Why house prices are headed down still

beingjdc

Things are unimaginably bad for house prices, and in fact for the economy in general. I mean worse than I imagined they could be, and I've been a bear for a fair while now. Cross-reading from the BoE Financial Stability report and the Bank for International Settlements work on cross-border bank lending is probably a mistake for my mental health, but I've been doing it.

Our banks owed, as of the end of Summer, £700bn in loans to foreign lenders, *in foreign currencies*. That's around equivalent to all the gap between saving and lending. Since then, the £ has tanked against those foreign currencies, pushing up what we owe - it's Iceland on a small scale. If it's from the EU, we're not too bad, if we've borrowed it from the US, China, or Japan, well...

Many of our big banks are broke. Even with Government support they can barely afford to refinance the mortgages they've already written, let alone push out enough new ones to keep the housing "ladder" going.

The banks which were still solvent and lending - HSBC, Santander, Barclays, are gradually turning out to be massively exposed to the implosion currently happening in some Asian and Central / Eastern European economies. Soon they won't have any money either.

The nationalised banks meanwhile are turning out to be in a far uglier position than thought - they haven't made serious allowances for the further downturn in the price they get for repossessed properties at auction, nor for the likely defaults from their corporate customers.

And we are going to cut interest rates so far that the Government will eventually have problems raising the amount of money it will need to borrow, as we are not a good investment - and that's just money being used in a desperate attempt to keep credit flowing, the money needed to prop up the real, productive, economy is a whole extra barrel.

Flee! Panic! Disaster!

StevieJ

IveSeenTheLight wrote: »

We've known for a long time that in a falling market, where mortgages are harder to get, there will be people in a much harder position to maintain the payments due to the less available re-mortgage options.

You should take heart that the government is working hard to try and ensure that repossession are only done when absolutely necessary.

Remember also, that it is not in the banks interest to repossess a depreciating asset where it is harder to sell on and recoup the lost money.

Is that a joke remark 'take heart' most of the people on here want repossessions so that the forced sales will reduce marginal house prices, thus enabling them to buy their dream home :rotfl: :rotfl: :rotfl:
I may add I am not one of them.

IveSeenTheLight

StevieJ wrote: »

Is that a joke remark 'take heart' most of the people on here want repossessions so that the forced sales will reduce marginal house prices, thus enabling them to buy their dream home :rotfl: :rotfl: :rotfl:
I may add I am not one of them.

Absolutely not.
I would not want anyone to be repossessed and lose their home.

chucky

StevieJ wrote: »

...most of the people on here want repossessions so that the forced sales will reduce marginal house prices, thus enabling them to buy their dream home

that's just the hard-core HPC ghetto - they haven't got a clue

StevieJ

alared wrote: »

Some of us have seen this happen before,late eighties/early nineties.
From the peak of June 2007,you can safely expect falls of at least 50% to the trough,whenever that may be.
When people start to lose their jobs and can`t pay their mortgage (next year) then you`ll see a rapid drop in property prices.
When the bottom is finally reached,prices will remain static for YEARS.
Of course all the people who had their greedy fingers in the property pie will try to talk up the market at every oppotunity.
Afterall it`s in their interest to do so.
This whole mess will NOT be over by Christmas 2012 let alone this one.

Well if you have seen this happen before late 80's early 90's where were the 50% drops? because I didn't notice any.

SingleSue

Well it happened to our house...and to many others on our estate, by the time ours was sold it went for a third of the original price before the recession.

mewbie_2

chucky wrote: »

that's just the hard-core HPC ghetto - they haven't got a clue

I'm bored with this HPC knocking twaddle. The people who will be crossing their fingers, and looking for prices crashing and forced repossessions more than anyone else will be the professional BTL'ers - who really are businessmen and in it for the long term. Assuming they have some cash put by - then they really can be looking to add to their porfolios as prices drop.

In fact any of the bulls on here should be beside themselves with the thought that they can add more property to their collection.

So actually - it's good news all round - isn't it?

loofer

Negative equity isn't really a huge problem as much as it is for people that are desparate to sell or need to remortgage.

People who were coming the end of their fixed rate deals were being moved on to the lender's SVR. Unable to get a mortgage elsewhere (-ve equity or just lenders tightening their belts/requirements) they were finding it hard to makre repayments - leading to repos.

With the base rate dropping (and expecting to drop even further apparently) those people on SVR won't be hit as hard as the last lot over the last 6 months or so (assuming the lender passes on the rate cut).

Sellers not desperate to sell (or disillusioned about what they think their house is worth) will just remove their property from the market. So will this just lead to a dip in the supply of houses on the market? market picks up again?

Banks no longer handing out the 90%/95% LTV so some buyers are having to hold off and save that much more of a deposit. So less buyers also. Prospective buyers will also drive down the selling price as they can't get the mortgage for the house they want. (counters the theory above about market picking up)

Just a scenario I was thinking about earlier today:o

ad9898_3

StevieJ wrote: »

Well if you have seen this happen before late 80's early 90's where were the 50% drops? because I didn't notice any.

The big bad internet wasn't available during the last crashes, now we have sites like this showing the truth of whats happening Steve and its only just begun. Check out the top 10 houses one is 53% down and the others aren't far behind

http://propertysnake.co.uk/

Not the best houses granted, still the drops are their and will only get worse over the next couple of years.

Theodore_Roosevelt_ASH

beingjdc wrote: »

Many of our big banks are broke. Even with Government support they can barely afford to refinance the mortgages they've already written, let alone push out enough new ones to keep the housing "ladder" going.

Several US banks, that have been bailed out by the US taxpayer, have apparently put aside tens on billions of dollars for the usual Christmas bonuses for all the bright fellows who got the system into it's current mess so they could "earn" the enormous bonuses they were given in previous years. Will the same happen in the UK?