trimandson Posted February 1, 2009 Share Posted February 1, 2009 Well, this thread stared nealy exactly a year ago with the simple premise Will the average house be worth more or less in real terms in 12 months time The average house price in January 2008 was £183,959 The average house price in January 2009 is £156,828 judging for inflation that means the average house price has fallen (in real terms) 20.8% in the past calendar year. So for all those keeping count, anyone who voted "More" -200 points, all those taking the easier option of "Less" get +10 points. Anyone want to start a house price 2010 thread or all too depressing? I'm sure there are some miserable people out there that just want the misery to keep on rolling. So bring it on. Any figures on Vals & Vols averages across banks? Link to comment Share on other sites More sharing options...
trimandson Posted February 1, 2009 Share Posted February 1, 2009 Well, this thread stared nealy exactly a year ago with the simple premise Will the average house be worth more or less in real terms in 12 months time The average house price in January 2008 was £183,959 The average house price in January 2009 is £156,828 judging for inflation that means the average house price has fallen (in real terms) 20.8% in the past calendar year. So for all those keeping count, anyone who voted "More" -200 points, all those taking the easier option of "Less" get +10 points. Anyone want to start a house price 2010 thread or all too depressing? I'm sure there are some miserable people out there that just want the misery to keep on rolling. So bring it on. Any figures on Vals & Vols averages across banks? Sorry, going by Monthly comparison figures for Apps & Completions et al... It'd be interesting to see what happens elsewhere. Link to comment Share on other sites More sharing options...
leviramsey Posted February 1, 2009 VT Supporter Share Posted February 1, 2009 at leats in terms of multiples of average income it looks better at about 5/6 times rather than 7/8 is the floor whene average is 4 times average salrary say £120k another 20% fall then ? Remember that valuation multiples (be they P/E ratios or whatever) tend to overshoot... wouldn't be surprised to see them bottom at something like 2 or 3 times average salary (and average salary could well take a hit to make things even worse). Another 50-75% fall from today's levels is not out of the question. Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 1, 2009 Share Posted February 1, 2009 it could do Lev, because it is impossible to predict but at some point people will start goig back in because the prices are so cheap and mortgage deals are out there. First time buyers for example with a decent deposit must be close to the level where they could enter but who knows and who could predict ? Link to comment Share on other sites More sharing options...
Juju Posted February 1, 2009 Share Posted February 1, 2009 it could do Lev, because it is impossible to predict but at some point people will start goig back in because the prices are so cheap and mortgage deals are out there. First time buyers for example with a decent deposit must be close to the level where they could enter but who knows and who could predict ? I think your totally wrong there Ian. The reason for dropping values initially is that historically there are very few housing transactions happening, due to lack of supply of funds. Because of this the only sales going through are to say those with cash, portable mortgages or those with a large cash pile behind them. In fact, even removing the "bubble" effect of people buying and selling to increase personal wealth, the level of sales at this time are below whats considered normal just to cater for those who "have" to move. Jobs moves, kids being born, families inheriting properties ect. What some are saying, is that there are people hanging on, who sooner or later "have" to sell. If the increase in supply of mortgages and entrants doesn't improve, then prices will plummet further as these "have to sell" people market their properties. I know at this point your saying "aha", and believing your argument is sound. However, the above has come about as a result of pre "recession" market conditions. Ie the crash in prices started due to bank mortgage supply, not due to lack of potential purchasers due to the more usual "recessionary" problems, job losses, lack of confidence. Whos going to enter the market on a downward trend? Your 10k carefully saved depoit will be gone in 9 months at present times, and there aint many young first time buyers yet with those kinds of savings, as living costs are still escalating making saving harder, with low interest rates being applied to those savings. Furthermore, people now have genuine job fears. I predict the house price drop is going to be a two stage affair, the first is what were in at the moment, and the second wave of price drop due to latter recessionary factors has yet to start - the house market cycle of spring to autumn, is when we'll see more price dropping happening. Even investors cant step in to buy up surplus housing stock, as theyre being hit hard - rents are dropping round here as well as house prices due to those who cant sell trying to rent. Usually in any normal recession, rents rise as people get repossessed. Its easier to think like RB profits,. heyve been hit by the first wave of problems that "caused" the recession. Its only now, as people pay of credit cards, use less bank services, shop around more, wil bank profits reduce further due to "recessionary" issues and not due to the earlier issues. Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 1, 2009 Share Posted February 1, 2009 Juju the key will be when banks start lending to normal levels again and 'normal' peopel can get affordable mortgages the question is timing of this Link to comment Share on other sites More sharing options...
leviramsey Posted February 1, 2009 VT Supporter Share Posted February 1, 2009 If you figure that the full-cycle average is going to be 4 times average wage, then it logically has to spend a good time below that level to balance out the time it was above that. What goes up must come down... Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 1, 2009 Share Posted February 1, 2009 yes and why do so many peopel the house market is any different and plan always for unlimited rises at the end of the day banks never factored in the house market going down when we all knwo it would how could so many smart people get it worng answer - greed and excessive profits Link to comment Share on other sites More sharing options...
leviramsey Posted February 1, 2009 VT Supporter Share Posted February 1, 2009 how could so many smart people get it worng answer - greed and excessive profits They all knew it would happen eventually. But the banks being public companies that compensated their stars based on year-to-year performance, it would be the shareholders who would be left holding the bag. Link to comment Share on other sites More sharing options...
trekka Posted February 1, 2009 VT Supporter Share Posted February 1, 2009 As a buyer on a shared ownership scheme (currently owning 25% of the property), I'm hoping the value continues to fall. I'm in the fortunate position of being able to eventually owning 100% of the property and able to have it revalued every year to staircase. The way it's looking, instead of buying a further 25-50% in a few years (which is what I was intending to do) I can potentially own the property outright. Link to comment Share on other sites More sharing options...
