The House Price Crash Thread

[Gringo]

but still in the long term you win ...

only speculators suffer in negative equity, as long as mortgage is paid whats the problem for most people ?

In the long term you win - as long as you don't die in the meantime, or get divorced and forced to sell your house or lose your job and have to move somewhere else and forced to sell your house or lose your job and not find a new one and forced out of your house.

and yes it is partly luck but also partly being intelligent enough to knwo the market is at the very top, a lot of experts ere predicting a downturn at some point

Being intelligent is great. Unfortunately intelligence varies across different disciplines - for instance, you yourself didn't belive house prices would fall, never mind crash. You were lucky that when you went to buy a house, the first time you were in a position to buy the market was at the end of a slump. To show such disregard for others, I'm sure you would agree, is a very tory attitude, not old labour or nu labour at all.

[snowychap]

so some peopel lose, are you gusy really suggesting that no one should ever lose ?

Yep. And no one should win and everyone should draw.

if you believe the market shoudl be artifically held so the average price is 8 times larger than average wage, then shoudl we bring all the coal mines back then and support a failing buisness ?

I'm not sure that 'all the coal mines' were failing businesses, were they?

I thought that only a few were failing business.

you can not have it both ways,either have amerket and suffer maybe losses or have strict state control over it

Why would you think that I want anything 'both ways'?

I am not a free marketeer. I am not a fan of any kind of economics whose main aim is to maximise production.

[ianrobo1]

not at all, I am would not have the market as it is now, but I am realstic to knwo the vast vast majority of the British want this model

so if you accept that and be prepared to pay upwards of £100k for an house then you shoudl take peoper advice and notice what is hapening

people's circumstances change, if I as made redundant tomorrow I would be in deep shit

but seriously as I posted before are you saying every single person who suffers shoudl be supported, maybe as you don;t live in the UK you don;t pay our taxes but that would cost so much it is unsuportable

not even the Tories are suggesting for eample bringing back mortgage tax relief (which would help)

[Gringo]

but seriously as I posted before are you saying every single person who suffers shoudl be supported, maybe as you don;t live in the UK you don;t pay our taxes but that would cost so much it is unsuportable

Nope not saying that, never have done, feel free to read back in the thread for such examples. As for the Drat vs NickRogers ongoing you don't live here debate - irrelevant as I never proposed spending taxpayers money, though I could always use the NR defence of owning UK properties and therefore having a taxable asset / liability in the UK, but I won't bother as you're missing the point.

[ianrobo1]

am I Gringo, because the fact is markets go down, so do you propose measures to support a falling market ?

[Gringo]

am I Gringo, because the fact is markets go down, so do you propose measures to support a falling market ?

I only posted that as it's your standard response when someone disagrees with you. And yes you are missing the point. I haven't once talked abut supporting a falling market. I am just commenting that the house market is fkd and a lot of people are going to get hurt and however protected I am, I won't be using my 20-20 hindsight vision in order to call other people foolish for having the misfortune of buying at the top of the market, even though I didn't think it was the top of the market.

[ianrobo1]

no gringo I feel sorry for some and others not, clearly some were foolish, over inflated wages, taking out high multiple salaries etc.

however and this si the point if some stay where they are and don;t move it is only a paper loss

people do lose their jobs all the time even in very good markets, it happens but because a large part of consumer spending is based on the nominal prices then maybe we shoudl look at the whole structure

we won't of course ....

[snowychap]

Record bail-out in US of Fannie Mae and Freddie Mac

THE US TREASURY will today announce a rescue of Fannie Mae and Freddie Mac, two giant American mortgage banks, in what is likely to be the biggest financial bail-out of recent history.

The move may trigger a bounce in global stock markets tomorrow. However, analysts warn that some of the uncertainties that plagued the markets last week, including worries over the duration of the credit crunch, will persist.

Henry Paulson, the US Treasury secretary, is believed to have told the chief executives of the two government-sponsored enterprises - Fannie Mae’s Daniel Mudd and Freddie Mac’s Richard Syron - that they will lose their jobs when the two firms, which control about 75% of the US mortgage market, are put into “conservatorship” today.

The boards of both Fannie Mae and Freddie Mac have been attempting to resist moves by the Treasury that would wipe out shareholders.

Paulson, however, is said to be keen to ensure any support for the companies comes at a price. The US government’s cash injection is expected to be between $15 billion (£8.5 billion) and $20 billion.

Some analysts said the action would boost confidence in the short term. David Buik at BGC Partners said: “It all comes down to whether or not we see the colour of their money. There have been a number of false dawns for Fannie and Freddie, which have amounted to nothing more than platitudes from Henry Paulson, who has assured us he would stand behind these organisations. If this is to work it has to be the real deal.”

Buik added that he expects the FTSE to bounce tomorrow morning after New York’s rally on Friday, which came in anticipation of a rescue of the two mortgage agencies. A bail-out of the two organisations would wipe out value for shareholders, but oil the wheels of the financial system.

