House Price Crash Discussion Thread

geoffky

abudan- why did you come on here with those links to the website...i cant for the life of me think why ?

codger

chriseast wrote: »

Up until recently people on both sides of the argument have been able to put their points across in a well-reasoned and helpful manner. It's been a helpful and enjoyable thread.

Descending into name calling and bickering when some contributors are clearly just looking for attention isn't doing anyone any favours. The mods have already closed down some house price crash threads and this might just be th excuse they need to do it again, losing valuable information once more.

:T

Couldn't agree more. This thread is invaluable for the kind of info geoffky's posted from the FT.

As long as no attention is paid to attention-seekers and / or posters who have left anyway, this thread is quite safe.

It began in the spirit of friendly, informed debate. It can so continue.

geoffky

B&Q, said UK consumer demand was likely to weaken in the coming months as it unveiled a slide in quarterly earnings. UK pre-tax profits fell 11.9% to £45.3m as flagging demand for DIY products - hit by a home improvements slowdown - dragged like-for-like sales lower.
Efforts to revamp stores and ranges of products were going well it added, but said no immediate pickup was expected.
Overall group profit fell 1.9% to £171.7m in three months to 3 November.
The firm, Europe's largest home improvement retailer, cited success in Poland and also France for a 1.9% rise in overall like-for-like sales to £2.4bn.
"Our international businesses which account for more than half of Kingfisher's sales, again delivered positive sales and profit growth," chairman Peter Jackson said.
"In the UK, where consumer demand is widely anticipated to soften further over the coming months, B&Q's renewal is progressing well.
"The new ranges and revamped stores showing that a compelling offer in the right store environment will continue to attract customers."

geoffky

this is a latest from a property investment company.well imagine
being one of those joe public who have paid tops and are now in negative equity...notice the bit about renatal coverage....you aint going to get the full rent paid for ,christ are these people for real

Our latest offer is from a well established and trusted Developer, with whom we have enjoyed a long-standing business relationship. They have served our Associates well over the years with quality property in popular areas.

This fabulous development in Colchester is at the upper end of the market with only 24 apartments. All but 9 were sold to Joe Public at £240,000 with a small incentive of around 6%, bringing the end price down to £225,000. Completions are due late spring to early summer and they have been offered exclusively to *** with a further 15% discount, at £191,250.

These units are in the posh part of town but they were never built as investor buy-to-let properties, so don't go for these on the basis of rental coverage. This is a very good capital growth product kicking off with a genuine Instant Equity of £33,750 and almost £49,000 below the original selling price.

geoffky

link http://www.marketoracle.co.uk/Article2954.html



Home owners failing to sell properties through the traditional estate agency route are increasingly opting for the chance of a quick sale offered by Auction houses up and down Britain.
However the number of sales being achieved at auctions has plummeted, even after worried sellers rush to accept offers prior to the auction. The resulting supply overhang will result in further sharp falls in the housing market that will accumulate over the coming year as home owners price expectations are behind the housing curve and are forced to repeatedly cut prices.

So not only are auction houses seeing properties selling for far less than just a few months ago, but the auction route no longer offers the near 97% certainty of the property being sold which existed earlier in the year.
As an example of the results from a typical northern auction house in the city of Sheffield on 6th November 07, compared with earlier auctions during the year.
Properties At Auction Jan 07 April 07 June 07 Nov 07 % of properties Sold 79%

66%

65%

49%

% remaining unsold (failing to achieve reserves)

3%

23%

23%

27%

% Sold prior to auction

11%

4%

0%

17%

% Sold afterwards

0%

4%

6%

4%

% Withdrawn Prior to Auction

8%

4%

6%

2%

% of Total available properties Sold at auction (excluding withdrawals)

