House prices cannot "recover", simple common sense!

Max_Headroom_3

On the news today they were on about house prices "starting to recover", as though the downward trend we've been experiencing has just been a blip before the recovery to "normal".

Thing is, this came as the second item after a long account of the billions upon billions of unrecoverable losses the banks are suffering.

Does it not occur to people that the only reason that house prices were able to reach the level they did was by banks lending more than borrowers can physically afford to pay off?

Now even if the public were still in the same financial position that they were a year or two ago, the banks are physically unable to lend at the sheer quantities that allowed house prices to reach the levels they did. So house prices could not possibly reach the levels they did.

But we're not are we? We're all skint or out of work or on short hours or reduced pay or scared to death that we will be out of work.

And as if that weren't enough, the main reason people were able to be frightened into spending far more than they should was because they were repeatedly told (and believed) that if they didn't borrow silly money and buy now, they'd have to borrow even more next month and more the month after. And if it all went wrong they could sell for a profit anyway so where's the risk? I think it's fair to say that that sentiment has now been well and truly buried.

So how is this "recovery" back to "normal" going to be financed? Where's the money going to come from? And why will people spend it in the same lemming like way?

Forget the charts and trends and percentages, look at common sense. The silly lending is gone, taking a huge swathe of income with it, and so has the logic to overspending.

I walked past an estate agent today, and a grotty tiny 2 bed house in the worst part of town with a front door that opened straight onto the street which is a major traffic route permanently snarled up with traffic was in the window for one hundred thousand pounds...!

Believe me, this house price crash has some way to run yet.

Forget the charts and the graphs and the percentages and the science. Just apply a little common sense.

PasturesNew

Houses at twice an "affordable price" are !!!!!! aren't they.

Can't even buy a !!!!!! house.

It's a !!!!!! world.

carolt

No, good world, but overpriced houses.

Xaviera

They were overpriced at the boom and now people who own houses think we'll get back to those prices....they're convinced everything will be back to 2007 in no time. :rolleyes:

It's just not sutainable.

Graham_Devon

Max_Headroom wrote: »

So how is this "recovery" back to "normal" going to be financed? Where's the money going to come from? And why will people spend it in the same lemming like way?

I'm begining to think a lot of the money is coming from equity, of which many people have amassed shed loads.

Those with that equity can often move for very little in terms of borrowing.

For the rest of us, say 30 and under, or those who have no equity, we just cannot see how houses are affordable.

I've said it before. It's a have and have not world out there. The haves are only "haves" because of the boom half the time, the have nots, missed the boom and are now paying the price....again.

Pete111

It's true.....and yet there appears to be a leeetle trend going on currently with all the major indices

( I am now about to be squashed by a large, bouncing deceased moggie..)

Personally, I would love prices to rise. Don't think they will be getting back to 07 anytime soon tho...ah well.

Max_Headroom_3

Interesting thought, but not sure I buy that.

I've got 100% equity in my house, so I could move to a slightly bigger house (if I had a job) for not much. Fine. But someone has to buy my house for that to happen, and ok they could have lots of equity but then someone has to buy theirs.

Somewhere down the line someone has to be borrowing. And the lending rates and the income and the sheer desperate need to borrow has all gone.

Max_Headroom_3

PasturesNew wrote: »

Houses at twice an "affordable price" are !!!!!! aren't they.

Can't even buy a !!!!!! house.

It's a !!!!!! world.

I was staggered when I saw this place for that money. Even as a starter home you'd need to be desperate, really desperate. And really really poor, bluntly.

And desperate and poor people do not have the ability to borrow the best part of one hundred thousand pounds.

It's things like this that remind me just how completely removed from reality house prices still are.

I think we've detached from understanding the value of money. And currently we're all re-attaching...

Graham_Devon

Max_Headroom wrote: »

Interesting thought, but not sure I buy that.

I've got 100% equity in my house, so I could move to a slightly bigger house (if I had a job) for not much. Fine. But someone has to buy my house for that to happen, and ok they could have lots of equity but then someone has to buy theirs.

Somewhere down the line someone has to be borrowing. And the lending rates and the income and the sheer desperate need to borrow has all gone.

Well this is the thing. Somewhere down the line has been the BTL landlord taking the FTB houses, and it seems, from what I can gather, this is still happening, not on as grand a scale, but still happening.

Then you got all those kids in which the bank of mummy and daddy make their deposits for them.

I think at this point, it's this which is keeping things floating, as remember, the turnover of houses is still small compared to history.

I certainly don;'t think it's your average joe bloggs families out there saving and earning who are buying the houses. I think it's BTL's thinking the prices have bottomed and rich kids, who are buying the more lower end, and all those with equity moving around at their leisure.

Max_Headroom_3

I suspect there are some BTL landlords daft enough to plough in now, but maybe not enough to shape the market as they have in the past.

And I suspect that the Bank of Mum & Dad still exists, but the urgency to get Junior on the ladder whilst prices are "still within reach" has gone, as has the feeling that any equity taken out will quickly be replaced by further house price rises. So again, yup probably still a few, but enough to shape the market?

Sooner or later it has to fall back to what real people can really afford.

Pete111

I know a couple of BTL Landords.

They are still looking and still buying. A little more carefully perhaps, but still buying.