A Good Time For First-time Buyers?

izzybusy23

beinerts wrote: »

Any I suppose you are a property guru who has made millions over the years through your acute knowledge? Care to share your own infinite wisdom? No? didn't think so...

My personal opinion is that anybody who bought within the past couple of years are likely to have the same outlook as you.. no crash, just a plateau.. however, history dictates something completely different.

Anybody who has a vested interest in a property bought recently is bound to believe the same way as you do.

And YES, completely agree to above post. It will happen, no bones about it. HBOS have just secured funding at 9.5% from the federal reserves... who do you think they will pass that increase onto... and who do you think won't be able to afford those increases? People on fixed rates who need to remortgage.. thats who.

teabelly

What also differs to the late eighties is the number of borrowers on fixed rate deals. Most FTBs and those with high LTVs are on fixed rates so it is several years before any changes are actually felt. Those being repossessed now were probably starting to have problems 12 months ago or more. Interest rates have fallen since then some that might have been caught onto a higher fix may have been able to get a lower fixed rate before the credit crunch. Borrowing rates seem to be rising again so those that will get into trouble may take 12-18 months for it to happen. Also there are many more buy your house quick companies that have prevented a significant number of repossessions and also resold properties for much higher than they paid. These also keep prices high as they seem to have found a rich seam of gullible investors to sell to

Buyers can only buy if sellers are willing to sell at a lower price. If market conditions change so that more people can only afford 100k houses then they will rise in value as more people will be chasing the fewer cheaper properties. Once they go then only ones left will be more expensive. People will either just put up with that and buy the more expensive ones or they won't bother at all. Sellers will either sit tight or decide to sell at the lower price and try and get a reduction off their next purchase. If the one above them won't budge then they'll either have to pay the extra money or drop out of the chain.

What is happening is a stand off. Sellers aren't prepared to sell for less than they think their property is worth. Dropping a few grand off after a few months is normal seller behaviour as everyone knows you market slightly above what you think you'll get and take offers. It is all part of the game. But ultimately buyers won't pay more either. Previously they have been in harmony but the media have been talking up a crash and bandying around how 'ridiculously over valued' property is but forgetting it is a free market and buyers don't buy if they don't think it is worth it so if they have been buying then they obviously do. No one is forcing you to buy at these prices. If you don't like them then do without and carry on renting or living where you are. At some point one side will give in. My betting is that buyers will give in first as their need for shelter and security is a stronger need than the sellers' need to prove what they think it is worth as they already have shelter and security so they can wait it out.

Any game theory experts on here?

izzybusy23

teabelly wrote: »

What also differs to the late eighties is the number of borrowers on fixed rate deals. Most FTBs and those with high LTVs are on fixed rates so it is several years before any changes are actually felt. Those being repossessed now were probably starting to have problems 12 months ago or more. Interest rates have fallen since then some that might have been caught onto a higher fix may have been able to get a lower fixed rate before the credit crunch. Borrowing rates seem to be rising again so those that will get into trouble may take 12-18 months for it to happen. Also there are many more buy your house quick companies that have prevented a significant number of repossessions and also resold properties for much higher than they paid. These also keep prices high as they seem to have found a rich seam of gullible investors to sell to

Buyers can only buy if sellers are willing to sell at a lower price. If market conditions change so that more people can only afford 100k houses then they will rise in value as more people will be chasing the fewer cheaper properties. Once they go then only ones left will be more expensive. People will either just put up with that and buy the more expensive ones or they won't bother at all. Sellers will either sit tight or decide to sell at the lower price and try and get a reduction off their next purchase. If the one above them won't budge then they'll either have to pay the extra money or drop out of the chain.

What is happening is a stand off. Sellers aren't prepared to sell for less than they think their property is worth. Dropping a few grand off after a few months is normal seller behaviour as everyone knows you market slightly above what you think you'll get and take offers. It is all part of the game. But ultimately buyers won't pay more either. Previously they have been in harmony but the media have been talking up a crash and bandying around how 'ridiculously over valued' property is but forgetting it is a free market and buyers don't buy if they don't think it is worth it so if they have been buying then they obviously do. No one is forcing you to buy at these prices. If you don't like them then do without and carry on renting or living where you are. At some point one side will give in. My betting is that buyers will give in first as their need for shelter and security is a stronger need than the sellers' need to prove what they think it is worth as they already have shelter and security so they can wait it out.

