House prices cannot "recover", simple common sense!

Max_Headroom_3

wolvoman wrote: »

You can't use 1996 as a good comparison - prices then were so unrealistically low. People earning the equivalent of minimum wage could buy luxury flats in 1996, that is just silly.

No they couldn't, they could afford what builders refer to as "luxury flats" or "luxury apartments".

I'm afraid that away from property marketing hyperbole, a real "luxury" flat requires a bit more than some laminate flooring, a vase with twigs in, a flatscreen TV, and a kitchen in the lounge.

Thrugelmir

lemonjelly wrote: »

There appears to be a little hesitancy by lenders to repossess too. It costs them to do this, and if there are arrears/NE, lenders are aware that they may well incur a loss.

Some of the big lenders are repossessing properties, but are then choosing not to put them back on the market, yet. They're waiting for prices to increase. I suspect that they also don't want to flood the market. IIRC there are one or 2 lenders holding on to about 5000 properties in England alone. These properties are just sitting there.

My neighbour is over £10k in arrears, yet the lender has been dragging their heels over repossessing for over 8 months now. Actually, was £10k 3 months ago at last court hearing, & I know they've paid nothing since.

Interesting asides. I have a client who went through the bankruptcy option 18 months ago. OR is in control of his assets. He is an OO. To date, the OR still hasn't put the house up for sale.

Another one, a client's lender has repossessed the home in court, but isn't acting to take possession by evicting him. The client has even offered to return the keys, but no-one will accept them.

It's all wierd out there...

All the worst lenders have given undertakings to the Government to be more patient. Thats a contributory factor.

Putting a lenders hat on. Until they repossess. The loss isnt crystalised. So providing they receive a payment in some form. That means the asset is still performing.

Arrears does not equal NE necessarily. House prices are still 100% up over 10 years. So despite people losing their jobs there is equity in their homes. So the bank still owns the asset (house) and providing their is equity in it ultimately will not suffer a loss.

For the longer term it means people will either have to increase the term of mortgage or increase repayments once their income returns.

Its a very complex situation that will take years to unwind.

More than anything makes it likely that prices will stagnate rather move sizably up or down. As the lack or tradeable property on the market will inhibit chains coming together to create movement.

chucky

Max_Headroom wrote: »

No they couldn't, they could afford what builders refer to as "luxury flats" or "luxury apartments".

I'm afraid that away from property marketing hyperbole, a real "luxury" flat requires a bit more than some laminate flooring, a vase with twigs in, a flatscreen TV, and a kitchen in the lounge.

step away from Location, Location, Location and into the real world.

mortgage rates post 1996 is when buying a house became cheaper than ever

the_ash_and_the_oak

not really imo...kinda feeling trend post-96 really not so much buying a house getting easier but more buying a flat instead of a house

Max_Headroom_3

Not saying is wasn't much cheaper then, it was.

But to suggest someone on a minimum wage could afford a luxury flat is nonsense.

chucky

Max_Headroom wrote: »

Not saying is wasn't much cheaper then, it was.

But to suggest someone on a minimum wage could afford a luxury flat is nonsense.

absolutely, combined with cheap rates and and also lowish house prices it became may be the best opportunity to buy property - not for everyone but a much better segment of wage earners.

Max_Headroom_3

Eh? How do you get that conclusion from what I said?

gjchester

I'm sure the banks have money to lend, they are just being choosy who to lend it to. Little dated now but we moved 6 months ago, borrowing just under £150K, and put in a £50K (25%) deposit. This was in November, not quite the bottom of the recent slup, but getting there. At that time we had over 20 mortgage offers to choose from, nothing amazing deal wise, but thats not the point, it wasn't as if we had just one deal. There may have been more a year ago, but 20 is not a famine.

A friend who is due to move in a month or so (solicitors being slow) had a similar situation, not amazing deals but still then had 30 or so possible offers.

The money is available if you are the right customer for the bank, (and the offer we took was with A&L of which neither of us have any accounts with). It's probably also compounded by the fact there are less sales as people were biding their time to see how the markets moved before buying and selling too.

To say banks have no money and are not lending just isn't true, they are just being choosy, which is probably what they should have been all along.

Max_Headroom_3

No one is saying they're not lending.

But the fact remains that they aren't (can't) lend in the reckless massive way that they were which enabled house prices to rise as they did.

It's physically impossible and has been proven to be totally unsustainable and resulting in banking collapses.

Hence my initial point, it's not possible for property prices to spiral back up to where they were, the finance is no longer there.

the_ash_and_the_oak

wolvoman wrote: »

You can't use 1996 as a good comparison - prices then were so unrealistically low. People earning the equivalent of minimum wage could buy luxury flats in 1996, that is just silly.

We will never see 1996 prices in real terms ever again.

just want to come back to this and say just because a house is cheap does not mean it is easily affordable. if the finance is expensive and a high deposit is required then the a significantly reduced house price doesn't make it any more affordable