The House Price Crash Thread

[Gringo]

The housing boom drove the economy for the last 7 or so years, a crash will strangle the economy and see the end of the labour govt ("it's the economy stupid" - to quote everyone for the last 15 years), so I guess you would be hoping for a crash to be avoided.

Yes the market is misbalanced, yes a correction is necessary to bring prices back in line with wages. And whilst you've been lucky in that you bought at the bottom of the previous cycle, there are many more who have bought in the past 12 months who will be saddled with that property/negative equity for the next 5-8 years if we judge by previous cycles, so not a very socialist attitude to take - "I'm alright Jack".

Whilst your vitriol seems to be aimed at the city boys, they're not the ones who are going to suffer - they might lose a few investments, but the yacht is probably paid for and in the wife's name and so safe - it's the one's who have only just got on the ladder, and who are stuck there or face repo.

Note: two of the commentators predicted a crash - one by 25% the other by 20%

[Gringo]

Mortgage approvals at 13 year low

The continuing decline in activity in the UK property market has been underlined by the latest Bank of England figures on mortgage lending.

The number of new mortgages approved for house purchase fell slightly in February to just 73,000, said the Bank.

That was a 39% drop on the same month a year ago, and leaves prospective mortgage lending still at its lowest level for 13 years.

Housing equity withdrawal also slumped in the last quarter of 2007 to £7.3bn.

[ianrobo1]

see it depends what you define, muy house is worth around £130k, if say we lost 25% it would be what, £100k which would be very cheap when average wage is around £25k and two people living together

so like when prices rose it is the SE that will take the brunt of this and the rest of us will be fine but as usual policy will skewered towards them when we may not need the same medicine , if at all any.

fact remains that like the last times any problems with negative equity is amainly around London because the rises as stated in the report were edriven massively upwards by the influence of the city and the madness they spark by the dodgy betting and gambling on the nation's future.

Yes I have a lot of vitroil for them basically they are a four letter word I can not use and purely work for the benefit of themselves yet are the first to moan when it goes wrong because of them

As it I don't think there will be a crash, demand is too high, interest rates still historically low and now real sign of mass unemployement (no matter what Tony thinks)

but a correction may be what is needed to curb the excess's

remember this whole thing was sparked by the madness of bankers int he states lending to totally unsuitable people who never had a chance of paying it back, in this country we sufferred but the bankers were not as stupid.

Then can anyone really say it is right for Bank A to pass their debt all the way down the line to an insurance company, that in itself should be stopped and then maybe sanity would return.

but the free marketers would never have it and they rule.

[snowychap]

see it depends what you define, muy house is worth around £130k, if say we lost 25% it would be what, £100k which would be very cheap when average wage is around £25k and two people living together

so like when prices rose it is the SE that will take the brunt of this and the rest of us will be fine but as usual policy will skewered towards them when we may not need the same medicine , if at all any.

fact remains that like the last times any problems with negative equity is amainly around London because the rises as stated in the report were edriven massively upwards by the influence of the city and the madness they spark by the dodgy betting and gambling on the nation's future.

Your house, Ian, is not 'worth' £130k. It is currently valued at £130k (possibly).

If there is a reduction by 25% - which would take it down to £97,500 - then only if you have held that asset since it was last valued at that level would you not be in a situation of negative equity. I would hazard a guess that this would not encompass anyone who has bought a property in your area in the last 3 or 4 years.

By your anecdotal evidence, you have shown that a 25% decrease in house prices would have an impact in terms of negative equity far beyond the SE.

[dundeevilla]

It's all a self-fulfilling prophecy really.

All the media scaremongering terrifies prospective house buyers, so they hold off, leading to a slow-down in the market, leading to more scaremongering stories, and around we go again.

[ianrobo1]

It's all a self-fulfilling prophecy really.

All the media scaremongering terrifies prospective house buyers, so they hold off, leading to a slow-down in the market, leading to more scaremongering stories, and around we go again.

possibly but it is the tossers who speculate on house prices who beenfit. Like those who made the false rumours about HSBC

Remember if the prices correct, then some hosuses will become very cheap, speculators come in, buy them and within a few years makes huge profits.

Captialism, dontcha u luv it !!