Any game theory experts on here?

Agree that its definately a mexican standoff.. but disagree that buyers will give in first. I truly believe that once the economy nosedives for sure, the polish will go home, the BTL brigade will offload so housing becomes more widely avaiable, and sellers will end up chasing the market down as their neighbours start lowering prices.

Its all a game at the end of the day, but I believe the sellers will lose the standoff in the long run.

carolt

teabelly wrote: »

What is happening is a stand off. Sellers aren't prepared to sell for less than they think their property is worth. Dropping a few grand off after a few months is normal seller behaviour as everyone knows you market slightly above what you think you'll get and take offers. It is all part of the game. But ultimately buyers won't pay more either. Previously they have been in harmony but the media have been talking up a crash and bandying around how 'ridiculously over valued' property is but forgetting it is a free market and buyers don't buy if they don't think it is worth it so if they have been buying then they obviously do. No one is forcing you to buy at these prices. If you don't like them then do without and carry on renting or living where you are. At some point one side will give in. My betting is that buyers will give in first as their need for shelter and security is a stronger need than the sellers' need to prove what they think it is worth as they already have shelter and security so they can wait it out.

The number of buyers is currently at record lows :

The Council of Mortgage Lenders said the number of mortgages taken out by people moving home fell to a new low of 50,300 in January, due to tighter lending conditions and buyers waiting until the economic outlook becomes clearer.
The total is 19% below the number of mortgages taken out in December and more than a third less than in January 2007, showing the speed at which the market is contracting. (Guardian, 12/3/08)

In all previous standoffs like this, the buyers have always lasted longer, for the simple reason that NOBODY HAS TO BUY, BUT PEOPLE SOMETIMES HAVE TO SELL. As a potential FTB, there is no logical reason for me to buy now if I think - and all the experts are telling me - prices will be lower in 6 months time. (I'll just rent that bit longer.) Same goes for BTL investors. But people who HAVE to sell, eg those who can no longer afford SVR's as their fixed rate runs out and who can't remortgage, those divorcing, those selling inherited properties, etc will just have to take whatever they can get. I suspect that as prices start to fall, they will be joined by an avalanche of BTL 'investors' who realise they had better cash in their equity before they lose it all again.

As the US has shown (and the example of the last UK crash also), unemployment is not needed to cause falling house prices; rather it is the result of them, due to the resulting job losses, initially in the construction sector, and then as recession kicks in, the wider economy.

Not a pretty picture, I admit.

But HOUSE PRICES WILL FALL. There's no two ways about it.

teabelly

As you are an FTB you have a vested interest in hoping prices will fall as otherwise you have wasted thousands waiting for the right time to buy rather than just buying when you want for a price you can afford at the time and for the reasonable future. The HPC people have been shouting crash for the last 5 years. Things were going the same way at the end of 2004/beginning of 2005 and look what happened. Mega price inflation after that. Credit tightened at the end of 2004 and prices carried on rising as it was only some that were affected, there was over supply then. Those that weren't carried on buying and investors soaked up the rest. As far as I can tell the only investors that are selling are dopey ones that bought new build flats without doing any research. Those with an ounce of nous aren't and are just sitting it out.

If the media weren't shouting doom and gloom because 'house prices stay the same in most places' isn't a story buyers would be there. If you read the comments from most of the surveyors they say the same. Many of them are commenting the buyers are now returning.

House builders are struggling as the media have been slagging off new builds, builders have also not helped themselves by building poor quality houses and trying to charge too much for them and investment companies have been causing endless problems by creating artificial demand for new build flats and encouraging dodgy deals. The govt have also made things worse by creating planning regulations which make it hard to build anything other than nasty little flats and shoebox sized starter homes which a lot of people honestly don't want.

If people are divorcing or splitting up then that increases demand as one household gets turned back into 2. They'll also be chasing the same properties as FTBs and with equity in their pocket FTB properties might end up being more expensive than they are now. Money is the biggest cause of arguments in most couples so if the economic outlook worsens then these arguments can only increase!

Average house price falls will be down to the high ticket properties being over priced and falling.The bread and butter properties will carry on rising as demand outstrips supply. What it means that FTBs will find it much harder to buy and with rising rents investors will find it easier to buy so FTBs will still be priced out and watching as prices of the bottom rung carry on getting further out of reach.

