The House Price Crash Thread

[snowychap]

Well I would imagine the forth coming presidential race and eventual new candidate will see the introduction of measures to help turn around the American economy and also give a substancial boost in confidence to the nation at large.

There may be a blip in the road ahead but little more than that although the days of easy borrowing are perhaps gone for a little longer.

Well, I'm sure the Fed tried to do something by a bit of drastic action earlier this year.

I can see a presidential race focusing on the bad state of the economy and therefore not being much of a boost for the nation at large.

[snowychap]

Don't let it be said that we ignore the plight of our antipodean cousins.

Mortgage woes hit Sydney suburbs

These are bleak times in Australia's mortgage belt.

Official interest rates are up again to 7.25%.

They haven't been this high for 12 years as the country's Reserve Bank seeks to curb creeping inflation and high commodity prices.

The pain is felt keenly in Sydney's blue collar western suburbs.

Eddy Ajami, a 58-year-old taxi driver, is working 14-hour days to stay ahead.

"I pay Australian $1,200 (US$1,109, UK £550) monthly on the mortgage, so I had to work very hard," he told the BBC.

"I had to cut down so much on the food shopping. That's me but what about the others? They can't even afford to eat."

Australian home owners with a AUD $300,000 (US$277,000, UK £140,000) mortgage will face extra repayments of about $50 a month following the rise in the cost of borrowing.

Mortgage stress

While that might seem a relatively small amount, there have now been a dozen rate increases in the last six years.

It's estimated that 300,000 Australians risk losing their homes if the cost of loans continues to spiral upwards.

Many more are suffering from mortgage stress where at least 30% of their income is spent paying off the debt.

"It's getting very difficult,¿ said Ziba Chohali, a jewellery store owner in the Sydney district of Bankstown.

"It's not just mortgages - bread, milk and petrol are all more expensive."

Financial counsellors are reporting record number of mortgage defaults and bankruptcies.

There are fears the latest rate hike will push more families over the edge.

Many are hanging on, but only just.

"I have to increase my work hours to five days a week just to keep on top of the mortgage so it's been a big struggle," explained Rose, a lunchtime shopper in Bankstown.

Others are seeing their hopes of buying a home slip away.

"I can't afford to buy to be honest," said Michael Buck, a 35-year-old painter.

"I've got a family of two sons and I can't afford to pay a mortgage."

Mansour Kaddissi, a child care student, shares that sense of frustration.

"Buying a place would be like climbing Everest. I'd have to work for another five years before I could even raise a deposit," he said.

"I'm 31 now so it's a grim situation."

About a third of Australians own their homes outright, while a similar number has a mortgage.

The final third either rents or lives with friends and relatives.

Falling property prices

Some homeowners in Sydney's west are trapped by falling property prices and more expensive loans, according to Professor Bill Randolph from the University of New South Wales.

"People are stuck in housing that is devalued or potentially devaluing yet the interest rate hikes are cranking up the mortgage payments.

"If you came into the market at the top and you mortgaged up to the hilt, then you're going to be in trouble," he says.

"There certainly was a phase in the early part of this decade where money to buy property was very easy to get hold of," Professor Randolph explained.

"Easy cash was being piled into the market. Finance has been cheap and there have been plenty of people willing to flog you it if they can," he said.

Loans may well been easily obtained, but experts don't believe this prolific lending was reckless.

"Clearly there is a credit squeeze and the banks are feeling that m but the downturn in the housing market here happened before the crunch in the US.

"We weren't anywhere near as over-extended in that sub-prime market here," Bill Randolph added.

Too greedy?

America's credit crisis has affected Australian banks.

Many have raised the cost of borrowing above official rates to cope with the problems they have raising funds on international markets.

In the short term at least that can only mean one thing - more grief for homeowners.

Not everyone though is sympathetic.

"I think people are basically a bit greedy and have fallen into the consumerism trap," said Ruth Cornell, a Bankstown office worker.

"So they have gone way over what they are able to handle and unfortunately they have got in too deep."

Barry Burke, a building surveyor, told the BBC that easy credit was to blame for Australia's mortgage crisis.

"The money is out there," he said. "The problem is most people don't have enough self-control to deal with all this ready cash and they go down the gurgler".

[TrentVilla]

Looks like now is the time to buy that property in Sydney harbour I've wanted for the last 10 years...

[snowychap]

Looks like now is the time to buy that property in Sydney harbour I've wanted for the last 10 years...

