The House Price Crash Thread

[greenz]

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.

Thanks snowy..... you really made my day there :winkold:

Oh well, if it does, i'm not going anywhere yet. I'm looking to keep this house for a few more years yet. A nice extension, conservatory, then cash in and emigrate to somewhere warmer!!!

[Gringo]

Oh well, if it does, i'm not going anywhere yet. I'm looking to keep this house for a few more years yet. A nice extension, conservatory, then cash in and emigrate to somewhere warmer!!!

You're probably better off investing in a loft conversion - an additional bedroom, prerferably en-suite will likely add more value, and differentiates more from the surrounding houses.

[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.

Thanks snowy..... you really made my day there :winkold:

Oh well, if it does, i'm not going anywhere yet. I'm looking to keep this house for a few more years yet. A nice extension, conservatory, then cash in and emigrate to somewhere warmer!!!

Sorry, mate. :oops:

[snowychap]

It's looking doubtful for an interest rate cut this month as price inflation continues to look bad.

Price inflation at 16-year high

Price inflation of goods leaving UK factories held at its highest rate in 16 years in February, as producers passed on rising raw material costs.

The Office for National Statistics said that producer prices rose at an annual rate of 5.7% in February, the same rate as January.

Prices paid by factories for raw materials rose 19.3% on the year - the fastest since records began in 1986.

Analysts said the rise could deter the Bank of England from further rate cuts.

Price concerns

"At these levels the Monetary Policy Committee will remain concerned about price pressures coming from food and energy, particularly given the surge in input costs this month," said Philip Shaw at Investec.

In February, the Bank's rate-setting Monetary Policy Committee reduced the key UK interest rate from 5.5% to 5.25% amid growing evidence that the economy is slowing.

Forecasters suggest that in 2008 the UK economy will experience its slowest rate of growth for 15 years.

But signs of rising inflation will make it tougher for the central bank to justify further rate cuts, despite the slowing economy.

Data released at the same time showed manufacturing production in January unexpectedly rose for the first time since October, although overall industrial output fell.

[snowychap]

And more gloom. Sorry.

Surveyor gloom close to a record

The number of UK surveyors reporting house price falls in February was close to the historic level of June 1990.

Cautious homeowners have caused housing stockpiles to rise to levels not seen for a decade, the Royal Institution of Chartered Surveyors (Rics) said.

Some 64.1% more surveyors reported a fall than a rise in house prices in February - up from 54.7% in January.

But the survey said Scotland was bucking the trend, with 25% more reporting price rises - up 18%.

Highs and lows

The survey showed the UK trend had continued for the seventh consecutive month and was close to the June 1990 low, when 64.5% more surveyors reported house price falls than increases.

But the picture in Scotland mirrored economic data coming out of the country, showing a rise in the balance of surveyors reporting price rises from 7% to 25%.

Across England and Wales, enquiries from would-be new buyers are still dropping fast and fell for the 15th month in a row, suggesting a continued slowdown in the market is likely in the coming months.

"Many would-be-buyers are either struggling to raise the necessary finance to precipitate a move or are exercising caution in light of current economic uncertainty," said Rics.

Common theme

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

But it did not report such a speedy decline as its rival, the Nationwide, which registered its fourth monthly price fall in a row and said prices in the three months to February had been 1% lower than in the previous three.

Rics said that would-be buyers were struggling to raise the necessary finance or sitting tight during the current economic uncertainty. Some 37% more surveyors said new buyers' enquiries were down than those reporting increases.

Effect on stock

Employment levels remain strong in the UK, which means homeowners are under little pressure to sell.

Yet a lack of demand meant the stock of unsold property on surveyors' books was up 8.5% in February, the fifth monthly rise in excess of 8%.

"Confidence in the market is clearly having an effect on prices," said Rics spokesman Ian Perry.

"While there is very little new supply coming onto the market, it is unlikely that there will be significant price drops in the short term but the build up of unsold stocks will encourage buyers to negotiate lower asking prices."

[Jon]

And more gloom. Sorry.

not your fault Snowster!

Seems Greenz's neighbour struck it v lucky. Full asking within 5 days, when it's generally accepted that the market is in decline.

stuck my flat on the market in July, and couldn't sell for anywhere near asking so have rented it out. It's worked out quite well, as have got decent tenents in, but a good sale would maybe have been preferable

Gonna have to bide my time i think......

[snowychap]

And more gloom. Sorry.

not your fault Snowster!

Seems Greenz's neighbour struck it v lucky. Full asking within 5 days, when it's generally accepted that the market is in decline.

stuck my flat on the market in July, and couldn't sell for anywhere near asking so have rented it out. It's worked out quite well, as have got decent tenents in, but a good sale would maybe have been preferable

Gonna have to bide my time i think......