What might make a big difference is whether the immigrant workers decide to settle and raise families here. After a while they'll tire of being 10 to a house and want a place of their own each. This will cause more upward pressure on the smaller flats and houses as they'll be in higher demand to rent out as it is harder for a foreign national to get a mortgage.

People selling at auction are already refusing just to take what they can get. Mortgage companies aren't even selling repossessions if they don't realise a decent amount as they know they are risking being in trouble. I have seen the same auction properties re-appear and still not sell as the sellers won't take what they think is a low ball price. One house that I know of that was repossessed over a year ago. That has just sold and they had loads of low offers and turned down all of them. They eventually got around 90% of market value which is what you expect. If repossessions, which is they hardest type of forced sale, aren't going for much less than full market value then where is the impetus for a crash?

dolcevita

teabelly wrote: »

As you are an FTB you have a vested interest in hoping prices will fall as otherwise you have wasted thousands waiting for the right time to buy rather than just buying when you want for a price you can afford at the time and for the reasonable future. The HPC people have been shouting crash for the last 5 years. Things were going the same way at the end of 2004/beginning of 2005 and look what happened. Mega price inflation after that. Credit tightened at the end of 2004 and prices carried on rising as it was only some that were affected, there was over supply then. Those that weren't carried on buying and investors soaked up the rest. As far as I can tell the only investors that are selling are dopey ones that bought new build flats without doing any research. Those with an ounce of nous aren't and are just sitting it out.

If the media weren't shouting doom and gloom because 'house prices stay the same in most places' isn't a story buyers would be there. If you read the comments from most of the surveyors they say the same. Many of them are commenting the buyers are now returning.

House builders are struggling as the media have been slagging off new builds, builders have also not helped themselves by building poor quality houses and trying to charge too much for them and investment companies have been causing endless problems by creating artificial demand for new build flats and encouraging dodgy deals. The govt have also made things worse by creating planning regulations which make it hard to build anything other than nasty little flats and shoebox sized starter homes which a lot of people honestly don't want.

If people are divorcing or splitting up then that increases demand as one household gets turned back into 2. They'll also be chasing the same properties as FTBs and with equity in their pocket FTB properties might end up being more expensive than they are now. Money is the biggest cause of arguments in most couples so if the economic outlook worsens then these arguments can only increase!

Average house price falls will be down to the high ticket properties being over priced and falling.The bread and butter properties will carry on rising as demand outstrips supply. What it means that FTBs will find it much harder to buy and with rising rents investors will find it easier to buy so FTBs will still be priced out and watching as prices of the bottom rung carry on getting further out of reach.

What might make a big difference is whether the immigrant workers decide to settle and raise families here. After a while they'll tire of being 10 to a house and want a place of their own each. This will cause more upward pressure on the smaller flats and houses as they'll be in higher demand to rent out as it is harder for a foreign national to get a mortgage.

People selling at auction are already refusing just to take what they can get. Mortgage companies aren't even selling repossessions if they don't realise a decent amount as they know they are risking being in trouble. I have seen the same auction properties re-appear and still not sell as the sellers won't take what they think is a low ball price. One house that I know of that was repossessed over a year ago. That has just sold and they had loads of low offers and turned down all of them. They eventually got around 90% of market value which is what you expect. If repossessions, which is they hardest type of forced sale, aren't going for much less than full market value then where is the impetus for a crash?

I just haven't got the time or inclination to reply to all of these points.
It was painful enough reading it.


Ignorance obviously is bliss.

izzybusy23

teabelly wrote: »

As you are an FTB you have a vested interest in hoping prices will fall as otherwise you have wasted thousands waiting for the right time to buy rather than just buying when you want for a price you can afford at the time and for the reasonable future. The HPC people have been shouting crash for the last 5 years. Things were going the same way at the end of 2004/beginning of 2005 and look what happened. Mega price inflation after that. Credit tightened at the end of 2004 and prices carried on rising as it was only some that were affected, there was over supply then. Those that weren't carried on buying and investors soaked up the rest. As far as I can tell the only investors that are selling are dopey ones that bought new build flats without doing any research. Those with an ounce of nous aren't and are just sitting it out.

