Property crash is finally here in UK
Sep 26th 2004, 6:16 pm
#31
Banned
Joined: Aug 2002
Posts: 7,613
Re: Property crash is finally here in UK
Originally Posted by MikeStanton
I think this is the more likely scenario.
Probably a bit like Oz : prices stop rising, fall some (5-15%?) and stabilise (be "price neutral" to use the jargon) for the next 5+ years.
(Although, as you imply, in real terms house prices will probably fall by ~2-3% each year for next 5 years, ie representing an overall fall of 10-15%, but spread out over 5 years; not a sudden crash).
Probably a bit like Oz : prices stop rising, fall some (5-15%?) and stabilise (be "price neutral" to use the jargon) for the next 5+ years.
(Although, as you imply, in real terms house prices will probably fall by ~2-3% each year for next 5 years, ie representing an overall fall of 10-15%, but spread out over 5 years; not a sudden crash).
My definition of a crash is about -25% from starting point (which is fairly subjective).
Timescale within which to judge this decline: hmm, more difficult and it depends on the issue in hand.
Housing: I would say a crash would be -25%, within about 2 years, from a baseline that is the median of house prices of a particular type in a particular area, March-August 2004. Ie judging like-for-like.
I reckon we're in for a crash but it will only put most medium term house owners back to the position they were in about 2-3 years ago.
Trouble is, it'll be 5-7 years until they feel they are as rich as they thought they once were.
Sep 27th 2004, 7:00 am
#32
Banned
Joined: Aug 2002
Posts: 7,613
Re: Property crash is finally here in UK
The warning signs have been there for a while, and now it seems as if house prices really are tumbling.
Miles Brignall and Patrick Collinson
Saturday September 25, 2004
The Guardian
Estate agents across the country are busy lowering prices - possibly even as you read this article. A snap survey by Jobs & Money has found that estate agents across the south and Midlands - although much less so in the north and Scotland - are lopping up to 10% off asking prices, while "reduced" signs are appearing for the first time in years.
Shares in Britain's largest estate agency group Countrywide dived this week after it warned that sales are falling, and that the "cooler market" that appeared in August has continued into September.
Earlier, the Royal Institution of Chartered Surveyors said potential house buyers are being scared out of the market by dearer borrowing and fears of a property crash. Data from the Council of Mortgage Lenders showed that the number of loans for house purchase, fell by 20% in August.
The simple message is: if you are planning to buy, it looks as though it could be time to start making much lower offers.
Jobs & Money contacted estate agents across the country. In Suffolk, a four- bed house has just been reduced by a whopping £90,000 and it is by no means the only one. According to the selling agent, Mike Bidwell of Fine & Country Es tate Agents in Needham Market, prices in the area have been on the wane for three months now. "Prices are coming down. Today, we've just reduced a pretty local cottage from £235,000 to £220,000. In general, offers are coming in much lower, and the difference is that they are now being accepted," he said.
Anne-Marie Thomas, who works at Michael Moon Estate Agents in the smart Liverpool suburb of Formby, says there has been a marked drop in prices in and around the city.
"New houses coming on to the market are being more realistically priced and those that have been on the market for a few months are either being reduced and subsequently sold, or are tending to hang about.
"It's definitely a buyers' market and if you want to sell you have to price accordingly. However, prices went up a lot over the past few years, and even with the recent reductions of between 5% and 10% prices are still significantly higher than they were," she says.
The Bristol market is another seeing a significant correction. Paul Jenkins, who runs the Andrews estate agency in the Longwell Green area of the city, says prices are starting to soften.
"If they haven't sold within a few weeks we will suggest a 5% reduction. Some vendors are happy to hang out for their asking price, but if they need a quick sale, it's the only thing to do," he said.
His colleagues at other Andrews branches we contacted, in Cheltenham and in Surrey, tell a similar story.
Lee Hunt, who runs Andrews' Coulsdon, Surrey office says prices are falling quite rapidly. "Houses that were £274,000 are now under £250,000 - terraced houses that were £199,000 are now £185,000."
How far will prices fall? Few people now expect interest rates to rise much further, so the market correction could be short-lived. But some highly respected economists reckon that the market could go back as much as 30%.
The International Monetary Fund this week warned that the risk of a sharp fall in prices in the UK is higher than anywhere else in the world with the exception of Ireland. On average, UK house prices are now close to six times average earnings. If the ratio was to fall back to its long-term average, it would imply a cut in house prices of around one-third.
Some areas appear to be bucking the national trend. In Manchester, for example, prices remain defiantly strong. But even there, local agent Benjamin Smith of Michael Herwald & Co, says the market has slowed dramatically.
"Houses that used to take three to four weeks to sell are now taking five or six, but prices around here aren't falling. Once you get above the £200,000 threshold, it slows even more."
But on the Stockport side the city prices are coming down says Stephen Tipping, area manager at Edward Mellor & Co.
One place that still appears immune to price falls is Edinburgh. The Scottish capital has, according to the Edinburgh Solicitors Property Centre, never experienced nominal house price falls and although the market has slowed over the past few weeks, prices are still rising slowly.
"House prices have risen by 20% a year over the past few years although that dropped to 13% last month," says a spokeswoman for ESPC, which claims to handle 92% of sales in the city.
"The thing we have noticed is that lots of houses are starting to hang about." One group, however, remains resolutely upbeat about the strength of the housing market - the National Association of Estate Agents. It believes that the IMF is wrong to predict a UK housing crash in its World Economic Outlook. Instead the NAEA - like many of the banks and building societies who sell mortgages - is predicting a continuing of the slowdown rather than an early-90s style crash. </FONT>
Miles Brignall and Patrick Collinson
Saturday September 25, 2004
The Guardian
Estate agents across the country are busy lowering prices - possibly even as you read this article. A snap survey by Jobs & Money has found that estate agents across the south and Midlands - although much less so in the north and Scotland - are lopping up to 10% off asking prices, while "reduced" signs are appearing for the first time in years.
Shares in Britain's largest estate agency group Countrywide dived this week after it warned that sales are falling, and that the "cooler market" that appeared in August has continued into September.
