richardg

he knows...
they're not all sold like that though - especially if the developer is a smaller company as these tricks haven't filtered all the way down the food chain yet. the company i used to work for made a point of quoting realistic prices and then discussing the fact that they didn't lie about their pricing in order to 'trick' people into getting a "deal" when they saw the bottom line price. didn't work, so they reverted to the same tactics as the big boys. shame really, but people do like to think they're getting a deal and everyone's a property expert these days

shamrock

So house prices will soon have bottomed out and this forecasted house price crash will soon be over?

What were we all worrying about!!

lozgti

Surprised 'flats' have done so well anyway.

I suppose by calling them 'city living' or 'lofts' or 'luxury apartments' they have made them sound more attractive to purchasers.

I personally think these high rise developments will simply become what the horrible 60's tower blocks did

stevebt

iTrader: (8)

House prices have bottomed in the new build sector as all the big house builders have just closed all their sites and nothing new is getting built unless contracts have been exchanged. The 2nd hand house market will be different though as people will still be desperate to sell to purchase their new home

fast bloke

So if you are driving down the road and you have enough petrol to last you another mile, then you see a garage selling petrol for a £10.00/litre, and the minimum delivery is 50 litres. You know there isn't another garage for 30 miles. Your choices are either to walk, or to take a hit and pay through the nose. (Did I mention that your wife is in labour) - So you decide that your only option is to buy the petrol at £10.00 per litre. Are you telling me that you really believe that that makes the value of petrol £10.00 per litre?

Dracoro

Of course it is ( to DS at that location at least and have to assume that that's the going rate - else the station would go bust!!!!).

It's simple supply and demand. If you want to sell NOW, you price at what will get a buyer through the door NOW (doesn't matter what the price in the past is, or indeed what the price in the future is).

And, as you should know, prices are regional and higher in some places and lower in others. So at the location of this fictional petrol station, the value (or rather price) is £10.00 per litre as that's what the market will pay (i.e. the highest price that still gets the sale, like anything else)

richardg

i know what you were trying to say before, but in the above example petrol would be worth that sort of money to me, at least in the very short term!! (however, it is more likely that i would phone for an ambulance and pick the car up another time )...although it does of course depend on how far the hospital is

fast bloke

Dracoro - The point being if you have to sell your house (or buy your petrol) NOW you are going to have your goolies put through the mangle. There is a house near us. 6000 sq ft, stables, sand school and 16 acres of land. I live in the middle of horsey country, so a year ago this would easily have made 2 million quid. The builder went bust and the house and land went for auction about 6 weeks ago. The bank put a reserve of 500k to cover the outstanding debt. The auctioneer dropped to 260k at one stage and received a grand total of no bids. At 500k, I would have bought it, but I would have needed 200k in cash as a deposit to get a mortgage on it for the other 300k. Looks like everyone else was in the same boat, so it didn't sell. It has just exchanged contracts for 1.3 million to some rich horse type with cash. So if we want to look at polarised examples, property values have increased by 125% in 6 weeks.

The current drop in prices isn't dictated by what people are prepared to pay. It is dictated by lenders imposing low LTV's and then insisting that surveyors under value houses by 30% as a starting point. The reason behind this is that many lenders don't actually have any money to lend, but they can't be seen to step out of the market.

The past 15 days has seen a fairly substantial shift in this scenario. It could be a blip or it could be the beginning of the end of the credit crunch. My opinion is that it is a signal that lenders are preparing to capture market share from September onwards. By September, all lenders will have results for a full year since the sub prime debacle started to bite, so everyone will know how much everyone else lost. Several lenders have changed headline deals from 60% LTV to 75% LTV in the past two or three days. Early days, but it is panning out fairly much as anyone who understands the system has predicted over the last 6 months. If all goes according to plan, the mortgage market should have normalised by the end of the year (no extra cheap deals, but realistic lending) and house prices will have bottomed out. Those who didn't have to sell at severe discounts will be able to sell without involving genitals and mangles and house prices will top March 2007 levels by 2010. Oil prices and unemployment could throw a ig spanner in the works yet though!!

MikeCardiff

iTrader: (2)

I think it'll be a buyers market for a good while yet - gone are the days of selling above the asking price, and being able to reject offers because another buyer will be along in 10 minutes.

Just as a very simple indicator, one agent in our village now has about a third of their properties with 'reduced' stickers on them in the window.

I agree with fast bloke that the lenders will more than likely lighten up a bit in the next few months after the knee jerk reaction... but I can still see that a 85 or 90% LTV is going to be about the most FTB's will get, and probably not on a long term fix rate.

Its easy to look back over the last couple of years and think that 100% long term fixes at low rates were the norm, but in reality it wasnt normal, and not a very good idea as Northern Rock found out.

lozgti

It still comes down to this.Wages lag miles behind and they won't catch up as fast as prices have risen.Prices will have to come down to match earnings

We were all allowed to borrow far to much and house prices are way out of a lot of peoples reach,especially if lenders are only prepared to lend under sensible rules eg 3x salary and10% down.

How many people earn £50,000 per annum? Not many.Even that in theory would only give you £150,000 to play with which would buy you what?

Average bloke say £25,000 pa? (I'm guessing) what is he going to get for £75,000?

There is no way that salaries are going to increase 3 fold or whatever to catch up with houses over the next couple of years.More likely 5+ years and I can't see lenders doing another round of 6x salary mortgages or self certs after the last cold they and America caught.They will want some breathing space so people forget about the shenanigans IMO

And then they will do it all over again......

