BBC - House prices dip 1.1% in November

AndrewSmith

It's all very interesting this isn't it?

Look at the trends. The press begin to publish the possibility of a house price boom so what happens? Sellers hold out for near asking price offers, Estate Agents value properties higher, everyone expects the value of property to increase, so...................... guess what? It does.

On the flip side, the press begin reporting that in 12 month's time there will be a property crash. What happens? Desperate sellers put their houses on the market to cash in before the crash. Buyers expect to snap up bargains so stop bidding high. The housing market becomes flooded with mid-range 2nd and 3rd time properties with no-one to buy them as everyone is waiting for the crash. Sellers reduce the sale price of their property to shift it before the reported crash, therefore the average sale price comes down and the press gives itself a massive pat on the back for being right.

My question:

Which came first, the report of a crash or the crash itself? If the press and media had not whipped up such a panic and frenzy would prices have dropped at all?

Interesting point for which I will probably be publically flogged but, hey, ce la vie.

Doc_N

$$$ wrote: »

but....but... what about immigration, pent-up demand etc etc...

Just an urban myth dreamed up by greedy estate agents, house builders, BTLs and others wanting to keep up the momentum of ever-rising house prices.

The real thing driving up prices is sentiment - people kept on paying higher prices just because they were scared prices would go even higher.

That's changed now. Everyone now recognises that prices are falling. So if you wait, you pay less. That in turn means fewer buyers, and even lower prices. A virtuous circle.

carpetbelly

MABLE wrote: »

Perhaps I was a bit harsh but the current housing market has been driven by greed. Some people never seem satisfied with what they have but always want more.

Again, I totally agree with you 100% on that one. Unfortunately look at society today. Look at the newspapers with nobodies who have been on tv for 5mins in a reality tv show commanding headlines. It makes no sense. I was chatting to a kid who was playing with my misses little boy and he wants to be 'famous' when he grows up. He doesnt want to sing, he doesnt want to act, he just wants to be famous and earn money for doing nothing. It's silly but that's the sort of society we're currently living in. People want something for nothing and are gobsmacked if they think they might actually have to work for something!

ruggedtoast

Wishing people would go under isn't a nice thing.

Neither is ramping property with 100% loans so people cant afford a place to live.

Totally agree but unfortunately where money is to be made people will always invest.

Land mine companies, chemical warfare plants... but if it makes money what the hell!

What, a credit crunch where people are going to find it harder to get a mortgage without a huge deposit. Omg, if they had a huge deposit anyway they could have afforded a mortgage. This credit crunch will do no one anygood until the market has stabilised and we see what happens then.

I have a large deposit but I am not blowing it on an asset class that has been massively over valued in a credit bubble for the last few years, and has been long due a correction. I feel sorry for people whove stretched themselves to breaking point to jump on what they thought was a vanishing opportunity, but as far as the Buy To Let leeches go...

This is the sound of the worlds smallest violin.

Incidentally 10 - 20 percent deposit on a property costing around 4 times your salary is not a huge deposit. It used to be called sanity.

carpetbelly

ruggedtoast wrote: »

Neither is ramping property with 100% loans so people cant afford a place to live.

100% loans. Who mentioned these? If you can't save up a deposit imo why are you looking at houses? If you can save up a deposit at least banks are giving varied options (well, have been) that allow you to borrow more than the old 3.5x salary multiple. It's been easier for people to afford properties.

ruggedtoast wrote: »

Land mine companies, chemical warfare plants... but if it makes money what the hell!

Yes, the all make money and are all viable businesses. I don't agree with them but that's a different arguement is it not. You're trying to compare business that ultimately in the end disfigure or kill people deliberately with people wanting to earn money by being landlords. Slightly over the top do you not think?

ruggedtoast wrote: »

I have a large deposit but I am not blowing it on an asset class that has been massively over valued in a credit bubble for the last few years, and has been long due a correction.

Well, there's your problem imo. You're talking about it as an asset. I look at my house as my home. I can afford it, thus I have it. Long due a correction, I'll agree with but again I only feel it will be a correction. No one knows for sure so you're making a gamble. I'd rather have my home. Personal choice.

ruggedtoast wrote: »

I feel sorry for people whove stretched themselves to breaking point to jump on what they thought was a vanishing opportunity, but as far as the Buy To Let leeches go...

This is the sound of the worlds smallest violin.