Earlier, the Royal Institution of Chartered Surveyors said potential house buyers are being scared out of the market by dearer borrowing and fears of a property crash. Data from the Council of Mortgage Lenders showed that the number of loans for house purchase, fell by 20% in August.
The simple message is: if you are planning to buy, it looks as though it could be time to start making much lower offers.
Jobs & Money contacted estate agents across the country. In Suffolk, a four- bed house has just been reduced by a whopping £90,000 and it is by no means the only one. According to the selling agent, Mike Bidwell of Fine & Country Es tate Agents in Needham Market, prices in the area have been on the wane for three months now. "Prices are coming down. Today, we've just reduced a pretty local cottage from £235,000 to £220,000. In general, offers are coming in much lower, and the difference is that they are now being accepted," he said.
Anne-Marie Thomas, who works at Michael Moon Estate Agents in the smart Liverpool suburb of Formby, says there has been a marked drop in prices in and around the city.
"New houses coming on to the market are being more realistically priced and those that have been on the market for a few months are either being reduced and subsequently sold, or are tending to hang about.
"It's definitely a buyers' market and if you want to sell you have to price accordingly. However, prices went up a lot over the past few years, and even with the recent reductions of between 5% and 10% prices are still significantly higher than they were," she says.
The Bristol market is another seeing a significant correction. Paul Jenkins, who runs the Andrews estate agency in the Longwell Green area of the city, says prices are starting to soften.
"If they haven't sold within a few weeks we will suggest a 5% reduction. Some vendors are happy to hang out for their asking price, but if they need a quick sale, it's the only thing to do," he said.
His colleagues at other Andrews branches we contacted, in Cheltenham and in Surrey, tell a similar story.
Lee Hunt, who runs Andrews' Coulsdon, Surrey office says prices are falling quite rapidly. "Houses that were £274,000 are now under £250,000 - terraced houses that were £199,000 are now £185,000."
How far will prices fall? Few people now expect interest rates to rise much further, so the market correction could be short-lived. But some highly respected economists reckon that the market could go back as much as 30%.
The International Monetary Fund this week warned that the risk of a sharp fall in prices in the UK is higher than anywhere else in the world with the exception of Ireland. On average, UK house prices are now close to six times average earnings. If the ratio was to fall back to its long-term average, it would imply a cut in house prices of around one-third.
Some areas appear to be bucking the national trend. In Manchester, for example, prices remain defiantly strong. But even there, local agent Benjamin Smith of Michael Herwald & Co, says the market has slowed dramatically.
"Houses that used to take three to four weeks to sell are now taking five or six, but prices around here aren't falling. Once you get above the £200,000 threshold, it slows even more."
But on the Stockport side the city prices are coming down says Stephen Tipping, area manager at Edward Mellor & Co.
One place that still appears immune to price falls is Edinburgh. The Scottish capital has, according to the Edinburgh Solicitors Property Centre, never experienced nominal house price falls and although the market has slowed over the past few weeks, prices are still rising slowly.
"House prices have risen by 20% a year over the past few years although that dropped to 13% last month," says a spokeswoman for ESPC, which claims to handle 92% of sales in the city.
"The thing we have noticed is that lots of houses are starting to hang about." One group, however, remains resolutely upbeat about the strength of the housing market - the National Association of Estate Agents. It believes that the IMF is wrong to predict a UK housing crash in its World Economic Outlook. Instead the NAEA - like many of the banks and building societies who sell mortgages - is predicting a continuing of the slowdown rather than an early-90s style crash. </FONT>
Sep 27th 2004, 7:17 am
#33
Joined: Mar 2004
Location: Varsity Lakes, Gold Coast
Posts: 177
Re: Property crash is finally here in UK
Originally Posted by Don
The warning signs have been there for a while, and now it seems as if house prices really are tumbling.
Miles Brignall and Patrick Collinson
Saturday September 25, 2004
The Guardian
Estate agents across the country are busy lowering prices - possibly even as you read this article. A snap survey by Jobs & Money has found that estate agents across the south and Midlands - although much less so in the north and Scotland - are lopping up to 10% off asking prices, while "reduced" signs are appearing for the first time in years.
Shares in Britain's largest estate agency group Countrywide dived this week after it warned that sales are falling, and that the "cooler market" that appeared in August has continued into September.
Earlier, the Royal Institution of Chartered Surveyors said potential house buyers are being scared out of the market by dearer borrowing and fears of a property crash. Data from the Council of Mortgage Lenders showed that the number of loans for house purchase, fell by 20% in August.
The simple message is: if you are planning to buy, it looks as though it could be time to start making much lower offers.
Jobs & Money contacted estate agents across the country. In Suffolk, a four- bed house has just been reduced by a whopping £90,000 and it is by no means the only one. According to the selling agent, Mike Bidwell of Fine & Country Es tate Agents in Needham Market, prices in the area have been on the wane for three months now. "Prices are coming down. Today, we've just reduced a pretty local cottage from £235,000 to £220,000. In general, offers are coming in much lower, and the difference is that they are now being accepted," he said.
Anne-Marie Thomas, who works at Michael Moon Estate Agents in the smart Liverpool suburb of Formby, says there has been a marked drop in prices in and around the city.
"New houses coming on to the market are being more realistically priced and those that have been on the market for a few months are either being reduced and subsequently sold, or are tending to hang about.
"It's definitely a buyers' market and if you want to sell you have to price accordingly. However, prices went up a lot over the past few years, and even with the recent reductions of between 5% and 10% prices are still significantly higher than they were," she says.
The Bristol market is another seeing a significant correction. Paul Jenkins, who runs the Andrews estate agency in the Longwell Green area of the city, says prices are starting to soften.
"If they haven't sold within a few weeks we will suggest a 5% reduction. Some vendors are happy to hang out for their asking price, but if they need a quick sale, it's the only thing to do," he said.
His colleagues at other Andrews branches we contacted, in Cheltenham and in Surrey, tell a similar story.
