Petem95

http://www.timesonline.co.uk/newspap...937132,00.html

Got to be honest, I expected more like 10%, but I think there'll be larger falls next year.

Interesting article however - some stock markets are doing rather nicely at the moment, Japans up 30% and Germanys up over 20%. Might have to start dabbling in shares again!

fast bloke

Strange that - I put my house on the market for an agressive 260k. Was on the market 8 days before I sold it for 302k. got to be honest - I think the scaremongers are just that - they have no idea how economics works and no idea how the economy works. So can you explain a generic economy then Pete?

Gav

I think it depends on the area you live in. Around South Manchester still seems to be on the up!

gav..

Petem95

Prices falling 2.5% (or 5% in real terms) obviously doesnt mean every property will fall by the same amount, and of course some will rise during that period.

IMO prices are far too high and will continue to fall for some time for a number of reasons. Firstly a lot of people out there seem to think house prices are directly linked to interest rates, so can only crash if rates rocket.

But they forget that as well as interest rates being low, inflation is also low so their mortgage is not being erroded by inflation like it was in the past - especially a problem for those who've taken out interest only mortgages.

According to most surveys average house prices are now between 6 and 8 times average salaries - a long way off the long term average of 3.5.. and the cycle of house prices has always been a boom bust cycle - I dont see why it should be different this time.

Theres a lot of vested interests out there who are obviously going to do what they can to talk up the market as they stand to benefit (Halifax, estate agents etc)

The number of home repossesions is on the increase, and its predicted that in the first 3 MONTHS of 2006, 20000 people will go bankrupt in the UK. In short current house prices will be looking very out-of-line with the rest of the economy.

GCollier

We sold our house earlier this year 4 days after putting it on the market at the higher end of estate agent valuations...and even had multiple firm offers.

If you plot house prices against average earnings, and yes the graph does have the appearance of a bubble at the current time. But plot repayments (i.e. affordability) instead and the picture changes dramatically.

People have been predicting a crash for at least 5 years, and the market has confounded them all. That's not to say it can't happen, but IMO it would take some pretty sudden catastrophic events to precipitate it.

Of course anyone who is confidently predicting falling property values can put their money where their mouth is and short the house price index by placing a spread bet.

Gary.

Petem95

??

But they arent affordable! The proportion of first time buyers entering the market is at the lowest level ever because houses are so UNAFFORDABLE!!

FTB's are an important part of the market, and are now leaving higher education with ever-increasing debts, and this makes high mortgage repayments even more difficult!

GCollier

I know things are expensive for first time buyers.

All I'm saying is that if you plot typical mortgage repayments over time, the curve - although somewhat above historical averages - does not currently resemble a "bubble" about to implode. Obviously if interest rates suddenly rocketed it would change things completely, but the market is offering 10 year fixed rate money at under 5% so is clearly not expecting that to happen.

Gary.

MikeCardiff

iTrader: (2)

Its very simple to see if houses are affordable or not - most mortgages are set at 3 times joint or 3.5 times single income - if the average house price is significantly more than the average wage multiplied by this, most people cant afford to buy.

For example, if average wage is £25K a single person can get a mortgage for £87,500 - if the average house price is £150K, they arent going to be able to buy a house ( yes, I know they can buy something cheaper, but we're talking averages across the country here ).

For the people who sold their houses, it depends on the area you are in and if there is a demand for a house like yours at the specific time you put it on the market - if so you'll sell, but if there were 2 or 3 other houses up for sale in your street, you wouldnt get a top price and would have to wait longer to sell.

FACT is houses are ridiculously overpriced at the moment - compare what it costs in this country compared to similar European countries and thats pretty obvious. Compare house prices with what the same house cost 5 years ago - have wages risen as much as the price of the house ?

If a paper has said average price has dropped by 5%, you can bet its more like 10% in reality - as more houses dont sell over the coming months, prices will drop more and continue to do so over the next couple opf years.

MikeCardiff

iTrader: (2)

And to reinforce #7's point - if you dont have FTB's you dont have a housing market - there are only so many people who already have houses to swap around amongst each other.

ScooBStu

I bought a house about 2 years ago and was told they were going to crash left right and centre - Our house has gone up in that time by 35%.

I found that the majority of people who said they were going to crash didnt own there own home and were hoping they would.

The one difference now is a lot more people are buying houses as a long term investment usually to give themselves a pension - This is the reason it cannot really be compared to previous crashes.

ADP

very regional dependant i think, Im in Southampton -oddly Ive noticed prices falling on some flats, however new developments are springing up left right and centre

fitzscoob

In east hertfordshire things are getting a little perculiar. I had the option of buying a 2 bed flat or a 2 bed house, no brainer really as both were in a good condition in a good area, house wins all the time.

The problem is that 2 bed flat prices are near enough the same price as 2 bed houses (give or take 5k)

jjones

not strictly true, current owners also buy to rent.

Petem95

This is true, buy-to-lets bought by current home owners is exactly whats kept the market at such high levels, and prevented a crash happening a couple of years back when it was expected.

But now BTL returns are looking pretty poor compared to other investments, so with all the BTL money now already in the market, where will all the money come from to keep the market propped up at current highs?

Dwindling number of FTB's and BTL's so where does the market go now? I think the most likely source of new money into the market is from FTB's - but only if they can afford to buy.... so prices will have to fall to allow this.

De Warrenne

we bought our house two years ago and its value has been static - all depends on where you are in the UK

Flatcapdriver

How much did you sell your house for then?

Martin_Aimless

Why do people think massive house price hikes are a good thing? The box they 'own' may have risen in 'value' by x%, but the property they aspire to own will have also risen by this amount, effectively putting it out of their reach.

lordretsudo

We just moved house a month or so ago. We initially put our house on the market in early 2004, and it sold for £5,000 over the asking price the same day it went on the market (this was at the peak of the boom period). Unfortunately, the sale eventually fell through and we waited a few months before putting it back on the market in autumn 2004. The way things had changed in just those few months was unbelievable. We had literally no viewings at all for a couple of months. Christmas was coming, so we decided to wait till afterwards and then reduce it, which we did. A couple of viewings from people clearly not serious, then nothing.

Eventually, after changing estate agents and reducing the price again, we sold it in early October 2005. We eventually got the house we bought for around £40,000 less than the original asking price, whilst we sold ours for about £20,000 less than we'd originally hoped. The thing we really couldn't understand was that our house was one of the cheapest of its type (3 bed detached) on the market in our area, plus it had a very large garden and garage, was well decorated, etc, and yet we had all this trouble shifting it. If that was the case, how on Earth are all the people asking £20,000 more ever going to sell theirs?!

In our area, there is a clear problem with the estate agents giving completely unrealistic valuations and trying to prop up prices. Some friends of ours have just had their somewhat neglected 2 bed semi valued at only £15,000 less than we eventually sold our 3 bed detached for! Crazy, and it basically means everyone's time is wasted. There are houses for sale on our estate that have been for sale for over two years, and still haven't dropped their asking price, presumably because the estate agents are still advising them that the price is achievable!

Sorry for the long post, but it's a subject close to my heart! I must say I feel genuinely sorry for first time buyers...