of course drop probably by 50% or more from their unrealistic original price tag).

You don't need to look further than the spread betting prices for the best information as you can actually trade on these prices now, buying or selling so the market makers would lose a fortune if they get it wrong badly. Of course yes it might turn out different to the mid spread price but what I am saying is this is the best info and they are indicating approximately 37% drop from summer 2007 for london prices.

I do agree with the timing of the bottom though, I think the market will be dire for 2 years then scape along at that level for a while before picking up

That's possibly the stupidest thing I've ever heard. Property is an extremely illiquid asset. It's also one of the most dependent on easy credit for its value. So all the spread betting prices, no matter how cheap they are, you are losing control of both when you can`t get your money back; and pretty much guaranteeing that your capital will depreciate as the market continues to weaken.

London more so than anywhere else, the bigger they are the harder they fall.

stevetodd

RDB wrote: »

That's possibly the stupidest thing I've ever heard. Property is an extremely illiquid asset. It's also one of the most dependent on easy credit for its value. So all the spread betting prices, no matter how cheap they are, you are losing control of both when you can`t get your money back; and pretty much guaranteeing that your capital will depreciate as the market continues to weaken.

London more so than anywhere else, the bigger they are the harder they fall.

You don't have to explain the housing market to me I am a chartered surveyor and I also own 5.5 properties.

I think you probably think it's 'one of the stupiest things you have ever heard' because you do not understand the content of my post. The spread betting prices are merely financial firm's opinions of how far the market will fall considering all the factors you mentioned. You can either bet it will be worse or better than their prediction. The spread prices are merely a reading of the housing market, I have no idea what you think they are from your post, what do you think they are?

Yoshua

Uncertainty about the banking system is causing this panic in the credit markets. Innocent bystanders are suffering from the fallout from this credit bubble.
For example, I've read several accounts of hedge funds whose assets are stuck in the black hole that is Lehman Brothers' balance sheet. I'm not referring to people who own Lehman bonds, I'm referring to funds that had custodial agreements with Lehman. Custodial agreements are supposed to ensure that Lehman could only execute trades for the pool of assets under its custody - not take actual possession of the assets.
It seems that in the days and hours before declaring bankruptcy, Lehman moved certain assets - many of which it did not own - to its subsidiaries all around the globe. Now, hedge funds with no perceived credit exposure to Lehman are joining the line of creditors, fighting to get their clients' assets back in bankruptcy court.
This total destruction of confidence in counterparty risk is the reason why credit is drying up.

dizzie

Don't think it will be as much as 50% in our area (north england). Our property has appreciated by approx 217% from 1993 to 2007 (approx £150K to £475K). If this drops such that by 2011, it is worth £237.5K, that will mean annual appreciation over 18 years of under 2.6% per annum. I don't think that they will fall that far - or if they do, I would predict a rebound in prices thereafter. Would maybe envisage a 36% drop at worst (bringing average appreciation back to 4% per annum).

I do agree though that house prices are massively inflated and that this can not be sustainable. I would welcome a correction that would mean that our children may be able to put a roof of their own over their heads when they grow up...

MissMoneypenny

House prices seem to be dropping in the parts of north England I know.

This one in a nice area and near the castle, would have been about 80 - 90k in 1997 and about 200k in the peak. Property Bee showing it has now dropped in price from £173,950 in April 08 to an asking price now of £139,950 and still not sold
http://www.rightmove.co.uk/viewdetails-19942439.rsp?pa_n=1&tr_t=buy&mam_disp=true

http://www.nethouseprices.com/index.php?con=sold_prices_street_detail&street=WESLEY+CLOSE&locality=SOUTH+CAVE&town=BROUGH&cCode=EW&year=All&house_style=All&house_age=All&search_radius=&outcode=HU15&incode=2EJ

Kong_2

Interesting video and all that but don’t forget Jonathan Davis the ‘expert’ in the video has been banging on about house prices crashing for years and he thought he would be clever and make a quick buck by selling his house to rent (STR) back in 2002 and then buying back after the crash. Well that back fired didn’t it - not taking any advice from you thanks mate!! He and his chums at Capital Economics were talking about a 30% crash from 2002 levels http://news.bbc.co.uk/1/hi/business/2577069.stm .

I am sure that prices will continue to fall but by 50%? Not from where I am standing but I am not an ‘expert’ so what do I know.