Housing market continues to slow....

wibble68_2

In reality the housing market boom of the past decade has been built on sentiment and the ability of people to make money in such a market.

I personally don't buy the "It's different this time" argument.

I also believe that prices staying stagnent for 5 years or so is best case senario.

Prices dropping steadily over the next few years is the most likely outcome.

Historically it's highly unusual that bubbles don't burst.
(If anyone would like to argue that we are not in a bubble then feel free)

Does anyone know how many housing market commentators got their predictions right in the 90's?

I know for fact that the Halifax got it all kinds of wrong.

eurows

I don't know if banks etc want to give correct prodictions when the market is falling.

They stand to lose so much if the market falls. Repos go up and then they cannot get these ridiculous prices again they lose all ends up.

If they predict falls it is doing them out of a job. Talk it up thats what banks do. Have you noticed that when prices do fall there is always a spin at the end with a big BUT

deemy2004

Yeh, its like stock brokers..... always talking the stock market up

So as is with estate agents banks... always talking the housing market up... or trying to pretend the decline is minor and coming to an end... i.e. soft landing BS.

Kenny4315

It was very interesting reading the guardian today, don't know if anyone saw it any. To cut a long story short one chap who regularly talks about house prices works for a banking type institution, normally his stance is 'we'll see a level off and then softening of prices' today his quote said the normal above but at the end says 'we can not rule out a crash though' interesting Mr Bond, seems like even these bozo's have cottoned on to the fact that there is no such thing as a soft landening when pure economic rules are broken as has been the case with UK house prices in recent years.

Look at the stock market for evidence of this, 6 months before the crash it was the best thing since sliced bread then suddenly 50% is wiped off in no time. I was very pleased with this however, and ploughed a pot of loot (some of which was from property) into the FTSE once it reached the bottom or close to it. The said loot is now awaiting a transfer from shares back into property once panic and resultant crash occurs. I don't envisaged a long drawn out correction, I believe that the correction will occur fairly rapidly once it begins in ernst, if it goes up by 25% a year it can easily come down at the same rate. I estimate based on my own home and its over-value at present the correction to be in the region of 25%, the speed of correction slowing once it gets close to realistic figures then a period of long drawn out stagnation with very small year on year increases.

It is virutally impossible to view house prices on an area by area basis, unless you are a full scale investor/speculator and can take vast quantities of cash quickly from one area to the next. For average joe public the market is inter-connected, London houses prices effect prices in York, York effects the surrounding towns, and so on. For example, York prices go up surrounding villages eventually go up in a domino effect, York becomes cheap, surrounding villages have to become cheaper. The market differential between places is always maintain over a period of time.

meanmachine_2

Kenny4315 wrote:

if it goes up by 25% a year it can easily come down at the same rate. I estimate based on my own home and its over-value at present the correction to be in the region of 25%,

I'd like to believe that, but I don't think it's necessarily true. That's why the property market is said to be "sticky" during any downward correction.

People are loathed to lose any "profits" they think they've made (basically by doing diddly, but hey, people are greedy).

And real falls are very slow in coming. Everyone is keen to drive prices up - the seller, the lender, the agent - but only the buyer wants to drive the price down, which is why they have a tendency to "stick".

I've been tracking a few areas and there is one bungalow I've had my eye on that has been on the market now for at least 15 months. It's dropped by just 5K in that entire time. And still no one's going near it.

Crazy.

Kenny4315

I believe there will be a point in time when things do move from a slow plateau as it is currently to a panic, as they say there is always calm before a storm. In the rise people panic to buy the house before it gets to high, the opposite is true when the market is falling and you can't see the bottom for a long time or alot of cash. People want to get out and get out quickly, don't forget the average buyer/seller in the UK ain't to money wise, infact far from it,and many are burderdened with significant debts. I'd love to know what the average total household debt in the UK is including mortgage, credit cards, HP, Loans, etc is, I expect it is substantially more an average household can maintain if the price of house that they have been releasing 'equity' from suddenly starts falling rather than rising, and the next 6 monthly/yearly remortgage suddenly to release more cash isn't viable.

Here are some figures from the article in the guardian

Data from office of deputy prime minister 'mortgage repossions were 30.1% higher in the three months to april than the previous 3 months, and 44% higher than year ago'

British Bankers Assoc 'Mortgage lending down 17% on year' 'approval down 24% on year'

Alot of people have talked about people needing places to stay, etc, but a high proportion of the boom has been caused by investors, some of whom will move quickly if they see a high risk of losses. There are alot of unoccupied rental houses in my area thats cash out of the window in a falling market.

I have been monitoring several house lately in my area, and I have noticed that they are on the market at daft prices, they move agents and they have dropped dramatically, example, House on Market with agent for £750k moved to a different agent then re-priced at £675k (£75k down), another in similiar area, on market for £825k then moved and on at £785k (£40k), another £535k moved agent £499k (£35k). I know someone trying to move have house on market for £210k had very little/no interest, are going to have to reduced by a fair amount to shift it, ie under £200k. Even an actual estate agent has just whipped £30k off the asking price of a place of his own he is selling !!!

meanmachine_2

This notion of there being a housing shortage is the first common misconception that needs to be addressed.

If there was a shortgage of housing, then there wouldn't be least 40 empty rentals in my small home town right now - a record number by the way.

And most of these have been lying empty for up to six months!! Doesn't sound like a shortage of property to me.

Sadly, I can see the BoE trying to shore up the market by cutting rates in the Autumn and again before Xmas. Basically they've said as much by arguing there *is* a link between house prices and the conomy as a whole. In effect they're saying it's their job to stop the market crashing.

I think we could see a dead cat bounce yet before the market really does correct in any meaninful way.

GreenB_2

Basically if you can't afford to buy a house ...its tough!
Move on and do something else. You have no god given right to be able to affford or buy a house... I would like a ferrrai but I can't afford one!

deemy2004

I suppose their are worse things for people to go mental over than property.

Remember the tulips bubble ! When a stupid little plant was worth more than a blooming house ! Now that WAS CRAZY ! - Still all crazy markets have their day of reckoning and with the tulips it literally happened in just one day ! POP !.....

mrcow

GreenB wrote:

Basically if you can't afford to buy a house ...its tough!
Move on and do something else. You have no god given right to be able to affford or buy a house... I would like a ferrrai but I can't afford one!

You don't work for my bank do you?