Juju Posted February 1, 2009 Share Posted February 1, 2009 Juju the key will be when banks start lending to normal levels again and 'normal' peopel can get affordable mortgages But who knows what normal is? its abnormal lending over the last 10 years that led to this. If the banks dont know what normal is, and I argue that they are still trialling new models over the old income multiples, and given that "normal" levels have to take into account cycles of recession and growth over a 25 year lifecycle of product, including building in enough margin to account for recessional factors, and that we can no longer rely on growth in house price, and the uncertainties of the future environmentally, its going to be more of a case by case basis. and banks need to make heavy charges on providing mortgate products, to begin to make themselves profitible. ITs a new unchartered territory. Even the last recession was forseeable and gentle in a way this one wasn't except a few experts. Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 1, 2009 Share Posted February 1, 2009 but if everyone knew including shareholders they ould have put pressue on but they enjoyed th excessive dividends greed drives it all and say you limited mortgages to a fixed multiple of wage that would stablise the excessive rises we saw Link to comment Share on other sites More sharing options...
Risso Posted February 1, 2009 Share Posted February 1, 2009 We're just about to take the plunge again, and get back on the property ladder. Got our mortgage offer, but not sure whether to go for a tracker or a 5 year fixed rate. Any advice? Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 1, 2009 Share Posted February 1, 2009 Juju the key will be when banks start lending to normal levels again and 'normal' peopel can get affordable mortgages But who knows what normal is? its abnormal lending over the last 10 years that led to this. If the banks dont know what normal is, and I argue that they are still trialling new models over the old income multiples, and given that "normal" levels have to take into account cycles of recession and growth over a 25 year lifecycle of product, including building in enough margin to account for recessional factors, and that we can no longer rely on growth in house price, and the uncertainties of the future environmentally, its going to be more of a case by case basis. and banks need to make heavy charges on providing mortgate products, to begin to make themselves profitible. ITs a new unchartered territory. Even the last recession was forseeable and gentle in a way this one wasn't except a few experts. don;t think anyone forecast this, not even Cable, he aadmitted on a R5 interview last week, he expect a 'correction' not this but no one knew about those 'assets' in the states and just hwo bad they were as to 'Normal lending' for me it is sensible lending based on a decent deposit (10%) and ultiples of 3/4 times income Link to comment Share on other sites More sharing options...
trekka Posted February 1, 2009 VT Supporter Share Posted February 1, 2009 We're just about to take the plunge again, and get back on the property ladder. Got our mortgage offer, but not sure whether to go for a tracker or a 5 year fixed rate. Any advice? Money Saving Expert is likely to have some good advice. Good luck. Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 1, 2009 Share Posted February 1, 2009 We're just about to take the plunge again, and get back on the property ladder. Got our mortgage offer, but not sure whether to go for a tracker or a 5 year fixed rate. Any advice? well it depends if you think rates will rise over the next 5 years, if it is really bad we could see it at thsi level for years for me always a fixed rate at least you knwo where you are, I am on a ten year one Link to comment Share on other sites More sharing options...
snowychap Posted February 1, 2009 Share Posted February 1, 2009 the key will be when banks start lending to normal levels again What are normal levels? Are they the levels of lending which we saw in 2007? Or 2002? Or 1997? Also, bearing in mind that a significantproportion of the lending that was done in the UK was money which came from outside the UK (which has gone) then even UK bank returning to lending levels of 2007 would leave a major shortfall overall. Link to comment Share on other sites More sharing options...
trekka Posted February 1, 2009 VT Supporter Share Posted February 1, 2009 We're just about to take the plunge again, and get back on the property ladder. Got our mortgage offer, but not sure whether to go for a tracker or a 5 year fixed rate. Any advice? well it depends if you think rates will rise over the next 5 years, if it is really bad we could see it at thsi level for years for me always a fixed rate at least you knwo where you are, I am on a ten year one I'm actually bloody glad I took the variable rate now (obviously he says!). Phoned up Woolwich at the start of the week to get them to adjust my interest rate and I've knocked £40 off my mortgage payments. Might not seem a lot but when I was only paying £250 for the mortgage anyway it's quite a difference. What fixed rate deal have you got, Risso? Link to comment Share on other sites More sharing options...
Risso Posted February 1, 2009 Share Posted February 1, 2009 5.99% for 5 years, or the tracker is base plus 2.29% for 3 years. Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 1, 2009 Share Posted February 1, 2009 We're just about to take the plunge again, and get back on the property ladder. Got our mortgage offer, but not sure whether to go for a tracker or a 5 year fixed rate. Any advice? well it depends if you think rates will rise over the next 5 years, if it is really bad we could see it at thsi level for years for me always a fixed rate at least you knwo where you are, I am on a ten year one I'm actually bloody glad I took the variable rate now (obviously he says!). Phoned up Woolwich at the start of the week to get them to adjust my interest rate and I've knocked £40 off my mortgage payments. Might not seem a lot but when I was only paying £250 for the mortgage anyway it's quite a difference. What fixed rate deal have you got, Risso? lets face no IFA can tell you what to do because no one will knwo what will happen the only possible parrell is Japan who reduced interest rates to zero and had 16 years of recession Link to comment Share on other sites More sharing options...
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