Rightmove April +1.7%

HAMISH_MCTAVISH

Property prices are falling in real terms, with Rightmove recording static prices year-on-year (+0.1%) while the latest RPI figure shows inflation at 5.3%.

However, with average annual wage rises failing to keep pace (+2.0%) and lenders’ high deposit requirements pulling the housing ladder up and out of reach for many would-be buyers, a recovery in volumes due to improved buyer affordability is not a near-term prospect.
http://www.rightmove.co.uk/news/house-price-index/april-2011

Says it all, really.

No improved buyer affordability.

Mortgage rationing continues to block hundreds of thousands of people from entering the market.

No wonder rents are soaring......

On another note, asking prices now up a whopping 6% or £13,412, since the start of the year. Sellers obviously factoring in the expected negotiations on price.

Mortgage lending remains constant. Stock levels increasing at estate agents.

And Shipside is sounding increasingly desperate for people to cut prices and get the market moving. No wonder..... His business depends on revenue from estate agents and turnover of houses in the market.

Cleaver

HAMISH_MCTAVISH wrote: »

Mortgage rationing continues to block hundreds of thousands of people from entering the market.

...and because house prices are still pretty high and a lot of people feel they might fall more. Just my opinion.

HAMISH_MCTAVISH wrote: »

On another note, asking prices now up a whopping 6% or £13,412, since the start of the year. Sellers obviously factoring in the expected negotiations on price.

Or they are just a bit mental.

Round my way story coming up, so please look away now. Down my road there are three houses, all 3-bed semis, that have been for sale now for over two years, none of which have seen their price reduced. They are on sale for between £160k and £175k, and they just sit there, with no one buying them. A near identical house came on the market at £150k around a month ago and sold within a week or two. If people lowered their prices by 10% or so it seems to me that their houses would sell. And if mortgages were more available it'd probably help too.

Hamish, please tell me why I'm wrong. Because I obviously am.

lemonjelly

MSE news sums it up pretty well, as does Cleaver:
http://www.moneysavingexpert.com/news/mortgages/2011/04/house-asking-price-rise-puts-sellers-off?utm_source=forum&utm_medium=sidebar&utm_campaign=box

Graham_Devon

Wonder who's suggesting the higher prices? EA's? Kind of shooting themselves in the foot if they have more and more unsold properties on their books?

Got to be some kind of reasoning for this. Just doesn't make much sense. It's a bit like car dealers unable to shift stock, so decide to put the prices up.

System

Cleaver wrote: »

Hamish, please tell me why I'm wrong. Because I obviously am.

I don't think you're wrong but if people aren't desperate to sell or can't afford to sell for any less then that's what will happen.

wotsthat

Cleaver wrote: »

Round my way story coming up, so please look away now. Down my road there are three houses, all 3-bed semis, that have been for sale now for over two years, none of which have seen their price reduced. They are on sale for between £160k and £175k, and they just sit there, with no one buying them. A near identical house came on the market at £150k around a month ago and sold within a week or two. If people lowered their prices by 10% or so it seems to me that their houses would sell.

I've seen this round my way as well (or in Cornwall at least). I liked a couple of properties which have now sold and found out they sold quite a way below asking price. As it turns out I would have paid more than the sold price but was put off by the asking price.

Cleaver

Joeskeppi wrote: »

I don't think you're wrong but if people aren't desperate to sell or can't afford to sell for any less then that's what will happen.

Yeah I agree, and that seems to be what's happening. Just strange really, as you'd think you'd want to get it sold. I fully understand that someone who bought in 2005,6,7 etc. may just hold out for a few years to get the price they want.

But, and apologies this is another anecdotal, I'm not sure that 10% or 20% off would make much difference to most people. I was chatting to my next door but one neighbour about the people who are selling over the road from us and have had their property on the market for £165k for over two years now with no price reductions. My neighbour knows the couple who have lived here for nearly 30 years and now want to downsize as they are in retirement, and, according to my neighbour they are 'devastated' that the house won't sell.

Now, it's none of my business what people choose to do, but they can't be that devastated as they'd just reduce the price. They house probably cost them about £10k when they bought it 30 years ago and they would have sat there seeing massive rises throughout the last decade. Would reducing it by £15k, getting it sold and taking a bit of a lower price be worth it so you can get on with your life? That's what I'd do anyway. The place they are downsizing in to would probably be cheaper than it was two years ago anyway.

