Sellers' gloom over property market inactivity

lemonjelly

http://www.bbc.co.uk/news/business-14885963

That's the beeb's headline:eek:

Fourteen homes were sold per UK estate agent in the three months to August - the lowest total for more than two years, a survey has found

More surveyors reported price falls than price rises in August

"The risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers, even where mortgage finance is available," said Alan Collett, housing spokesman for Rics

None of which makes good reading.

Also interesting are the comments that the sellers in the greatest difficulty are those who bought new build flats in complexes who are looking to move on. This suggests not just a lack of FTB's (the article discusses mortgage rationing as well as the tough deposits etc required) but also the lack of chains within the market. Surely there is a risk then that this could spread & have potentially severe knock on effects?

shortchanged_2

lemonjelly wrote: »

http://www.bbc.co.uk/news/business-14885963

That's the beeb's headline:eek:







None of which makes good reading.

Also interesting are the comments that the sellers in the greatest difficulty are those who bought new build flats in complexes who are looking to move on. This suggests not just a lack of FTB's (the article discusses mortgage rationing as well as the tough deposits etc required) but also the lack of chains within the market. Surely there is a risk then that this could spread & have potentially severe knock on effects?

I stated this some time ago although the idea was dismissed by a certain julieq.
She seems to feel you don't need 1st time buyers for a housing market to function.
However without the 1st time buyers you don't have any 2nd time buyers and so on.
Basically the housing chain is in a serious mess.

shortchanged_2

I also love this statement by a developer who states....."There is no lender flexibility. A loosening of lending terms will help."

What about seller flexibility? i.e DROPPING THE PRICE!!!

This is the problem now in that property is still seen as a cash cow that must/will make money. The problem with it is that if you view it as an investment you have to be willing to take the good times with the bad and take the hits when the market is weak, after all these people are happy enough when they are making money during times of rampant HPI.

HAMISH_MCTAVISH

shortchanged wrote: »

I also love this statement by a developer who states....."There is no lender flexibility. A loosening of lending terms will help."

What about seller flexibility? i.e DROPPING THE PRICE!!!
.

Both his statement and yours completely fail to recognise the main problem causing the inactivity mentioned in the article.

Which is of course mortgage rationing.

There are only around 45,000 mortgages a month being approved because that is all the money the banks have to lend.

IN a market that needs around 120,000 approvals a month to let people move without difficulty, price changes will make almost no difference.

A 10% fall in prices would only increase approvals to 49,500, a 20% fall in prices would lead to 54,000 mortgages being approved. And in a market that needs 120,000 approvals, that simply isn't going to fix the problem.

Only a massive increase in lending will enable sufficient numbers of FTB-s to buy houses, and prevent those FTB-s from being locked out of the market and forced to enrich their landlords for a decade or so.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Which is of course mortgage rationing.

There are only around 45,000 mortgages a month being approved because that is all the money the banks have to lend.

That's not mortgage rationing then. If all they have to lend is X and they are lending X, what are you asking / wanting them to do?

Am I rationing my wages as they will only go so far and I can only buy so much?

Funnily enough, if prices dropped, I could buy more stuff from the same wages.

HAMISH_MCTAVISH

Graham_Devon wrote: »

if prices dropped, I could buy more stuff from the same wages.

In a period of deflation it's not just average prices that will drop, but average wages also.

So no, you couldn't.:cool:

ruggedtoast

HAMISH_MCTAVISH wrote: »

Both his statement and yours completely fail to recognise the main problem causing the inactivity mentioned in the article.

Which is of course mortgage rationing.

There are only around 45,000 mortgages a month being approved because that is all the money the banks have to lend.

IN a market that needs around 120,000 approvals a month to let people move without difficulty, price changes will make almost no difference.

A 10% fall in prices would only increase approvals to 49,500, a 20% fall in prices would lead to 54,000 mortgages being approved. And in a market that needs 120,000 approvals, that simply isn't going to fix the problem.

Only a massive increase in lending will enable sufficient numbers of FTB-s to buy houses, and prevent those FTB-s from being locked out of the market and forced to enrich their landlords for a decade or so.

If you have ten pounds and ten family members who need to borrow 5 pounds each, how many family members can you lend to?

If you have ten pounds and ten family members who want to borrow one pound each, how many family members can you lend to?

Graham_Devon

HAMISH_MCTAVISH wrote: »

In a period of deflation it's not just average prices that will drop, but average wages also.

So no, you couldn't.:cool:

Who said anything about deflation?

HAMISH_MCTAVISH

ruggedtoast wrote: »

If you have ten pounds and ten family members who need to borrow 5 pounds each, how many family members can you lend to?

If you have ten pounds and ten family members who want to borrow one pound each, how many family members can you lend to?

A 10% fall in prices would only increase approvals to 49,500, a 20% fall in prices would lead to 54,000 mortgages being approved. And in a market that needs 120,000 approvals, that simply isn't going to fix the problem.

DervProf

HAMISH_MCTAVISH wrote: »

In a period of deflation it's not just average prices that will drop, but average wages also.

So no, you couldn't.:cool:

Rubbish answer.

Just because house prices drop, doesn't mean that wages will drop. And even if wages do decrease, they won't always decrease at the same rate as house prices.

Now, have a go at responding to the other part of the post.......

Graham_Devon wrote: »

That's not mortgage rationing then. If all they have to lend is X and they are lending X, what are you asking / wanting them to do?

Graham_Devon

HAMISH_MCTAVISH wrote: »

A 10% fall in prices would only increase approvals to 49,500, a 20% fall in prices would lead to 54,000 mortgages being approved. And in a market that needs 120,000 approvals, that simply isn't going to fix the problem.

Ok, let's talk about this, considering you are not willing to talk about rationing.

Do we REALLY need 120,000 approvals?

What is that based on? Where have you got that figure from? Why is it relevant?

Even if we could have 120,000 approvals each month, why would that magically fix the "problems" you perseive with mortgages?

And why were these approvals not a problem to you in 2009?