Are house prices falling?

deemy2004

Not_so_bad_mum wrote:

Aresellers blind, don't they read the papers and look at the proprerty pages, house prices have stagnated. I have been looking for 2 years and houses that were on the market then are still there because the seller won't drop the price.It is definatly greed. If everyone dropped their price then the market would start to move again, it would all be relative.

The sellers have enjoyed a 10 year bull run... They can hear the words, they can see it in print, but it just does not register on the brain - FAALLLINNNGG HOUUSEE PRICCESS.... Nope... not a flicker in the nurons....

Even as they fall... not a flicker...
What ? falling ? whats that then ? no, not falling, no, look again... you will see they are stablising ready for the next step up... yes thats right not falling just whats the word .... correcting... yes thats it nothing just a healthy correction.. I am sticking to my guns ! I WANT TOP £'s for my house no, no, no way am i cutting a penny off the price !

6 months on........... Prices down 4%

No, go away.. I'm not cutting the price... Up, look it went up 0.00001% last month the correction is over... yipee .. !!

12months on.......... Prices down 8%
Very healthy correction, lots of buyers, okay I will , perhaps take a slightly lower offer, what ? 10% drop - No chance !!!!!! off - 1% only !!!

18 months down the road... 13%
Oh crums ! Wish I had sold 18 months ago... , okay I will take an offer 5% less than my original price... NO not 15% - !!!!!! off !!!

2 years down the road --- down 17%
What the hell is going on ???? Ive lost nearly 20% !!! :eek: .. Anyone please buy my house, sell, sell, sell before it goes 30% down !!! - What someones offering 25% less than original - Okay thanks ! Thats great news- phew ... thought it was going to go to 30% drop !!!

John_M_Business

This thread is like the leaders' speech at a party conference... all in agreement, standing ovation... yet a 'back slapping sideshow' and ineffectual on the final 'result'.

The only two things that will encourage a sharp decline in the market are:
- Recession
- High interest rates
Neither look likely to happen, if anything the interest rates will go DOWN over the next six months to a year. Sure there might be a continued gentle decline in the market, but not on the 20-30% scale... perhaps up to 8% over the next 18 months.

Of course there will be the occasional areas that buck the trend in both directions... look for:
- Static house prices in most of the desirable parts of London (Central, West, South West)
- Sharp falls in the 'overflow' areas (i.e. Wales)

That's your lot, I'm afraid.

rizla01

John_M_Business wrote:

This thread is like the leaders' speech at a party conference... all in agreement, standing ovation... yet a 'back slapping sideshow' and ineffectual on the final 'result'.

The only two things that will encourage a sharp decline in the market are:
- Recession
- High interest rates
Neither look likely to happen, if anything the interest rates will go DOWN over the next six months to a year. Sure there might be a continued gentle decline in the market, but not on the 20-30% scale... perhaps up to 8% over the next 18 months.

Of course there will be the occasional areas that buck the trend in both directions... look for:
- Static house prices in most of the desirable parts of London (Central, West, South West)
- Sharp falls in the 'overflow' areas (i.e. Wales)

That's your lot, I'm afraid.

At last a show of good sense as opposed to the hysteria that abounds whenever property prices are mentioned.

Well Done, John M Business for bringing some sanity to this thread. (Now wait for the onslaughts).

Also to remember that Property Prices ALWAYS increase in value over a ten-year period.

As I have always said, if you are thinking about buying there is never a good time to buy or a bad time to buy. Go ahead when you can afford it.

JUST DON'T OVER COMMIT YOURSELF!

rIZ

meanmachine_2

John_M_Business wrote:

The only two things that will encourage a sharp decline in the market are:
- Recession
- High interest rates
Neither look likely to happen, if anything the interest rates will go DOWN over the next six months to a year. .

Erm, you have been looking at all the latest output figures haven't you?

You do realise that technically we're already in a recession, don't you?

You do realise that the last recession was caused by falling house prices don't you?

Agreed, IR rates are still incredibly low, and the BOE is still suggesting rates will be going UP. Where on earth did you hear that IR rates will be cut?

If you bother reading the BOE's latest minutes you'll see that one of them is demanding a rate rise and the others are suggesting rates may still have to rise in the coming months.

It's all academic anyway, since US rates are soaring and we'll have to follow suit, regardless of its impact on the UK economy.

Woby_Tide

meanmachine wrote:

Agreed, IR rates are still incredibly low, and the BOE is still suggesting rates will be going UP. Where on earth did you hear that IR rates will be cut?

It's like the Grand Old Duke of York, there's more signs that they'll be neither up nor down.......;)

The minutes showed the MPC voted 8-1 against raising rates by 25 basis points earlier this month, compared to a margin of 7-2 in April, as Paul Tucker moved back to the “no change” camp. The majority view was that “there was little sign that inflation expectations were in danger of moving significantly away from the target in either direction.”