HAMISH_MCTAVISH

Cleaver wrote: »

Hamish, please tell me why I'm wrong.

Sure......:D

There aren't enough buyers to buy all the houses, even if they all dropped by 10%, or 15%, or 20%.

Mortgage lending is at 35% or so of peak levels. The banks are rationing mortgages quite simply because they don't have the money to lend.

Example:

In Cleavertown, there are 10 houses for sale, and 2 buyers with access to a mortgage.

Changing the price on all the houses by 10% makes no difference. There will still only be 2 buyers with access to a mortgage, and 80% will remain unsold.

Now you could argue the case that if you drop the prices far enough, then nobody will need a mortgage, and all the houses will sell. This is true. But mental.

You could also argue the case that reducing prices will allow more people to get a mortgage as their deposit will increase. This is also true, but utterly insignificant within the bounds of reality. A 10% decrease in price turns a 10% deposit into an 11.1% deposit. And almost nobody would be daft enough to drop by the 30% or 40% required to make a difference in that regard, when by doing so they'd almost certainly be allowing a speculator to jump in and get a 7% to 10% rental yield in most places. Better to rent it out themselves, which is what we're seeing when people realise they can't sell.

Cleaver

HAMISH_MCTAVISH wrote: »

In Cleavertown, there are 10 houses for sale, and 2 buyers with access to a mortgage.

Changing the price on all the houses by 10% makes no difference. There will still only be 2 buyers with access to a mortgage, and 80% will remain unsold.

I think in an area like mine though (3 or 4 bed houses, family area) people do have access to mortgages. This isn't really FTBer land. There definitely seems to be two type of houses:

1) Houses that have been on sale for 24, 18 or 12 months at one price. The houses just sit there.
2) Houses that come on the market and are obviously priced at 10%, 15% or even 20% below very similar houses on the street. From what I've seen, these houses sell pretty quickly. There was one around the corner from us that sold within a week, and this was after I commented to Mrs Cleaver, "oooh, that's on the market for quite a cheap price".

So it doesn't seem to be getting a mortgage that's the problem in my area or at least it doesn't seem to be the main problem.

You've seen my opinion on mortgage lending on here and I agree with you that it seems dysfunctional at the moment and I also agree with you that a bit more flexibility in the mortgage market would allow more people to buy and, just maybe, some of those homes down my street would sell. But, in my personal opinion, it's price that is the main stumbling block down my road. I fully concede that mortgage issues might be more the problem in traditional FTBer areas.

HAMISH_MCTAVISH wrote: »

Now you could argue the case that if you drop the prices far enough, then nobody will need a mortgage, and all the houses will sell. This is true. But mental.

I agree.

HAMISH_MCTAVISH wrote: »

You could also argue the case that reducing prices will allow more people to get a mortgage as their deposit will increase. This is also true, but utterly insignificant within the bounds of reality. A 10% decrease in price turns a 10% deposit into an 11.1% deposit. And almost nobody would be daft enough to drop by the 30% or 40% required to make a difference in that regard, when by doing so they'd almost certainly be allowing a speculator to jump in and get a 7% to 10% rental yield in most places. Better to rent it out themselves, which is what we're seeing when people realise they can't sell.

I also agree. Which is why, and see above, I think it's price that is the main issue for a lot of houses 'round my way'.

HAMISH_MCTAVISH

Cleaver wrote: »

I think it's price that is the main issue for a lot of houses 'round my way'.

I disagree.

What I think is happening is that 100% of the people able and willing to buy a house "round your way" are doing so.

They're just choosing to buy the houses that appear to be bargains.

If all of the houses were priced at the same higher price, the same number would sell, but they'd sell on features not price.

If all of the houses were priced at the same lower price, the same number would sell, but based on features not price.

Lowering the price of all the houses (again, within reason) would not result in an increase in sales.

Graham_Devon

I think a clear line needs to be drawn here. Mortgage funding is hard to come by for FTB's. That's not disputed. But for those moving, with equity, mortgages are not really an issue.

Price then becomes the issue.