Have house prices dropped?!!

mummytofour

MrsPitcher2b wrote: »

Last week, we went to see a 2 bed flat which has been up for sale since oct 2008.

It was up for sale for Offers greater than 130k. we offered 120, and was told by the agent 'You do realsie they want offers in excess of 130'... So i said yeh but we arent willing to go higher than 130.

So then he comes back to me and says 'nope they are looking for around the 150-155k mark. Bearing in mind we can buy a 3 bed house in the same area for 170k (Which is alot bigger!) I said i wasnt willing to stretch myself for a flat when i could get a 3 bed flat at a strech.

They bought the flast 3 years ago for 145k, so i can see why they dont really want to lose money, but do they not realise prices have come down!!

Or have prices come down!!! I cant seem to find anything other than run down repossesitoons which you wouldnt get amortgage on because it has no kitchen/bathroom...

Grr, i hope it starts dropping a bit more soon!! We can afford some places, but they are places that wont ever really go back up, and will continue to drop because of the terrible area!!

I guess if the owner purchases for a certain price they may NOT be able to sell for less due to owing on the mortgage.

whathavewedone

We bought in 2007 but it wasn't a 1 bedroom box.

It was a 4 bedroom, 3 storey victorian house close to great schools and where we plan to stay until the children grow up.

If prices went back to 2000 levels then we would be in negative equity but so what? We can afford our mortgage easily on one income, have 30k in savings which we add to each month to cover us if interest rates go into double figures if we have to go on the SVR at the end of 2011. Of course if interest rates do go up then that means inflation which means property prices will rise again which will mean we ought to be able to fix our mortgage again once we get out of negative equity.

I can see why people in family homes aren't reducing their prices tbh. They are likely to be downsizers testing the market. Having tested it they will either take their houses off the market until it rises again or leave them on the market indefinitely. The market WILL rise again. For people in their late 50s or in their 60s who were just thinking of moving to a smaller place to free up some money to go on lots of nice holidays in their retirement etc why on earth would they sell now?

abaxas

mark5 wrote: »

The average wage now is higher than it was in say 2002 its called inflation,

You forget about inflation eating into wages.

If anything people have less disposable income now than they did in 2002.

tommy75

whathavewedone wrote: »

For people in their late 50s or in their 60s who were just thinking of moving to a smaller place to free up some money to go on lots of nice holidays in their retirement etc why on earth would they sell now?

Because they realise that they will be in the late 60's & 70's if they want to get anywhere near what they still may be able to get now?

whathavewedone

Mmmm.

If potential downsizers shared your certainty about that then perhaps they would be lowering their prices now.

That doesn't seem to be happening.

Perhaps they don't share your certainty?

Alternatively they see it as a possibility but would prefer to downsize ten years later if need be with more money in the bank to enjoy life.

If I was 60 there is no way that I would sell my house in this market. Supposing you had a house that was valued at 500k in 2007 - you might have to reduce to 350k to secure a sale now, possibly even more than that if your house was dated as a lot of older people's houses are. That's not a huge amount of money for a 60 year old couple to buy a new place with and enjoy life with. People live a lot longer nowadays.

I don't necessarily share your absolute confidence that prices won't rise for at least ten years but if I was 60 odd I would be prepared to wait it out. 60 is pretty young these days.

Our neighbours are 92 and 96 respectively and manage to live in their 4 bedroom house just fine. They've lived in it for over 50 years. Seen a few recessions in that time!

I also think that the low interest rates make it unattractive for people to downsize right now.

Someone else mentioned recently that during the last recession when prices were really low all that was on the market was crud as everyone else was hanging on. I see the same scenario this time round only with bells on as interest rates are waaaaaaaaaaaaay lower, you can transfer to interest only etc.

tommy75

whathavewedone wrote: »

If potential downsizers shared your certainty about that then perhaps they would be lowering their prices now.

That doesn't seem to be happening.

Perhaps they don't share your certainty?

What desn't seem to be happening? Alot of sellers are reducing their prices now as they have to if they want to sell. Just like they have since 2007.

whathavewedone wrote: »

I don't necessarily share your absolute confidence that prices won't rise for at least ten years but if I was 60 odd I would be prepared to wait it out. 60 is pretty young these days.

You don't? Have the recessions of the last 40 years been any different? Does this recession not look like its going to be worse than any other in history?

whathavewedone

It didn't take 10 years for house prices to start rising last time. By 2000 they were a lot higher than they had been in 1989.

Also prices fell more slowly last time so it took a long time to hit the bottom. I think we will see the bottom by the end of next year, followed by a couple of years of a flat market/small growth in high prices and then people will be piling into the market again.

