Housing market continues to slow....

Kenny4315

A gentle correction will not be happening, it will be a big correction and it won't take too long once it starts. I will take my own house as an example, I live in a 4 bedroomed victorian townhouse in central york location. I bought it for £120k 5 years ago (which at the time I thought was a fairly hefty amount), (did a bit of work on it around £15k on materials plus alot of my own time). I have recently had it valued by 4 EA's on average at £335k. I personally reckon that it will fall back to around £235 to £250k overtime because that's what its really worth. Even with a £100k clear deposit after selling / buying costs (around £20kish) at present a buyer would have a mortgage of £235k. That means needing to earn nearly £70k a year (based on 3 1/2 time salary), in York that sort of cash is virtually unheard of. In the country as a whole that sort of salary is very substantial, and you are talking very senior management level. Let's not forget the average salary is around the £25k pa mark.

The office of the deputy prime minister today produced figures showing house price year on year down to about 6.9%, compared to 12.8 (or something like that) the previous year. Even then there is an excuse saying Easter came at a bad time, rubbish ! Without huge debt levels most houses are now beyond many peoples sensible limits, even those with houses already.

Everyone talks about interest rates being at the lowest for x years etc, and affordability. However, the capital amount to pay off now for the same house as 5 years ago is probably 100% greater, or in some case even more, off-setting the lower interest rates by some considerable distance. With low inflation that makes it a long process to pay off a big mortgage, as it is not eroded by high inflationary salary increases.

Why in a hard global recession would the single biggest purchase go up ? It's all to do with speculation, there is no real economic reason for it. It is totally illogical at a time when folks should have being tightening there belts they have been spend spend spending. It won't matter to much what the interest rates are once the market is falling, people will panic as they realise they are in some significant doggy doo doo if they don't sell pronto and cuts there losses. It human instinct and in such a debt ridden society its ineveitable, that a great many people will face very severe hardship.

Another point is re-mortgages have fuelled figures from various building societies, and fuelled consumer expenditure, but these guys are now loaded down with vast amounts of debt. It is fair enough re-mortgaging for a better rate, or to release cash for sensible investments, but most have blown the loot on un-necessary keep up with the jones items. I only have to look at any car park in the last few years to see that, it's full of high spec motors probably bought out of house equity from re-mortgaging to the hilt.

eurows

i got this off the sky news site and Its music to my ears.

PROPERTY MARKET FALLING

Chartered surveyors are reporting the highest levels of house price falls since the 1990s property crash, a survey has shown.

The Royal Institution of Chartered Surveyors said 49% more of its members reported prices fell in May than those who thought they rose.


It is the highest proportion of surveyors to report a drop in the value of property since November 1992, the height of the last house price crash.

trafalgar_2

Can you provide a link to the full article please...........I can't find it
it's ok ..........got it

http://www.sky.com/skynews/article/0,,30400-13370207,00.html


it also says

"But despite the gloomy figures, confidence among surveyors is at its highest level since November last year.

RICS said its members expected sales to pick up going forward as interest rates peaked and possibly fell."

Bundy_2

He's right!
its here

http://www.sky.com/skynews/article/0,,30000-13370207,00.html

ReportInvestor

Mortgage Introducer

The mortgage industry puts a more positive spin on the survey .

"...........Nevertheless, surveyors anticipate an improvement in sales activity with interest rates near a peak and possibly set to fall. Confidence is at its highest level since last November.

One benefit of a slack housing market is that lettings market activity remains firm as many are inclined to rent homes, waiting to see where the market stabilises before making a decision on whether to buy.

Across the country, only Scotland is still seeing price increases. The most noticeable price falls are in the Midlands and Yorkshire & Humberside, with the pace of falls also increasing in London.

According to RICS housing market spokesperson, Jeremy Leaf: "The froth has come off the market. Choosy buyers can now afford to bide their time as available property has risen by a quarter in the past year. Sellers must adapt their behaviour to account for the fact that boom conditions of recent years have come to an end.

"An economic slowdown has led to an element of caution. Nevertheless, expected increases in income and employment growth will provide some underlying support to the housing market while the negative impact of interest rate rises will also fade later in the year."

Bundy_2

Having just had on offer accepted on a house in Yorkshire, this is bloody unwelcome news.

rchddap1

But will interest rates go down? Take a look at the quote taken from this article on the BBC.


HBOS treasury services economist Mark Miller said: "The most likely path for interest rates is to be on hold for the rest of the year. (After that) we are looking for a move up rather than down."
http://news.bbc.co.uk/1/hi/business/4090926.stm

meanmachine_2

But Merv King is also suggesting that inflation remains a major worry.

int rates ain't going nowhere kids. In fact, with US rates on the up, the next move might be....wait for it...a rate rise!

eurows

Hurrah for common sense. If Jackson can get off anything can happen

eurows

I notice they also point out their hopes for the coming months. But it is their business they have to put a good spin on their bad news