Has the crash / correction started?

dannyboycey

Sorry to start yet another topic on this but I've been keeping an eye on property prices for a few months now and something interesting appears to be happining in my area which may suggest that prices have hit their peak. This may or may not result in a full blown crash, but the chances of a correction in prices sometime soon now seems a reality.

I have been looking for a property for myself for some months now and making notes on houses I'm interested in on rightmove and I've noticed that every now and again they just dissapear from the site. This is quite normal I thought... the house has obviously been sold and taken of the market and therefore the website. However, here's the interesting bit... a number of weeks later (sometimes a couple of months) these same properties began popping up again, this time with an asking price a few thousand below what it was before!! This leads me to believe that houses in some areas are not sellling as quickly as we are led to believe.

If you read the papers, or watch the news you would assume that the housing market is going strong, with prices continuing to rise. I read somewhere that estate agents are saying that in some areas there are as many as 8 people after each house. The estate agents and so called 'financial experts' are obviously going to spout this kind of rubbish as their business depends on it. Call me a cynic, but if a crash or correction in prices were looming, the estate agents and lenders would keep saying there's nothing to worry about and encouraging young people to get mortgaged up to the hilt, as when the proverbial inevitably hits the fan they will benefit from these people. They are effectively making hay whilst the sun shines.

I believe will hear more and more statements from the media saying that the housing market is going strong in the coming months. This is because they have to deny the possibility of a crash, because once one of the big players admits it, it creates panic and mass hysteria and becomes a self-fullfilling prophecy. There are thousands of buy to letters in the market at the moment balanced procariously, with interest only mortgages. Another rate rise could mean that many would no longer make enough to cover mortgage payments from rental income, and they are likely to bail out asap when this happens.

The fact is that curent prices are unsustainable. There is no disputing that. In the near future, at the current rate of growth, there comes a point when a first time buyer just does not have the capital to cover their monthly payments, and unless salaries rise dramatically (which of course they wont), they are stuck, and the bottom falls out of the market.

By the way, I don't believe the figures that are given out anyway. When we are told that prices rose by x% in whatever month, these prices are skewed upwards by london prices and other areas in which there is less supply and more demand.

Just my 2p. Call me a crazy conspiracy theorist if you wish . :rolleyes:

BargainHunterCat

Oh how I hope you're right...lets wait and see!

abaxas

Sort yourself out!

Mr Brown said 'no more boom and bust' so we can never have a housing correction. We can stay in perma-boom forever and get infinitly rich by doing nothing but paying a mortgage.

Infact why not just buy lots of properties and never work again!

dannyboycey

abaxas wrote: »

Sort yourself out!

Mr Brown said 'no more boom and bust' so we can never have a housing correction. We can stay in perma-boom forever and get infinitly rich by doing nothing but paying a mortgage.

Infact why not just buy lots of properties and never work again!

The scary thing is that some of my friends actually believe this!

RabbitMad

Sorry, I don't agree. I see houses put on the market all the time at what I would consider way over priced. Sometimes they are just taken off the market, other times the vendors drop their asking price as they want to / need to move.

This is nothing new and has been happening around this way for the last few years. Only by looking at actual sale prices can you tell what the market is doing.

ashcarrot

what worries me is if Mr Brown will try to keep away a crash for a few years until he's in power so it doesn't make him look bad.

dannyboycey

ashcarrot wrote: »

what worries me is if Mr Brown will try to keep away a crash for a few years until he's in power so it doesn't make him look bad.

The house market has crashed in the USA and the world economy is shaky to say the least. Things may catch up with him before he even gets in to power.

icklejulez

In my area houses havent upped or downed for 2 years but the two loations Ive looked at buying in recently Stockport and Blackpool are jumping up in price by the minute. I cant keep up and just whilst Ive been looking Im getting less and less for my money. I think it all depends on area and the house. My area was very sought after till recently theres been an increase in crime and a murder near by. Doesnt help prices. Blackpool is having a lot of money invested in it and the neighbouring areas are benefiting. Stockport was incredibly pricey yet rough but because Manchester prices are so high more and moer people were looking at Stockport to buy as its 5 mins on the train and excellent commuter links.

The other thing Ive noticed in all these areas is 50% of the properties are bing snapped up within a few days, the rest sit there unwanted for months even years. Theres no inbetween so if you want something special you have to be on the ball.

Generali

dannyboycey wrote: »

The house market has crashed in the USA and the world economy is shaky to say the least. Things may catch up with him before he even gets in to power.

The house market has crashed in the US as you correctly state. Not too sure why you think the world economy is looking shaky though. Growth rates are high, inflation is pretty low (if rising).

It may well be that the US ecnoomy will drag the rest of the world down with it but at present there is absolutely no evidence for this that I am aware of.

Still house prices are extremely high by most measures. I read today that 4% of GDP is MEW'd and spent each year in the UK. When that tap is turned off we're probably all doomed.

Dead_Eye_Jones

I thought things were still rising pretty fast!

First we need a slow down, and then who knows if we will see things hit reverse? Sure this growth cant go on forever, but I dont see why we wont have a big slow down!

As to anecdotal evidence, a house on my road is up for sale at about 40%(!!!) more than my place which I bought last year - obviously im interested to see if it sells lol. Maybe its time to cash in, ditch London, and head over to Wales..!

Alan_M_2

My experience is limited to commercial property only, I've been trying to move into a new warehouse for a year now and found prices had reached levels where it was actually putting businesses under.

I looked at a number of properties over the last year around 5000 sq/ft - and a lot were priced at £10 a sq/ft and more....towards the end of last year this was levelling out around £8 sq/ft as Landlords were realising businesses simply cannot afford to pay these rates and their buildings were standing empty.

I've paid a deposit this week on a building in Hookwood, close to Gatwick Airport, I looked at this building 6 months ago at £8 sq/ft, it was just too expensive. Six months later, none of the buildings have been let, I've just signed at £5 sq/ft - and taken the best site on the plan, there are other building s there now quoting as low as £3.50 sq/ft.

The agents were explaining the bottom has just fallen out of the commercial market, its a reality check really.

Unlike Domestic property, a lot of which is bought on sentiment as well as financial principals. Commercial property is bought on numbers alone, the business can either afford it or it can't. Wanting to move somewhere is irrelevant and not part of the equation.

This is not isolated, from being in what was a drought, I've now been inundated with prime property at what I consider sensible prices. As a result I've been able to pick what's most suitable for my business needs and take a building which is the perfect size for me requirements rather then having to compromise. Across the board we're seeing reductions of 40% as normal as Landlords are desperate to get people in.

The let value then effectively governs the sale value of a building.