Freddie and Fannie are among the world’s biggest counterparties on derivatives trades. These positions have all been marked down following fears about their financial stability. If the government were to intervene, the positions would be marked up, providing a boost to the system.

But other analysts feared government control could backfire. “If there is a bounce, it’s a false one. If anything, the situation has changed for the worse. We knew these companies were too big to fail; now it is the government that’s on the line instead of them,” said veteran analyst Richard Bove at Ladenburg Thalmann. He said unless the government had a plan for what to do next this was an “unbelievably negative move” that would increase the government deficit and could impact on America’s ability to borrow money.

The weekend talks followed a week in which stock markets were shaken by more bad economic news. Repossessions in America accelerated to the fastest pace in almost three decades during the second quarter, the Mortgage Bankers Association announced on Friday.

In the UK, the British Retail Consortium’s monthly retail sales monitor is expected to show a fall in August compared with a year earlier. This would make it the fifth out of six months in which like-for-like sales have shown an annual fall.

Retailers say the squeeze on incomes, rising unemployment and pessimism over the economic outlook are all hitting trade.

Not all retailers are suffering, however. The John Lewis Partnership said sales at its department stores and Waitrose supermarkets were up by 1.7% on a year earlier in the week to August 30.

However, DSG, which owns PC World and Currys, last week reported a 7% drop in like-for-like sales in the 16 weeks to August 23.

Meanwhile, gloom in the housing market, with the Halifax reporting a 12.7% drop in prices in the 12 months to August, spread to new-car sales, which last month showed an 18.6% drop on a year earlier.

[ianrobo1]

amazing isn't it the orlds biggest captilist country has had to nationalise two major banks because of the very free market they support

I just wonder when the history of this is written will this be seen as the start of the end for unfeted free markets

[drat01]

amazing isn't it the orlds biggest captilist country has had to nationalise two major banks because of the very free market they support

I just wonder when the history of this is written will this be seen as the start of the end for unfeted free markets

But Ian wasn't this supposedly only a problem in the UK and a sign of Labour not doing well when Northern Rock got into difficulties?

Interesting that the loudest shouters then are not exactly doing the same now are they?

As for the free market thing, that is very interesting. Where does it stop? will the wealth gained through property be the only casualty? will other "industries" take similar hits and will they be supported by various governments?

[ianrobo1]

well that is the thing Ian, the US and us are based on the housing market so these banks have to be bailed out

I have no issue with that but they have to larn the lessons of allowing the free market to have the say ...

I means the US do in their sports which are the most socialist ones around

[snowychap]

I just wonder when the history of this is written will this be seen as the start of the end for unfeted free markets

I doubt it, Ian.

I doubt that greed will be vanquished that easily.

[ianrobo1]

I just wonder when the history of this is written will this be seen as the start of the end for unfeted free markets

I doubt it, Ian.

I doubt that greed will be vanquished that easily.

maybe it won't snowy but stranger things have happened this 'shock' has really changed things I think ....

economies won't collapse over this but things will get tight and it gives a government the chance to change things

doubt it though

[leviramsey]

I just wonder when the history of this is written will this be seen as the start of the end for unfeted free markets

Bush will go down in history as the man who set the US down the road to socialism/serfdom.

Yet another reason he'll be rivalling Ulysses S. Grant for the bottom of the presidential table.

[ianrobo1]

well Lev, I think it is fair to say you support the free market ?

the credit crunch is the direct result of the free market is it not and the the US have refused to properly regulate it even after enron ?

any can anyone seriously say it was right to lend the money to people who clearly could not pay and if they lie no proper checks were done

[leviramsey]

Let the imprudent lenders and their shareholders go down. That's what a free market should do.

In a free market there wouldn't be GSEs like Fannie and Freddie.

[snowychap]

When discussing future buidling developments, this kind of message is one that we shouldn't ignore:

Bad building, not heavy rain, made these houses flood

Headline writers have been thumbing their copies of Roget's Thesaurus over the weekend for words relating to “deluge” and “tempest”. But what they should have written, was “homes flooded on slightly damp day, thanks to foolishly designed housing estates”.

My first reaction on seeing the pictures of people knee-deep in their living rooms was: what incredible rainfall there must have been. But when I looked up the figures, I was shocked by how little rain fell over the country on Friday and Saturday. The wettest place in Britain, Liscombe, Devon, received 2.04ins in 24 hours - a trickle compared with the 7ins that fell on Worcestershire in a few hours in June 2007.

It was poor Mrs Pritchard, of Lydney, Gloucestershire, who gave the game away as she mopped up her home, flooded for the third time in 15 months. She had never had a problem in 23 years, she said, until a new housing estate was built nearby.

It is silly enough building on floodplains - I've lost count of the number of developers' hoardings I've seen in fields where a few months before ducks had been swimming.

