House Price Crash Discussion Thread

mystic_trev

viddy wrote: »

But if the banks make it tough to get a mortagage then house prices would have to come down i guess.

Consumers are under pressure because around three million borrowers are facing big increases in their mortgage bills over the winter as cheap fixed-rate deals taken out in 2005 and last year come to the end of their lives. At the same time banks are curbing their lending with the proportion of credit card applications that are rejected rising to as much as 50%.

http://www.thisismoney.co.uk/news/article.html?in_article_id=426141&in_page_id=2&ct=5

pamaris

Quotes from this link:

http://news.bbc.co.uk/1/hi/business/7078492.stm

And the housing crash is now extending to the formerly "hot" housing markets in Southern California, Arizona, Nevada and Florida, where expanding populations and a strong economy were expected to keep prices high.

This is the first time we have had an absolute decline in housing prices in the US since the Great Depression and it's the first time we have had this kind of impact on the housing market without it being driven by macro-economic declines," !!!!!! Syron told the BBC.

Interesting that in the real world the oversimplified supply and demand argument (expanding populations, immigration) did not hold up in SoCal, Az, Nevada & Florida... and neither did the "strong economy" argument. These are the same arguments being spouted by those in the UK who do not believe it can happen here. Many also state that it cannot happen as long as employment is high and there is no recession. The jury is out as to whether a recession will follow, or how severe it will be, but clearly a recession does not have to come first.

Thali

To slow down the markets or to stop properties from spiralling (sp?) the government has only to options:

1) Increase interest rates.

This is what's happening at the moment, interest rates went up and might do so for another 0.5%, maybe even 1.0%. This might be tough on the people who had common sense and weren't borrowing 7-times their incomes but still manageable. We don't have a economic downturn at the moments, jobs are safe so people might have to grit their teeth.

On the other hand, interest rates can't go up and up and up. Happy voters are not the one which just had their home re- possessed .... So, they need to find a balance

2) Build more houses

Yes, right. Very easy with all these "NIMBYs" and also, it is only possible to do so outside London (just speaking for London, as I have no idea about the rest of the UK). So this is an option, just not an attractive one and certainly not a quick fix. Given that the government "miscalculated" the incoming immigrants as well (being one of them myself), I wonder how much the shortfall really, really will be 2012 ....

So, will there be a crash? I would assume so, as it's almost a prophecy which fulfills itself due to ongoing repeats!

PS: Just to clarify my statment re the immigrants - not everyone is after council houses, however, even with a non-British passport you can save a deposit and buy a house here ... not just job but housing "competition" as well

LisbonLaura

Please forgive me if this has been mentioned in previous pages of this thread, but much of the time, for a house to sell there needs to be finance involved & shortly there will be little of that around unless the buyer has a 20% deposit, & a secure job (whatever that is).
Then his cautious lender will stump up max about 2.5X main earnings. If he has a wife who works the lender may offer 1X hers also.
The buyer may also have to wait for the funds to become available.

That is reality, & there is nothing new about it. It worked well for decades.

From his early years in the business I'm sure Simon w will remember those days.......

& thxs Simon for that post, it is such a change from the 'what I believe' stuff I have been reading here. For 'believe' read 'hope'.

I am afraid this whole debacle is now for most in phase 2 of the well-known
'6 stages of a project or business idea':

1) enthusiasm

2) disillusionment

3) panic (2&3 usually tend to blur for quite a time)

4) search for the guilty

5) punishment of the innocent

6) Honours & accolades for non-participants.
(though I'm not sure about this last one yet...... maybe give it another decade).

With the average wage at around £23,000, do your own maths for house values.

tr3mor

LisbonLaura wrote: »

Please forgive me if this has been mentioned in previous pages of this thread, but much of the time, for a house to sell there needs to be finance involved & shortly there will be little of that around unless the buyer has a 20% deposit, & a secure job (whatever that is).
Then his cautious lender will stump up max about 2.5X main earnings. If he has a wife who works the lender may offer 1X hers also.
The buyer may also have to wait for the funds to become available.

I'm not sure we'll go back this far. But the general idea, yes.

jamie_brummet

The tides must turn. Too many landlords with too many properties. from Cabbies to MDs.

movilogo

Millions braced for biggest leap in the fixed mortgage rate on record

http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=492784&in_page_id=1770

For £150k, monthly payment up by £200 compared to 2005.
How can people afford buying???

LisbonLaura

Most can't afford it, & haven't been able to for quite a while in reality......(cheap credit distorts & delays the truth).

Now add in food & fuel costs rising sharply ...........

The party's over

but where is the freedom to call it a day?

WTF?_2

Thali wrote: »

To slow down the markets or to stop properties from spiralling (sp?) the government has only to options:

1) Increase interest rates.

This is what's happening at the moment, interest rates went up and might do so for another 0.5%, maybe even 1.0%. This might be tough on the people who had common sense and weren't borrowing 7-times their incomes but still manageable. We don't have a economic downturn at the moments, jobs are safe so people might have to grit their teeth.

On the other hand, interest rates can't go up and up and up. Happy voters are not the one which just had their home re- possessed .... So, they need to find a balance

2) Build more houses

Yes, right. Very easy with all these "NIMBYs" and also, it is only possible to do so outside London (just speaking for London, as I have no idea about the rest of the UK). So this is an option, just not an attractive one and certainly not a quick fix. Given that the government "miscalculated" the incoming immigrants as well (being one of them myself), I wonder how much the shortfall really, really will be 2012 ....

So, will there be a crash? I would assume so, as it's almost a prophecy which fulfills itself due to ongoing repeats!

PS: Just to clarify my statment re the immigrants - not everyone is after council houses, however, even with a non-British passport you can save a deposit and buy a house here ... not just job but housing "competition" as well

There will be a crash simply because there's nothing to hold up the market any more. Sentiment was the last thing, the deluded belief that house prices could only ever go up and up at a stratospheric rate. That's now in tatters following the fact that the media finally have turned.

FTBs are long gone, only the 'investors' with more money than sense are getting into BTL.

The credit crunch ensures that ordinary people can no longer 'afford' to buy a house or move to a better one. As pointed out by another poster, it's been a long time since people could genuinely afford to buy but cheap and easy credit covers a multitude of sins and many got themselves in over their heads because the initial (2 year fixed) repayments were just about affordable and anyway, plenty of jobs around and the possibility to increase their income....

The sooner people accept the reality, the less chance they have of getting financially burned. Having eye-watering levels of debt is not a good idea at the best of times but definitely not so when the economy is taking a downturn and you aren't sure of your job.

dunnomate

I thought that if prices dip, people snap up the houses, and the prices just go up ! Therefore - no crash !