How far will house prices fall? [Volume 2]

[groak]

You kids are paddling in the baby pool. There's an English guy (can't remember his name, but he was on the back page of the Sunday Times Money section a few weeks ago) whose portfolio includes forty thousand (yep 40000) dwellings in Germany.

Ps: bet he's got a major sized property maintenance company as well (not to mention a few other ancillary firms).

[JohnnyPanic]

I have it on good authority that house prices have bottomed out. Sarah Beeny says so, so it must be true!

However, I might just wait a little longer before buying...

[Frankeh]

groak said:

You kids are paddling in the baby pool. There's an English guy (can't remember his name, but he was on the back page of the Sunday Times Money section a few weeks ago) whose portfolio includes forty thousand (yep 40000) dwellings in Germany.

Ps: bet he's got a major sized property maintenance company as well (not to mention a few other ancillary firms).

German property is (Or maybe was. Probably saturated now) a great investment because the german people don't have a "Must own" attitude like we do.
They mostly rent and see housing a service that they pay for monthly. It's a totally different culture.
I saw a block of old flats, needed total renovation (Probs about 100K euro for ren). But it was 12 flats for 10K euros. Looked at prices in the area and the rental yield on those flats was about 20K euro a year minimum..

[Frankeh]

NoelWatson said:

Cheque is in the post

http://www.dailymail.co.uk/news/article-1227624/Mo...

They're the 2 biggest morons in history. They bought up houses all in one relatively small area.
This was never going to end well for them.
What happens when you need to sell 5 and free up some money quickly? You have to sell, lets say, 5 houses. Selling them all in the same area to make some quick money will now be a lot harder. Supply and demand.

If you could sell 2 up north, 2 down south and 2 in the midlands you'd be more likely to sell them all a lot quicker.

Absolute idiots. Also, they were never worth £180m

[anonymous-user]

Taylor Wimpey, the housebuilder, said market conditions had improved so much that it had already sold all of its stock of homes for 2009 and was looking forward to raising prices on houses to be sold next year.

The upbeat statement mirrored rival, Redrow, which said that it expected its average prices to start increasing soon. Yesterday, Halifax said that house prices rose by 1.2 per cent in October to an average £165,528.

http://business.timesonline.co.uk/tol/business/ind...



The UK housing market is continuing to recover, the UK's largest home builder by volume, Persimmon, has said.

The York company said trading activity in the second half of 2009 continued to be better than a year earlier, with forward sales "well ahead" of 2008.

It added that prices had also "held firm", and it was increasing its investment in new developments.

http://news.bbc.co.uk/1/hi/business/8361809.stm

[Andy Zarse]

anonymous said:

[redacted]

I posted this a while back, it's simply staggering. I like it when Ross Ashcroft facepalms and slumps forward onto the desk. You never see Dimbleby do that do you though.

[eightseventhree]

The developers on estate that i live on dropped there prices 10k early this year. . They have now stuck that 10k back on them and are selling off plan for the next phase.

The village is a desirable area and these are only new houses that are allowed to be built.

[briSk]

anecdotally, I think the builders are getting a lot of deposits for as yet unbuilt houses. and it's supported (anecdotally!) by people the wife knows (colleagues and friends) doing the same..

___

we also have friends looking in (very) north London and the sarf laandan yummy mummy belt both of whom have made asking price offers and are likely to 'lose out'.

____

slightly OT but in terms of 'exit strategies': if one had bought a house over the summer for what may well be a reasonable discount to 'likely market value' (my term!) do you reckon it could be worth trying to flip it in the new year? is the market hot/firm/other word that sounds a bit saucy enough to support trying to sell a house for aug09+25% do you reckon? if we the people we know had basically not done much do you reckon it would actually get interest? do you reckon a quick £10k kitchen an bathroom change would do much? a touch of planning permission?

it's a bit compromised and was bought as a long term proposition but given how things seem to be going I do wonder if trying to crystallise some gains might be worth a punt. (doubt I'd be allowed to do it by the steering committee but I have to entertain the idea!).

[J381]

Out of curiosity, does anyone know any websites that has repossessed houses for sale? Interested to see what they are fetching...

Cheers.

[Deva Link]

J381 said:

Out of curiosity, does anyone know any websites that has repossessed houses for sale? Interested to see what they are fetching...

Cheers.

http://tinyurl.com/yjrh75x

[Mr Whippy]

Deva Link said:

J381 said:

Out of curiosity, does anyone know any websites that has repossessed houses for sale? Interested to see what they are fetching...

Cheers.

http://tinyurl.com/yjrh75x

http://www.repossessedhousesforsale.co.uk/

The top URL given even matches the question asked

Edited by Mr Whippy on Thursday 19th November 15:16

[Goochie]

So are we at the bottom yet ?

[shamrock]

Bloomberg: "U.K. house prices will probably fall next year, and it may take until 2014 to return to the levels at the 2007. The market is still overvalued, whichever measure you use. Prices need to fall a further 20 percent to 25 percent to get back their long-term trend”

http://www.bloomberg.com/apps/news?pid=20601087&am...

[Frankeh]

shamrock said:

Bloomberg: "U.K. house prices will probably fall next year, and it may take until 2014 to return to the levels at the 2007. The market is still overvalued, whichever measure you use. Prices need to fall a further 20 percent to 25 percent to get back their long-term trend”

http://www.bloomberg.com/apps/news?pid=20601087&am...

Bloomberg may say that, but the daily whale and the sun both say the opposite. And that's what really matters.

[anonymous-user]

shamrock said:

Bloomberg: "U.K. house prices will probably fall next year, and it may take until 2014 to return to the levels at the 2007. The market is still overvalued, whichever measure you use. Prices need to fall a further 20 percent to 25 percent to get back their long-term trend”

http://www.bloomberg.com/apps/news?pid=20601087&am...