But equally foolish is the covering so much land with concrete and tarmac - which prevents water soaking into the ground and allows it to run off. Houses used to have decent-sized gardens, with grass and exposed soil to mop up large quantities of rainwater. Now even expensive houses are packed close together and what open ground remains is taken up with hard standing for a couple of BMWs plus a large patio for the barbecue.

If you don't believe what a difference this makes to drainage you should see the controlled experiment that I performed in my own garden. The path outside my back door used to flood to a depth of 3ins. Since I took half the patio up it has flooded to a maximum of 1in and when the other half comes up I expect never to be flooded again.

Multiply my patio by the number of houses on a new estate and what have you got - overwhelmed drains and a raging flood born out of a heavy shower. Yet flooding is easy to avoid. Every house by law should be required to have a large underground tank to collect rainwater, which can be used to flush the loo. Roads, car parks and patios should be built from porous asphalt. Bizarrely, I need permission from the local authority every time I prune a tree or change a window frame - yet I could concrete over my garden, and flood the neighbourhood without asking anyone.

You may be wondering when the weather will relent long enough to use your barbecue. But when it comes to flooding I'm afraid your barbie is part of the problem.

[snowychap]

Home sales fall to one a week, says Rics

Estate agents are selling an average of just one home a week as the number of sales hits a 30-year low, according to a report today.

The latest monthly snapshot of the housing market by the Royal Institution of Chartered Surveyors (Rics) said it had stalled in August as a result of a continued lack of finance for mortgages and uncertainty over stamp duty.

Rics said its members had reported the lowest number of home sales since records began in 1978.

Asked about the market in their area, 81% more surveyors said they had seen a fall rather than a rise in house prices. The majority said new enquiries from buyers were also down.

Three-month figures showed surveyors averaging 12.7 sales each, while Rics said that in some areas they were reporting fewer than one sale a week.

The number of properties put on the market in August also fell for the eight month running, the survey said, although the pace of decline showed signs of slowing.

The slowdown is a hopeful sign, as it suggests homeowners are not being forced to sell.

Market uncertainty

Surveyors said August property sales, traditionally slow with many would-be buyers on holiday, had ground to a halt following speculation that stamp duty might be suspended.

Last week, the government finally confirmed the change, raising the stamp duty threshold from £125,000 to £175,000 for 12 months, meaning that almost half of purchases are now free from the tax.

The move, which lifted half of property sales out of paying stamp duty, was part of a package to encourage first-time buyers back into the market.

However, Rics spokesman Jeremy Leaf said more help was needed to revive the market, and urged the government to step in to help mortgage lenders.

"While money is scarce, many will continue to be denied the next step on the property ladder," he said.

"The government's stamp duty policy will not be enough to kick-start transactions and is more likely to assist buy-to-let investors with better access to finance than the first-time buyers it was aimed at. More needs to be done to reinvigorate a market whose confidence has taken a severe knock."

The Rics survey adds to the growing picture of gloom in the housing market.

Nationwide and Halifax both reported double-digit falls in house prices in August - the fastest rate of decline since 1990 - and yesterday the chief executive of Nationwide said he expected prices to fall by 25% from their peak last autumn before the market recovers.

Figures published by the Council of Mortgage Lenders this morning showed the number of first-time buyers entering the market had fallen to a new low in July, with just 17,300 new buyers receiving mortgage approvals, compared with 33,100 in the same month last year.

[Richard]

Here

The UK's annual rate of inflation has risen to 4.7% in August, its highest level since records began in 1997.

Bank of England Governor Mervyn King will now have to write a letter to the chancellor explaining why inflation is higher than the government's 2% target.

Higher energy and food bills sent the Consumer Price Index (CPI) higher, the Office for National Statistics said.

Inflation as measured by the Retail Prices Index (RPI) - often used in pay negotiations - fell to 4.8% from 5%.

I would imagine the letter would be pretty short

Dear Chancellor,

We haven't met the target for two reasons

1. The target is unrealistic and one we were never going to achieve but one you put in place for political reasons

2. Forgetting the fact that the target was crap your economic policies, such that they are, have not helped with the actual rate

Yours as ever

Merv

[Gringo]

Large discounts by home sellers

Home sellers are being forced to accept offers on average 9% below their asking price, said the Royal Institution of Chartered Surveyors (Rics).

The gap between asking and selling price is widening as the property market downturn worsens, Rics added.

Property prices have fallen by 11% in the past year, according to major lenders, while sales have fallen by more than half.

The available evidence suggests that prices and sales will fall further.

"With housing transactions currently at a 30-year low, many vendors are being forced to lower their asking prices to achieve a sale in an ever shrinking market or they are being forced to rent their property until the market picks up," said Simon Rubinsohn, RICS chief economist.

"The gap between asking prices and selling prices could widen in the coming months as the downturn in the economy becomes more visible, he added.