[Gringo]

"The money is out there," he said. "The problem is most people don't have enough self-control to deal with all this ready cash and they go down the gurgler".

*** Calling Alf Stewart ***

Any chance you could translate this one for me?

*** Calling Alf Stewart ***

[TrentVilla]

The most shocking part of that article for me is the women who is out shopping on her lunch hour (always what I would do when I'm short of cash) saying she has had to start working 5 days a week! I had no idea things had got so bad in the land of Oz!!! Whatever next?

[ahamaad]

The most shocking part of that article for me is the women who is out shopping on her lunch hour (always what I would do when I'm short of cash) saying she has had to start working 5 days a week! I had no idea things had got so bad in the land of Oz!!! Whatever next?

I noticed that too.

Working 5 days a week? Whatever next?

Accepting a sporting defeat with good grace?

:winkold:

[Gringo]

Bank keeps interest rates on hold

The Bank of England's rate-setting Monetary Policy Committee (MPC) has decided to keep interest rates on hold at 5.25%.

The decision is in line with expectations.

Analysts have highlighted that the Bank faces the threat of a slowing economy at a time when inflationary pressures are rising.

In February, the bank cut rates by a quarter of a percentage point from 5.5%, amid signs of a slowdown.

February's interest rate cut was the second lowering of UK rates in three months, with the previous reduction coming in December last year.

While the UK has lowered rates, the reductions have been less dramatic than in the US, where the Federal Reserve has lowered rates from 5.25% in September 2007 to the current rate of 3%.

Inflation climbing, factory output prices going up, petrol $105/bl. Not much scope for futher cuts for a while

I'ts down to darling now to see what rabbits he's going to pull out of his budget hat.

[ianrobo1]

not many it is too tight for much to do

petrol duty won't go up that for certain

I have a bad feeling that beer duty will go up by more than the usual 1p or so

but beyond this not much really

[tonyh29]

It's down to darling now to see what rabbits he's going to pull out of his budget hat

I suspect the rabbit will be here in the UK on a illegal passport and it will come out the hat saying the budget we promised isn't goping to happen but we will hold a government enquiry into why there isn't one ..

[TrentVilla]

It's down to darling now to see what rabbits he's going to pull out of his budget hat

I suspect the rabbit will be here in the UK on a illegal passport and it will come outthe hat saying the budget we promised isn't goping to happen but we will hold a governemnt enquiry into why there isn't one ..

Ah yes but what you forget is that said illegal rabbit will soon be sent to jail without charge on suspision of terrorism and once he has severed sufficiant time be offered £3000 to go home and help reduce prison over crowding.

[Gringo]

House prices continuing to slow

House prices are continuing to slow down, says the Halifax, the UK's biggest mortgage lender.

According to its latest monthly survey, prices across the UK fell by 0.3% in February, taking the annual rate of inflation down from 4.5% to 4.2%.

That means the average UK home now costs £196,649, according to the lender's calculations.

The Halifax said prices would be flat over the coming year if the economy and employment continued to grow.

"House prices fell by 0.3% in February. Prices in the three months to February, however, were marginally (0.2%) higher than in the previous quarter," said Martin Ellis, the Halifax's chief economist.

"Whilst the housing market has slowed over the past six months, it is supported by sound economic fundamentals.

"Interest rate cuts by the Bank of England are also helping to underpin house prices," he added.

[CVByrne]

House Prices in Ireland are falling too and I'm delighted. They were overpriced by 15-20% anyway this correction is a good thing. This market correction is a natural cycle, we had 5 years of worldwide growth which is the best run markets have ever had. If in 12 months things arn't looking up I'll get a bit worried but for now everything is fine.

[leviramsey]

House Prices in Ireland are falling too and I'm delighted. They were overpriced by 15-20% anyway this correction is a good thing. This market correction is a natural cycle, we had 5 years of worldwide growth which is the best run markets have ever had. If in 12 months things arn't looking up I'll get a bit worried but for now everything is fine.

When did you get worried about that stake in Northern Rock that you picked up?

[greenz]

I have no real knowledge of the housing market, but what i do know is that i bought my house last July for the pricely sum of £116k... (Semi in Rowley Regis)

My next door neighbour is moving to Oz (not the fictional one ), and his house is a carbon copy of mine apart from a partition wall being knocked down. Tuesday his house went on the market valued at £125k. :shock:

As far as i'm concerned if the value of my house has gone up even £5k in 8 months, then i'm pretty happy with the state of the market.

