House price fall "accelerating"

Turnbull2000

I think two recent articles have summed up quite nicely what we've already experienced and we're where at. We've reached a point where all the broadsheets, most tabloids, most financial analysts, the International Monetary Fund, Citigroup, HSBC etc. are all in agreement that the market is fundamentally wrong, grossly overvalued and the bubble is in trouble. Even many EAs are admitting the game is up.

Those that persist in believing the market will be OK, saying that you should still buy at a stretch or invest in BTL or talk up the market have dwindled down to the following; recent buyers, BTL investors, BTL mortgage lenders, Nationwide and the Daily Express.

There's probably a few I've missed, but you get the idea. Those few self-interests remaining are now going against popular opinion. The truth of the market has come through and the debate is dead. Put an argument forward; they have nothing of substance to throw back.

Anyway, back two those articles I mentioned. The first one appeared in the Telegraph;

The prospect of a free lunch created a surge of buy-to-let punters. The sector experienced an old-fashioned gold rush. Ordinary people, who wouldn't normally risk a pound on the lottery, went mining for riches. In 1998, there were 30,000 BTL mortgages; today there are about one million.

BTLs were symptomatic of the Blair-Brown boom: a period of uneven wealth explosion, much of it illusory, created by pumping out easy credit and sucking in foreign moolah. British house prices went up 200 per cent in 10 years, until they reached the point where a man on the average annual salary of £25,000 had to borrow eight times his income to afford the average house.

For many, the numbers did not add up. So debt affordability was "redefined" to mean simply servicing the interest. Worries about repaying the capital were dismissed as "outdated", a bit like tank tops and loon pants.

Those who predicted disaster were branded as "mugs". Reality was suspended in favour of excess. Too few wanted to miss out on the eternal summer of perpetual house-price inflation. It was a time of collective deceit, into which borrowers, lenders, regulators and ministers happily bought.

At the peak of investor exuberance just before the 1929 Wall Street Crash, American stockbrokers were opening offices on cruise ships and at seaside resorts to feed the masses' addiction to the upward tick of share prices. In a similar vein, contemporary real-estate peddlers have combined with television companies to nurture our obsession with house prices through "property !!!!!!" shows.

When bull markets turn into asset bubbles, something dangerous occurs: vulnerable folk start to mistake themselves for financial geniuses. They begin to believe they are blessed with insights and talents not available to previous generations. They become susceptible to revivals of faith in "a new era".

According to Incademy.com, an investor education website, an insidious assumption takes hold: "It is different this time." As a result, established rules for wealth preservation are flouted. Eager buyers become blinded to overvaluation and start to pay too much, often with borrowed money.

"Repeated on a large scale, this is how a whole economy loads up with too much debt, supporting too many over-priced assets. The unwinding of this process is one of the leading causes of recessions," Incademy observes.

The second - from the Independent - I posted earlier today. Here it is again;

The clearest sign that an investment bubble is in desperate danger of bursting is the moment you discover that those with a vested interest are the only ones still insisting that everything's going to be OK. So, when a press release from Bradford & Bingley (the UK's largest buy-to-let mortgage lender) landed in my inbox this week, boasting that Britain's landlords are "upbeat" about the prospects for the residential-property sector in 2008, it finally became abundantly clear to me just how bad things are looking for the UK housing market over the next 12 months.

dunnomate

When the market goes down its NEVER a 'soft-landing' !!!!!

ttfn

dunnomate

ukjoel

I think there are several valid points been made.


What I would LIKE to know is all the people sitting and waiting for a crash/drop/rebalance etc - At what point will you enter the game.

I have seen lots of comments but nowone has yet said I want a 5% drop and then I will buy, or I will offer 90% of asking price.

My wife never parks in the first space she sees as there is always a better space further on. I suspect a few of the contributors here are the same.

andysstuff_2

ukjoel wrote: »

What I would LIKE to know is all the people sitting and waiting for a crash/drop/rebalance etc - At what point will you enter the game.

quote]
For me, when I can afford to - in effect when I can buy a flat for sub £80K - about a 20% fall from where they are now, so looking at the end of 80's situation, probably about 3 years.

secondtoughest

When I can get a repayment mortgage for the same money I pay in rent.

DreamBreaker

secondtoughest wrote: »

When I can get a repayment mortgage for the same money I pay in rent.

I may be on your side with this one in normal markets are rents not usually the same or higher than a repayment mortgage. I know years ago scarily many moons ago) when I rented after finishing university that we rented for a year and the rent was approx £500 for a 2 bed apartment. We bought a house and the mortgage was only about £300pm for a 2 bed town house. We stopped renting as buying was cheaper. Is that not the case still in some areas, I know probably not many as my houses would not be tenanted if so

m00m00

DreamBreaker wrote: »

I may be on your side with this one in normal markets are rents not usually the same or higher than a repayment mortgage. I know years ago scarily many moons ago) when I rented after finishing university that we rented for a year and the rent was approx £500 for a 2 bed apartment. We bought a house and the mortgage was only about £300pm for a 2 bed town house. We stopped renting as buying was cheaper. Is that not the case still in some areas, I know probably not many as my houses would not be tenanted if so

rents have gone up by something like 3% per annum for the past 5 years or so

HPI has been rather more, the cross over point between renting and buying came a few years ago, exactly when will depend on the area.

HPI has been driven in some part by demand from BTL investors, this in turn has led to an increase in supply of rental stock which has pushed the prices in a downward trend, as far as rental income has been concerned.

DreamBreaker

m00m00 wrote: »

rents have gone up by something like 3% per annum for the past 5 years or so

HPI has been rather more, the cross over point between renting and buying came a few years ago, exactly when will depend on the area.

HPI has been driven in some part by demand from BTL investors, this in turn has led to an increase in supply of rental stock which has pushed the prices in a downward trend, as far as rental income has been concerned.

In my area I am not seeing a downward trend simply because people are not buying they are renting. I cant rent a property quick enough. If one is void for more than a week I have been unlucky.

m00m00

east or west midlands ?

DreamBreaker

m00m00 wrote: »

east or west midlands ?

Ment to put areaS, I have properties in many areas