The House Price Crash Thread

[snowychap]

More job cuts at UK housebuilders

Bovis Homes and Redrow have become the latest UK housebuilders to announce a sweeping reduction in their workforces.

Staff numbers will be cut by 40% compared with the beginning of the year at both firms.

A credit crunch and drop in the number of affordable mortgages are to blame for the market problems, they said.

Bovis said it would shed about 400 office and site-based jobs, while 850 Redrow jobs will go as part of broad cost-cutting measures.

The whole property industry is reeling from low homebuyer confidence.

Persimmon, Taylor Wimpey and Barratt Developments have all announced job cuts and warned on the outloook for the housing market for 2008.

'Worst for years'

Bovis said the market for selling homes was the "worst that the group has seen for years", while Redrow called the sharp decline "unprecedented".

Sales completions at Bovis for the six months to the end of June were down 32%.

Of the homes that were completed, 27% was social housing, rather than private homes, more than double the amount in the same period last year.

Bovis said it would continue to seek opportunities in social housing as it expects private home sales to remain low for the rest of 2008.

As part of its cost-saving drive, Bovis said it was closing one of its offices and merging a number of key functions of its northern region with its central region.

It will also cut its interim dividend to 5 pence per share. The company said that it had expected to pay shareholders a dividend of 20p per share.

Redrow is also making moves to manage its cost base, closing two of its 10 offices.

It is carrying out a review of the value of inventory and land not in development. It warned that this review may lead to it cutting the value of its holdings.

Both Redrow and Bovis were pessimistic about the short-term outlook for the property market.

With all of these major housebuilders cutting back, can the government still hope to get anywhere near the plan to get 3 million new homes by 2020?

[OutByEaster?]

I'm looking to buy somewhere right about now, I'm lucky enough to have cobbled a decent enough deposit together over the last 10 years, and I'll be looking to offer 15% less than the offer price on a place I've seen, but I've got to say, I'm not overflowing with confidence on it.

Is this a buyers market or not?

[snowychap]

UK house prices 'fell 2% in June'

UK house prices fell by 2% in June, according to the UK's biggest mortgage lender, the Halifax.

The drop meant that prices were 6.1% lower than a year ago, with the average home costing £180,344.

The lender said that average house prices were now at the same level as in August 2006.

But it said that strong employment levels and low interest rates meant that the housing demand retained firm foundations despite price falls.

A squeeze on spending power, and the lack of availability of mortgages were behind the latest monthly fall, said Halifax chief economist Martin Ellis.

"These factors have curbed housing demand. There has been a slight fall in 'real' earnings over the past year," he added.

More falls?

The Halifax recently forecast that UK house prices are set to fall by 9% this year - having revised its views from February that the market would be "flat" in 2008.

The latest survey from rival the Nationwide said that house prices fell by 0.9% on average last month, with the average home costing 6.3% less than a year ago.

The Halifax's figures came as house builder Barratt confirmed more job cuts in the sector. Barratt said it was cutting 1,200 jobs owing to the housing slump and the squeeze on mortgage lending.

The survey was released just three hours before the Bank of England's Monetary Policy Committee (MPC) announces its latest interest rate decision.

"We expect the UK economy to slow further in 2008, with a further rise in unemployment and low interest rates, accepting that inflationary pressures will restrict the MPC's ability to reduce base rates below current levels," said Mr Ellis.

House builder Barratt cuts jobs

UK house builder Barratt Developments has confirmed it is cutting more than a thousand jobs due to the housing slump and the squeeze on mortgage lending.

Barratt, which employs 6,700 staff, said it was cutting 1,200 jobs by closing two divisions and merging other parts of its business.

The company also said it had reached a deal with its lenders to give it extra breathing space to pay back its debt.

It added it expected housing production to hit a 50-year low in 2008.

Barratt said a £400m debt facility, which was due to be paid next April, has been extended to July 2011.

...more on link

Bank expected to keep rates at 5%

The Bank of England is expected to announce it is keeping interest rates at 5% when it meets later - amid growing signs the economy is weakening.

A recent report suggested the UK was at risk of recession, and building firms have laid off thousands of jobs.

However, City experts believe that with inflation hitting 3.3% last month the Bank will leave rates unchanged.

Meanwhile, accounting firm PwC expects higher living costs will mean the consumer squeeze will worsen in 2009.

As a result, PricewaterhouseCoopers expects consumer spending to rise by just 0.5% next year.

"The outlook for household spending growth in the UK is looking more subdued now than at any time since the early 1990s," said John Hawksworth from PricewaterhouseCoopers (PwC).

Tighter household budgets will have an impact on economic growth, PwC said.

It predicted that the UK economy would grow by 1.75% this year, down from 3.1% in 2007. This is expected to fall to 1.25% in 2009 - much lower than the government's current forecasts.

