MSE News: Halifax: house prices dive in record plunge

mustrum_ridcully

MobileSaver wrote: »

I don't dispute that some people will be in this situation but I believe most people simply choose to move home and they can just as easily choose not to if the market isn't attractive.

A falling market isn't attractive for the following groups:
- Property speculators wanting to sell their properties (I'll include BTL here)
- Those stuck in negative equity (or with too little equity)
- Those downsizing (and wanting to pay off mortgage and live off the money they have left)

The majority of home owners don't fall into those groups.

Most people move because they want/need a bigger house or because they are moving town and so long as they have enough equity they'll benefit from low interest rates and lower prices. Although it might will take a while for people to realise this and it'll become the new 'group-think'.

I'm sure there will be a reduction in the number of houses for sale, but it might not be as big as some people imagine.

The important thing to remember is mortgages will be harder to get for the next few years at least (due to new regulations and lenders being more cautious in a falling/stagnant market) so many people won't be able to keep their old house to rent whilst buying a new one.

When_is_the_reset?

rickbonar wrote: »

I think it's fairly obvious that the house price boom went too far and we're all paying a price indirectly right now.

The problem I think stemmed from the fact that there were little legal restrictions in place like some other countries have. With banks & building who loaned mortgages and were estate agents at the same time could tell you the house prices were anything they thought they could get away with charging and the envelope was pushed to the limit.... and it went just a little too far.

I mean some little semi worth half a million nicker??? ..... Several times what an average earner would make in his life!

The bankers and financial institutions made millions though.

I remember just before the financial crisis started back when Northern Rock were crumbling the bankers were waffling on about mortgages that would last 2 or 3 generations.... your children to complete them and so on.. :- yes they did come up with one as they realised that the house prices just could not keep on going up and up at the rate it was. ...

Projecting it just a few years ahead you could have a one bed flat selling at £2 million and only be earning £20,000 a year... that was a potential scenario ... £23,000 apparently is the median wage now isn't it? I think I read that somewhere recently but can't find the reference on the internet.

Quantitative easing is still eroding the true value of your money - you've only got to look at foreign currencies like the Aus $, Swiss franc, euro, gold to see that Brown & co with the Banks measures were like a pickpocket masquerading as a charity donor.

Yes house owners are all holding on to the top price their house was valued at and not dropping the price. But who is going to buy it?

When more people start losing their jobs with the cuts and the interest rates go up, more people will struggle to pay and repossessions will happen. This in turn will send prices down further.

So people with houses will just say well we’ll rent it out but again … who to?
The benefits office is capping the amount they will pay too as at the moment we all know will pay up to £2000 a week. This is set to be a max of £400 a week and I believe even this is too much.

So I think the rents will fall too.

Excellent post.

What he said +1

rickbonar

I wonder though why Halifax has put this info out though as over the last couple of years they've generally said prices were rising. (usually selecting districts that were rising). Nationwide a week or so later tended to be a bit more honest and say prices were falling but "not significantly" and put a positive spin on it.

Now the only real guide to house prices sales is the land registry and they're always some months behind the times as they show what sold in previous months as the records up to date aren't published until they're listed and compiled.

Halifax may be giving a high fall figure this month just so the next couple of months looks as if it's bouncing back you know to con a few more buyers into the market. ( the marketing backroom boys are on a new strategy)

GillsMan7

mustrum_ridcully wrote: »

Spoken like a property speculator... or someone who isn't good at maths... or both.

I'll give you an illustrated example of why falling house prices can help sellers/buyers (in this example a growing family moving up the property ladder).

2-bed starter home current value £100k (mortgage paid off to make life easy)
...blah, blah, blah, waffle, etc

What I actually said was that this news won't bring out the massive free-for-all on rock bottom priced houses that some people think will happen. And I provided some reasons why. That's not to negate your points particularly, but I was just throwing in a note of caution to the whooping masses.

I'm not a property speculator and I have a reasonable command of maths. I've just got a firm grip on reality tbh.

tawse57

Yesterday Was A Bad Day For Property Bulls

http://www.moneyweek.com/investments/stock-markets/the-uk-stock-market-is-getting-riskier-by-the-day-04011.aspx

The Halifax housing market index was a shocker. Prices fell by 3.6% in September from August - the worst monthly reading on record. That took the year-on-year rate of house price inflation to -0.7%. It's the first time this has been negative since October 2009.

Also, the IMF warned that UK house prices could "correct" further.

All things considered, yesterday was a bad day for property bulls. As Merryn Somerset Webb says in her latest blog, Even ultra-low rates can't prop up house prices for ever.

beccad

rickbonar wrote: »

Projecting it just a few years ahead you could have a one bed flat selling at £2 million and only be earning £20,000 a year... that was a potential scenario ... £23,000 apparently is the median wage now isn't it? I think I read that somewhere recently but can't find the reference on the internet.

Yes house owners are all holding on to the top price their house was valued at and not dropping the price. But who is going to buy it?

So people with houses will just say well we’ll rent it out but again … who to?
The benefits office is capping the amount they will pay too as at the moment we all know will pay up to £2000 a week. This is set to be a max of £400 a week and I believe even this is too much.

So I think the rents will fall too.

I've read two different figures for the median salary - £23k and another one in the early thirties, I'm not sure which is correct? Either way house prices bear little relation to current salaries...

My experience of most vendors over the last couple of months is that they're clinging onto the 2007 prices... I walk around so many houses thinking "Why/how can this property cost SO much?"

Rents are expensive at the moment I think. In the area we want to buy in, it's cheaper for us to have a mortgage than to rent :eek: I don't know whether that's typical, though, as I've not rented for eight years...

tawse57 wrote: »

Daily Mail Story today - houses losing £200 per day.

Moneyweek has just landed on my mat - big article in there about the UK housing bubble.

Is this magazine generally available? Would I be able to get it somewhere like WHSmiths do you think?

tyllwyd wrote: »

Well, in my sleepy little Wiltshire market town, I don't see a huge number of Arabian investors queuing up to buy three-bed semis. Wasn't it talking more about the top end of the London market?

Yes! Until fairly recently they've been willing to spend SILLY sums of money on a property in prime central London...

brit1234

Lets hope we get big falls in Nationwide and Landregistry in coming weeks. These huge price falls are good for the vast majorirty. Thats either people who want to upsize or people wanting to get on the ladder.

The more prices fall the smaller deposits will be needed in terms of percentage and amount.