It's obviously overpriced

Emy1501

HAMISH_MCTAVISH wrote: »

Sentiment is not the factor restricting the number of buyers.

House prices are not the factor restricting the number of buyers.

Mortgage rationing is the factor restricting the number of buyers.

Its a bit of all of the above. The agents selling my property have advised that after each of the reports from RICS and Rightmove last month they had buyers either pulling out or dropping the agreed price.

New FSA guidelines mean that lenders have to take affordability into account when lending. The days of 2007 and before where banks lent without checking a buyer could afford to pay are long gone. Also with banks needing to hold more capital high loan to value mortgages are little interest to many banks. Mortgage is not going to improve in the near future and will get worse over the coming years.

over 1m people tried and failed to sell their house last year thats more than actually sold. The figure is likely to be way higher this year when you take into account the amount of properties on the market at the moment etc.

With buyers not being able to afford prices as they are something will have to give. When it comes down it many people have to move at sometime to get on with their lives and with the way mortgages are these days even trying a let to buy is becoming hard work for many even those with lots of equity.

pararct

MadnessOfHPC wrote: »

Dream on, IR's aren't going anywhere.

Course they aren't :cool:

http://www.guardian.co.uk/business/2010/sep/16/inflation-expectations-highest-in-two-years

UK inflation expectations rise to highest in two years

The Bank of England said that inflation expectations for the next 12 months rose to 3.4% last month from 3.3% in May

Not a question of if, now its when!!

HAMISH_MCTAVISH

bullau wrote: »

Exactly. As many have realised and even hamish pointed out, mortgages are not getting any easier to find and as prices fall the mortgage issue will increase.

If ftb's can not get the funds to buy and vendors will not drop prices then the stale mate continues.

And now even the commentators are picking up on it.

From the wall street journal.....

What Good Are Lower U.K. House Prices if Banks Won’t Lend?

http://blogs.wsj.com/source/2010/09/15/what-good-are-lower-uk-house-prices-if-banks-wont-lend/

A very good question.

The situation will only be resolved in one of 2 ways imo. Banks start to lend freely again or prices have to drop to levels that are affordable to more people. I know which outcome my money is on.

There is a third way.....

Those unable to sell rent it out instead. BTL is close to dead, given the funding restrictions in place, but HTL (hold to let) is alive and well as equity rich homeowners rent their current house instead of selling it to take advantage of the rental/housing shortage and soaring rents whilst buying another to live in themselves.

Property consolidates in the hands of an increasingly wealthy section of the population. A generation of young FTB's is locked out of homeownership for a decade or more. And a lot of people who wished for a crash bitterly regret ever being so foolish.

The law of unintended consequences at work......

HAMISH_MCTAVISH

pararct wrote: »

Course they aren't :cool:

http://www.guardian.co.uk/business/2010/sep/16/inflation-expectations-highest-in-two-years

Not a question of if, now its when!!

It's always been a question of when, not if, but in order to have any chance of answering that question correctly you should probably learn the difference between demand-pull and cost-push inflation.

FTBFun

bullau wrote: »

Linking to bearish articles now means that you are being realistic and expect falls aswell?

The percentage of the market that is able to HTL can't be significant enough to actually be enough to represent a third option. There may well be quite a few equity rich that can let their places and buy another but nowhere near enough to make a dent imo.

I do believe that the middle class is going to be pretty much wiped out, the rich will get richer, the poor will stay poor and there will be little in the middle. There may not be a crash of epic proportion but house prices are going to come down one way or another. I do wonder if it is going to play out over a decade or so though rather than the flash crash people were waiting/preparing for.

The middle class is going to be wiped out? What rubbish is this?

HAMISH_MCTAVISH

bullau wrote: »

Linking to bearish articles now means that you are being realistic and expect falls aswell?

I predicted several months of falls this year over 9 months ago.

Therefore I'd hardly be surprised when it happens....

Nothing goes up in a straight line, and further fluctuations both up and down are likely.

But having said that....

1) The bottom for the cycle was reached in Feb 2009. That low won't be seen again.
2) Over the medium to long term, there is only one possible direction for UK property, and it ain't down.

The percentage of the market that is able to HTL can't be significant enough to actually be enough to represent a third option. There may well be quite a few equity rich that can let their places and buy another but nowhere near enough to make a dent imo.

There are roughly 22 million private houses in the UK.

Only 11 million have a mortgage at all.

Of the 11 million that do have a mortgage, the LTV distribution is pretty consistent, from memory, so around half will have more than 50% equity.

So 50% of houses have no mortgage, another 25% have at least 50% equity.

Therefore 75% of homeowners are "equity rich" enough to make HTL a viable proposition.

I do believe that the middle class is going to be pretty much wiped out, the rich will get richer, the poor will stay poor and there will be little in the middle.

Everyone should hope you are wrong.

There may not be a crash of epic proportion but house prices are going to come down one way or another. I do wonder if it is going to play out over a decade or so though rather than the flash crash people were waiting/preparing for.

Further significant nominal falls are highly unlikely. And even if they do fall we've already seen what happens. Supply will dry up, prices will rebound rapidly, rinse and repeat.

However a long period of house prices rising less rapidly than inflation is entirely possible.

So real terms falls may well occur over the next decade. But as that neither hurts existing homeowners, nor helps FTB's forced to rent in the meantime, nobody really cares.

Emy1501

HAMISH_MCTAVISH wrote: »

And now even the

Those unable to sell rent it out instead. BTL is close to dead, given the funding restrictions in place, but HTL (hold to let) is alive and well as equity rich homeowners rent their current house instead of selling it to take advantage of the rental/housing shortage and soaring rents whilst buying another to live in themselves.

Property consolidates in the hands of an increasingly wealthy section of the population. A generation of young FTB's is locked out of homeownership for a decade or more. And a lot of people who wished for a crash bitterly regret ever being so foolish.

The law of unintended consequences at work......

Let to buy is no different to BTL. You need at least a 30% deposit and then a 25% to buy the next house. Few people who have bought over the last 10 years have that and I doubt many people selling FTB properties have the equity to do this.

getting a mortgage is hard enough let alone getting one where you also have to convince the bank that a second property you have will generate enough income to cover a BTL mortgage.

mynameisdave

This is getting rather tedious.

Now I see why MSE created a seperate boad to discuss house prices.