House prices. Have they bottomed?

lili2008

Well, have they? Certain voices in the media are sounding very bullish about house prices but it seems to me that if unemployment continues to rise, it doesn't matter how they try to talk up the market, house prices have got some way to fall. Also, for some years now, prices have been ludicrously high. Time was the average joe could aspire to property but that hasn't been true for a while.

So...has the bubble burst? Will house prices fall further, to the point where an ordinary young couple (or single person) can borrow 3.5 times their salary and buy (which has not been realistic for some years)? Or has the market really bottomed and the only way is up?

What do peope think?

tek-monkey

I think if people can afford to buy then prices will rise until they can't, then drop again til they can, then rise til they can't.....

I'm not sure salary multiples are relevant TBH, its just the availability of credit and the comparison to rental prices.

lili2008

tek-monkey wrote: »

I think if people can afford to buy then prices will rise until they can't, then drop again til they can, then rise til they can't.....

I'm not sure salary multiples are relevant TBH, its just the availability of credit and the comparison to rental prices.

Once upon a time, 3.5 times the salary was the guideline for mortgage lending. These days you hear of more irrational arrangements which, I'm sure, contributes to bad lending and the consequences of.

I have a very basic grasp of the issue, though, and would love to hear what everyone thinks.

Cannon_Fodder

The fear of redundancy, as much as those actually being made unemployed, can have substantial effect on sentiment, reducing the numbers who wish to enter the property market.

But on the other side of the market, there have been fewer sellers who wished to accept the reduction in prices, so they haven't gone onto the market.

Along with a quite a number of "cash-heavy" buyers, who have sat out the last couple of years waiting for prices to fall, this has caused the "bounce" in the market, recently.

Due to the demands being made by lenders for higher deposits and cleaner credit histories, there is little likelihood of this period being sustained.

Many commentators, including the CML and RICS, talk about temporary nature of this summers price moves.

Rightmove recently recorded a shift back to lower asking prices, after previously noting higher ones. The exact cause is difficult to gauge. Maybe its more supply - i.e. recent price rises encouraging more sellers into the market. Maybe "cash-heavy" types are running out, so less demand is now present.

Autumn/winter is likely to see the resumption of price drops. Probably until the usual spring bounce gets everyone all excited again...

If you review the Headline history of the 89-96 crash (to be found in several threads around here), you will see that every year there were "getting better" and "normal service resumed" Headlines every few months, and yet 6+ years passed before the bottom was reached.

Those who say you cannot directly compare then with now are correct.

Then, there were no banks collapsing, no banks being nationalised, and a very mild recession...

DVardysShadow

tek-monkey wrote: »

I'm not sure salary multiples are relevant TBH, its just the availability of credit ....

Salary multiples are effectively the availability of credit.

Ian_W

Once upon a time threads like this were all the rage on this board but then MSE invented the Debate house prices, the economy and recession board specially for them - HERE.

besonders1

I could see it taking years before house prices start bottoming out. I also agree with the other posters that there aren't many decent properties to choose from just the overpriced ones swapping EAs on right move. I have noticed that certain "low demand" areas and one bedroom flats are more realistically priced and are falling faster than 3 bed semi's in nice areas.

franklee

The case for down:

Unemployment figures have got to be a key indicator IMO.

Also worth noting is the number of sales which are still way below normal.

Interest rates especially for those on older tracker deals are very low so no prizes for guessing where they will go.

Inflation, also allegedly low with plenty of upside.

Many sellers have been able to afford to hold on, e.g. by buying a new home and renting out the old one. Now this is not quite as easy as it looks so how long can they hold on?

Can lenders go back to irresponsible lending that brought banks to the brink of collapse? Is there an indefinite pit of public cash to bail them out?

The case for up:

The pound is now worth peanuts so foreign buyers can flood in to snap up the bargains.

Kirsty and Phil say house prices only ever go up or Kirsty will eat her hat ...

Conclusion:

Er I dunno

franklee

Ian_W wrote: »

Once upon a time threads like this were all the rage on this board but then MSE invented the Debate house prices, the economy and recession board specially for them - HERE.

I'm not going in there, it's too :eek::eek::eek:

Ian_W

franklee wrote: »

I'm not going in there, it's too :eek::eek::eek:

I nearly added to that post words to the effect -
that you'll get a much better class of house price nutters posting there!

Glad you agree, frank.

franklee

Ian_W wrote: »

I nearly added to that post words to the effect -
that you'll get a much better class of house price nutters posting there!

Glad you agree, frank.

They only allow you in there if you are logged on and I've heard a rumour that they don't let you out again. It's to protect the folks out here from having nightmares. Most lurkers and newbies probably don't even notice there exists as it doesn't even show up in the forum list unless you log on.

When house prices start rising again I expect they will abolish there and let house prices be discussed out in the open again.

Meanwhile few people that venture over there ever come back ...