Jamescsti

Depends on where you live I live in Leeds in a reasonable area bought our first house at end of Feb for 125k, 2 bed semi detached, needed a bit of work but only cosmetic, did it all myself. Decent houses are out there to be bought just not in the south.
I think we bought at the right time though, the house was marketed at £135k, new build flats round the corner sold for 150k in August last year.

MikeCardiff

iTrader: (2)

You have to remember as well that most FTB's will be couples now, so not just one wage to consider. I agree that most single people will struggle to even get a small one bedroom flat at current prices.

Also, FTB's are getting older and older - IIRC the average age was nearly 30 a couple of years ago.

A lot of couples in their late twenties or early thirties can easily be earning £50K between them without having particularly impressive jobs - with a 3x salary mortgage and a deposit they can buy around the £160K - £170K mark easily enough, which funnily enough is roughly what the average house price will be with a 10 - 15% drop.

lozgti

Didn't it used to be either 3x1 or 2.5x joint?

Deep Singh

I can't even be bothered to point out all the differences between your scenario above and house prices.

It does not matter WHY people can't/won't buy property it just matters that they can't/ won't. Therefore the value of a property TODAY is what someone is prepared to pay for it TODAY, its very simple really.It maybe different 6 months from now but thats not the point we are talking about now.

Its no different than when people pay an extra £100k for a property because of a view/locality to school etc

Its also no different to any other asset, ie the value of your shares are what they are worth today, if you are forced to sell today then its that value no matter what they may be worth in two weeks time.

If you think the credit crunch is coming to an end and that house prices will have recovered to their 2007 peak by 2010 you are in living in cloud cuckoo land. I may have got this wrong, but aren't you a financial advisor of some sort? If so I feel very worried for the clients you advice

rossyboy

iTrader: (8)

My solicitor was valuing my flat back in May and he said "things have been a bit quiet in the last 2 weeks, but it looks like the credit crunch is coming to an end now, so things will pick up again"

Sadly, even the "experts" cannot predict when the credit crunch will end.

Thats not a dig at Fast bloke, just an observation.

shamrock

I reckon you could read a thousand different comments on the internet from self confessed Finance Experts and get a thousand different opinions on where the market is going.

Even those at the very top of the Ecomomics career ladder have very different opions on where the Economy is heading, they can't all be right.

Deep Singh

I agree no one can predict these things, but then they shouldn't come out with such ridiculous statements like;

Quote fastbloke; 'house prices will top Mar 2007 levels by 2010'

fast bloke

I've just type a two page explanation which didn't post, so fek it. Yes I am a financial advisor of some sort, so I feel that training, experience and knowledge allow me to understand what is hapenning now and what will more than likely hapen in the future. What is it that you do for a living that makes you an expert in UK economics?

Rossyboy - Why on earth did you get a solicitor to value your flat? Did you get a plumber to do do your conveyancing?

fast bloke

Stick this thread in your favourites and feel free to resurrect it in December 2010. One of us will be wrong. Shall we stake a crate of Chateau Neuf on the winner?

fatherpierre

I saw that too, but you got there 1st.

Maybe said solicitor wants to buy it after he's got his baker to change the head gasket on his car

fast bloke

My baker knows sh*t all about head gaskets. When i got him to do the brakes they were really spongy for ages.

fatherpierre

My dentist sorted my leaking washing machine, though.

Re-trainer.

He used to be a driving instructor.

fast bloke

Bet you were sick to the back teeth when you got the bill

fatherpierre

Boom Boom

StickyMicky

boom bust

Deep Singh

Sorry FB, but you're so called training,experience and knowledge count for very little in these matters. You maybe an expert in dealing with my inheritance tax, advicing me on a pension etc and I genuinely respect your knowledge on such matters and have even asked you advice on such matters in the past, but this is different.

I don't pretend to be an expert and hence don't give black and white predictions on house prices like the one you gave. I do however have some personal experience in such matters, that I'd rather not go into on an open forum

shamrock

Would you consider a financial advisor to be an expert in UK economics? If so, then that would make myself an expert as well and I would not class myself in that bracket. How many £bn's do you have responsibility for?

I have a cousin that is a Doctor of Economics at the age of 25, I would class her as an expert. I have another cousin (her sister) that is head of the credit team of one of the largest banks in the world, I would class her as an expert.

Their opinions on Ecomomics would carry more weight than a financial advisor as they are much higher up the food chain and are paid hefty sums by leading organisations with £bn turnover to provide Economic advice.

That being said, I would find it arrogant if either of them stated that they're opinion on what is likely to happen in the future is more correct than anyone else just because of their qualifications/experience. Luckily they are both very humble and are willing to accept that their respective forecasts may not be correct and somebody with from a non-economic background could be spot on.

rossyboy

iTrader: (8)

some people are too quick to comment without finding out the facts first.

I live in Scotland. WE DONT HAVE ESTATE AGENTS. Solicitors deal with house sales. I didnt ask them to send one of the partners round to value it, but thats the way things are done.

TelBoy

Gotta be careful there, FB, in my opinion. I see as many of the minute-by-minute movements in expectations etc as anybody, but it doesn't change the underyling fact that intrinsic value really is what people are willing to pay, there and then. The mark to market is irrelevant if you really do need to liquidate. I can point you in the direction of quite a few sub prime abs product holders for confirmation of that!!

fatherpierre

LOL. Chill.

http://www.germes-online.com/direct/...87/Handbag.jpg