Lee Hunt, who runs Andrews' Coulsdon, Surrey office says prices are falling quite rapidly. "Houses that were £274,000 are now under £250,000 - terraced houses that were £199,000 are now £185,000."
How far will prices fall? Few people now expect interest rates to rise much further, so the market correction could be short-lived. But some highly respected economists reckon that the market could go back as much as 30%.
The International Monetary Fund this week warned that the risk of a sharp fall in prices in the UK is higher than anywhere else in the world with the exception of Ireland. On average, UK house prices are now close to six times average earnings. If the ratio was to fall back to its long-term average, it would imply a cut in house prices of around one-third.
Some areas appear to be bucking the national trend. In Manchester, for example, prices remain defiantly strong. But even there, local agent Benjamin Smith of Michael Herwald & Co, says the market has slowed dramatically.
"Houses that used to take three to four weeks to sell are now taking five or six, but prices around here aren't falling. Once you get above the £200,000 threshold, it slows even more."
But on the Stockport side the city prices are coming down says Stephen Tipping, area manager at Edward Mellor & Co.
One place that still appears immune to price falls is Edinburgh. The Scottish capital has, according to the Edinburgh Solicitors Property Centre, never experienced nominal house price falls and although the market has slowed over the past few weeks, prices are still rising slowly.
"House prices have risen by 20% a year over the past few years although that dropped to 13% last month," says a spokeswoman for ESPC, which claims to handle 92% of sales in the city.
"The thing we have noticed is that lots of houses are starting to hang about." One group, however, remains resolutely upbeat about the strength of the housing market - the National Association of Estate Agents. It believes that the IMF is wrong to predict a UK housing crash in its World Economic Outlook. Instead the NAEA - like many of the banks and building societies who sell mortgages - is predicting a continuing of the slowdown rather than an early-90s style crash. </FONT>
Miles Brignall and Patrick Collinson
Saturday September 25, 2004
The Guardian
Estate agents across the country are busy lowering prices - possibly even as you read this article. A snap survey by Jobs & Money has found that estate agents across the south and Midlands - although much less so in the north and Scotland - are lopping up to 10% off asking prices, while "reduced" signs are appearing for the first time in years.
Shares in Britain's largest estate agency group Countrywide dived this week after it warned that sales are falling, and that the "cooler market" that appeared in August has continued into September.
Earlier, the Royal Institution of Chartered Surveyors said potential house buyers are being scared out of the market by dearer borrowing and fears of a property crash. Data from the Council of Mortgage Lenders showed that the number of loans for house purchase, fell by 20% in August.
The simple message is: if you are planning to buy, it looks as though it could be time to start making much lower offers.
Jobs & Money contacted estate agents across the country. In Suffolk, a four- bed house has just been reduced by a whopping £90,000 and it is by no means the only one. According to the selling agent, Mike Bidwell of Fine & Country Es tate Agents in Needham Market, prices in the area have been on the wane for three months now. "Prices are coming down. Today, we've just reduced a pretty local cottage from £235,000 to £220,000. In general, offers are coming in much lower, and the difference is that they are now being accepted," he said.
Anne-Marie Thomas, who works at Michael Moon Estate Agents in the smart Liverpool suburb of Formby, says there has been a marked drop in prices in and around the city.
"New houses coming on to the market are being more realistically priced and those that have been on the market for a few months are either being reduced and subsequently sold, or are tending to hang about.
"It's definitely a buyers' market and if you want to sell you have to price accordingly. However, prices went up a lot over the past few years, and even with the recent reductions of between 5% and 10% prices are still significantly higher than they were," she says.
The Bristol market is another seeing a significant correction. Paul Jenkins, who runs the Andrews estate agency in the Longwell Green area of the city, says prices are starting to soften.
"If they haven't sold within a few weeks we will suggest a 5% reduction. Some vendors are happy to hang out for their asking price, but if they need a quick sale, it's the only thing to do," he said.
His colleagues at other Andrews branches we contacted, in Cheltenham and in Surrey, tell a similar story.
Lee Hunt, who runs Andrews' Coulsdon, Surrey office says prices are falling quite rapidly. "Houses that were £274,000 are now under £250,000 - terraced houses that were £199,000 are now £185,000."
How far will prices fall? Few people now expect interest rates to rise much further, so the market correction could be short-lived. But some highly respected economists reckon that the market could go back as much as 30%.
The International Monetary Fund this week warned that the risk of a sharp fall in prices in the UK is higher than anywhere else in the world with the exception of Ireland. On average, UK house prices are now close to six times average earnings. If the ratio was to fall back to its long-term average, it would imply a cut in house prices of around one-third.
Some areas appear to be bucking the national trend. In Manchester, for example, prices remain defiantly strong. But even there, local agent Benjamin Smith of Michael Herwald & Co, says the market has slowed dramatically.
"Houses that used to take three to four weeks to sell are now taking five or six, but prices around here aren't falling. Once you get above the £200,000 threshold, it slows even more."
But on the Stockport side the city prices are coming down says Stephen Tipping, area manager at Edward Mellor & Co.
One place that still appears immune to price falls is Edinburgh. The Scottish capital has, according to the Edinburgh Solicitors Property Centre, never experienced nominal house price falls and although the market has slowed over the past few weeks, prices are still rising slowly.
"House prices have risen by 20% a year over the past few years although that dropped to 13% last month," says a spokeswoman for ESPC, which claims to handle 92% of sales in the city.
"The thing we have noticed is that lots of houses are starting to hang about." One group, however, remains resolutely upbeat about the strength of the housing market - the National Association of Estate Agents. It believes that the IMF is wrong to predict a UK housing crash in its World Economic Outlook. Instead the NAEA - like many of the banks and building societies who sell mortgages - is predicting a continuing of the slowdown rather than an early-90s style crash. </FONT>
I think things will go pear shaped big time, the next ressesion will be worse than the one in the early 90s.Everybody who owns a property has been feeling pritty rich the last few years, i have done okay in property, only by luck as im not the sharpest knife in the draw.So when we all start feeling poor again that will push the world into ressesion, it will be like Japan with deflation,and low intest rates, but by then property will be a dirty word. I will be buying more propery then, i give it 2 years until that starts to happen.
