But, but, but.... they said it was a bull trap.

HAMISH_MCTAVISH

nembot wrote: »

I would really like someone to explain to me how 80,000 people can lose their job every month and no reals signs of it stopping, yet somehow house prices are rising?

I'm all ears...

There is a MASSIVE shortage of housing. There are 250,000 households being created a year and only 100,000 houses being built.

The bears are correct in some ways...... there is no doubt that mortgage rationing, credit shortages, onerously high mortgage rates (particularly for FTB's and those without huge deposits) and unemployment are having a very negative impact on house prices. They are still down 14% from peak after all.

But they are rising again, have been for 6 months now, and about to go 7 months by the look of things. Because all those negative have now been proven to be a weaker downwards force on the market than the underlying upwards pressure from the huge supply and demand imbalance.

In other words, if prices can rise for 7 months in the middle of the worst set of economic and unemployment results since the great depression, just imagine how fast they'll rise once the economy and employment really do start to improve...;)

HAMISH_MCTAVISH

tom.daniel wrote: »

Simple supply and demand. There are so few houses coming onto the maret at the moment there are lots of buyers for each property, therefore keeping prices artificially high.

Not quite. These prices aren't "artificially" high, they are just at the natural level of the market.

As job losses continue and more people lose their jobs there will be more and more propeties coming onto the market and prices will fall further. Even agents are expecting the market to struggle come october time

Again, not quite. There will not be a flood of properties onto the market. Too many people are in, or close to, negative equity. Around 3.5 million last time I checked. So those houses are gone until prices recover. Plus of course another few million who wouldn't get a good mortgage rate as they now have less than 25% equity. They won't sell either.

The potential supply of houses, already well short of demand, has been reduced by millions because of lower prices. These people won't sell unless forced to, but we know the reposession stats are tiny. Less than one months worth of sales for the whole year of repo's. Simply not enough to drive down prices.

Interestingly ive just had my flat valued at the same price as 2007! we have made a couple of improvements, but just cosmetic. I think agents are still valuing too high

Depends where you live and what kind of flat. Some areas are already back to within a few percent of 2007 prices. Some are still well down.

chucky

shakerbaby wrote: »

Too few transactions and the ones going through are expensive properties to cash buyers so all stats are being skewed. Don't believe the hype it is very much BAU for this crash.

comprehension is difficult for you even with the simplest logic - but this man below explains it for you... :T

HAMISH_MCTAVISH wrote: »

Not exactly true.

There were 76,000 sales last month and 55,000 mortgage approvals.

Whilst the ratio of cash buyers to mortgage buyers has certainly increased since 2007, mortgage buyers still outnumber cash buyers by almost 3 to 1, and the gap between mortgage buyers and cash buyers is increasing every month as mortgage approvals rise.

Furthermore, many of the indices are mix adjusted, to avoid precisely the type of skew towards more expensive properties you mention.

And what cash buyers there are should actually be paying LESS for properties, not more, as they are in a far better position to negotiate. In fact the boards are full of stories of people accepting lower offers from a proceedable cash buyer rather than accepting higher mortgaged but possibly non-proceedable offers. Cash buyers drag the average down, not up.

HAMISH_MCTAVISH

tom.daniel wrote: »

By artificially high i mean that there is further to fall when you look at the economy as a whole.

Possibly, but I doubt it. I'm sure we'll see further falls over winter, followed by further rises next year. I don't expect that we'll see the lows of feb 09 breached again on average though.

Lots of housebuilders have huge stocks of land which arent been built on, again to try to help prices and also because they are short of funds.

Yes they do, but that land was bought at previously high prices. The reason they haven't built is because it's not profitable to do so until prices rise. So they reduce supply, and prices rise. They won't suddenly overbuild to drive prices down again.

If you fall into negative equity it doesnt mean that you wont sell, it all depends on your situation. I believe we will see an increase in supply next year

I think most peoples situation is such that they simply cannot afford to sell from a position of negative equity. I also think that most people on existing mrtgages are on far better deals than can be had today, and porting a mortgage is still difficult.

As prices rise back to 2007 levels, there will be an increase in supply for sure. But if that increase is big enough to cause prices to fall back again, then a lot of those properties will be withdrawn again, or just not sell. If people can't afford to sell for 15% below peak now, it's unlikely they will do so next year or the year after either.

The inability of so many millions of people to sell at 15% off, or 20% off, or 25% off peak prices has created a regulating mechanism. As prices fall to these levels, the availability of stock reduces so much that prices rise again.

Thrugelmir

HAMISH_MCTAVISH wrote: »

Hardly.

1. Rates of 6% to 8% in the next decade are extremely unlikely... The base rate stayed at 2% for 18 of the 20 years after the last recession this serious.

2. Inflation, even low inflation of around 2%, will massively reduce the real cost of debt service over 25 years.

3. Buying is still a far better proposition than renting over any 25 year period, let alone versus renting for a lifetime. Even buying at peak, and even if HPI is minimal for the next 2 decades. (which of course it won't be)

The only thing worth getting all :eek: about is the concept of renting (paying someone elses mortgage) for any substantial time.

6% to 8% are hardly extreme. Many are already paying these rates.

Wage inflation under 2% is no compensation for 6% rates.

A 2% differential makes a real difference between owning a home and an investment.

HAMISH_MCTAVISH

tom.daniel wrote: »

People will always need to sell, death, divorce, migration etc

Yes they will. But they are only a small percentage of the market.

I think thats what we were seeing when prices were falling so much last year. It was only the forced sellers that were selling, and discounting heavily, as almost nobody was buying.

Transaction numbers have increased greatly since then, and as more people return to the market the supply of forced sellers quickly dried up and buyers had to start raising offers to access the non-distressed stock.

HAMISH_MCTAVISH

Thrugelmir wrote: »

6% to 8% are hardly extreme. Many are already paying these rates.
.

Very few people are paying 6% to 8%. Only a few idiots daft enough to have a sub prime type of mortgage from pre 2007, and those without a decent deposit looking for a fixed rate mortgage today.