odaat

Tip .... tip .... over she goes ....

U.K. House-Price Index Slumps to Lowest Since 1992
(Update2)

Dec. 21 (Bloomberg)

-- An index measuring changes in U.K. house prices fell in the three months through November to the lowest since December 1992, suggesting a decline in the nation's property market is deepening.

The seasonally adjusted net balance of property appraisers reporting an increase in house prices from a year ago, less those identifying a drop, fell for the seventh straight month, to minus 48 percent from minus 40 percent in the October period, the Royal Institution of Chartered Surveyors said.

The Bank of England's Monetary Policy Committee, which has raised interest rates to a three-year high of 4.75 percent, last month forecast declines in house prices amid mounting evidence that a five-year property boom is fizzling out. The last time the RICS index was this low Britain was mired in a four-year housing market slump which, accompanied by a surge in loan defaults and home repossessions, helped push the economy into its last recession.

``The boom is well and truly over,'' said Nick Kounis, an economist at Fortis Bank in the Netherlands who was the most successful forecaster of the U.K. economy in Bloomberg's first- quarter survey. ``It's an open question what kind of correction it's going to be: so far it looks like a soft landing.''

U.K. government bonds rose on speculation the Bank of England is unlikely to raise interest rates. The 5 percent gilt due September 2014 rose 0.21, or 2.1 pounds per 1,000-pound ($1,940) face amount, to 104.39, according to RBC Capital Markets. Its yield fell 3 basis points, or 0.03 percentage point, to 4.44 percent.

Average Sales

There were an average 22 sales per surveyor in the three months through November, the fewest since August 1995, said RICS. The amount of unsold property on the market rose to an average 67 properties per surveyor, the highest in more than a year.

``The market remains pretty weak,'' Milan Khatri, RICS's London-based head of economics, said in an interview. ``The interest rate impact will take a while to wear off.''

Khatri forecast a 3 percent recovery in house prices next year, arguing there should be a pickup in demand by mid-to-late next year as long as economic growth holds up. He expects the Bank of England to raise interest rates another quarter point before reducing them again to 4.75 percent by the end of 2005.

The central bank said when giving economic growth and inflation forecasts on Nov. 10 that it assumes property prices will fall, the first time it has built declines into its forecasts. The bank forecast Britain's economic expansion will continue, albeit at a slower rate than in 2004, saying falling house prices needn't have a substantial damping effect on consumer spending.

Below Forecast

Today's main index number was 5 percentage points worse than the median estimate of 16 economists surveyed by Bloomberg on Dec. 17. It follows a report from Rightmove, the nation's biggest online home advertiser, which said that house prices fell for the third month in five in December, slipping 0.3 percent in the four weeks ended Dec. 11.

``A negative balance around the 40-50 percent level is consistent with a fall in house prices of around 2 percent over the next three months months,'' said John Butler, an economist at HSBC Holdings Plc in London.

House-price declines were biggest in southern English regions and the Midlands, with prices dropping in every area surveyed except Scotland, said RICS, which received 337 contributions to the survey.

The balance of surveyor's expectations for price movements over the coming three months was minus 22 percent, up slightly from minus 24 in the previous period. The reading for expected sales rose to 28 percent, the highest in almost a year, from 17 percent in the period ended October.

The price balance in London was minus 36 percent, down from the previous month's minus 33 percent. Surveyors are predicting an improvement in sales over the coming three months, RICS said, though prices in the capital are expected to be flat.

``Interest rates are still having a fundamental effect on the slowdown of the housing market,'' said Peter Lawrence, a surveyor based in Harrow, north London. ``Interest rates must come down by at least a quarter percentage point to start confidence rising.''

Bleech

Of course mate, no problem at all.
I actually live in a place called Portishead, also called Bristol by the sea!!! Ah hem, more like Bristol by the mud, but there you go.
Portishead has been called a hotspot for several years now as a lot of development has gone into the marina. It's very close to Bristol and also has good motorway links, so it's been quite attractive.
Property is still moving here and quite a few Sold signes have gone up recently, just not on our house
We're planning on moving out to Canada, so I'm the opposite to you guys and want the market to hold up, at least until I've sold my house anyway

Herman

We completed the sale on our flat in the Marina a month ago, making a small net gain on the purchase price (18 months ago bought off plan). The estate agents in Portishead told us we completed the sale just in time as the value of our flat has now fallen by about 10% and looking at the current prices they seem to be telling the truth (hard to believe, the truth, from an estate agent). A lot of investors in the Marina have had problems achieveing any kind of sensible rent, and many investment properties have been empty since they were built 18 months ago. Hence the sold signs and quite a wave of panic selling now, pushing prices down.