[Jon]

I have no real knowledge of the housing market, but what i do know is that i bought my house last July for the pricely sum of £116k... (Semi in Rowley Regis)

My next door neighbour is moving to Oz (not the fictional one ), and his house is a carbon copy of mine apart from a partition wall being knocked down. Tuesday his house went on the market valued at £125k. :shock:

As far as i'm concerned if the value of my house has gone up even £5k in 8 months, then i'm pretty happy with the state of the market.

it hasn't mate.

even though his house is "on the market" at £125, he/she might have to accept and offer of say £110 or so, if they want to sell anytime soon.

So, in reality, your house value may even have fallen, at this current moment in time.

so, all i'd say is, don't look to be selling right now.

Fair enough, if you're mate is looking to go to OZ, then he has to sell now, in which case this property is ripe for someone to make a bit of cash on.

But i'd be very surprised if it got anywhere near asking, in the current climate.

[CVByrne]

When did you get worried about that stake in Northern Rock that you picked up?

Lost a wee bit on that, but I had a sell limit so it basically sold out of it a few days later at at 2 pound something. Really didn't see them folding, but that was money I had to gamble with, like I've a money on horses at Cheltenham. Gambling is good. I've a spread bet on Wheat prices at the moment, hoping food prices keep rising this year.

[snowychap]

European and Asian shares slump and FTSE is back down to the level it was a month ago.

European shares have followed the lead from Asia and fallen in early trading, with investors troubled by signs that the US housing market is deteriorating.

London's FTSE 100 fell 1%, the Dax in Frankfurt's was down 1.1% and the Cac 40 in Paris fell 1.1% by late morning.

In Asia, Hong Kong's Hang Seng closed down 3.6% while Japan's benchmark Nikkei 225 index closed 3.3% lower.

The falls followed Thursday's US figures, which showed a record number of home repossessions.

India's Sensex index shed 5% before closing 3.8% lower while Taiwan's Taiex dropped 1.47%.

Repossessions

The number of US home repossessions, and the speed at which they were being repossessed, hit record levels in the fourth quarter of 2007, figures from the Mortgage Bankers Association showed on Thursday.

Separate data from the Federal Reserve showed that the amount of equity Americans have in their homes has dropped below 50% for the first time since 1945.

The Dow Jones Industrial Average had closed 1.75% lower on Thursday, while the Standard & Poor's 500 index shed 2.20% and the Nasdaq dropped 2.3%.

"There are still serious concerns about credit markets, particularly about where the US economy is heading," said Tony Russell, senior equities adviser at ABN AMRO Morgans in Australia.

"We're probably close to re-testing our lows seen earlier this year."

Asia relies heavily on the US for exports, adding to concerns that a slowdown would hit blue-chip firms in places including Japan. The weakening dollar compounds the problem by making local goods relatively more expensive than US items.

"If the dollar weakens further on worries over a slowdown in the US economy, investors may be buying defensive shares like food and drug shares, since exporters are not an option," said Kyoya Okazawa, who heads equity research at Credit Suisse.

[greenz]

I have no real knowledge of the housing market, but what i do know is that i bought my house last July for the pricely sum of £116k... (Semi in Rowley Regis)

My next door neighbour is moving to Oz (not the fictional one ), and his house is a carbon copy of mine apart from a partition wall being knocked down. Tuesday his house went on the market valued at £125k. :shock:

As far as i'm concerned if the value of my house has gone up even £5k in 8 months, then i'm pretty happy with the state of the market.

it hasn't mate.

even though his house is "on the market" at £125, he/she might have to accept and offer of say £110 or so, if they want to sell anytime soon.

So, in reality, your house value may even have fallen, at this current moment in time.

so, all i'd say is, don't look to be selling right now.

Fair enough, if you're mate is looking to go to OZ, then he has to sell now, in which case this property is ripe for someone to make a bit of cash on.

But i'd be very surprised if it got anywhere near asking, in the current climate.

Update:

He accepted an offer of the £125k askiing price, 4 days after being on the market.....

Not that i like to gloat Jon, but that kinda blows your theory out the water doesn't it? :winkold: i see where you're coming from, can't guarantee you get what your asking for at the best of times.

I'm not looking to sell.... not yet anyway. it's got enough space to acommodate myself, the missus and any impending spawn.

[snowychap]

That pretty much sounds like the housing market in Malvern of about 6 months ago, greenz.

Don't worry - you've probably got a couple of months before the slow/stall/crash/despair/repos hit(s) Rowley.