...more on link

[HongKongVillan]

I'm looking to buy somewhere right about now, I'm lucky enough to have cobbled a decent enough deposit together over the last 10 years, and I'll be looking to offer 15% less than the offer price on a place I've seen, but I've got to say, I'm not overflowing with confidence on it.

Is this a buyers market or not?

Same here! However I guess I am even worst as I am looking for 10% deposits. But spoke to a mortgage advisor the other day, I could still afford a mortgage on a 10% deposits on a £350k property, but on a fixed rate term of around 6.5% for 2 years. (Is this high?)

If none of us (me and my wife) get the sack from work, we could manage it, but if it happens we would be skin tight and have to look for work as soon as.

Hopefully the house price do go down a bit more by the end of the year and by then I could potentially have a better deposits. I guess it is a good time to wait and build up a bigger pot of gold before buying around winter time...

anyone advice me if I am wrong...

[snowychap]

Is this a buyers market or not?

Same here! However I guess I am even worst as I am looking for 10% deposits. But spoke to a mortgage advisor the other day, I could still afford a mortgage on a 10% deposits on a £350k property, but on a fixed rate term of around 6.5% for 2 years. (Is this high?)

If none of us (me and my wife) get the sack from work, we could manage it, but if it happens we would be skin tight and have to look for work as soon as.

Hopefully the house price do go down a bit more by the end of the year and by then I could potentially have a better deposits. I guess it is a good time to wait and build up a bigger pot of gold before buying around winter time...

anyone advice me if I am wrong...

Chaps, I'm no expert at all but it would appear that the perceived wisdom is that house prices will continue to go down for a while - even in the best case scenarios.

I'd say that those people being interviewed on the subject would say that it is a buyer's market (though it might well get even better for buyers) but only really for those with the cash to take advantage. It certainly doesn't appear to be a good time to even get close to over-extending so if you are weighing up chucking all of your eggs in one basket and things would be tight then I'd really take some time in thinking about that.

[Clarry]

[

I'd say that those people being interviewed on the subject would say that it is a buyer's market (though it might well get even better for buyers) but only really for those with the cash to take advantage.

So expect more loaded landlords to buy up more "cheap" houses to rent out and more loaded developers to buy up more. And so the cycle continues.

[PaulMcgrathsknees]

Free no register compare mortgages Gov't site

[Rudy]

Work in the property industry. I can tell you there will be many forced sellers out there in 12 months or so. Therefore, delay any house purchase for a few months as prices will be lower by the end of the year.

I was due to exchange contracts on our house sale last week, and the day before the guy at the bottom of the chain wanted £15k off. Tosser! Deal fell through and we're back to square one. We were going to rent for 12 months.

Such is life

[snowychap]

Mortgage squeeze tightens further

The mortgage squeeze is continuing to tighten with a further drop in lending, according to new figures.

The fall in gross mortgage lending is accelerating, with a 3% dip from May to June, according to the Council of Mortgage Lenders (CML).

The CML said gross lending declined to an estimated £23.8bn in June, some 32% lower than the same month a year ago.

CML director general Michael Coogan said borrowers on tight budgets must plan ahead as the trend will continue.

Credit crunch

The more sturdy quarter-on-quarter figures show that lending declined by 1% from the first three months of the year to an estimated £74bn in April to July.

But spring and early summer are usually times when the housing market is more buoyant, with people more likely to look to move than in winter.

The quarterly year-on-year decline had accelerated, the CML said, with lending in the second quarter of 2008 down 21% on a year ago, after a year-on-year dip of 11% in the first quarter.

"Market activity during a traditionally a busy time of year for mortgages has been muted by funding shortages and, more recently, dampened consumer demand," said Mr Coogan.

Lenders are taking fewer risks with lending, leading to more expensive mortgages and a demand for bigger deposits.

But the demand from buyers has also fallen as house prices drop. Many are likely to be waiting for a sign of property prices stabilising before they choose to move.

Government plans

Mr Coogan said that net lending had been "constrained" in 2008 and this picture would to continue for the rest of the year.

The figures came in the same week that Housing Minister Caroline Flint announced plans for a "rent now, buy later" scheme to help first-time buyers get onto the property ladder but have time to save for a deposit.

Opposition parties questioned how the scheme would be funded.

...more on link

[ender4]

I'm looking to buy somewhere right about now, I'm lucky enough to have cobbled a decent enough deposit together over the last 10 years, and I'll be looking to offer 15% less than the offer price on a place I've seen, but I've got to say, I'm not overflowing with confidence on it.

Is this a buyers market or not?

Its definitely a buyers market now.

15% less than asking price is fine, if the sellers have any sense they should accept your offer straight away.

I think 25% less than asking price is fair at the moment - prices may fall by this amount over the next 18 months anyway.