Bleech

Cheers mate!! Merry Christmas to you too!!!

odaat

N0. # 1 new resolution -/- Shop for a better rate mortgage

Millions face new year mortgage shock
By Jessica Bown, The Sunday Times

TWO MILLION homeowners face a hike of up to 27% in their mortgage repayments in the new year. :scared:

Borrowers with “annual review� mortgages, where repayments are set once a year, have so far been insulated from the one-percentage-point rise in interest rates in 2004. Their bills will soar from January.

Someone with a £250,000 interest-only mortgage, for example, will see their repayments leap by £208 a month or £2,500 over the year.

Up to 1.5m people have annual-review mortgages. In addition, another 600,000 borrowers face a payment shock next year because they will be coming off rock-bottom fixed rates taken out two years ago.

For borrowers whose rates expire in the next six months, repayments will jump by an average of 27%, according to Capital Economics, a consultancy. This assumes the base rate goes up by another quarter point to 5%. Even if rates remain the same, their bills will go up by 24%. The consultancy estimates that consumers coming off fixed rates will have to pay a total of £715m in extra interest over 2005, which could hit the already fragile housing market.

Ed Stansfield at Capital Economics said: “The sharp rise in mortgage payments faced by borrowers can only add to the downward pressure on house prices.� He thinks prices will drop 20% over the next two years.

Borrowers are being urged to remortgage, which could save them thousands of pounds a year.

Lenders including Yorkshire and Norwich & Peterborough building societies automatically put borrowers on annual- review schemes. Others, such as Leeds & Holbeck, offer the option.

Even where lenders no longer run the schemes, they still have large numbers of customers on annual review. Halifax, for example, has 150,000; Nationwide has 100,000.

In January, when the base rate was at 3.75%, someone with a £250,000 interest-only mortgage at the typical standard variable rate (SVR) of 5.75% would have had their repayments set at £1,197.92.

Now the typical SVR is 6.75%, and monthly repayments would be set at £1,406.25 from January.

But many borrowers with interest-only mortgages face a double blow. They will be charged for the interest they have underpaid during 2004, on top of the higher rate for 2005.

In the above example, the borrower would have to pay another £117.17 a month.

Some lenders, including Bradford & Bingley, have already written to customers on annual-review mortgages inviting them to increase their payments to avoid a big jump in January.

But many borrowers could still be in for a shock. Ray Boulger of Charcol, a broker, said: “Homeowners may not realise just how deep they will have to dig into their pockets following the base-rate rises of the past year.�

Quinkana

You think this will result in home-owners selling to rent rather than curtailing shopping? Rent rises not possible for housing-investors?

odaat

"You think this will result in home-owners selling to rent"
Yes ....
The masses who purchased no matter what the cost 24 - 36 months ago took it as a *given* that house price inflation would continue to climb, they will already be in a panic as the price of property has been steadily cooling for the last 6 months .... and now - fixed rate discounted mortgages are coming to a close and mortgage repayments are set to "jump" 2 - 3%, plus the repayment of loans secured on equity gained over the last 24 - 36 months has been taken out to purchase furniture, cars, holidays and whatever "doodad" is being pedalled.

Then there is the "pub and gym" sentiment, *sell up and rent* has become the new mantra ....

"rather than curtailing shopping?"
Yes ....
no shopping = no jobs .... ergo - sell up and rent.

"Rent rises not possible for housing-investors"
Yes ....
At the risk of the tenant moving to cheaper accomodation - simpler and easier on the mind to sell and cut losses

Regards and best wishes for 2005
predict the thread makes 10,000 hits by jan 1st ....

odaat

SHEETY

stop talking about or it will happen it justs panics everybody and starts the ball rolling

eatstatic

Yes, just like all the building societies, mortgage lenders , estate agents and all the other vested interests talked up the housing market to its current ridiculous and unsustainable levels.

Now it is payback time for this credit bubble madness.

http://www.housepricecrash.co.uk/forum/

SHEETY

sssshh I want to sell my house and go to oz

odaat

Sheety, you are in a win win scenario as prices in Oz are falling as well - what you lose on this side of the pond can be gained on the other

better still, rent for a while when you get out there - do plenty of research and cherry pick the best and dive in with a low offer.