[ianrobo1]

see it depends what you define, muy house is worth around £130k, if say we lost 25% it would be what, £100k which would be very cheap when average wage is around £25k and two people living together

so like when prices rose it is the SE that will take the brunt of this and the rest of us will be fine but as usual policy will skewered towards them when we may not need the same medicine , if at all any.

fact remains that like the last times any problems with negative equity is amainly around London because the rises as stated in the report were edriven massively upwards by the influence of the city and the madness they spark by the dodgy betting and gambling on the nation's future.

Your house, Ian, is not 'worth' £130k. It is currently valued at £130k (possibly).

If there is a reduction by 25% - which would take it down to £97,500 - then only if you have held that asset since it was last valued at that level would you not be in a situation of negative equity. I would hazard a guess that this would not encompass anyone who has bought a property in your area in the last 3 or 4 years.

By your anecdotal evidence, you have shown that a 25% decrease in house prices would have an impact in terms of negative equity far beyond the SE.

nope 3 years ago houses were worth around £110k

my house is worth £130k because that is what a simialr one sold for just a week or so back, same standard etc.

and they will not drop that much. Even in the big crash of the early 90's property in our area dropped around 10% because it is a popular area, plenty of amenties and cheap ...

[snowychap]

nope 3 years ago houses were worth around £110k

my house is worth £130k because that is what a simialr one sold for just a week or so back, same standard etc.

and they will not drop that much. Even in the big crash of the early 90's property in our area dropped around 10% because it is a popular area, plenty of amenties and cheap ...

So, you're alright.

What about the person in the street half a mile down the road which is not quite as close to amenities?

Your area is 'cheap' in comparison to where?

It is unlikely to be both relatively cheap and in demand.

[ianrobo1]

cheap in terms of average wage, the type of house and where we do live

for example Streetly is just over the road for us, has far less amenties, house slightly nicer but prices at least 10 if not 20% higher as it is perceived to be a nicer area

Now I understand for some any negative equity is a problem but surely there has to be common sense

Housing like any other commodity is a market place and like any other commodity prices can go down

Is not part of the problem, started by Thatcher that there is an obession in owning an house, an obession that meant some took out 5X salary and at times 100% mortghages.

This same obession especially in the SE caused the massive rises we saw ?

I brought my house using some savings and a mortgage based on around 2.5X salary (which was slightly bnelow the average wage), that now would be impossible as the same principle would now mean between myself and the wife we would have to be earning more than £45k a year a figure we are nowhere close to due to the wife working part time with little un.

However for two people both earning slighhtly below national average it is still affordable.

[snowychap]

cheap in terms of average wage, the type of house and where we do live

for example Streetly is just over the road for us, has far less amenties, house slightly nicer but prices at least 10 if not 20% higher as it is perceived to be a nicer area

Now I understand for some any negative equity is a problem but surely there has to be common sense

Housing like any other commodity is a market place and like any other commodity prices can go down

Is not part of the problem, started by Thatcher that there is an obession in owning an house, an obession that meant some took out 5X salary and at times 100% mortghages.

Please don't take this personally, Ian, becaue it is not meant to be a slight on you but a big part of the problem is that 'housing' is seen just as a commodity - even it seems by those who, I think, consider themselves to be socialists still.

Housing is a necessity.

The view that it is something to be traded, just because it can be, ought to be anathema in any civilized society.

[ianrobo1]

yes Housing is a neccessity like Health

the poltical concenus is that health in the whole should be funded centrally

yet the councils can not or are not allowed to provide social housing and any decent stock is allowed to be sold

renting for a large number of people is the only way to get housing but for those who should be renting they are almost forced to buy

[snowychap]

renting for a large number of people is the only way to get housing but for those who should be renting they are almost forced to buy

Forced by what or whom?

Forced by social pressure?

Forced by rental prices?

Forced by greed?

Something else?

[Digsby]

It's all a self-fulfilling prophecy really.

All the media scaremongering terrifies prospective house buyers, so they hold off, leading to a slow-down in the market, leading to more scaremongering stories, and around we go again.

Absoloutley spot on.

[peterms]

renting for a large number of people is the only way to get housing but for those who should be renting they are almost forced to buy

Forced by what or whom?