Lets put some money on how much property goes down in the UK i say 40%
in 3 years from This years prices, i feel sorry for all those that will be in negitve equity and traped for 8 years
Rob
Sep 27th 2004, 7:26 am
#34
BE Forum Addict
Joined: Jan 2004
Location: Far away from canned Oz
Posts: 1,833
Re: Property crash is finally here in UK
Originally Posted by robertd
I think things will go pear shaped big time, the next ressesion will be worse than the one in the early 90s.Everybody who owns a property has been feeling pritty rich the last few years, i have done okay in property, only by luck as im not the sharpest knife in the draw.So when we all start feeling poor again that will push the world into ressesion, it will be like Japan with deflation,and low intest rates, but by then property will be a dirty word. I will be buying more propery then, i give it 2 years until that starts to happen.
Lets put some money on how much property goes down in the UK i say 40%
in 3 years from This years prices, i feel sorry for all those that will be in negitve equity and traped for 8 years
Rob
Lets put some money on how much property goes down in the UK i say 40%
in 3 years from This years prices, i feel sorry for all those that will be in negitve equity and traped for 8 years
Rob
Of course, call me a cynic, but it sounds to me like a posting from somebody in Oz who would like to see big falls in the UK market. Why not just relax and enjoy all those wonderful, stimulating things that redneck Q'land has to offer?
You said it yourself buddy, you ain't the sharpest knife in the drawer...
Last edited by MikeStanton; Sep 27th 2004 at 7:30 am.
Sep 27th 2004, 8:29 am
#35
BE Enthusiast
Joined: Jan 2004
Posts: 385
Re: Property crash is finally here in UK
Originally Posted by robertd
I think things will go pear shaped big time, the next ressesion will be worse than the one in the early 90s.Everybody who owns a property has been feeling pritty rich the last few years, i have done okay in property, only by luck as im not the sharpest knife in the draw.So when we all start feeling poor again that will push the world into ressesion, it will be like Japan with deflation,and low intest rates, but by then property will be a dirty word. I will be buying more propery then, i give it 2 years until that starts to happen.
Lets put some money on how much property goes down in the UK i say 40%
in 3 years from This years prices, i feel sorry for all those that will be in negitve equity and traped for 8 years
Rob
Lets put some money on how much property goes down in the UK i say 40%
in 3 years from This years prices, i feel sorry for all those that will be in negitve equity and traped for 8 years
Rob
Sep 27th 2004, 9:12 am
#36
Banned
Joined: Jul 2003
Posts: 1,048
Re: Property crash is finally here in UK
Location / demand / supply are substantial factors in property prices. But in any one location property prices respond inversely to real (or net) interest rates - the nominal interest rate minus the inflation rate.
In the mid 1980's inflation was higher than interest rates - real rates low to negative - and property prices went up.
Interest rates were raised to throttle inflation – real rates moderate to high – down went property prices.
Anyone having a good handle on the future of interest rates does not need to fiddle with property investments.
In the mid 1980's inflation was higher than interest rates - real rates low to negative - and property prices went up.
Interest rates were raised to throttle inflation – real rates moderate to high – down went property prices.
Anyone having a good handle on the future of interest rates does not need to fiddle with property investments.
Sep 27th 2004, 9:56 am
#37
Banned
Joined: Aug 2002
Posts: 7,613
Re: Property crash is finally here in UK
Originally Posted by simbacat
Sounds to me like wishful thinking and trying to make thousands on the misery of others.
Just look at Q's graph (above) and you see that the UK property mkt is cyclical. Want me to get you a longer term graph showing the same cycle over 50 years?
So: not 'wishful thinking' but fairer to say just a fairly logical anticipation of price decline.
If timing the market or buying an asset at a cheaper price than somebody else is 'making thousands on the misery of others' then many millions of asset owners in the UK and elsewhere are misery-mongers.
Your argument doesn't stand up to scrutiny.
Sep 27th 2004, 11:02 am
#38
BE Enthusiast
Joined: Jan 2004
Posts: 385
Re: Property crash is finally here in UK
Originally Posted by Don
Bit harsh.
Just look at Q's graph (above) and you see that the UK property mkt is cyclical. Want me to get you a longer term graph showing the same cycle over 50 years?
So: not 'wishful thinking' but fairer to say just a fairly logical anticipation of price decline.
If timing the market or buying an asset at a cheaper price than somebody else is 'making thousands on the misery of others' then many millions of asset owners in the UK and elsewhere are misery-mongers.
Your argument doesn't stand up to scrutiny.
Just look at Q's graph (above) and you see that the UK property mkt is cyclical. Want me to get you a longer term graph showing the same cycle over 50 years?
So: not 'wishful thinking' but fairer to say just a fairly logical anticipation of price decline.
If timing the market or buying an asset at a cheaper price than somebody else is 'making thousands on the misery of others' then many millions of asset owners in the UK and elsewhere are misery-mongers.
Your argument doesn't stand up to scrutiny.
Sep 27th 2004, 11:23 am
#39
BE Forum Addict
Joined: Jan 2004
Location: Far away from canned Oz
Posts: 1,833
Re: Property crash is finally here in UK
Originally Posted by Don
Bit harsh.
Just look at Q's graph (above) and you see that the UK property mkt is cyclical. Want me to get you a longer term graph showing the same cycle over 50 years?
So: not 'wishful thinking' but fairer to say just a fairly logical anticipation of price decline.
If timing the market or buying an asset at a cheaper price than somebody else is 'making thousands on the misery of others' then many millions of asset owners in the UK and elsewhere are misery-mongers.
Your argument doesn't stand up to scrutiny.
Just look at Q's graph (above) and you see that the UK property mkt is cyclical. Want me to get you a longer term graph showing the same cycle over 50 years?
So: not 'wishful thinking' but fairer to say just a fairly logical anticipation of price decline.
If timing the market or buying an asset at a cheaper price than somebody else is 'making thousands on the misery of others' then many millions of asset owners in the UK and elsewhere are misery-mongers.
