House keeping

An interesting article which doesn't actually say anything new but is well worth a read by anyone unfamiliar with the territory. I agree his conclusions:

" First, Britain is likely to suffer a substantial housing decline, which easily could snowball and become steep -- as in the United States.

Second, that housing decline poses huge risks to an overleveraged economy accustomed to easy debt and house price inflation -- as in the United States.

Third, as prices fall and the economy struggles, a lot of UK mortgage debt will go bad, hitting banks and investors in Britain and abroad -- as in the United States.

All three will magnify and feed one another.
"

As far as Joe public in Uk is concerned, I don't think the truth has really hit home yet - they sense that something's wrong and that the government is making all sorts of excuses but they don't understand the seriousness.

In my locality (upmarket provincial Midlands market town with significant number of London commuters) the housing market is dead. No one (except possibly the estate agents - who are starting to reduce some prices by nibbles) seems to understand that to sell a property you've now got to offer a realistic price - and even that may not be sufficient in the current market of no easy mortgages. I bought here Dec 2006 and was laughed at when making what i considered to be realistic offers. I eventually found a nice house with a smart owner who took my offer and saved himself the problem of now, either not selling or taking even lower.

I've surveyed the housing market here pretty thoroughly since i first started looking in early 2006. Now, many many sellers have just removed their properties from the market - i dont think HIPS have helped - only politicians who've never even run a whelk stall could have engineered that one. The removals from market appears to be because they think the market will bounce back - has all the smell of those who continually adjust their stoploss downwards. I'm talking in the main, decent 4 bed detached houses which is what i was specifically searching. The situation now is that there are hardly any for sale and if i were looking now i'd be hard pressed no matter how much ready money I've got. This, of course, is the market in action. The sensible buyer will go into temporary rental, wait, and get a good deal later on. This is what I usually do and it is quite surprising how sellers' attitudes change when you turn up with a wallet-load of money and no chain.

The BTL (buy to let) & other get rich quick property merchants are going to get severely hurt. But they were, in the main, either greedy or stupid or both.

The people who i really feel sorry for are those struggling to earn a decent living who are going to get shafted by irresponsible bankers (i did say bankers), politicians and smart marketing whiz kids who've never seen a recession.

PS - didn't mean to make a rant but it does seem a bit like that on re-read. Ah well, it's all true!
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Last edited by 0007; Apr 2, 2008 at 11:56am.
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Old Apr 2, 2008, 12:44pm #3
Trader333
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The housing market may be dead where you are but where I am it is still buoyant and prices have held their value.

I agree that HIPS have had a negative impact and have been responsible for around 30% of properties being withdrawn. The reason is that around 30% of all properties on the market were from people who would just test the market and move if they sold but didn't need to or maybe fancied a move just up the street. With the time limited HIPS coming in these people have just disappeared as they were only happy to sell if no upfront cost was incurred.

In my view the biggest factor in house price deflation and ultimate crash will be interest rates and there is talk of reducing them. If that happens then I don't think we will see the same problems as the US is seeing but with any market who can tell.