Are these the same experts who predicted 25-40% drops this year alone?

[Trommel]

Dave_ST220 said:

Are these the same experts who predicted 25-40% drops this year alone?

Who predicted over £250 billion of "quantitative easing"?

[shamrock]

anonymous said:

[redacted]

Exactly.

[PPPPPP]

shamrock said:

Bloomberg: "U.K. house prices will probably fall next year, and it may take until 2014 to return to the levels at the 2007. The market is still overvalued, whichever measure you use. Prices need to fall a further 20 percent to 25 percent to get back their long-term trend”

http://www.bloomberg.com/apps/news?pid=20601087&am...

& Barrons reports:

THURSDAY, NOVEMBER 19, 2009
UP AND DOWN WALL STREET
Housing Recovery Built on Sand
By RANDALL W. FORSYTH | MORE ARTICLES BY AUTHOR

Even massive government support can't overcome past excesses, foreclosures, unemployment and tight private credit.

THE ONLY REAL SURPRISE in the latest disastrous batch of data on housing is that anybody is surprised.
With the $8,000 tax credit originally set to expire, housing starts plunged nearly 11% in October, to a seasonally adjusted annual rate of 529.000 units. That put new home construction back to the dismal levels of last spring before a temporary blip lifted housing activity during the warm-weather months.
Even though the home-buying subsidy was extended through next March and expanded beyond first-time buyers, there's little evidence that these giveaways are working. Applications for mortgages for home purchases, for instance, fell to a 12-year low last week even with a 30-year mortgage going for well under 5%.
For reasons best understood themselves, analysts had forecast an uptick in housing starts to the 600,000 annual rate in October from September's 592,000 pace. While the lowest fixed mortgage rates and reduced home prices have kept housing from collapsing further, the 10.2% unemployment is working against home buying. Meantime, foreclosures, which are running at 300,000 a month are adding to the inventory of homes available for sale.
In other words, prospective buyers have an array of houses available to them in most regions at knock-down prices. But there's no reason for them to hurry while apartment rents are tumbling. Builders, meanwhile, would be loath to build new houses on spec, even if their banker would provide the financing.
All of which points to an extended period of depressed housing activity after the excess supply from the boom built on absurdly easy credit is worked off. This is an example of what economists of the Austrian school call "malinvestments," which are the inevitable result of a credit inflation. The boom results in an inevitable bust, during which past excesses have to be corrected, however painfully.
That's not in keeping with 20th century let alone 21st century political realities, which mean government actions to counter the downturn. Don't waste time debating the merits; the matter is settled. For practical investors, the question is the effectiveness of the government's efforts.
Even with the Federal Reserve's program to buy over $1 trillion of mortgage-backed securities and the myriad other schemes to bolster housing, including the tax credits for homebuyers, the government isn't getting much bang for all those bucks.
As noted here previously, the $8,000 tax credit for first-time homebuyers may have actually cost the government $43,000 for each extra house sold ("Homebuyers' Handout -- Worse Than Cash for Clunkers," Oct. 21.) That's because most of the recipients of Uncle Sam's largesse would have bought a house anyway. Now that the credit been extended to next March and applied to home buyers who were previously homeowners (with some restrictions), who knows how much extra incremental house sale will cost the Treasury.
Yet another federal housing-support program also is looking like a boondoggle. The Federal Housing Administration, which backs home loans with down payments of as little as 3.5%, has become the new subprime lender, some contend..
That charge comes from Robert Toll, chief executive of luxury home builder Toll Brothers (ticker: TOL.) As the Developments blog at wsj.com reports, Toll called the FHA a "definite train wreck" at a builder's conference Wednesday, a week after the agency reported its insurance reserve ratio had fallen to just 0.53%.
The FHA has become one of the sources of low-down-payment home loans, but that's led to soaring defaults. "What the government is doing is beyond belief in that once upon a time... FHA did very small percentage of business in the country," the Developments blog quoted Toll as saying. But he noted that the agency's market share has boomed in recent years "and the reason is, yesterday's subprime is today's FHA." The FHA avers and contends its borrowers' credit scores have increased to 690 from 625 two years ago and has improved its risk control.
But, as the latest Fed survey of senior bank loan officers released last week showed, private credit conditions continue to tighten, including for residential mortgages. And given the overhang of unsold homes -- plus a shadow inventory from homeowners who have been holding back from putting their house for sale until the market improves -- no wonder homebuilders are glum.
The National Association of Home Builders/Wells Fargo index of builder confidence hovered at a low 17 for the second straight month in November. A reading below 50 denotes conditions respondents deem as poor. The gauge averaged 16 last year.
"What the government is doing is beyond belief in that once upon a time... FHA did very small percentage of business in the country," Toll said.
But he noted that the agency's market share has boomed in recent years "and the reason is, yesterday's subprime is today's FHA."
Even with housing affordability the highest in years from low mortgage rates and reduced home prices, there's little reason to expect a revival in homebuilding as long as the inventory of unsold houses and foreclosures remain high, credit is tight and unemployment is in double digits.
Perhaps that's why the shares of the big public homebuilders, as represented by the SPDR S&P Homebuilders exchange-traded fund (XHB), topped out two months ago and have been moving sideways to lower since. That says more than economists' misguided forecasts of rising housing starts.

[VX Foxy]

"Nationwide house price warning as profits fall"
http://www.thisismoney.co.uk/news/article.html?in_...

[Sam_68]

anonymous said:

[redacted]

OK, so they failed to predict QE as well. So you're suggesting that two failures make a success?

'I could have been right if it wasn't for the fact that I got it wrong'?