Your argument doesn't stand up to scrutiny.
Nobody is disputing that house prices will be impacted, the point of disagreement is 'by how much?'.
Property market cycles prove nothing - except that prices go up and down (like all other assets) : hardly rocket science. The key difference between this peak and that of the late 80s/90s is the big disparity in interest rates.
Not one rational argument has been put forward here to suggest a significant risk of a 40% fall. And let's not forget the 'doom and gloom' scenario beloved of elements of the Brit press.
BTW, I would love prices to fall 40%, I'm holding off to buy. But, if you don't mind, I won't be basing the probable %age falls on the arguments I've read here...
Sep 27th 2004, 11:39 am
#40
Banned
Joined: Aug 2002
Posts: 7,613
Re: Property crash is finally here in UK
Originally Posted by MikeStanton
Not one rational argument has been put forward here to suggest a significant risk of a 40% fall. And let's not forget the 'doom and gloom' scenario beloved of elements of the Brit press.
BTW, I would love prices to fall 40%, I'm holding off to buy. But, if you don't mind, I won't be basing the probable %age falls on the arguments I've read here...
BTW, I would love prices to fall 40%, I'm holding off to buy. But, if you don't mind, I won't be basing the probable %age falls on the arguments I've read here...
Quote
My reasons for giving those percentages are as follows. The historic house-price-to-(national-average)-earnings (HPE) ratios from the Halifax data series for 83-01 are:
UK HPE
Average = 3.64
Low = 3.14
London HPE
Average = 5.32
Low = 3.94
Jun04 earnings and 04Q2 HPE ratios from ditto are:
National average earnings = £28,839
UK HPE (non-seasonally adjusted) = 5.5
London ditto = 8.6
For housing to become historically "good value" according to this data would require overnight corrections from current prices of:
UK
To average = -34%
To low = -43%
London
To average = -38%
To low = -54%
***
I could find loads more...if anybody's interested.
Sep 27th 2004, 11:42 am
#41
Banned
Joined: Aug 2002
Posts: 7,613
Re: Property crash is finally here in UK
House prices have gone down and I am in negative equity. This is because...
1) The FSA has introduced tighter regulations regarding lending of money. The result is that other people are now unable to over-exagerate their income and so cannot borrow as much money as I did. This means I cannot sell my house for anything like what I paid for it. This change was made by the gubmint. I'm in negative equity and it's the gubmints fault.
2) I got an introductory rate of 4% (Interest only) fixed for 2 years from my mortgage provider. With the salary I totally made up (60K) to qualify for the loan and the 30K that my parents re-mortgaged their house for as a down payment I was able to borrow 250K. Despite only really earning 15K working as a Internet Disabled Access Facilitator employed by the local council. Unfortunately the introductory period has now expired and the best I can get is 5.5%. I cannot pay this mortgage and live. The Gubmint should not have allowed interest rates to go up. I cannot sell my house because then I will have made a loss and be unable to repay my parents. I'm in negative equity and it's the gubmints fault.
3) The banks knew I didn't earn 60K a year. That's why they invented the 'self-cert' route. I mean if I was really earning 60K a year I'd just have filled out the regular application form and let them verify it with my employer wouldn't I? Anyway, prices have gone down due to the gubmint limiting other people lending as much money as I did. But what really makes me mad is that the banks allowed me to borrow so much money. I'm in negative equity and it's all the banks fault.
4) The banks were in cahoots with the valuers. I mean surely the valuers knew that 250K for a two bed ex-council flat in Woolwich was over-priced. So why did they value it so highly? Because the banks were desperate for my money and they influenced the valuers - that's why. They knew it wasn't really worth that kind of money and yet they let me believe it was. I'm in negative equity and it's all the valuers fault.
5) All my friends were self-certifying and borrowing the deposit from their credit cards and they advised and encouraged me to do the same. Some of them had been remortgaging for years and had been on fantastic holidays and they all had nice new Audi TTs. Now we're all in negative equity. But I was the person who bought last so I never even got to buy an Audi TT. It's just soooo not fair. It's almost as if they wanted me to validate their decision to keep borrowing massive amounts of money by encouraging me to do the same. I'm in negative equity and it's all because of peer pressure.
7) My parents told me they'd never lost money on a house. When I couldn't save enough (okay, any) money from my salary for a deposit they were the ones who remortgaged their house to give me a 30K deposit. Well, how could you save after you've paid your mobile phone bills, your gym fee, bought all your groceries including the little bottles of water for the desk? I mean you just can't on 15K a year can you? Really. Hah. And now I find out that while I was in primary school there was a property crash in the late 1980's. Hah. House prices have never gone down eh? Thanks mum and dad for totally stuffing up my life. I'm in negative equity and it's all my parents fault.
8) The man from The Halifax came around to my rented accomodation, put a gun to my head and forced me to buy a house. I wasn't even looking for a house. I was quite happy living with Penny and Tammy and the cats but I guess they'd run out of willing buyers and so, in order to keep the market alive, I was forced to buy a house. Look at the signature on the mortgage application - you can see where he held my hand and forced me to sign. It's not even my signature. I was forced to do it. I've kept quiet about it for so long but now I'm in negative equity I have to tell the truth. I'm in negative equity and they made me do it.
9) I bought an over-priced old nail of a house because I have the IQ of a goldfish. And now I can't get shot of it without owing a shed-load of money and having nothing to show for it. I am a dolt but I will learn from this. Yeah, right, as if.
http://boards.fool.co.uk/Message.asp?mid=8764614
1) The FSA has introduced tighter regulations regarding lending of money. The result is that other people are now unable to over-exagerate their income and so cannot borrow as much money as I did. This means I cannot sell my house for anything like what I paid for it. This change was made by the gubmint. I'm in negative equity and it's the gubmints fault.