Forced by social pressure?

Forced by rental prices?

Forced by greed?

Something else?

In some areas, people who might prefer to rent find there's nothing available of an acceptable standard at the right price. While they might want to own in the longer-term, in the short term it might not be the best option. They can however find themselves first pushed out of the area where they would rather live, and second then also facing little realistic choice but to stretch themselves further than they are comfortable with in order to buy something that's not really what they wanted in the first place.

This is a feature of highly pressured areas like central London, Edinburgh and others.

It leads to many people becoming marginal home owners, at risk if interest rates go up, travelling further than they want to get to work. It adds to congestion, it's environmentally unsound, it's a pain for the people in question, and it adds to the amount of social and economic disruption if the economy falters.

If there had been a wider choice of buying or renting, many of these people might have decided to postpone buying until they could more easily afford it in the place they want or need to live.

[ianrobo1]

and look at teh rent market especially in London it is full of sharks, Hoogstrem (??) sheriff fatman has carter sung was just a total bastard and forced people to live in shit conditions when he knew they would not compalin through terror

a proper way is a balanced mix, where govrnements (of both parties) don;t encourage council house sales and encourage and feed the desire to own homes

I said before but I reckon the sale of the best council housing int he 80's will be seen long term as one of the worse social descions any government has made, both finaicially and morally

[claret+blue_watch]

It's all a self-fulfilling prophecy really.

All the media scaremongering terrifies prospective house buyers, so they hold off, leading to a slow-down in the market, leading to more scaremongering stories, and around we go again.

Absoloutley spot on.

Is this the same media who have been shamefully and irresponsibly ramping property for ten years?

Only last week the Daily Express 'newspaper' had the headlines of 'House prices still rising'.Only thing is they failed to mention that this was YoY figures, which over the next 1-2 months will show negative YoY.Didn't mention that, strange eh?Misleading and irresponsible reporting.

I believe the owner of the Express paper has a huge property portfolio.Coincidence?

As for Phil and Krusty on Channel 4 and their ilk, I hope and presume they don't have a conscience, as all those people they advised with their 'expert' opinions to buy buy buy, no matter how far they stretched themselves and with the age old myth that 'prices only ever go up', could be in serious financial difficulties in the next few years.

As Mr Buffet once said "It's only when the tide goes out that you learn who's been swimming naked"

[ianrobo1]

spot on C&B the whole culture is fed towards buying your own price no-one eer asks if you can afford it and in the states it is far worse, as we have seen than here

[snowychap]

renting for a large number of people is the only way to get housing but for those who should be renting they are almost forced to buy

Forced by what or whom?

Forced by social pressure?

Forced by rental prices?

Forced by greed?

Something else?

In some areas, people who might prefer to rent find there's nothing available of an acceptable standard at the right price. While they might want to own in the longer-term, in the short term it might not be the best option. They can however find themselves first pushed out of the area where they would rather live, and second then also facing little realistic choice but to stretch themselves further than they are comfortable with in order to buy something that's not really what they wanted in the first place.

This is a feature of highly pressured areas like central London, Edinburgh and others.

It leads to many people becoming marginal home owners, at risk if interest rates go up, travelling further than they want to get to work. It adds to congestion, it's environmentally unsound, it's a pain for the people in question, and it adds to the amount of social and economic disruption if the economy falters.

If there had been a wider choice of buying or renting, many of these people might have decided to postpone buying until they could more easily afford it in the place they want or need to live.

Great post, Pete. :nod:

[claret+blue_watch]

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

Sorry Snowy I didn't notice your reply.Do you think that really was Krusty?

Wouldn't put it past the avaricious bint.The bulls are getting very angry now aren't they

Here is another example recently of another ramper turning angry, this time it's all the FTB's fault that her portfolio may go up in smoke, and she may have to get a real job because those selfish FTB's won't put themselves on a treadmill of debt until they are ninety. :evil:

Times

Forgot to say to look at the have your say comments at the bottom

[claret+blue_watch]

With the impending downwards correction I'm having first dibs on this house:Chateau Neville

Look at those wonderful initalised gates Who says footballers haven't got class .I reckon I'll get it for approx £30,000 in 18 months