House Price Crash Website

mystic_trev

lynzpower wrote:

Anyone

Can some one tell me why it will be Sellers packs/hips that are often mooted as the start of the crash. Aside from all the pros & cons of hips that weve discussed to death, why is the HIPS thought to be the start of the crash?

Flood of properties on the market prior to their introduction!

lynzpower

Trev though, why would over supply create a crash

Sorry, this sort of thing is quite new to me, im learning!!

BobProperty

lessonlearned wrote:

....With almost 20 years experience of selling houses I think I've come to the conclusion that for most of my clients, buying a house is seldom a simple financial decision.

Most people buy a home (note the word home) with their hearts and not their wallets and they will move heaven and earth to acheive their goals......

Most purchasers will stretch themselves to their absolute limitto buy the best they can afford, for themselves and/or for their families......

I'm going to ignore the "small island...not making any more land" estate agent VI stuff and just concentrate on the above. See the bit in bold - they can stretch themselves to the limit of the products currently available. When I bought my first property, 3 x income was the absolute max 99.9% of all buyers would be offered. Now you can self dec and get 5 x income apparently. Go and play with a spreadsheet readers, work out how much of your income goes on your mortgage when you have borrowed 5 times income and interest rates are 15% (and they have been that or more twice in my lifetime). Do it with 8%, which is a more typical rate, and see how much you have left to live on. We are heading for "Jam City" scenarios (Jam City is old CB radio speak for an area of modern housing with young families, big mortgage, car on HP, furniture on HP only enough money left to afford jam sandwiches for food)
Going back to the affordability, F_T_B quoted someone on HPC and I agree with their sentiments. The only way that the current affordability can be continued is with the "exotic" American type mortgages, and anyone who takes out one of them (as they say round here) "needs his head feeling".
Finally, how HIPs will trigger a crash: Big rush to get stuff on the market before deadline. Therefore high supply, prices lower. After HIP deadline, reluctance to put property on market due to cost and low prices of stuff already on market which hasn't sold. Props which haven't sold need more price cuts to make them sell. Property coming on the market needs to be realistically priced to compete with the surplus already there. Oh look, property prices are starting to fall...:eek:

Ian_W

I'm not totally convinced yet, but I do think HIPs could be a step in the right direction so I'm perhaps not the right person to answer this BUT....

The theory is that anyone thinking of selling next year will market their property before June and avoid the £600 - £1K costs. The market will be flooded with properties and sellers will have to cut their prices to sell, ergo lower prices will mean a crash. Obviously puts the dumb/smart balance way out of kilter!! :rolleyes:

It does ignore the fact that most sellers are also buyers and the fact that there will be a shortage of properties going on sale post June so it should even itself out in a few months.

If you were cynical [which of course neither you or I are ] you might think it was a scare story being put about by those, like EAs, who oppose HIPs.

Now where's BobProperty when you need him?

EDIT: Apologies Bob - you got in before I did!
So thats it, as explained an over-supply pre-June but an undersupply afterwards? Wouldn't less properties mean higher prices? I am obviously missing something, somewhere.

BobProperty

Ian_W wrote:

....Now where's BobProperty when you need him?

EDIT: Apologies Bob - you got in before I did!
So thats it, as explained an over-supply pre-June but an undersupply afterwards? Wouldn't less properties mean higher prices? I am obviously missing something, somewhere.

Someone already mentioned the word "sentiment". That's what drives markets. Sentiment early summer will be having to lower prices to sell as there will be an oversupply. That's all that happen last time with the removal of double MIRAS. Double MIRAS didn't apply to a lot of people. Of those it did apply to, I suspect a significant number of the people could still have managed to pay for a mortgage without one lot of MIRAS on part of their mortgage. BUT it was the effect it had on market sentiment. Everyone had bought and no-one could sell apparently. Suddenly (and it was in only about 6 months as I remember it) this wonderful investment called property was no longer wanted and prices fell. Why did it suddenly stop being such a good investment? I think fear of unemployment and interest rates which equals risk and affordability. Why so suddenly? I don't know, but we seem to like to pick out an excuse or trigger like double MIRAS removal. Are there any parallels to today?
As a sideline on HIPs, I saw a story somewhere saying that the fine for creating a false one was going to be £200. Which when you are going to charge the customer £600-800 for a typical one looks like a risk worth taking. Now how to add that to my ebay "replacement pay slips" and "car mileometer correction" businesses...:D

lynzpower

I admit I dont really know much about this, but maybe bob you can help me out here.

Property A valued by EA now as 50k over what it was bought for 1 year earlier.

Hips coming in, lots of similar property A's all come on the market, now so vendors saave themselves a grand. ( im not convinced by this happening, we shall see...)

Someone owns a property A, they think, oh well, the hips are going to mean a market is flooded, and prices reduce, maybe i will wait a year to see if prices stabilise.

Or they sell at a smaller profit due to competition, maybe taking 20k over what was paid instead of 50k, thats not a crash in my book, its a correction of the market, which, surely, we need? Unemployment isnt rising really, I dont think the other recession type symtoms are around are they? Or am i being londoncentric again?

Sorry, I just dont get it, have i missed something here?

hitman_uk

I don't know much about house prices - im in council property at the moment with an option to buy at a discounted rate. We can have maximm knocked off which is 26K. My partner an I earn approx mid 30k between us and can afford to buy it. However Im in a position where i can wait as they do not add to the value for 24 months. The rent is dirt cheap compared to a morgage (less than half) which is why im holding on until the baby is out of nurserry (300 quid a month).
Regarding unemolyment this is on the up at the moment in the NW or i must have picked up the wrong conclusion. In the last week alone on the radio ive heard of 2 big places closig down with close to 2.5k people looisng work. Vauxhall in liverpool and a place in wigan. I also work as an outsource manager and work very closley with a bluchip company and through face to face meetings with my client they are lookingat ways where they can minimise staff and use temps instead even in the more skilled roles.
In the future this will surely have an effect as companies either move offshore or get outsourced. I know its a nghtmore for temps to borrow money especially for mortgages.
Or am i just talking rubbish?!? :O)

nelly_2

lynzpower wrote:

? Unemployment isnt rising really, ?

it is they are just manipulating the figures as usuall

lynzpower

Nelly & hitman UK

thats what i mean about being londoncentric, I havent heard of any trends towards greater unemployment here, of course, manufacturing and outsourcing of call centres & the like are happening elsewhere in the country.

Is it that these lay offs are happening more and more, or is it that we are taking more notice. I do know of 2 major companies that outsourced thier back office to india, and are now in the process of bringing them back in house. the LA i work for is bringing some outsourced stuff back in house now as theyve realised what poor VFM it is and how it doesnt work. Seems to be a trend in local govt in london,but again, am i being london centric again?

sanfrancisco

http://news.bbc.co.uk/1/hi/business/4989258.stm

The number of people out of work in the UK has risen to a four-year high, according to figures from the Office for National Statistics (ONS).

http://news.bbc.co.uk/1/hi/business/4996656.stm

"In the past couple of months the interest rate picture has changed and financial markets are expecting the Bank of England to raise rates this summer.