2) I got an introductory rate of 4% (Interest only) fixed for 2 years from my mortgage provider. With the salary I totally made up (60K) to qualify for the loan and the 30K that my parents re-mortgaged their house for as a down payment I was able to borrow 250K. Despite only really earning 15K working as a Internet Disabled Access Facilitator employed by the local council. Unfortunately the introductory period has now expired and the best I can get is 5.5%. I cannot pay this mortgage and live. The Gubmint should not have allowed interest rates to go up. I cannot sell my house because then I will have made a loss and be unable to repay my parents. I'm in negative equity and it's the gubmints fault.
3) The banks knew I didn't earn 60K a year. That's why they invented the 'self-cert' route. I mean if I was really earning 60K a year I'd just have filled out the regular application form and let them verify it with my employer wouldn't I? Anyway, prices have gone down due to the gubmint limiting other people lending as much money as I did. But what really makes me mad is that the banks allowed me to borrow so much money. I'm in negative equity and it's all the banks fault.
4) The banks were in cahoots with the valuers. I mean surely the valuers knew that 250K for a two bed ex-council flat in Woolwich was over-priced. So why did they value it so highly? Because the banks were desperate for my money and they influenced the valuers - that's why. They knew it wasn't really worth that kind of money and yet they let me believe it was. I'm in negative equity and it's all the valuers fault.
5) All my friends were self-certifying and borrowing the deposit from their credit cards and they advised and encouraged me to do the same. Some of them had been remortgaging for years and had been on fantastic holidays and they all had nice new Audi TTs. Now we're all in negative equity. But I was the person who bought last so I never even got to buy an Audi TT. It's just soooo not fair. It's almost as if they wanted me to validate their decision to keep borrowing massive amounts of money by encouraging me to do the same. I'm in negative equity and it's all because of peer pressure.
7) My parents told me they'd never lost money on a house. When I couldn't save enough (okay, any) money from my salary for a deposit they were the ones who remortgaged their house to give me a 30K deposit. Well, how could you save after you've paid your mobile phone bills, your gym fee, bought all your groceries including the little bottles of water for the desk? I mean you just can't on 15K a year can you? Really. Hah. And now I find out that while I was in primary school there was a property crash in the late 1980's. Hah. House prices have never gone down eh? Thanks mum and dad for totally stuffing up my life. I'm in negative equity and it's all my parents fault.
8) The man from The Halifax came around to my rented accomodation, put a gun to my head and forced me to buy a house. I wasn't even looking for a house. I was quite happy living with Penny and Tammy and the cats but I guess they'd run out of willing buyers and so, in order to keep the market alive, I was forced to buy a house. Look at the signature on the mortgage application - you can see where he held my hand and forced me to sign. It's not even my signature. I was forced to do it. I've kept quiet about it for so long but now I'm in negative equity I have to tell the truth. I'm in negative equity and they made me do it.
9) I bought an over-priced old nail of a house because I have the IQ of a goldfish. And now I can't get shot of it without owing a shed-load of money and having nothing to show for it. I am a dolt but I will learn from this. Yeah, right, as if.
http://boards.fool.co.uk/Message.asp?mid=8764614
Sep 27th 2004, 11:45 am
#42
Banned
Joined: Aug 2002
Posts: 7,613
Re: Property crash is finally here in UK
As per my previous post, it is my perception of events,that we are now back in a situation similar to that in September 2002, when we had a bad Summer market, at least in London. With the vested interests bleating on about seasonal slowdowns, the burst out of the gates that they assured us was waiting in September simply gave way to a decidedly nervous and lacklustre market that carried through into 2003. When finally in the Summer,the most high profile and high pedigree of all those who share my belief that we are in an unsustainable and highly dangerous bubble (but are never likely to say so in public), the members of the MPC, cut rates to emergency levels of 3.5%, in expectation of cushioning the collapse that we all thought was about to ensue. It didn´t and it didn´t IMHO, largely because of their well intentioned but ultimately doomed and futile attempts to control this mountain of debt based dewy eyed optimism on the part of the masses towards never ending property paradise and annual remortgaging rituals that seemed to make working for a living positively soooo last century.
I, and no shortage of of other bubble watchers, some of them high profile and high pedigree, decided we were most likely finally looking at the final reckoning, payback time for the great turn of century never ending property party, where Mr & Mrs `I´ve never bought anything more important than a badly designed DFS sofa, but now I´m shelling out 300K on an overpriced rathole from the Rightyerown Mortgage Centre ´ went completely, and collectively stark staring bonkers. We weren´t. And with the benefit of hindsight, were all things are crystal, especially asset price manias, we weren´t looking at the end of the party two years ago, most likely due to the MPC´s actions, which merely subjected the great bubble to another blast around the track.
To many, this was just proof positive that this market really was indestructible, that we truly were this time, subject to a new paradigm : not enough places to live blah blah, wealthy immigrants cunningly disguised as Romanian gypsies waiting to splurge out on Belsize Park apartments blah blah, builders not building enough houses blah blah, different this time blah blah, different to when it was different this time last time blah blah blah blah, safety in numbers blah, if we all say it together loud enough, often enough, markets really will only go up and never go down, we won´t lose money, we´ll only ever make money, all of us, always, for ever and ever amen, and we´ll all be as safe as......well you know what.......................blah blah blah.
Well, AFAIAC, what is different this time, at least in direct comparison to our last property bubble 15 years ago, is that we are going on longer and harder, and in part this is due to a second wind, common in many asset price bubbles,which are characterised by their force and by their brevity. That´s exactly what we´ve seen over the last twelve months IMHO, and I would say it´s just died as quickly as it flared up. This Autumn and Winter, like those of two years ago should be very interesting for those who follow our chosen specialist subject, but some here might be a little surprised by what I think might happen next. I would put the chances of the famous and universally desired gentle slowdown at less than zilch...no great surprises there, and the liklelihood of a calamitous reckoning as quite high, as there is just no way in a pink fit that market history is going to be rewritten this time around, the market will correct and seriously so, it´s just a matter of when. But I also put the possibility of another mad burst, a second second wind, if you like as quite high. I could certainly envisage such a devlopment if the MPC keep telling everybody it´s safe to come out of their hidy holes In which case we get another year like the last.