Cheers, Jon.

I just didn't want people to see me as the 'Harbinger of doom'. :winkold:

I'd imagine that in Greenz area the market is still good as is the case in Scotland according to the RICS report?

So you're one of those landowner/landlord types now, eh? Booooo...

[Jon]

So you're one of those landowner/landlord types now, eh? Booooo...

indeed :winkold:

not really by choice though. Sort of forced on me, really , by being unable to sell it for a decent price.

not really making much on it either. Covers the mortgage and then a little extra, but not much, especially when/if things start "going wrong".

[snowychap]

It does seem landlords are rather like panto' villains.

Without landlords, from whom would I rent? :?

I can see it being forced on a lot more as well in the next few months.

A few friends have also found themselves in this sort of situation (quite often when they move in with their other halves).

[Jon]

I can see it being forced on a lot more as well in the next few months.

A few friends have also found themselves in this sort of situation (quite often when they move in with their other halves).

Indeed.

If you don't financially HAVE to sell right now, then people shouldn't, really. The market (for many areas) really is a buyers one right now, and if you're in a position where it would be preferable but not necessary to sell, then i'd ride it out, and try to let the property out.

In terms of couples moving in together for example, then i'd guess they don't financially need to sell the property straight away.

TBH before i was "forced" to remortgage and let out, i was not a fan of landlords that would buy up properties solely to make money by letting them out and then maybe selling on at a profit at a later date. I think it skews the market, especially for first time buyers.

I still think there's something not quite right about Buying To Let. I think it needs to be addressed at a national governmental level.

[Gringo]

On the one hand

He announced he was writing to the Governor of the Bank of England to re-confirm that the inflation target for the Monetary Policy Committee remains 2% on a CPI basis - "entrenching our commitment to low inflation".

which given the news that

Rate cut hopes hit as energy bills help drive up inflation to 2.5%

Inflation hit 2.5 per cent last month, up from 2.2 per cent in January, the Office for National Statistics said yesterday, narrowing the Bank of England's room for manoeuvre on interest rates.

The ONS said the sharp increase in the Consumer Price Index (CPI) was largely due to higher energy bills, particularly following a technical change in the way inflation is calculated. Previously, gas and electricity price changes were phased into the figures over a four-month period because prices do not change for customers until the day their meters are read. But the increases are now factored into the CPI when the change is made, so price rises announced over recent months are included in the February index.

The ONS said that, had the old methodology been kept, inflation would have been unchanged. Nevertheless, economists said the Bank of England might now be more cautious about lowering interest rates, even with the impact of the credit crunch and the more aggressive example set by the US Federal Reserve tugging in the other direction.

The Bank's view is that inflation from higher oil and food costs as well as the depreciation of sterling is "already baked in the cake", and will be temporary.

"Core" inflation – stripping out volatile items such as energy and food – actually fell last month, from 1.3 to 1.2 per cent.

would mean no interest rate cuts this side of france winning euro2008.

But on the other hand

Minutes of the last meeting of the rate-setting Monetary Policy Committee released Wednesday surprised economists, revealing that economist David Blanchflower's repeated call to cut the bank's key interest rate was joined March 6 by John Gieve, one of the bank's two deputy governors and the official in charge of financial stability.

That made for a 7-2 vote to hold rates steady at 5.25%, the minutes said, with Blanchflower and Gieve arguing in favor of cutting the rate by a quarter point.

"Blanchflower has been traditionally dovish but Gieve's position comes as a surprise," said Charles Davis, an economist with the Center for Economic and Business Research.

The minutes showed the dissenters were worried about the deteriorating outlook for the U.S. economy and the resulting impact on financial markets.

The doves are gathering and I think gordo will have given them a nudge following the markets recent fluctuations. As Levi said, it's time to get the free beer out. It might not work, but they'll give it a spin anyway. So I predict rate cuts in April and June, and to hell with inflation.

[leviramsey]

As Levi said, it's time to get the free beer out.

Anybody up for a pint at Mervyn & Ben's?

[Gringo]

Houses prices down 1.5% in three months

House prices fell for the fifth month in a row during March as the market continued its downward trend, figures showed today.

The average cost of a home in the UK dropped by 0.6 per cent during the month to stand at £179,110, according to Nationwide Building Society.

At the same time, annual house price growth also continued to ease, slowing to just 1.1 per cent, its lowest level since March 1996, and less than half the year-on-year gain of 2.7 per cent recorded during February.

The average home now costs just £2,027 more than it did in March last year, with prices falling by 2.9 per cent during the past five months.

Fionnuala Earley, Nationwide's chief economist, said: "A clear change in sentiment since the late summer has led to the sharp slowing in house price growth, even in the less volatile three-month on three-month series.