If you don't need to buy at the moment, the best thing to do is just wait & see what happens. I think it's going to get a lot worse before it gets better.

[ianrobo1]

for scott it could get better and better ...

[Gringo]

I thought prices had "stabilised" or reached their realistic level?

[bickster]

I'm looking to buy somewhere right about now, I'm lucky enough to have cobbled a decent enough deposit together over the last 10 years, and I'll be looking to offer 15% less than the offer price on a place I've seen, but I've got to say, I'm not overflowing with confidence on it.

Is this a buyers market or not?

Its definitely a buyers market now.

15% less than asking price is fine, if the sellers have any sense they should accept your offer straight away.

I think 25% less than asking price is fair at the moment - prices may fall by this amount over the next 18 months anyway.

If you don't need to buy at the moment, the best thing to do is just wait & see what happens. I think it's going to get a lot worse before it gets better.

hmm I'm not so sure that this is an accurate picture myself. As soon as house prices started to dip, it seemed obvious to me that there were suddenly a lot more properties on the market, many more For Sale boards were noticeable. A lot of these people don't need to sell, they are just hoping to sell to someone stupid enough to come close to the asking price. Sure you'll find those that NEED to sell will reduce their price so they can dispose of the asset but many vendors don't need to sell, their houses are on the market as a panic measure, if they ca get out now they will but only on their terms

[ianrobo1]

I thought prices had "stabilised" or reached their realistic level?

not yet but at leats some prices are looking more relastic now

it could and maybe shoudl go a lot further because until the first time buyers cann afford it not much demand will be generated

you knwo Gringo the house market was vastly inflated, we have had this debate in this thread but average house prices of nearly 7 or 8 times national average wage is not substantable

[Gringo]

hmm I'm not so sure that this is an accurate picture myself. As soon as house prices started to dip, it seemed obvious to me that there were suddenly a lot more properties on the market, many more For Sale boards were noticeable. A lot of these people don't need to sell, they are just hoping to sell to someone stupid enough to come close to the asking price. Sure you'll find those that NEED to sell will reduce their price so they can dispose of the asset but many vendors don't need to sell, their houses are on the market as a panic measure, if they ca get out now they will but only on their terms

Houses aren't shifting so longer on the market so more for sale signs around.

I'm with ender - offer 15-25% bellow offer price and chance your arm. It's not if they want to sell - you need to find the ones who have to sell. Capitalism will eat itself.

[Gringo]

I thought prices had "stabilised" or reached their realistic level?

not yet but at leats some prices are looking more relastic now

it could ans aybe shoudl go a lot further because until the first time buyers cann afford it not much demand will be generated

you knwo Gringo the house market was vastly inflated, we have had this debate in this thread but average house prices of nearly 7 or 8 times national average wage is not substantable

The other week you were claiming prices had stabilised, now you are claing that for a buyer it can only get better and better. The only reason I'm pointing this out is because of the roasting you gave tricella for getting predictions wrong and having the audacity to offer further opinions in the face of his fallibility.

[ianrobo1]

well it looks like I was wrong, not sure I said they had stablised but a small fall, well it looks larger than that but I do not see the overall problem, everytime there has been a fall the bounceback has been much larger

[Gringo]

Yes, and for those who bought in 1990 it took 10 years to bounce back to the same level.

"Bounceback much larger" - can only be viewed in an unrealistic historical level for those looking to move up the property ladder at the start of a crash.

[bickster]

hmm I'm not so sure that this is an accurate picture myself. As soon as house prices started to dip, it seemed obvious to me that there were suddenly a lot more properties on the market, many more For Sale boards were noticeable. A lot of these people don't need to sell, they are just hoping to sell to someone stupid enough to come close to the asking price. Sure you'll find those that NEED to sell will reduce their price so they can dispose of the asset but many vendors don't need to sell, their houses are on the market as a panic measure, if they ca get out now they will but only on their terms

Houses aren't shifting so longer on the market so more for sale signs around.

I'm with ender - offer 15-25% bellow offer price and chance your arm. It's not if they want to sell - you need to find the ones who have to sell. Capitalism will eat itself.

No I agree with that, if they NEED to sell that is exactly the way to go, I just don't think that many NEED to sell just yet. And I'm only talking with the evidence of my eyes driving around. I'd say the houses for sale here at least are mainly in the more affluent areas. I also think that there was a sudden explosion of For Sale signs that appeared in a few short weeks as soon as the jitters started, thats what I'm talking about.

In the less affluent areas there seems to be less For Sale signs. It's just my impression of the way things are, no real basis of it, purely empirical

[ianrobo1]

lts face it whilst jobs are still there and no mass unemployment not really a problem

the OECD are foregcasting slow growth (nb not a recession, we are not in one yet, some industries are) so if this continues, tight but not the levels of 1990

the key is when the credit markets loosen up