Interesting weeks and months anyway, but my Spanish internet cafe is closing for siesta, so I´ll just have to go and lie on the beach and dream of buying houses like the one I bought in 1992. It´s so tough being a professional doomsayer.
http://boards.fool.co.uk/Message.asp?mid=8773095
I, and no shortage of of other bubble watchers, some of them high profile and high pedigree, decided we were most likely finally looking at the final reckoning, payback time for the great turn of century never ending property party, where Mr & Mrs `I´ve never bought anything more important than a badly designed DFS sofa, but now I´m shelling out 300K on an overpriced rathole from the Rightyerown Mortgage Centre ´ went completely, and collectively stark staring bonkers. We weren´t. And with the benefit of hindsight, were all things are crystal, especially asset price manias, we weren´t looking at the end of the party two years ago, most likely due to the MPC´s actions, which merely subjected the great bubble to another blast around the track.
To many, this was just proof positive that this market really was indestructible, that we truly were this time, subject to a new paradigm : not enough places to live blah blah, wealthy immigrants cunningly disguised as Romanian gypsies waiting to splurge out on Belsize Park apartments blah blah, builders not building enough houses blah blah, different this time blah blah, different to when it was different this time last time blah blah blah blah, safety in numbers blah, if we all say it together loud enough, often enough, markets really will only go up and never go down, we won´t lose money, we´ll only ever make money, all of us, always, for ever and ever amen, and we´ll all be as safe as......well you know what.......................blah blah blah.
Well, AFAIAC, what is different this time, at least in direct comparison to our last property bubble 15 years ago, is that we are going on longer and harder, and in part this is due to a second wind, common in many asset price bubbles,which are characterised by their force and by their brevity. That´s exactly what we´ve seen over the last twelve months IMHO, and I would say it´s just died as quickly as it flared up. This Autumn and Winter, like those of two years ago should be very interesting for those who follow our chosen specialist subject, but some here might be a little surprised by what I think might happen next. I would put the chances of the famous and universally desired gentle slowdown at less than zilch...no great surprises there, and the liklelihood of a calamitous reckoning as quite high, as there is just no way in a pink fit that market history is going to be rewritten this time around, the market will correct and seriously so, it´s just a matter of when. But I also put the possibility of another mad burst, a second second wind, if you like as quite high. I could certainly envisage such a devlopment if the MPC keep telling everybody it´s safe to come out of their hidy holes In which case we get another year like the last.
Interesting weeks and months anyway, but my Spanish internet cafe is closing for siesta, so I´ll just have to go and lie on the beach and dream of buying houses like the one I bought in 1992. It´s so tough being a professional doomsayer.
http://boards.fool.co.uk/Message.asp?mid=8773095
Sep 27th 2004, 11:46 am
#43
Banned
Joined: Aug 2002
Posts: 7,613
Re: Property crash is finally here in UK
Many people have been comparing the housing market bubble to previous market bubbles such as pre-the 1929 Wall Street Crash, the 1997-2000 “tech stocks� bubble, the south sea bubble and the tulip bubble. Of course this is absurd. There are clear differences between the two, which I shall now demonstrate in a comparison between the 1929 bubble and the present housing market:
Past Bubble: Prices of stocks soared to record levels with no sign of coming down again
Present Housing market: Prices of houses soared to record levels with no sign of coming down again
Past Bubble: Everyone and his aunt got involved in the market, even the shoe shine boys were buying stocks
Present housing market: Everyone and his aunt got involved in the market, even the shoe shine boys were buying to let
Past Bubble: The market became a national obsession, with whole sections of newspapers filled with watching its every move and bestselling books written on how to get rich quick from the market
Present housing market: The market became a national obsession, with whole sections of newspapers filled with watching its every move and TV programmes made such as “property ladder�, “location location location� and “the million pound property experiment�
Past Bubble: In the early stages of the boom it was emphasised that stock values were based on fundamental underpinnings such as real companies, and at the end of the day people would always buy the products of these companies
Present housing market: In the early stages of the boom it was emphasised that house values were based on fundamental underpinnings such as real estate values, and at the end of the day people would always need somewhere to live.
Past Bubble: It became common to buy stocks on margin without having to pay the normal price
Present housing market: It became common to buy houses on 100%+ mortgages or using self certification loans without having to fill in the normal forms
Past Bubble: Then when margin wasn't enough derivatives were traded to allow investors to gear up even more.
Present housing market: Then when mortgages weren't enough off-plan deposits were traded to allow investors to cash in even quicker.
Past Bubble: In the middle stage of the boom stock prices were justified by a new paradigm
Present housing market: In the middle stage of the boom house prices were justified by a new paradigm
Past Bubble: Investment trusts were created to help people cash in on the boom without buying actual shares.
Present housing market: REITS, and SIPPS were mooted to help people cash in on the boom without buying actual shares.
Past Bubble: It was claimed there was a shortage of suitable stocks which justified both the bubble and the bringing to the market of dozens of useless new ones.
Present housing market: It was claimed there was a shortage of desirable houses which justified both the bubble and the building of tens of thousands of identikit new build Georgian style houses in Ashford.
Past Bubble: In the later stages of the boom it became more important that stocks went up, than whether they paid dividends or that they had any fundamental value whatsoever.
Present housing market: In the later stages of the boom it became more important that house prices went up, than whether the tenants paid any rent; or that they had any fundamental value whatsoever.
Past Bubble: Companies without any redeeming features, or even a business plan, came to the market and were given wildly optimistic valuations.
Present housing market: New build flats without any redeeming features, apart from being open plan, came to the market and were given wildly optimistic valuations.
Past Bubble: Biased commentators appeared in newspapers, talked up the market and denounced the naysayer's
Present housing market: Biased commentators appeared on television, talked about loft conversions, and denounced the naysayer's
Of course there are some similarities:
Past Bubble: The government did nothing for fear of causing panic.
Present housing market: The government did nothing for fear of causing panic.
Past Bubble: It was all the Federal Reserve's / Banks / Governments fault
Present housing market: It was all the Federal Reserve's / Banks / Governments fault
Past Bubble: It wasn't my own greedy self's fault
Present housing market: It wasn't my own greedy self's fault
But at the end of the day the key difference is this:
Past Bubble: The market crashed and burned, causing misery to millions.
