FT- UK housing slump fears overplayed?

chrisandanne

This thread ought to be renamed What Pickles Did....and....What Pickles Did Next. A

cadavari

chrisandanne wrote: »

This thread ought to be renamed What Pickles Did....and....What Pickles Did Next. A

I agree! Seriously, prices will take months to fall.

xiox

ianmr65 wrote: »

I wonder about the ft... normally they are spot on, and informative...

http://www.ft.com/cms/s/0/59a5ee60-12fc-11dd-8d91-0000779fd2ac.html?nclick_check=1

But if you read the article, all they are basically saying is

12% HPC = 3% neg equity

25% HPC = 7% neg equity

Compared to last time when 10% HPC = 7% neg equity

I wonder what happens if you turn this % neg equity into real money? I bet you end up with a larger value relative to average wages than you did back then, making it harder to pay off. Wages have increased much less than house prices, making the percentage a bigger value relative to income.

baby_boomer

EdInvestor wrote: »

All but 5% of homeowners have 20% of equity in their properties or more.Source is the BoE..

Building society lending 2003-2006

Well under 10% of BS loans in any period were at 90% Loan to Value or less.

The number at 95% LTV is tiny, however significant it may turn out to be for those individuals.

Societies would have catered for about 1/6 of loans.

The big change 2003-6 is not in LTV but the increase from 46% to 65% in the % of loans above 3x single income or 2.5x joint income.

EdInvestor

It does appear that the negative equity lesson of the last crash has been learned.

ianmr65

merlinthehappypig wrote: »

I think the difference this time will be the amount of unsecured debt people have taken on because of the perceived value of their house.

They might have 20% equity, but that's not a lot of help if they have already spent it on the credit card.

As someone who was a borrower in the last crash it was nothing like as easy to borrow money in the years leading up to it as it has been in the last few years.

Indeedy, esp bearing in mind the latest general ruling from the high court allowing a charge against unsecured debt to be placed on property, for people defaulting on credit cards, overdrafts and loans.
Now historically very few people, if any, have been repo based on such charges imposed case by case. However as times get tougher.....

brit1234

EdInvestor wrote: »

It does appear that the negative equity lesson of the last crash has been learned.

Then why have so many investors purchased properties using newbuild discounts as a deposit (effectively 100% mortgages)?

Buy to Let is the British Sub Prime. The majority of investors have used equity in their other properties to buy new properties. But as this equity is removed through price falls these property portfolios look increasingly vulnerable. Hence the large proportion of buy to let repossessions compared to other sectors.:eek:

baby_boomer

brit1234 wrote: »

why have so many investors purchased properties using newbuild discounts as a deposit (effectively 100% mortgages)?

Out of interest, what are the numbers for newbuild flats sold in 2006 & 2007?

Generali

baby_boomer wrote: »

Out of interest, what are the numbers for newbuild flats sold in 2006 & 2007?

I'm having trouble finding the figures but by the 3rd quarter of 2007, they were 49% of all new build ('housing starts') up from 21% at some prior, unspecified date.

baby_boomer

There were 160,000 total new builds in 2007 - so maybe 145,000 new build flats in 2006/7?

And not all on 100% mortgages .

There has been and will be a further price fall in these flats, but as the number of new builds falls off the cliff, there may also be a firming up in demand for the flats which have been built once a proper market has been established with hard prices rather than the former guesswork.

We remain a small island with an expanding population.