People adapt to their circumstances. FTBs know they need substantial deposits so they are saving because they can't get 95% mortgages any more. Once people have saved a decent deposit and house prices have fallen to 2002 levels say people will pile in. Then confidence returns and the cycle changes.

It might take 10 years for prices to return to 2007 levels but they won't keep dropping/stay flat for that length of time. Any seller that doesn't have to sell would prefer to sell in a rising market (not necessarily the top, most people don't know where that is at the time).

If you sell in a falling market people can expect you to sell below the current market value and may also gazunder you just before exchange. This is not a very attractive prospect.

You are looking at this from a buyer's perspective which is understandable. I'm not selling but I do own a house and I can tell you that nothing would make me sell in this market apart from the threat of repossession and by that I don't mean the remote prospect of it happening in the future for fear of my husband's business going down the tubes (no signs so far), I wasn't able to get a job (unlikely I'm a property litigation lawyer an area of law that booms in recessions), interest rates going sky high in the future (quite likely but we have savings to cover that eventuality) I mean it would have to be an absolute certainty that was staring us in the face if we did not sell and quickly.

You can argue the toss with me and other home owners about this until you're blue in the face but the fact of the matter is that it is not a good time to sell and people will not do so seriously (ie aggressively reducing the price) unless they have to/are utterly miserable and cannot face living in their one bedroom flat for the forseeable future. People with big nice houses are less likely to be in that position unless the couple is divorcing.

exil

Well said. Whilst a few people might want to take a flyer, sell their house and rent it back (or rent another house) until the price rises back to its present level, Murphy's law would probably mean they did it at exactly the wrong time and the market would start heading upwards before they could react. And as soon as it does happen then we will be back in the world of the seller's market, gazumping and the rest of it. Who would put themselves through that unless forced to by redundancy or divorce? If I had to move house now I would rent out my old one, not sell it.

tommy75

whathavewedone wrote: »

It didn't take 10 years for house prices to start rising last time. By 2000 they were a lot higher than they had been in 1989.

Also prices fell more slowly last time so it took a long time to hit the bottom. I think we will see the bottom by the end of next year, followed by a couple of years of a flat market/small growth in high prices and then people will be piling into the market again.

People adapt to their circumstances. FTBs know they need substantial deposits so they are saving because they can't get 95% mortgages any more. Once people have saved a decent deposit and house prices have fallen to 2002 levels say people will pile in. Then confidence returns and the cycle changes.

It might take 10 years for prices to return to 2007 levels but they won't keep dropping/stay flat for that length of time. Any seller that doesn't have to sell would prefer to sell in a rising market (not necessarily the top, most people don't know where that is at the time).

If you sell in a falling market people can expect you to sell below the current market value and may also gazunder you just before exchange. This is not a very attractive prospect.

You are looking at this from a buyer's perspective which is understandable. I'm not selling but I do own a house and I can tell you that nothing would make me sell in this market apart from the threat of repossession and by that I don't mean the remote prospect of it happening in the future for fear of my husband's business going down the tubes (no signs so far), I wasn't able to get a job (unlikely I'm a property litigation lawyer an area of law that booms in recessions), interest rates going sky high in the future (quite likely but we have savings to cover that eventuality) I mean it would have to be an absolute certainty that was staring us in the face if we did not sell and quickly.

You can argue the toss with me and other home owners about this until you're blue in the face but the fact of the matter is that it is not a good time to sell and people will not do so seriously (ie aggressively reducing the price) unless they have to/are utterly miserable and cannot face living in their one bedroom flat for the forseeable future. People with big nice houses are less likely to be in that position unless the couple is divorcing.

I pretty much agree with what you have said. I didn't say that I thought houses would still be losing value in 10+ years time and agree that things should be settled hopefully by the end of 2010. I don't think there will be a certain point where FTB will pile in. People will buy in when its finantially right for them all the way down and all the way up next time.

QTPie

whathavewedone wrote: »

I also think that the low interest rates make it unattractive for people to downsize right now.

Someone else mentioned recently that during the last recession when prices were really low all that was on the market was crud as everyone else was hanging on. I see the same scenario this time round only with bells on as interest rates are waaaaaaaaaaaaay lower, you can transfer to interest only etc.

Agreed, this is why we are having problems - looking at larger 4/5/6 bedroom family homes (anyone selling one is likely to be down-sizing).

Buyers us to virtually give them (and pay for the privelege!) our 4 bedroom, 5 year old, immaculate "smaller family" house. Yet those in the houses we want to move to aren't budging (if they can't get "late 2007 and then some" prices, they stick there or remove them from the market). We just cannot afford to up-size (i.e. sell at "2004 prices", but buy at "2007 and then some prices) at the moment.

QT