If the media weren't shouting doom and gloom because 'house prices stay the same in most places' isn't a story buyers would be there. If you read the comments from most of the surveyors they say the same. Many of them are commenting the buyers are now returning.

House builders are struggling as the media have been slagging off new builds, builders have also not helped themselves by building poor quality houses and trying to charge too much for them and investment companies have been causing endless problems by creating artificial demand for new build flats and encouraging dodgy deals. The govt have also made things worse by creating planning regulations which make it hard to build anything other than nasty little flats and shoebox sized starter homes which a lot of people honestly don't want.

If people are divorcing or splitting up then that increases demand as one household gets turned back into 2. They'll also be chasing the same properties as FTBs and with equity in their pocket FTB properties might end up being more expensive than they are now. Money is the biggest cause of arguments in most couples so if the economic outlook worsens then these arguments can only increase!

Average house price falls will be down to the high ticket properties being over priced and falling.The bread and butter properties will carry on rising as demand outstrips supply. What it means that FTBs will find it much harder to buy and with rising rents investors will find it easier to buy so FTBs will still be priced out and watching as prices of the bottom rung carry on getting further out of reach.

What might make a big difference is whether the immigrant workers decide to settle and raise families here. After a while they'll tire of being 10 to a house and want a place of their own each. This will cause more upward pressure on the smaller flats and houses as they'll be in higher demand to rent out as it is harder for a foreign national to get a mortgage.

People selling at auction are already refusing just to take what they can get. Mortgage companies aren't even selling repossessions if they don't realise a decent amount as they know they are risking being in trouble. I have seen the same auction properties re-appear and still not sell as the sellers won't take what they think is a low ball price. One house that I know of that was repossessed over a year ago. That has just sold and they had loads of low offers and turned down all of them. They eventually got around 90% of market value which is what you expect. If repossessions, which is they hardest type of forced sale, aren't going for much less than full market value then where is the impetus for a crash?

I will reply to this, very quickly.

Was I stupid enough to go rushing out when the media and papers was screaming' buy now, hurry, hurry, the boat is leaving the shore'...? Nope. I was not suckered in to being a debt and mortgage slave for the rest of my working life just because many 'sheeple' bought into the whole stupid house of cards.

I know what I can afford and can't afford and I was damned whether I was going to max out my credit cards, get as much cheap credit that I could and do 6 x my salary for a shoe box. It was obvious what was going to happen. Now I am not saying I am 'clever'.. its just that I am not a follower and know my own mind and have control over my life.

Now the news has turned bearish, the sellers don't like it. What were they all doing when the news was bullish, smiling their smug faces off at all those who had 'left it too late'.. now the tide has turned all we are hearing are sellers blarting on about 'there will not be a crash... the government won't allow it'.. looking after their vested interest, their house. Well I am now looking after MY vested interest, which is keeping my money firmly in the bank until houses come back DOWN to normal levels.. which will happen.

dopester

izzybusy23 wrote: »

now the tide has turned all we are hearing are sellers blarting on about 'there will not be a crash... the government won't allow it'.. looking after their vested interest, their house.

Most of the MPs have considerably more of their wealth in financial assets (liquid cash, pensions, investments) than they do in property. Also most people of wealth do + anyone of intelligence.

Added to which the financial instruments of the UK (savings, investments, pensions) far outweighs the £4 to £5 trillion of UK real-estate.

I'm in full agreement with you. It is painful, but allowing natural asset deflation is the only route that makes any sense. The UK would suffer much more serious harm if destroying it's financial assets to bail out monging home-owners who've over-extended themselves in the house-prices-can-only-go-up to a level which is now in fantasy land.

dolcevita

The other thing that makes me smile is the contradiction in these 2 statements popular among HPI cheerleaders:

1. "Doom-mongers have been talking about a crash for years and it hasn't happened"

in the same breath as:

2. "It's only the doom-mongers that are making things worse now"



So first of all it doesn't make any difference, house prices continue rising
then when they don't continue rising, it's the fault of the doom-mongers.

pricesless.

m00m00

Deadman wrote: »

There's a lot of people in the 'denial' stage on here.

There WILL be a crash and it WILL be significant.

plenty of VI's have moved away from denial in the kübler-ross scale, and moved onto the pleading/bargaining stage.

notice all the calls from VI's for rate cuts/stamp duty reform to 'kickstart the market'