UK house prices set for 14 pct 1-yr fall

mystic_trev

LONDON, May 6 (Reuters) - The average cost of a British house is expected to sink by 14 percent over the next year and prices could take a decade to return to 2007 highs, property derivative brokers said on Tuesday.

http://www.reuters.com/article/marketsNews/idUSL0692226520080506

Generali

Like the signature mystic_trev. Is it new or have I been unobservant?

14% over the year would mean falls staying at the same monthly rate as shown in the Halifax over the year (1.3%).

If someone with a house currently worth £200k and a current £160k mortgage @ 7% is reposessed having missed 6 months payments, assuming another 2 months to sell plus £5k in repo costs (conservative) they will still owe £500 after reposession if they are reposessed after a fall in house prices of 14%*. That's assuming that they can get the full market value of the house if sold at auction.

In reality, someone with a £150k mortgage on this mythical house is going to be lucky to be able to walk away without additional debt as it would only mean the buyer getting a discount of 6% to market value.

It's pretty scary going through the sums - you'd think someone with a 25% deposit would be sitting pretty even if house prices fall 14%! Apparently not.




*£200,000 house is worth £172,000 after a 14% fall. Mortgage interest = £7.5k. Repo costs of £5k. Total debt = 160,000+7,500+5,000 = £172,500. £500 shortfall is a week of net income to the median male earner.

epz_2

Dont know about average 1.3% drops but i recon the next few months could easily be over that.

Think about it it was only in march/april that the credit crunch kicked in with the death of 100% mortgages and real rates alost 1% higher than before the last 2 rate cuts.

PasturesNew

I should become a property derivatives broker.
I bet they're well paid.
I've been saying 10 years to get back to today's prices for aaages.

So, what IS a property derivatives broker and how do I get to be somebody who writes down and publishes stuff everybody already knows?

epz_2

untaxed bookmaker?

pickles110564

PasturesNew wrote: »

I should become a property derivatives broker.
I bet they're well paid.
I've been saying 10 years to get back to today's prices for aaages.

So, what IS a property derivatives broker and how do I get to be somebody who writes down and publishes stuff everybody already knows?

I have been saying that Ipswich Town will the Premiership title, but im just as clueless as you are.

PasturesNew

pickles110564 wrote: »

I have been saying that Ipswich Town will the Premiership title, but im just as clueless as you are.

On the contrary. I am informed. You are delusional and deranged.
Different thing I think you'll find.

pickles110564

PasturesNew wrote: »

On the contrary. I am informed. You are delusional and deranged.
Different thing I think you'll find.

I think not. Now Mr big bucks has bought our club who knows what will happen.
The original quote says that they will get back up to 2007 highs in ten years.
Fat chance, to do this people will have to have had 10% or more pay increases year on year.
We are heading for mass unemployment and very painful times all down to GB shortsighted balancing of the books.
If we robbed the pension pots we would be sent to jail yet GB is allowed to do what he wants.

PasturesNew

10 years suits me fine. I don't need to buy a house now, then a retirement home. It means the next one I am choosing IS my retirement home.

Saves looking in 5 years then again in 15-20.

WTF?_2

epz wrote: »

Dont know about average 1.3% drops but i recon the next few months could easily be over that.

Think about it it was only in march/april that the credit crunch kicked in with the death of 100% mortgages and real rates alost 1% higher than before the last 2 rate cuts.

I agree. Houses have been falling in price since last September/October but it wasn't until around this March/April that the whole "Can't get an affordable mortgage" thing really kicked in.

As a result, the pace of the fall could well pick up.

Also, the '3-month adjusted' average thing that they've been using to play things down so far is about to exacerbate the headline figures somewhat.

Generali

!!!!!!? wrote: »

I agree. Houses have been falling in price since last September/October but it wasn't until around this March/April that the whole "Can't get an affordable mortgage" thing really kicked in.

As a result, the pace of the fall could well pick up.

Also, the '3-month adjusted' average thing that they've been using to play things down so far is about to exacerbate the headline figures somewhat.

That's the system HBOS always use. It dampens movements up and down so it's a little unfair to criticise it when it doesn't show what you want it to.

The point of it is to make the numbers less volitile. As with any stats it's as important to know how they're being measured as what is being measured.