U.K. Home Prices Decline as Outlook Worsens, Hometrack Says

julieq

I thought we agreed yesterday that 20% was a crash? Simple enough really. It's only a word. What it means is that there was a 20% correction or so. We can use the number, it doesn't matter what we call it. Same as Graham's boating nonsense really.

The idea that "liar loans" and high multiples pushed the market up is pure fantasy. How can I say that? Well we don't have them any more, and prices have settled not far away from peak values. And it's a matter of historical record that loan to salary multiples throughout the boom were never more than 3.5x. You may not like the fact that there are people who can afford housing and people who can't, but it was affordable then and is now. To those who can afford it. Which means not Graham's mates. Until you build houses which Graham's mates can afford, or allow them to borrow money, then that's how things will stay.

As to the future, well things never look so bad as when you are in the bottom of a slump. It was the same in 2009 when Mewbie posted his great prophecy as a joke and then it came true (funniest bear moment ever). We're stagnating now, we have a fair period of low interest rates to go, and to be honest if you're a bear and you haven't bought now you're never going to, because you're proceeding according to articles of faith and you think things are going relentlessly to get worse.

And remember, renting is 40-60 years of commitment to an amount increasing essentially with inflation. Buying is 25 years decreasing in real terms. You can compare the first few years and it's nip and tuck, but after 5-10 years it's a one way bet. The real winners in this slump are those who bought 2009 on a tracker arranged in Autumn 2008.

geneer

RenovationMan wrote: »

Got to agree with everything you say here. I guess as well as splitting people into 'soft landing' and 'crash', depending on their perspective we can also add in a third category called 'Peak' where they have so little interest in house prices that they have no idea that a correction has occurred.

To be fair, now that I think about it, I fell into that category. My previous house sold higher than 2007 peak price. Although I knew a correction had occurred, it certainly didn't impact me, except in as much as I got my current house much cheaper than I otherwise would have.

Ha ha. Brilliant. So a nuclear explosion might in “reality” become someone striking a match if the observer was far enough away from it?

Nope. Its still a nuke. Just further away.

You really have to admire the jaw dropping logical contortions that must be required to let such spurious thought processes emerge into the real world.

It reminds me of the father ted episode where its explained to dougle that one is a toy cow held up close whilst the other is a real cow out in the field.

shortchanged_2

julieq wrote: »

The idea that "liar loans" and high multiples pushed the market up is pure fantasy. How can I say that? Well we don't have them any more, and prices have settled not far away from peak values.

You are even more insane than I previously thought if you genuinely believe this julieq. That really has to be one of the most bizarre things I have heard in a long time.

Do you genuinely believe that house prices would have got as high as they did if liar loans and high multiples never happened? :eek:

The fact that house prices haven't dropped that much is because of low interest rates, low transactions and a lack of forced sellers.

julieq

Geneer, the FSA figures are a matter of record. 3.5x multiple on average. A *few* high multiples to good risks in London and the professional urban centres, with most people receiving multiple levels of 3x joint salary maximum set at times when interest rates were sitting around 10%.

Your problem is that you've come to believe the crash rhetoric. A few large multiple mortgages doesn't make a general problem. There was no affordability issue pre crash, there certainly isn't now. A switch to unchecked mortgages does not mean that there was general dishonesty about income declarations: i.e. a "liar loan" isn't necessary based on a lie, it's just an emotive word. Like "crash". It's designed to lead you to a conclusion.

We have no liar loans now. We have no high multiples. We still have high prices. And that is because there are more people needing homes than homes available, with the shortfall increasing year on year by hundreds of thousands. That is what sustains prices. Build more homes and the problem reverses, but nothing else is going to work.

Pimperne1

shortchanged wrote: »

Or the average price of a 3 bed semi could come down to £130K. Now that would be better for all. A smaller mortgage, therefore more money to spend on other things in the economy.

Everyones a winner.

I wouldn't be.

crash123

ukcarper wrote: »

I think you are kidding yourself if you don’t think there aren’t a large number of people who would buy if they had the deposit or didn’t need one.

Because property only ever goes up. This is correct isn`t it.( tongue in cheek).:T

Jimmy_31

Rinoa wrote: »

2.8% is around £4500 off the average house.

Is it better to lose £4500 ~ or pay £7000 annually to rent one.

It is better for me for the price to drop by 4.5k

mcc100

julieq wrote: »

We still have high prices. And that is because there are more people needing homes than homes available, with the shortfall increasing year on year by hundreds of thousands. That is what sustains prices.

Silly me ..... there I was thinking that it was a base rate of 0.5% since March 2009 that was sustaining prices.

crash123

julieq wrote: »

We have no liar loans now. We have no high multiples. We still have high prices. And that is because there are more people needing homes than homes available, with the shortfall increasing year on year by hundreds of thousands. That is what sustains prices. Build more homes and the problem reverses, but nothing else is going to work.

You can still get a liar loan and high multiples even today. You just have to have enough equity.
prices are still high due to low interest rates.

Jimmy_31

HAMISH_MCTAVISH wrote: »

True.



So very little, if any, gain has been had by waiting then.

On average.



Or rather, if you're not living in one of the sh1thole Northern England towns that skew the average downwards, then renting (and delaying purchase) has made no financial sense over the last 4 years.

In the majority of areas in fact, prices are not falling at all at the moment. (See RICS and Hometrack area data).

.

Or the 5hithole scottish towns ?

Cracking post that hamish.

As long as nobody mentions london skewing the average price that is.