Housing market collapses

macaque_2

Lots of people would like to buy a home, and why not? The question is, are they willing to part with £450k for a pile of bricks that is worth no more than £150k? Judging by these latest numbers, the answer is clearly no. The lenders have also lost their appetite for toxic debt.

House prices have been falling steadily for months. It will be interesting to see the magnitude of the falls over the next few months.

A fresh slump in mortgage lending triggered warnings over the "near-paralysis" of the market today amid mounting signs of ebbing confidence as consumers brace themselves for austerity Britain.

http://www.thisislondon.co.uk/standard-business/article-23916298-home-loans-freeze-hits-uk-recovery.do

Loughton_Monkey

These are startling figures. You are claiming that a house on the market for £450K is worth no more than £150K.

So all of us 25 million UK owner-occupiers need to rush to the Estate Agent for a valuation, divide it by three, and write that figure down as our "Property Value"?

How do you expect a rational debate when you quote numbers like that?

abaxas

Loughton_Monkey wrote: »

These are startling figures. You are claiming that a house on the market for £450K is worth no more than £150K.

So all of us 25 million UK owner-occupiers need to rush to the Estate Agent for a valuation, divide it by three, and write that figure down as our "Property Value"?

How do you expect a rational debate when you quote numbers like that?

He does had a point, the built cost of lots of houses is much les than the 66% drop he proposed.

So some houses could drop by 90% and still technicality be overvalued to build costs.

Looks at a house down the road on for 1.4 million. If the self build figures are correct it should cost 250-300,000 to build if you work out by square footage.

AD9898_2

I posted this on another thread.... but it applies here......

No surprise, it's what I've been saying for months, that any rises in prices that have been posted over the past 12-18 months is set against a backdrop of very low activity. Which means if you want or 'have' to sell your house you're on a wing and prayer, it may take a few weeks but likely months or even years.

This is why low IR's, government schemes and banks not repo'ing have been so important in keeping the market from dying completely. If rates were to rise I can easily see the market 'coming off' 40% with no banks wanting to lend and lots of forced sellers who can't pay their massive mortgages.

PasturesNew

Round my way, looking at "houses to market in the past 24 hours, including those with price changes", just chucked up a couple with 'big drops'. One from £120k to £105k and another two at £135k down to £110k. Proper drops, not these namby pamby £5-10k drops others are so fond of.

nearlynew

I'm seeing further big drops in asking prices round my way.

But interestingly, it's not just drops on existing houses for sale, but new ones are coming in lower still.

Not looking good if you need to sell, but have blown all your equity on debt-fuelled consumption.

macaque_2

THE_GHOULS_ARE_FOOLS wrote: »

Periods like this are a fantstic time to expand your BTL portfolio I find. Especially as you can get some mug renter to pay the mortgage for you. IT's a Win Win situation.

A home owner has a £100k mortgage on a flat worth £110k. Even though he has a mortgage of 3%, he cannot keep up the payments. The bank forces a sale.

A BTL buys the property at £100k with a £35k deposit and a £65k mortgage. The bank gets its £100k back from the original owner. The BTL rents the property out at a yield after costs of 4% (based on £100k). He pays the bank interest of 6.5% on £65k which amounts to 4.2% on the £100k outlay.

The housing market takes a tumble and the BTL sells the property 2 years later for £65k. The bank gets its money back.

The original home owner lost £10k and the BTL lost £35k. The bank however converted a 3% mortgage on 90% loan into a 6.5% mortgage on a 65% loan before getting all its money back.

Spot the winner.

papalimabravo

PasturesNew wrote: »

Round my way, looking at "houses to market in the past 24 hours, including those with price changes", just chucked up a couple with 'big drops'. One from £120k to £105k and another two at £135k down to £110k. Proper drops, not these namby pamby £5-10k drops others are so fond of.

How would you say the original prices compare to the market?

Shows intent from the seller if they were comparably priced.

amcluesent

>Spot the winner.<

Actually I was thinking more about buying two properties around the £75K mark each for cash and letting to as many EEs as can fit in. There's always good money for slum LLs

Loughton_Monkey

abaxas wrote: »

He does had a point, the built cost of lots of houses is much les than the 66% drop he proposed.

So some houses could drop by 90% and still technicality be overvalued to build costs.

Looks at a house down the road on for 1.4 million. If the self build figures are correct it should cost 250-300,000 to build if you work out by square footage.

The rebuilding cost is well known to be far less than value. Always has been. But the assertion is about drop in value of your £450K house.

If you want to discuss House Prices - then stick to what is normally defined as the cost of the house (plus its land). If you want to discuss re-building costs, then try a Civil Engineering site.

diable

Lots of people around where I live can afford £650k to £2million and the market isn't stagnant, thank fcuk Cameron moved out though.........