Housing market continues to slow....

meanmachine_2

GingeG wrote:

I dont think they will crash here is another report

http://news.bbc.co.uk/1/hi/business/4081282.stm

That's hilarious. According to a "report" (a survey) by a bank (a lender), people who have homes don't think they will fall in value.

If I had a home, I'd be hoping the same. But there's naff all I could do about it.

I'm refusing to pay current prices (I can't afford to), and so houses will have to fall in value if anyone is ever going to sell.

grebbo

meanmachine wrote:

To grebbo, I'd ask you this - at the beginning of the year were you telling your clients that house prices will fall 5%? Or were you predicting a Spring Bounce? I'll predict that, in three more months you'll be suggesting everything will be fine, but that prices might fall by 10%. It's exactly what happened last time. No one in the property business predicted the crash and even while it was happening none of them admitted to it.

Just like now.

Hi meanmachine

I deal with property investors not residential buyers. Property is a long term investment, people invest in it as in 10/20 years time its a safe bet that the property will have increased in value. Short term is of no interest to property investors.

Like I said if you're looking for a quick return then buy in an emerging property market (eg Eastern Europe) or dont invest in property.

If you are waiting for house prices to fall by 30% before you buy you could be waiting a lifetime!

May I suggest that if you are in the position to buy now then make low offers on properties that you're interested in. You never know the owner's circumstances and they might sell.

grebbo

meanmachine wrote:

I'm refusing to pay current prices (I can't afford to), and so houses will have to fall in value if anyone is ever going to sell.

You're presuming that people are going to want to sell if there's a price "crash". Why?

People are still going to need somewhere to live so why not stay in their home? People who get themselves into difficulty by borrowing too much might have to sell/get repossessed but these homes will be the minority.

meanmachine_2

grebbo wrote:

Hi meanmachine

I deal with property investors not residential buyers. Property is a long term investment, people invest in it as in 10/20 years time its a safe bet that the property will have increased in value. Short term is of no interest to property investors.

Like I said if you're looking for a quick return then buy in an emerging property market (eg Eastern Europe) or dont invest in property.

If you are waiting for house prices to fall by 30% before you buy you could be waiting a lifetime!

May I suggest that if you are in the position to buy now then make low offers on properties that you're interested in. You never know the owner's circumstances and they might sell.

You may suggest this course of action, but I won't be taking it thanks, as it doesn't suit my present circumstances. But thanks for the feedback.

Since property has risen by 150% over five years, a correction of 30% seems minor, doesn't it?

But of course, property prices only ever go up....

meanmachine_2

grebbo wrote:

You're presuming that people are going to want to sell if there's a price "crash". Why?

People are still going to need somewhere to live so why not stay in their home? People who get themselves into difficulty by borrowing too much might have to sell/get repossessed but these homes will be the minority.

But property prices are only set by those who do have to sell, you know that. If a vendor doesn't have to sell, and doesn't, then they don't register on the official stats.

And with a property led recession predicted (by some), I'd say that forced selllers are going to increase, wouldn't you?

But what do I know, you're the expert...

deemy2004

During the last property slump... All the way down the press /vested interest were reporting how the fall is over and now is a good time to buy cheap properties and how next year prices will rise... instead prices continued to fall and stagnate

loanranger_4

This boom has been financed by borrowing £581 billion over the last 8 years !!!

This money has to paid back sometime, once interests rates rise and the debt becomes hard to service, we're going to know about it big time!

deemy2004

The aim of governments is get the economy to both inflate and grow themselves out of debt..

Now there are times when this has worked perfectly i.e. the 1990's...

Then there are times when this has gone horibly wrong i.e. the 1970's

Its difficult to see where we are going next because even though britain is relatively well managed economy.

There are some really nutcase economies out there !
I.e. America - are really a flip-case economy !
Japan - another nutter that needs to be resuscitated from a 15 year depression.

And not forgettting the EU, where many countries have been what looks like permanent f'd up by the euro.

So what happens next ?

Do we grow and inflate our way out of the high debt levels as we did in the 90's ?

Do we inflate ourselves out of high debt levels as we did in the 70's ? - Which means high inflation.

Or do we go into a japan style depression with no end in sight ! And takes the likes of a Maggie Thatcher to sort things out !

Offcourse the plan is to grow our way out of high debt ... in which case it will take about 6 years of growth and debt reduction as a proportion of GDP / earnings ...

meanmachine_2

loanranger wrote:

This boom has been financed by borrowing £581 billion over the last 8 years !!!

This money has to paid back sometime, once interests rates rise and the debt becomes hard to service, we're going to know about it big time!

By avoiding the natural recessionary cycle of the economy back in 2001 (when house prices started to fall), the cost has been, as you say £581b of debt. Now we're paying the much greater price for that.

Only a fool would think that we've avoided boom and bust. It's actually better sometimes to accept a bust, instead of slide into what seems to be happening now - years of stagnation.

loanranger_4

We have been through 911 and then the iraq war, the government's solution (with a little influence from over the pond) has been to make debt cheaper to continue and fuel the consumer boom.

As a consequence the housing market was barely affected by either of these events.

I think the reason is that we have changed about how we assess how we can afford a house. Because we buy houses with debt, the house price to income multiple has become less important than the monthly cost to after-tax income ratio. As we have had very low interest rates we have had much more money to spend on housing which has resulted in higher than normal house prices. Put another way people are looking at buying through the eyes of renting (i.e. I can afford this mortgage because the repayments are £1000/month).

Interestly the average household debt and interest charges to after income tax ratio is now at 22%, the same as it was in 1990 i.e. we are now as stretched as we were in 1990.

Further I believe that with the likes of NetHousePrices.com we are now a lot more savvy. I was at a viewing today and the agent said that they had sold the house next door 18 months ago. I asked how much more and he wouldn't/couldn't say. So when I got back home and voila! It was much cheaper that the one on the market at the moment!