However, with a decreased risk of any further UK rate hikes already largely priced in to sterling, the pound edged down just 0.3c to $1.8322 against the US dollar, 0.15p to £0.6882 against the euro and 0.8 centimes to SFr2.2400 versus the Swiss franc.

Moreover monetary loosening still appears to be a long way off, at least according to Daragh Maher, senior forex strategist at Calyon. “It is worth noting that the minutes do not point to any emerging consensus for a cut,” he said.

Howard Archer, chief UK economist at Global Insight, added: “This supports our recently changed view that interest rates have now peaked. Even so, we do not expect an interest rate cut to occur until early 2006, unless there is sustained evidence of significant consumer retrenchment over the coming months.”

meanmachine_2

What you're doing there Woby is quoting from an article, not the actual minutes.

The minutes themselves suggest the BOE is still concerned about inflationary pressures and the balance is more towards a rate rise than the status quo.

For ITV News, say, to claim that IR rates are to be cut in the shorter term is just wishful thinking.

More worryingly Merv from the BOE is hinting that economic stability could be coming to an end. With so many retailer profit warnings on the one hand, and US rates rising on the other, I'm not surprised the MPC don't know which way to turn.

Could turn ugly.

Pal

Woby_Tide wrote:

"...significant consumer retrenchment over the coming months.”

"consumer retrenchment" = consumers not borrowing or spending = unemployment = fall in demand for housing = house price crash. Lower interest rates because the economy is in trouble will not result in higher house prices.

The alternative = consumers keep borrowing and spending, inflation rises, interest rates rise, SOME people are in trouble if they have borrowed too much but house prices generally stay static because there is lots of demand for private housing from those still in work. This is the current position.

The irony is that those homeowners who want house prices to go up (for some reason that I cannot understand) should be looking forward to another interest rate rise.

Falling interest rates are a sign of a slowing or failing economy, something that helps no-one.

ManAtHome

John_M_Business wrote:

The only two things that will encourage a sharp decline in the market are:
- Recession
- High interest rates

Sorry John, but a couple of other things likely to cause problems are:
- Increased Taxation
- Fall in the value of Sterling
Either of these will have as much effect on the pound in your pocket.

There is also the underlying problem of the increase in taxpayer-funded jobs - these have boosted UK GDP (consumption...) in the short-term but could leave us with a big hangover. Overall inflation has been relatively subdued, but this is mainly due to the constantly falling price of goods. If that levels off, service sector inflation will really bite us.

Also, any dramatic increase in the number of bankruptcies could cause the banks to tighten up on their lending policies (or force the BoE to force the banks) - not good news for any of us.

Anyway, just my opinion - I'm sure we're all following our own hunches.

Woby_Tide

meanmachine wrote:

What you're doing there Woby is quoting from an article, not the actual minutes.

The minutes themselves suggest the BOE is still concerned about inflationary pressures and the balance is more towards a rate rise than the status quo.

http://www.bankofengland.co.uk/mpc/mpc0505.pdf

34 Judging by the sterling yield curve and market intelligence, market participants thought that a change in the repo rate at this meeting was unlikely, and that the perceived probability of one or more rate rises this year had declined since February.

39 For another member, the balance of risks to the inflation projection was sufficiently on the upside that a small rise in the repo rate was still justified.

40 The Governor invited members to vote on the proposition that the repo rate should be maintained at 4.75%. Eight members of the Committee (the Governor, Rachel Lomax, Kate Barker, Charles Bean, Marian Bell, Richard Lambert, Stephen Nickell and Paul Tucker) voted in favour. Andrew Large voted against, preferring a rise in the repo rate of 25 basis points.

Not disputing the fact they are concerned with inflationary pressures but could you define 'balance'. As far as I can see 8 against a movement versus 1 for a rise, compared with the previous meeting of 7 against and 2 for, is actually heading towards the status quo?

dougk_2

Pal wrote:

The irony is that those homeowners who want house prices to go up (for some reason that I cannot understand) should be looking forward to another interest rate rise.

Falling interest rates are a sign of a slowing or failing economy, something that helps no-one.

I disagree strongly with this. Low interest rates mean that people can afford more (i.e they are paying out less per month) thus the prices of houses increases as demand increase.

Falling intrest rates are not a sign of a failing economy otherwise this would have been the case several years ago when rates fell before rising again slightly. It is my view that the opposite is true.

The FACT that lenders are now reducing their fixed rates is another reinforcement that the feeling or trend will be lower interest rates over the fixed period (typically 2 to 3 years).

I expect rates to stay as they are for a while then come down a .25% to .5% and consumer confidence to return (as a number of reports today have shown is already happening).