"Prices on this measure are now 1.5 per cent lower than three months ago. The price of a typical house in the UK is now £179,110, only £2,027 more than this time last year."

But she added that prices were still 11 per cent higher than they had been two years ago and 47 per cent higher than they were five years ago.

The group said deteriorating affordability, higher interest rates and slow earnings growth were already beginning to affect house prices in early 2007, although this was not reflected in consumers' expectations for property price growth.

But since September, people's expectations have been falling sharply, coinciding with the turmoil in the financial markets and the problems at Northern Rock, as well as a slowdown in annual house price inflation.

Nationwide said lower consumer expectations would cause at least some of the demand in the housing market to fall away.

Ms Earley said: "Once a general trend in expectation has been formed its effect is likely to be highly influential on both transactions and price levels.

"This happens, first by removing the urgency to move and second by giving buyers a bigger incentive to drive a harder bargain in order to hedge against any possible falls in prices."

The group said it expected a "modest fall" in house prices across the whole of 2008, adding that such a fall would ensure greater stability in the market going forward.

The Nationwide figures come the day after data from the British Bankers' Association showed that the number of mortgages approved for people moving house in February had fallen by a third compared with the same month of 2007.

House prices likely to fall by a quarter in two years

House prices in Britain could crash by 25 per cent before mid-2010, forecasters at Capital Economics have warned. That would wipe £45,000 off the value of an average house, currently worth £180,000.

Ed Stanford, property economist at Capital, said it was 'entirely plausible' that house prices would fall by between 20 per cent and 25 per cent in the next two years, particularly if the economy continued to be buffeted by the credit squeeze, financial markets' turbulence and sliding consumer confidence.

Capital has already published forecasts that flag a 5 per cent fall in house prices in 2008 and 8 per cent in 2009. It also expects unemployment to rise from 5.3 per cent of the working population to 7.5 per cent.

Last week, Nationwide building society revised its forecast of no change in prices this year to a modest fall. It changed its prediction after publishing figures that showed UK house price annual inflation at its lowest rate for 12 years. Prices fell for the fifth month running; March was down 0.6 per cent on February. If the trend continues Britain's housing market will soon record annual falls for the first time since 1996.

Other UK housing bears include David Miles, chief UK economist at Morgan Stanley. He reckons the market is due a 20 per cent correction. If he and Capital are broadly correct, a significant number of people who bought two years ago will find themselves in negative equity by 2010.

Not everyone is as pessimistic: JP Morgan's Malcolm Barr envisages a 6 per cent fall in 2008, but then a slow recovery.

The Royal Institution of Chartered Surveyors reports that new buyer inquiries at estate agencies are sharply down.

The market is being depressed by the credit crunch, with banks hoarding cash and demanding that borrowers put down huge deposits.

[claret+blue_watch]

I think we have entered the 2nd stage:Anger

Daily Telegraph

Labelling people 'Doomsters' because they could see one of the biggest asset bubbles in history, and how it could go very wrong.Disgraceful journalism, read all the comments below, people are angry.A comment by Richard Hayward at 12.24PM hits the nail firmly on head in my opinion.

[snowychap]

I like this comment:

Asset bubbles have three stages. Stage one is when the smart money buys. Stage two is when the friends of smart money buy. Stage three is when unqualified journalists tell Joe public to buy - this is when smart money sells because he's smart enough to know what a bubble looks like. Evidence? have a look at the FTSE listed builders.

I haven't checked the accuracy of his claim, though.

Awful article; interesting comments.

Why anyone would think that TV presenters are experts just because they present a program on a particular topic, though, is beyond me.

Those kind of programs have long made me uneasy. They have concentrated (in a particular climate) on the nominal increase in the value of a property without any regard to the indirect fall out and consequences of those increases.

It is all about the house (or flat) as a commodity the main purpose for which is for trading - oh, and here's an incidental bonus : it can be lived in, too.

I'd be interested to see if the BBC keep their program 'Homes under the hammer' going. Next year the show could be of a completely different nature. Instead of showing people who buy a property at auction and walk out of the door to sell it to some other mucker for an extra £5k, perhaps we'll get a program showing former family homes being auctioned to rooms filled only with the tearful, evicted families and those few with the hard cash that can buy them. That'll keep the daytime TV watchers happy..

One other comment:

I will let it be known that all your IP numbers have been recorded.

All posts will now be checked for threatening words by the police.

Posted by Kirsty Allsopp on March 30, 2008 4:27 PM

[snowychap]

First Direct withdraws mortgages

First Direct has temporarily stopped offering any of its mortgages to people who are not already its customers.

