The housing market is heading for a fall

smeagold

On Monday, Rightmove delivered news of its latest health check on the UK housing market. And boy was it ugly.
Rightmove spelled out the news in three grim statistics:

• 1.3m properties were put on market last year
• 884,000 properties were sold (HMRC data)
• 530,000 mortgages were granted

Those three facts all point to one thing: the UK housing market could soon be falling in a big way

Rightmove represents 90% of the housing market in the UK. So its statistics are meaningful and shouldn't be ignored.
The story this time is a very worrying one for homeowners.
If 1.3m homes came to the market and 884,000 sold, that left a new overhang of just under half a million properties. But had it not been for rich cash-buyers, ferreting away investment property (no mortgage), this would have been much worse.

The other issue is credit. If buyers can't get mortgages, then there is very little chance that that massive overhang of property is going to get cleared anytime soon.

Mortgages granted to homebuyers were a paltry 530k and most of those were to equity-rich buyers. The banks have already indicated that they aren't going to be increasing lending this year. In fact lending could even go down from here. As John Stepek points out (see: Borrowing costs will go up – even if the Bank keeps rates at 0.5%) the banks will have a hell of a lot of debt to pay back to the Bank of England and Treasury by the time this year is out

http://www.moneyweek.com/investments/property/uk-house-prices-heading-for-a-fall-10707

movilogo

Sold at what prices - that's the question

Some sellers are sitting tight as they think price will rise again (but they don't realize the house, usually a more expensive one, they want to upgrade will also then rise in price putting them into net loss).

FTBFun

I blame the Illuminati.

bendix

I blame the Reptilians

Thrugelmir

The other issue is credit. If buyers can't get mortgages, then there is very little chance that that massive overhang of property is going to get cleared anytime soon.

Then there are the other alternatives such as saving which includes repaying existing debt committments at a faster rate.

We seem obsessed with borrowing in this country. Like an achoholic looking for his next drink.

Sometimes growth can be organic. Utilising what you already have and making better choices as how to spend it.

abaxas

I blame Hamish.

Pete111

Won't someone think of the children?

AD9898_2

Pete111 wrote: »

Won't someone think of the children?

Not if they think there is money to be made by putting twigs in vases.

smeagold

Well we know that there was an almighty overhang left over from last year. And we know that property coming onto the market in January was up around 35% on last year. And according to Rightmove, that's only going to get worse as ‘forced sellers' start to appear. Many people just won't be able to afford to keep up mortgage repayments as stagflation bites

Rightmove rightly identifies the second half of this year as the time when the chickens come home to roost.

Interest rates are set to go up - and that's even if the bank rate doesn't move. We're already seeing evidence of rising market interest rates (where the mortgage lenders borrow the cash) and it's pushing up mortgage rates.

With the overhang of property from last year still on agents' books, and coupled with an increased supply this year, a very unhealthy dynamic is emerging.

Ultimately, the underlying imbalance in demand and supply of houses has been repressed by low rates. Existing homeowners have hung on in there and cash rich buyers have chased any old yield - together, they've kept the market in check.

As the imbalance continues to grow and rates start to let rip, things are about to change.

ukcarper

movilogo wrote: »

Some sellers are sitting tight as they think price will rise again (but they don't realize the house, usually a more expensive one, they want to upgrade will also then rise in price putting them into net loss).

I do love that acording to the bears people selling are so stupid that they don't see this but the bears are so clever they can.

Mallotum_X

ukcarper wrote: »

I do love that acording to the bears people selling are so stupid that they don't see this but the bears are so clever they can.

Sadly you should never underestimate the stupidity of the great British public.

I wouldnt expect that they all dont see this, but so many do seem to think that higher prices overall are better, and just do not make the link.

Read some of the selling threads on other parts of this forum, people wont drop a penny on their house, "cos its worth it", but expect drops elsewhere. Look also how many want to work out how to get surveyors to increase the value the surveyor puts on their potential purchase, rather than asking on best approach to get the seller to drop. Now it may be that the surveyors are covering tehir backs, but peoples first thought is to get the value higher, rather than the price lower.

There have even been bulls on this forum state that higher prices actually help people move up the ladder.

I think a great number of the British public are very blinkered when it comes to property and do not even attempt to join up the dots.