House Price Crash Discussion Thread

m00m00

and paragon of course would say that wouldn't they, given what their primary business interest is.


for every 'expert' saying BTL is still viable for new entrants, there are scores of 'experts' giving differing views.

ivegotabig1

As Usual people believe what they WANT to believe .... Would the Buillding Societies or Banks. or indeed any other party with a vested interest in property ever talk the market down ??? ofcourse not !! But With the U.S Sub prime problems still causing mayhem, Oil at near record levels & likely to stay there..The UK & US economies set to slow markedly nxt yr..What does that suggest to you ...??? Honestly ?? Trying to Bullsxxt People into thinking everything is Rosey (i.e Darling this aftrnoon) will only go so far in keeping a positive outlook... For some but by no means all..there are rough times ahead..as the longest Boom in nearly half a century begins to wind down !!..Time to tighten your belts guys & gals !

WTF?_2

ivegotabig1 wrote: »

As Usual people believe what they WANT to believe .... Would the Buillding Societies or Banks. or indeed any other party with a vested interest in property ever talk the market down ??? ofcourse not !! But With the U.S Sub prime problems still causing mayhem, Oil at near record levels & likely to stay there..The UK & US economies set to slow markedly nxt yr..What does that suggest to you ...??? Honestly ?? Trying to Bullsxxt People into thinking everything is Rosey (i.e Darling this aftrnoon) will only go so far in keeping a positive outlook... For some but by no means all..there are rough times ahead..as the longest Boom in nearly half a century begins to wind down !!..Time to tighten your belts guys & gals !

Agreed - how some people determined to deny the truth when it's staring them in the face is beyond me.

You don't have to be a genius to see that much of the 'prosperity' of recent times has been down to easy availability of credit. Both on the personal and corporate level. Credit has been so cheap and easy to obtain that just about everyone has been splashing out - creating boom conditions in almost every consumer area. The stock market and investment banking sectors have been enjoying massive stimuli as 'private equity' organisations have borrowed huge amounts of money to facilitate corporate takeovers.

That couldn't continue indefinitely and we're now seeing the inevitable result - or the beginning of it anyway. Those who think that the 'solution' is to just keep interest rates low are missing the point. You can't just go on increasing the money supply ad-infinitum unless you are growing the total economy too. Relying on jobs created by selling goods to consumers on credit and 'wealth creation' from selling houses to each other at ever higher prices is not 'growing the economy'.

Our economic model lends itself to booms and busts, unfortunately. Well we've had an amazing boom and now it's time for the bust. We should already have had 'busts' in 2001 and 2005 but the Western governments chose to try to inflate the economy to avoid them, not a good idea. You can't keep pumping more air into the balloon and expect it not to burst.

LisbonLaura

May I quote from http://www.timesonline.co.uk/tol/comment/columnists/william_rees_mogg/article650854.ece


"..........The evidence is reviewed by Fred Harrison in the latest issue of Money Week. He quotes David Miles, the chief UK economist of Morgan Stanley, who gives warning that “a sharp fall in real house prices is likely at some point in the relatively near future”. Clive Briault, the manager of retail markets at the Financial Services Authority, gave his warning to the British Bankers Association that the banks should now factor in the possibility of a 40 per cent fall in property prices. That is not a prediction but a precaution........."

It makes me wonder about Northern Rock in particular, as the article is dated 27 November last year!

carolt

IveSeenTheLight wrote: »

It's amazing how people look at an article and only see the points they want to see.

Very true - you pick out the only section of 10 sections in the whole article which is NOT negative!

The article was entitled:
A survivor’s guide to buy to let

With many landlords in negative equity as new-build home prices tumble, our correspondent offers some tips


If you want to paint that as a rosy picture, then feel free, and you are clearly one of the glass-half-full types, no matter what life throws at you, but I feel duty-bound to report what the paper actually says, rather than just the one not-quite-so-negative bit......

carolt

To update:

http://www.guardian.co.uk/money/2007/nov/08/houseprices.personalfinancenews

House prices continue to fall


House prices in the UK fell for the second month running in October, the UK's largest mortgage lender said today, in a further sign the market may be grinding to a halt.
The 0.5% fall reported by the Halifax follows a 0.6% dip in September - the first time prices have dropped in two consecutive months since the early summer of 2005.
The fall has brought annual price inflation down to 8.9%, from a high point of 11.4% in August.
The average price of a home in the UK now stands at £197,248, Halifax said.
This is the first time since February that the annual growth rate recorded by the lender has been in single figures.
Halifax said the rate was expected to fall further over the next few months as the strong monthly price gains seen in the autumn of last year began to drop out of the equation.
Growth over the three months to the end of October stood at 0.3%, Halifax said, continuing a downward trend that started at the end of last year, part way through the last cycle of interest rate rises.
The bank's chief UK economist, Martin Ellis, said the three-month figures were a good guide to the underlying trend and suggested a "steady easy" in price growth.
"The rise in interest rates since August last year and negative real earnings growth so far this year are curbing housing demand, leading to a slowdown in both price growth and activity," said Mr Ellis.
There are signs elsewhere that activity in the market is declining, with the number of mortgages approved for house purchases down 6% in September, and levels of interest from new buyers also down.......

pamaris

What I want to know is, why the discrepancy between Halifax & Nationwide? They are both mortgage lenders... is it just that Nationwide services higher income clients/ higher HPI areas? Why does Nationwide say 1.1% rise and Halifax says .5% drop? Obviously I vote for the Halifax data, but with these discrepancies people will believe what they want. I think that if prices are falling, Rightmove will come in with a drop this month... I think that at this point (small) reductions in asking prices will show up in the data. But I am not clear why Halifax and Nationwide contradict?

carolt

From the same article, I quoted, this should answer your question:

Volatile data

Halifax's figures contradict last week's claim by Nationwide building society of a 1.1% rise in prices over October.
The rise, which took many industry watchers by surprise, took annual price inflation to 9.7% - lower than the 11.1% peak in June, but higher than the 9% of the previous month.
Howard Archer, chief UK economist at consultancy Global Insight, said: "Housing data can be very volatile on a month-to-month and survey-to-survey data, and we suspect that the Nationwide survey was an outlier.
"Most data and survey evidence are pointing to weakening housing market activity and cooling prices in the face of slowing activity, increased affordability pressures and tightening lending practices, and the Halifax data are certainly consistent with this."

mystic_trev

pamaris wrote: »

But I am not clear why Halifax and Nationwide contradict?

I believe Nationwide is more 'biased' towards London and The SE.

simon_w_3

I am an estate agent of 27 years experience.
I connat remeber demand having slumped so quickly in just a matter of weeks, compounded by bad Press ie Northern Rock etc. In simple terms the market has stalled and selling prices are falling. Many homeowners and estate agents have not yet realised what is happening.
I saw this all in 87-92 when prices dropped 65%.
Smart homeowners will actually reduce prices now, rather than following the market down. I recall a property locally that we had on the market for 2.5 years in 1989. It stated at £350,000 and eventually sold for £189,000. The owners were always to late in reducing their price to its 'market value'.