**Don't Buy A House** House Prices Set To Crash!!!

Pal

Re: economic conditions not changing, interest rates have risen which are slowly squeezing first time buyers and BTL investors out of the market. Remember that there were few rational reasons for the housing market to increase at the rate it has over the last 4 years. It was just the impact of low interest rates making borrowing cheaper.

At the very least as interest rates return to a neutral level house prices should adjust back to around 2000/2001 levels (which were still considered high at the time!).

Returning to the 2000/2001 level would involve a drop of around 30-40%. I think people are forgetting that most house price growth happening in the last 3 years. Anyone talking about a 10% drop is only talking about prices returning to the level they were late in 2003. Any fall in prices is going to be bigger than that simply because of market momentum.

I am still convinced prices will remain static for a few years until an economic shock (unemployment, high interest rates etc) causes prices to fall. There are no strong economic arguments for higher prices, but lots for lower ones.

manhattan

while i was browsing the property section in my local paper last night (im a first time buyer waiting and watching) i noticed alot of houses in there with "new price" and i mean lots! which probably means the asking prices are not being met anymore .so i know prices are on the downward turn in cambs 8) not sure about other areas though?

wlfc1

what a lot of old tosh written on here about 30-40% price crash and people trying to talk the market down, there are no comparisons with the early  90s, property is a and always will be a fantastic long term investment.......no matter what the doom and gloom merchants might have you believe

Robert_Sterling_3

You could be right ...

deemy2004

what a lot of old tosh written on here about 30-40% price crash and people trying to talk the

Try telling that to the two million homes recently identified at risk of flooding due to climate change etc.. They probably will experience a 30-40% drop. As for the rest of the housing stock ?

Woby_Tide

Economy heading for a 'soft landing'
David Smith, Economics Editor





THE economy and the housing market face a “soft landing” next year, with only a modest slowdown in growth and no crash for the housing market, according to the latest Ernst & Young Item club forecast, to be published tomorrow.

The forecast, which uses the Treasury’s model of the economy, warns that Britain is already past the peak of the boom but predicts 2.8% growth next year compared with an expected 3.3% this year.

Only if oil stays at $50 a barrel would growth next year be seriously hit, said Professor Peter Spencer, Item’s economic adviser. Under those circumstances growth would slow to 2.3%. The forecast assumes that oil prices will average $37 a barrel next year.

“No-one can say that the UK economy is not in a strong position,” he said. “The good news is that higher interest rates are starting to slow the consumer and rebalance the economy.” Spencer expects rates to peak at 5.25% next year.

Analysts are split about the extent to which the Bank of England will raise interest rates again, following the warning last week by Mervyn King, the governor, that the peak may not have been reached. A survey of analysts by Ideaglobal.com, a financial-research firm, shows they see only a 16% probability of a rate hike next month.

The Item forecast predicts that the rise in oil prices will lead to a £6 billion shortfall in revenues this year and warns that Gordon Brown’s golden rule — of balancing the current budget over the cycle — will be broken next year.

wlfc1

30-40% drop, the country about to flood, jesus christ the figures speak for themselves !, renting is dead money and the monthly rent works out a lot more than the mortgage, actually costs more thaover the long term buying is a sound investment.

My opinion is that there will be a helthy period of stabilisation and more sensible hose price inflation.

Woby_Tide

My opinion is that there will be a helthy period of stabilisation and more sensible hose price inflation.

tell me about it, one week they're £10, the next week they are special coiled ones for £5, the week after on a big reel to keep them tidy, I mean it's winter, we've no need to be watering, it's gardening gone mad I tell you.

deemy2004

I really think that the main cause of the 'dip' in house prices is the doomsters writing in the media and in on bulletin boards such as this- which only serves to undermine public confidence.

There are no economic factors to justify- employment is high and interest rates are still low.  

LOL

The main reason for the fall is that the market has become way overextended where people now need to borrow 5, 6 or even 7 times there salary to get on the housing ladder !!

Markets move between two extremes over valuing assets and under valuing assets , this market has gone to one extreme now its headed towards the other.

it will fall, it is falling, anyway you look at this market its going to fall !

Pakard

If 30% to 40% of the buyers believe that House prices will go down and postpone buying for a year or two, than the rest of buyers will join the club and adopt a "wait and see" approach to the housing market. Prices will go down not for economic reasons but because FTB are not willing to live in a shed
valued at £100.000. I buy a house to live in it, not as an investment and I am prepared to wait till I get my dream home at the write price in one or two years time.

Lots of properties in the SE were reduced by at least £5000 last week and most of them are on the market more than 8 months. Lots of ex BTL with no chain. They can't even let it.
Takes 10 weeks to sell...maybe in the North. Down here the housing market is dead.

Prices are inflated and if I can't buy an apartment now, I can't even rent it. I will continue to share house, reducing my monthly outgoing and saving money in a long run.

If market stays like this till next April 2005 than the house prices will go down by at least 30% by end of 2006.

See latest News below!

“House prices fell at their steepest pace in nine years in the three months to September, a survey shows, in the clearest sign yet that the once-booming property market has turned.”http://uk.news.yahoo.com/041018/325/f4s3c.html
http://www.iii.co.uk/news/?type=afxnews&articleid=5097813&subject=economic&action=article

“The NAEA says prices in September slipped by -1.6 per cent, confirming the downward trend recorded over the past few months. Prices in August fell by -1.25 per cent following a drop of -0.1 per cent in July and -0.2 per cent in June.”
http://www.findaproperty.com/cgi-bin/story.pl?storyid=6581

“Developers are down on their sales figures over the past four months. The investment market has dropped away. They can’t see that there will be more capital growth in the near future or that they will be able to cover their outgoings with the rent.”
Kings Oak are discounting 10%-15% on their new-build,” he says. “Birmingham developers are discounting 15% for city- centre flats and throwing in furniture when they can. It’s the London effect. My advice to buyers? If there isn’t a bargain yet, there will be soon.”
http://property.timesonline.co.uk/article/0,,14050-1316508,00.html

“In its monthly house price report, the NAEA said that the price of a house in the UK was on average 1.6% lower in September than in August. The annual increase in property prices sank to 7.95%, the lowest level this year. The number of new buyers registering with estate agents dropped by some 20%”
http://money.guardian.co.uk/houseprices/story/0,1456,1330269,00.html?gusrc=ticker-103704

“Annual house price inflation fell sharply from 16.4% to 13.4% this month and is heading for single digits in 2005, according to Rightmove's October housing report out today.”
“So far, we’ve seen a rapid slowdown in prices and in activity levels," says Shipside. "House price inflation is no longer keeping the MPC awake at night, but it won’t be a ‘soft landing’ unless and until people start to buy and sell properties again.”
http://www.themovechannel.com/sitefeatures/news/2004-october/18a.asp

Estate Agencies and builders want a soft landing. If they don't get that lots of them will go bust. They are dreaming about it ..."Soft Landing", 0% increase next year, buyers getting bigger discounts hmmm they mast be the experts hmmm in selling / building a house, but not in the economy.

Economists, bankers know what they are talking about if they say that house prices are overvalued by 20% than they are overvalued, whether we like it or not.
Once prices start going down it will be a long way down. Buckle up for soft landing chaps.

BoE did not increase Base Rate just to stop House Prices going UP. They also want to stop people borrowing money for a lifestyle above their means. Christmas is coming; people are going to spend lots of money. Will they? Will the BoE increase the base rate in November just to stop that? If not in November than in February. Only the future will tell.