My young son has just beat me at snake's + ladders, he consoled me with a bit of advice .... I think his advice goes for the prop market :-

"Dad, life is like snakes and ladders - there are as many snakes as ladders - as long as you keep playing, you will get on a ladder ....not bad for a 7 yr old

SHEETY

Thanks for that better not give your boy a monopoly set then or there wont be any property left to buy

Don

Not looking good for the GBP though, maybe forward buy some currency?

odaat

* Homes going cheap in the sales *

Michael Clarke, This is Money
22 December 2004
IT may not just be a nice sweater you pick up in the new year sales this January – you could snap up a new house on the cheap as well.

OTHER STORIESHouse prices down £12,000 in six months
Two-year standstill for house prices
More gloom for housing market
Cut the price to sell your home
House prices down - for sixth month

The UK housing market stagnated during the last quarter of 2004 and most experts now agree we are in a buyer’s market.

Recent figures from the Council of Mortgage Lenders revealed loan approvals - loans agreed but not yet made - fell 25% in November compared to 2003, with the British Bankers’ Association claiming lending was nearing a three-year low.

It now takes the average property 81 days to sell compared with just 53 days during the summer, and those properties that failed to shift before Christmas are most likely to drop in price.

Gideon Sumption, Somerset and Devon regional director of Stacks Property Search and Acquisition, says those who haven’t sold will be getting desperate as they face competition from properties now coming on to the market.

He says sellers can be split into two camps: those who can afford to choose either to sell or not and those that need to sell through desperation. Those in the latter group are typically selling because of the four Ds – developer, death, debt and divorce.

Developer refers to individuals who have done up a property in the hope of a quick profit.

Sumption says: ‘We are without a shadow of a doubt in a buyer’s market and there are good bargains to be had. If you didn’t sell over Christmas and you keep the property on the market, it probably shows your are heading towards the desperate stage and will be more willing to accept below the asking price.’

He adds: ‘If you want to pick up a bargain in the new year you will need to be in the right place at the right time. Properties that aren’t in top condition - where there’s a fault or a blemish somewhere - will be where the bargains are.’

Tips for buyers include checking with the estate agent how long the property has been on the market and quizzing the vendors on their reason for selling. If they sound like they need a quick sale it is worth offering at least 10% below the asking price.

Miles Shipside, managing director of property website Rightmove.co.uk, agrees sellers are being squeezed and predicts prices may have to come down by around 8% to stimulate interest.

He says housing booms tend to overshoot before a price readjustment period like the one we are now experiencing. Shipside thinks the market is likely to bottom out in early 2005 before gathering pace again towards the end of the year.

‘I think sellers who have struggled to sell their property will see sense and cut prices in the new year or listen to offers they would have laughed off a few months before.

‘How much they are prepared to knock off depends on personal circumstances and how desperate they are. For example, someone may have seen a property of their dreams so needs a quick sale on their house, or a relationship could have broken up.

‘Two similar houses in the same street could be sold for vastly different prices because one vendor is more desperate than the other.’

The key to a bargain, he says, is research and perseverance.

A wad of cash and a pre approved mortgage to secure the deal ASAP helps as well ....

dugongs

If the property market is falling and has further to go how can any purchase made now be a bargain ? Within a few lines it contradicts itself. This article is rubbish just like 99.9% of the others written. It comes from the Daily Mail as well so should'nt come as a surprise to anybody with a brain.

The only two arguments worth listening to imho are roger bootle at capital economics and david smith in the sunday times. one says 20% drop the other stagnation. capital economics seems to be based more on historical comparison on income multiples which i do not think fully stands up today due to society shift to dual income families and availability of credit. affordability is more important and that underwrites the david smith scenario.

i think broadly falls in the north and stagnations small rises in the south over the next 5 years. i base this on no large interest rate rises and population growth and shift is all biased towards the south where the better paid jobs are and climate more agreeable.

there will be a few hotspots like devon and dorset due to baby boomer retirees / middle class flight from cities. places like scotland are receiving vast amounts of fiscal stimulation courtesy of new labour but for how much longer this can be sustained if we have a hung parliament next may or labour get the boot. transport links will always boost an area. inner city terraces in northern cities were in a speculative bubble and will fall the most.

buying is still cheaper than renting over the next 5 years though in all but the most extreme scenarios of price falls and owning you do not have uk's army of landlords with victorian attitudes on your back.