The bank, which is part of HSBC, said the withdrawal was to allow it to cope with the unprecedented demand for its range of mortgages.

Many providers have withdrawn mortgages or raised interest rates this year, leaving some smaller banks and building societies unable to cope with demand.

First Direct says applications have been five times usual levels.

Historic highs

"The flood of interest in our mortgages has meant we're taking longer than we'd like to handle applications, especially from non-customers," said First Direct chief executive Chris Pilling.

"Rather than increase interest rates dramatically to discourage new applications, we've decided to withdraw temporarily from offering mortgages to non-customers until we've cleared the backlog."

As a result of the credit crisis, the interest rates at which banks lend money to each other are unusually far above the Bank of England's base lending rate.

That has made it uneconomic for some institutions to carry on offering mortgages and thousands of products have been withdrawn already this year.

First Direct is the first major lender to withdraw its entire range to non-customers, although the Bath and Earl Shilton building societies took the same step last month.

[Gringo]

London and South East house prices fall as buyers tighten belts

The squeeze on credit by mortgage suppliers is already hitting the housing market. House prices in London and the South East are on the slide, two new surveys have revealed. London house prices fell 0.4 per cent in February, compared with January, with the average house price dropping to £353,760, according to Land Registry data. The fall was the biggest monthly decline in two years, fuelling fears that further sharp falls may be around the corner. In the South East, prices fell 0.7 per cent in February to £230,717.

Worries over City jobs and bonuses have affected prices of multimillion-pound homes in the capital, where price inflation last year was rampant. The number of London properties changing hands worth £1 million or more fell by 32 per cent in February, from 317 to 215, according to the Land Registry. Across England and Wales, sales in this bracket fell from 542 to 381.

Land Registry figures revealed that prices across London fell most sharply in the west and southwest boroughs. Many bankers begin with a flat in Ken-sington and Chelsea, before moving to larger family homes in the Barnes-to-Richmond corridor.

Knight Frank, the property agency, reported that prices of homes worth £1 million to £5 million were static, with a 0.1 per cent rise in March over February. The number of prime Central London homes sold in this bracket in the first quarter fell by 20 per cent.

Worst affected were homes worth £3 million to £5 million, the bracket favoured by City bankers from Notting Hill to Knightsbridge. Prices were unaltered in March, taking the three-month rise to only 1.5 per cent.

Liam Bailey, of Knight Frank, blamed “growing fears for job security in the City”.

This week Capital Economics, the forecasters, said that it was “entirely plausible” that London house prices could fall 25 per cent over two years.

[ianrobo1]

sorry but who cares if millionnairres have seen a slight drop because of their own incompetence in the city a lot of their polcies led directly to this

A small fall is what everyone is predicting not a crash, still demand for mortgages out there and in fact don;t we need a period of static or hegative grwoth in house prices to make them more affordable to most normal people in this country and not city rocket polishers in London

[Gringo]

sorry but who cares if millionnairres have seen a slight drop because of their own incompetence in the city a lot of their polcies led directly to this

If you don't think there is a knock on, then you're not paying attention. The london market drove the boom, it will lead the fall

A small fall is what everyone is predicting not a crash

Who exactly is everyone?

— Martin Ellis, Halifax's chief economist, predicts flat prices this year.

— Fionnuala Earley, chief economist at Nationwide, expects “modest falls” in 2008.

— Mervyn King, Governor of the Bank of England, forecasts prices could remain “broadly flat” over the next four years, but price falls are “conceivable”.

— Capital Economics sees a 5 per cent fall this year, 8 per cent in 2009 but a “plausible” 25 per cent fall by mid 2010.

— David Miles, Morgan Stanley's chief economist, says that house prices could fall by 20 per cent over two years.

still demand for mortgages out there and in fact don;t we need a period of static or hegative grwoth in house prices to make them more affordable to most normal people in this country and not city rocket polishers in London

Plenty of demand for mortgages, but with supply falling away. Fewer mortgages means fewer buyers, means decreasing demand, means falling prices, means lower LTV's on offer, means even further reduced demand as buyers need to save larger deposits, means lower prices. And that's just the FTB market; if you look at the remortgage market and BTL market with LTVs on offer decreasing there could be a chunk of people who won't be able to get a new mortgage and forced into repossession.

[ianrobo1]

but what is so bad about a crash, yes some people may feel poorer, some people may be stretched but a lot more may benefit due to it.

Even the people you quote only one is predicting anywhere near a crash and besides is that not the market economy that is so loved by many

there are winners and losers out there and always will be,

can house prices continues to be so high whereby the average house price is now 8 times or more larger than average wage

last time there was a crash I broght in at the end of it, so now I have loads of equity despite remortgaging several times, an house price decline is not neccessarly bad.