Why? because they've got into a market and made it harder for you? Oh no, cry me a river. They were willing to make a gamble you werent. You make your choices and live with them. Other people are free to make their choices to and surprise surprise, they have every right to buy a property to rent out. As I've clearly said, I don't like it but I dont envy/hate/mock these people. I've got more important things to worry about.

ruggedtoast wrote: »

Incidentally 10 - 20 percent deposit on a property costing around 4 times your salary is not a huge deposit. It used to be called sanity.

20% is on the larger side of deposits (but then I'm not too old so cant remember to far back historically) and is still a large amount of money (which is what I meant by huge deposit, not percentage share).

I personally think sensible BTL'ers have been the good guys here. A lot of FTBers are getting 100% loans without thinking, on interest only and max amounts. No way of paying these back, just hoping HPI will clear off the property allowing them to remortgage down the line in a more favourible rate (if they've even thought that far ahead). I know to many FTB'ers who seem to think HPI will pay off the capital of their house and all the have to worry about it making the interest payment on their mortgage for the next 2yrs.

As has been pointed out before to me. People on MSE aren't the norm. They're more likely to be a bit more money savy than the rest or are trying to be to make sure they don't end up in that position.

ruggedtoast

If you can save up a deposit at least banks are giving varied options (well, have been) that allow you to borrow more than the old 3.5x salary multiple. It's been easier for people to afford properties.

I had to read this twice. Good grief - do you actually believe that? In what way has 100% LTV - 6 times salary and lie to buy self cert mortgages made it "easier" for people to afford properties?

All it has done is massively inflate prices on the back of sub-prime borrowers who inevitably have started defaulting, just like in the States. and burden everyone else with unprecedented amounts of debt.

merlinthehappypig

AndrewSmith wrote: »

It's all very interesting this isn't it?

Look at the trends. The press begin to publish the possibility of a house price boom so what happens? Sellers hold out for near asking price offers, Estate Agents value properties higher, everyone expects the value of property to increase, so...................... guess what? It does.

On the flip side, the press begin reporting that in 12 month's time there will be a property crash. What happens? Desperate sellers put their houses on the market to cash in before the crash. Buyers expect to snap up bargains so stop bidding high. The housing market becomes flooded with mid-range 2nd and 3rd time properties with no-one to buy them as everyone is waiting for the crash. Sellers reduce the sale price of their property to shift it before the reported crash, therefore the average sale price comes down and the press gives itself a massive pat on the back for being right.

My question:

Which came first, the report of a crash or the crash itself? If the press and media had not whipped up such a panic and frenzy would prices have dropped at all?

Interesting point for which I will probably be publically flogged but, hey, ce la vie.

No flogging from here I totally agree. We have stupid house prices supported only by the public's opinion that house prices can only ever go up. This idea has largely been the result of the media's obsession with house prices and the money to be made.

Now the media have totally shifted and are predicting doom and gloom. Public confidence is already damaged and prices will drop.

carpetbelly

ruggedtoast wrote: »

I had to read this twice. Good grief - do you actually believe that? In what way has 100% LTV - 6 times salary and lie to buy self cert mortgages made it "easier" for people to afford properties?

All it has done is massively inflate prices on the back of sub-prime borrowers who inevitably have started defaulting, just like in the States. and burden everyone else with unprecedented amounts of debt.

Nice of you to miss out my first sentence there

100% loans. Who mentioned these? If you can't save up a deposit imo why are you looking at houses?

That knocks 100% mortgages on the head. 6 times salaries, why not? What's wrong with affordability as a measure of borrowing over salary multiples?

I never mentioned lietobuy, you have now. I'm not going to defend lietobuy. SubPrime, again, something you've just brought up and not me.

But you seem to have gone from blaming BTL to now lietobuy and subprimes. Can you not make your mind up?

Lomion

As soon as house prices drop by 40-50% I'm going to go buy 2 more houses

Buy to Let here I come :T

Paul_N_4

carpetbelly wrote: »

6 times salaries, why not? What's wrong with affordability as a measure of borrowing over salary multiples?

Correct me if I'm wrong here but doesn't affordability depend on current interest rates? Naturally your affordability will be more when rates are low, but rates do go up as well. I'm assuming the 3.5x salary multiplier was introduced so that people can afford to pay their mortages in times of both low interest rates and high interest rates.

With the average mortgage over the course of 25 years, going by what you can afford in year one of the mortagage seems pretty silly to me.