Surveyors blame price decline on credit crunch

EdInvestor

Crash not expected.

http://www.guardian.co.uk/money/2008/apr/15/houseprices.property

RICS spokesman Jeremy Leaf said the market remained very difficult: "Sentiment is at a very low ebb and will continue to remain depressed while the economy suffers from this unique liquidity blight. The slowdown in prices is directly attributable to a lack of available finance which has hit demand...."
RICS does not expect house prices to crash, despite some experts saying prices might be overvalued by up to 30%."Until new supply increases dramatically a significant crash remains unlikely," said Leaf.

So the advice for sellers is to sit tight and wait until the credit crunch is sorted. Judging by the ultra quiet state of the market and closure of estate agents and mortgage brokers, the message seems to have been received loud and clear.

WTF?_2

EdInvestor wrote: »

So the advice for sellers is to sit tight and wait until the credit crunch is sorted. Judging by the ultra quiet state of the market and closure of estate agents and mortgage brokers, the message seems to have been received loud and clear.

WARNING: This post may seriously damage your financial health.

EdInvestor

Jeremy Leaf, spokesman for RICS, comments: "The slowdown in prices is directly attributable to a lack of available finance which has hit demand.“However, until new supply increases dramatically a significant crash remains unlikely. The next six months will be a crucial period for homeowners.”
RICS says the current market presents a good opportunity for first time buyers with large deposits as they can still access good deals and will benefit from the downturn in prices.

Message for the STRs: don't wait too long, this could be as good as it gets..

dannyboycey

EdInvestor wrote: »

Message for the STRs: don't wait too long, this could be as good as it gets..

Roughly translated as "please come back to the market.... I'm on my knees, my job depends on it.... I have to pay for my ill-fitting pin-stripe suit and Audi TT somehow!".

Anyone that STR'd between October and January will make an absolute killing in the next year or so.

Datasafe_2

EdInvestor wrote: »

Crash not expected.

http://www.guardian.co.uk/money/2008/apr/15/houseprices.property

Yet the data is the worst since records becan in 1978. Yes thats before the great crash of the early nineties.

Some can wait it out, others can't. Its those which will drag prices down.

Pez2

I'm curious, when was the last time that a UK housing boom was followed by a period of price stagnation in real terms. Has that ever happened before?

Guy_Montag

The credit crunch is a return to normality; the past five years have been the anomoly.

100%+ LTV loans are not normality
5+ salary multiples are not normality
Self-cert for 40% of the population is not normality

Paul_N_4

EdInvestor wrote: »

So the advice for sellers is to sit tight and wait until the credit crunch is sorted.

As has already been said, lots of people can't wait and sit it out, especially when re-mortgage time comes. But as I've said a number of times, only a small percentage of current home owners would have issues if they wanted to sell now. Namely those that bought a home (to live in or as an investment) over the past couple of years.

The overwhelming majority of home owners have high equity in their homes so moving simply involves going from house that's fallen in value to next house that's fallen in value.

So what you really mean is - if you've recently bought a home, especially if you're a property invester, sit it out and you should be able to make the same money as summer 2007 after the credit crunch. For probably 90%+ of home owners, carry on as normal.

BobProperty

EdInvestor wrote: »

"Sentiment is at a very low ebb and will continue to remain depressed while the economy suffers from this unique liquidity blight. The slowdown in prices is directly attributable to a lack of available finance which has hit demand...."

That will be the "unique liquidity blight" that is only hitting the UK and not affecting anywhere else in the world then will it?

EdInvestor

Paul_N wrote: »

The overwhelming majority of home owners have high equity in their homes so moving simply involves going from house that's fallen in value to next house that's fallen in value.

Unfortunately, many people don't like to accept that their property has fallen in value especially if the fall might be short term before another rise.Thus, as reported elsewhere, you get situations where an FTB/STR negotiates a discount, but then his vendor finds he cannot repeat the performance with his vendor further up the chain.

So the STR/FTB wins, and the second vendor wins, leaving one mug punter in the middle who loses, simply ending up with a bigger mortgage. This is a recipe for breaking chains.

In cases like this, it's better for the first vendor to sit tight and stay off the market IMHO, as the following might happen:

1)The credit crunch is resolved and things get back to normal
2)Prices continue to fall, and the vendors further up the chain get realistic
3)Normal less opportunistic FTBs are priced back in to the market, putting a floor under the downward price.

Either way the market is rapidly freezing up with hardly any deals going through to completion, so it's really a waste of money trying to do anything at present.

Guy_Montag

EdInvestor do you really believe:

100%+ LTV loans
5+ salary multiples
Self-cert for 40% of the population

are normal?