97%

76%

76%

71%

The auction results clearly illustrate the deteriorating trend in the ability of sellers to sell properties, despite cutting back on reserve prices. Back in January 2007, sellers clearly had the upper hand and could achieve prices in excess of their reserve with only 3% of properties remaining unsold at auction. The situation has now deteriorated to the point where approaching 1/3rd of properties remaining unsold, this despite sellers more eager to do a deal with buyers prior to the auction so as to ensure a sale.
If the situation has deteriorated in the auction houses to this degree then the position with estate agencies must be dire at this point in time which supports my view that the next financial crisis to hit the housing sector will be amongst the estate agencies.
As mortgages dry up from traditional sources such as Northern Rock, Alliance and Leicester, Bradford and Bingley and Paragon so will the ability of buyers to secure financing seeking to pick up potential bargains amongst panicky sellers. Throw in an anticipated 80,000 of repossessions during 2008 means a lot of supply will over hang the UK housing market by the end of 2008 ensuring that the housing bear market will persist well into 2009 despite cuts in UK interest rates and a decline in house prices during 2008.

[SIZE=+1]UK Housing Market Forecast for 2008-09[/SIZE] - As of 22nd August 2007

UK House Prices to fall by 15% over two years, falling prices to be accompanied by cuts in UK interest rates. (22nd Aug 07),

1st May 07 - UK Housing Market Heading for a Property Crash

25th Sep 07 - UK Housing Market on Brink of Price Crash - Media Lessons from 1989!

28th Oct 07 - UK House Prices - Primary Reasons For a Sharp Fall

10th Nov 07 - Crash in UK House Prices Forecast for April 2008 As Buy to Let Investors Sell on Capital Gains Tax Change

boinging_2

Please help me understand this property investing lark...

I buy a house for £400,000 today
Stamp duty = £12,000
Interest Only Mortgage Payments for 1 year on 75% value (£300K) = £16800
Total Cost to me = £428800

Therefore I would need over a 7% rise in property value just to break even in one years time. If property declines next year, with inflation added would I not then need a more than double digit growth the following year just to break even to where I am today?

This seems a massive risk to me, as I haven't seen one person / bank / government figure say that property will rise 7%.

geoffky

if you have had any missed mobile phone call bill payments recently you will get shown the door now. i have heard of a refusal for a £10 overdraft..

LisbonLaura

It's a suicidal risk boinging.

But I didn't say it as I'm not a 'financial adviser' with my own website who gets miffed everytime someone dares to laugh at my hideous self-interest.

codger

boinging:

I can't see any flaw in your maths. What I can see is a question that, with different sums, must be being asked by many, many individuals and families throughout the UK as they contemplate a price (£400,000, in your example) which may not actually be a "fair" or "true" price. . .

And which, even if they can remotely figure out what it should be, may then prove in months from now, rather than years, to have been a "stupid" price to have paid.

All prospective home owners are at the moment saddled with the "fair" (apparent value for money), "true" (what a valuer may think at the start of this month compared to what a valuer might think at the start of next month) and "stupid" price question (what a comparable property is going for in Spring of next year.)

Little wonder that so many are hesitating. Little wonder there's so much uncertainty.

None of which would actually amount to anything of seismic implications were it not for the fact that, as other posters on this thread have pointed out, the robustness of the economic environment within which this uncertainty has taken root is itself a subject for debate and growing anxiety.

All that seems certain is that there have been a lot of losers where the housing market has been concerned these past few years. And that there are a growing number of losers now.

Anecdotally that seems to be largely in the BTL sector at the moment, with which I can't have much sympathy because those who speculate do so at their own risk -- and especially all those who fell for the ludicrous advice of so many Internet UK property "gurus" who urged them into equity release so as to fund BTL investments.

It's if the number of "losers" in the non-speculative, home-owning sector grow that the picture will darken.

Doubtless the Bank of England will signal a cut in interest rates as soon as possible. That this may be as effective in addressing the problem as the Bank of England's unpardonable behaviour in presiding over a housing price boom in the first place is debatable.

Not for the first time where the UK housing market is concerned, what happens in the wider world beyond the first floor window may come home to land on the front door-step.

codger

Slightly off-topic, I know.

But of the many and varied consequences posited from a slow down in the housing market, I never came across one that identified a slow down in MSE.

Alarming.

There are other threads on MSE about a possible site problem but so far, no-one has identified the cause.



Or if they did, it took the page so long to load, I never saw it.