Present housing market: The market gently slowed down, and we all lived happily ever after
http://boards.fool.co.uk/Message.asp?mid=8663433
Past Bubble: Prices of stocks soared to record levels with no sign of coming down again
Present Housing market: Prices of houses soared to record levels with no sign of coming down again
Past Bubble: Everyone and his aunt got involved in the market, even the shoe shine boys were buying stocks
Present housing market: Everyone and his aunt got involved in the market, even the shoe shine boys were buying to let
Past Bubble: The market became a national obsession, with whole sections of newspapers filled with watching its every move and bestselling books written on how to get rich quick from the market
Present housing market: The market became a national obsession, with whole sections of newspapers filled with watching its every move and TV programmes made such as “property ladder�, “location location location� and “the million pound property experiment�
Past Bubble: In the early stages of the boom it was emphasised that stock values were based on fundamental underpinnings such as real companies, and at the end of the day people would always buy the products of these companies
Present housing market: In the early stages of the boom it was emphasised that house values were based on fundamental underpinnings such as real estate values, and at the end of the day people would always need somewhere to live.
Past Bubble: It became common to buy stocks on margin without having to pay the normal price
Present housing market: It became common to buy houses on 100%+ mortgages or using self certification loans without having to fill in the normal forms
Past Bubble: Then when margin wasn't enough derivatives were traded to allow investors to gear up even more.
Present housing market: Then when mortgages weren't enough off-plan deposits were traded to allow investors to cash in even quicker.
Past Bubble: In the middle stage of the boom stock prices were justified by a new paradigm
Present housing market: In the middle stage of the boom house prices were justified by a new paradigm
Past Bubble: Investment trusts were created to help people cash in on the boom without buying actual shares.
Present housing market: REITS, and SIPPS were mooted to help people cash in on the boom without buying actual shares.
Past Bubble: It was claimed there was a shortage of suitable stocks which justified both the bubble and the bringing to the market of dozens of useless new ones.
Present housing market: It was claimed there was a shortage of desirable houses which justified both the bubble and the building of tens of thousands of identikit new build Georgian style houses in Ashford.
Past Bubble: In the later stages of the boom it became more important that stocks went up, than whether they paid dividends or that they had any fundamental value whatsoever.
Present housing market: In the later stages of the boom it became more important that house prices went up, than whether the tenants paid any rent; or that they had any fundamental value whatsoever.
Past Bubble: Companies without any redeeming features, or even a business plan, came to the market and were given wildly optimistic valuations.
Present housing market: New build flats without any redeeming features, apart from being open plan, came to the market and were given wildly optimistic valuations.
Past Bubble: Biased commentators appeared in newspapers, talked up the market and denounced the naysayer's
Present housing market: Biased commentators appeared on television, talked about loft conversions, and denounced the naysayer's
Of course there are some similarities:
Past Bubble: The government did nothing for fear of causing panic.
Present housing market: The government did nothing for fear of causing panic.
Past Bubble: It was all the Federal Reserve's / Banks / Governments fault
Present housing market: It was all the Federal Reserve's / Banks / Governments fault
Past Bubble: It wasn't my own greedy self's fault
Present housing market: It wasn't my own greedy self's fault
But at the end of the day the key difference is this:
Past Bubble: The market crashed and burned, causing misery to millions.
Present housing market: The market gently slowed down, and we all lived happily ever after
http://boards.fool.co.uk/Message.asp?mid=8663433
Sep 27th 2004, 11:52 am
#44
BE Enthusiast
Joined: Jan 2004
Posts: 385
Re: Property crash is finally here in UK
Originally Posted by Don
It would be easy to pinch stuff from elsewhere to show the logic of 25-40% price falls, esp why not try the Motley Fool site www.fool.co.uk
Quote
My reasons for giving those percentages are as follows. The historic house-price-to-(national-average)-earnings (HPE) ratios from the Halifax data series for 83-01 are:
UK HPE
Average = 3.64
Low = 3.14
London HPE
Average = 5.32
Low = 3.94
Jun04 earnings and 04Q2 HPE ratios from ditto are:
National average earnings = £28,839
UK HPE (non-seasonally adjusted) = 5.5
London ditto = 8.6
For housing to become historically "good value" according to this data would require overnight corrections from current prices of:
UK
To average = -34%
To low = -43%
London
To average = -38%
To low = -54%
***
I could find loads more...if anybody's interested.
Quote
My reasons for giving those percentages are as follows. The historic house-price-to-(national-average)-earnings (HPE) ratios from the Halifax data series for 83-01 are:
UK HPE
Average = 3.64
Low = 3.14
London HPE
Average = 5.32
Low = 3.94
Jun04 earnings and 04Q2 HPE ratios from ditto are:
National average earnings = £28,839
UK HPE (non-seasonally adjusted) = 5.5
London ditto = 8.6
For housing to become historically "good value" according to this data would require overnight corrections from current prices of:
UK
To average = -34%
To low = -43%
London
To average = -38%
To low = -54%
***
I could find loads more...if anybody's interested.
I suppose you can live in hope. I don't think many people except investors are after good value. So that adjustment means nothing. And where in all of this calculation is the demand factor. With people living longer, divorce rates higher then ever, many people deciding to live single. I am sure prices will come down to a certain extent but not to what has been wished for on here. One open question though why this interest by people who don't live in the UK? Is the speculation on the Austrian market not worth while?
Sep 27th 2004, 12:28 pm
#45
Banned
Joined: Aug 2002
Posts: 7,613
Re: Property crash is finally here in UK
Originally Posted by simbacat
One open question though why this interest by people who don't live in the UK? Is the speculation on the Austrian market not worth while?
We may easily decide to live and work in the UK for a few years, which would be very useful in all sorts of ways, not least for my sons. I would not wish to lose a lot of money by buying a house at the wrong point in the cycle.
Since you're interested, property opportunities where I live right now look extremely lucrative IMHO.
