How far will house prices fall [volume 4]

[fido]

lepetitoeuf said:

That's an incredibly tight fisted way to approach life. You're suggesting that I could pull out, wait a few months, then come back and expect to buy the same property, which it took 6 months to find, for less money?

Not the same property, but similar and possibly better, as more properties come on the market. It is selfish perhaps, but I wish I did something like this before when I was in a chain! The person at the start of the chain has the power .. actually I did once complete on my sale and then pull out on the purchase, so effectively the same thing.

[gibbon]

okgo said:

Yes, but they're not at a decent price. That is the point.

Look at what brickwall posted, people jump in with both feet, realise they're being mugged off, pull out, and back on it goes. Its happened a lot locally to me, and slowly they're coming down in price.

The value is the price it trades at, desirable property will sell, its really quite simple. You may not believe they are 'decent' prices, but the market may well decide otherwise.

[gibbon]

fido said:

Not the same property, but similar and possibly better, as more properties come on the market.

I guess that depends if you are looking at buying an identikit suburban house on an estate or a Georgian townhouse in one of the most desirable cities in the world for example.

If the former, then yes, maybe you have a chance to achieve that.

[okgo]

gibbon said:

The value is the price it trades at, desirable property will sell, its really quite simple. You may not believe they are 'decent' prices, but the market may well decide otherwise.

So why are people pulling and stuff is coming back to the market then?

And regards your post above, there are areas where this sort of thing doesn't matter, Chelsea etc. But there are countless other nice parts of London where victorian townhouses are ten a penny and they will be hit. Its not going to just be Barratt homes in Camberley.

[fido]

gibbon said:

I guess that depends if you are looking at buying an identikit suburban house on an estate or a Georgian townhouse in one of the most desirable cities in the world for example.

Sure it's harder if there are only 1 or 2 properties that fit your budget, but it doesn't mean you can't rent for a bit and wait for another one to come along. I bought a later Edwardian place last year and it wasn't perfect but after missing a few opportunities I just went for it. I can see okgo's point though .. there is the perception and some evidence that the market has peaked and why pay top dollar for a property NOW when you might be able to choose another in a few months time?

[gibbon]

fido said:

Sure it's harder if there are only 1 or 2 properties that fit your budget, but it doesn't mean you can't rent for a bit and wait for another one to come along. I bought a later Edwardian place last year and it wasn't perfect but after missing a few opportunities I just went for it. I can see okgo's point though .. there is the perception and some evidence that the market has peaked and why pay top dollar for a property NOW when you might be able to choose another in a few months time.

That's true I guess, however if we are looking at this from purely a financial perspective you must surely consider renting is a drain to your resources also, renting a home similar to mine for example would have been around 3.5k a month. So you wait 3 months and you spend 10k, with current mortgage funding also now creeping up, its likely that you may lose out on the cheaper deals also in that respect.

Or, you could wait until you find a home you fall in love with, that you can afford, and then buy it and stop worrying too much about it.

BTL and investment of course is different.

[okgo]

gibbon said:

That's true I guess, however if we are looking at this from purely a financial perspective you must surely consider renting is a drain to your resources also, renting a home similar to mine for example would have been around 3.5k a month. So you wait 3 months and you spend 10k, with current mortgage funding also now creeping up, its likely that you may lose out on the cheaper deals also in that respect.

Or, you could wait until you find a home you fall in love with, that you can afford, and then buy it and stop worrying too much about it.

BTL and investment of course is different.

I get your point but lets say you're at around 1 million mark based on that rental, if prices go down 10% in the next 6 months or so, which given they dropped 6% in London in August alone seems a , then that's £100k saved on the price vs £18k in rent. And that is best case, what were we, 30% up on the peak of 07/08? Nothing to suggest that it won't go down a fair bit in the next year or so.

[gibbon]

okgo said:

I get your point but lets say you're at around 1 million mark based on that rental, if prices go down 10% in the next 6 months or so, which given they dropped 6% in London in August alone seems a , then that's £100k saved on the price vs £18k in rent. And that is best case, what were we, 30% up on the peak of 07/08? Nothing to suggest that it won't go down a fair bit in the next year or so.

I guess we shall have to wait and see.

I will wait for the actual sale data to come out before I accept that prices are dropping, the data you a referring to is average asking price on RightMove, its relevant sure, but not overly indicative of where the real market is going in the next year or two.

Its also worth noting that house prices have always been seasonal, and always will, looking at monthly averages is fairly meaningless, long term averages are far more relevant. But as I say, we shall see, and whilst we wait for that I will continue to live happily in a home I love. Not everything is about cash.

I would also add that 07/08 was an enormous stress test for the system, and if you look at what most property really came off, it really wasn't that terrible.

Edited by gibbon on Wednesday 20th August 11:43

[fido]

gibbon said:

renting a home similar to mine for example would have been around 3.5k a month. So you wait 3 months and you spend 10k

I had a similar situation and used it as an opportunity to get rid of second car, old furniture and stuff, then put the rest into storage. If you rent a flat (do you really need a garden?) in the same locale then it should cost about half, in which you can sit out for 6-12 months. It worked fine for me and I got 10% off the asking price on my purchase. My biggest loss was actually the time taken, but given that chains are falling through all the time it was at least a much less stressful period.

Edited by fido on Wednesday 20th August 11:45

[ClaphamGT3]

okgo said:

But you could buy it for a huge amount less in a few months? How can you look past that?

Being in a chain obviously a bit different, but as I said above, many people are chain free.

Could you point to any data that points to anything other than a trended rise in house prices in the next 12 months?

Even the recent RICS report - the most pessimistic I've seen by far - suggests that prices will track at or slightly above inflation in the next year.

Within the generality of nationally trended data, there are of course regional and local market specifics but, overall, we seem to be seeing a natural, and probably healthy, slow down in growth as the market rebalances after several years of stagnation, uncertainties about interest rates, tighter lending criteria and point in the political cycle all exert an influence

[TLandCruiser]

especially when just last week they were saying prices are set to rise in East Anglia over the next year by 5.9%, really no one really knows whats going to happen as every week else is said. Take the BOE interest rate for example, just the other day interest rates were said to stay the same until next year at least, now today the news is making it out as if rates are going up next week.

[gibbon]

fido said:

I had a similar situation and used it as an opportunity to get rid of second car, old furniture and stuff, then put the rest into storage. If you rent a flat (do you really need a garden?) in the same locale then it should cost about half, in which you can sit out for 6-12 months. It worked fine for me and I got 10% off the asking price on my purchase. My biggest loss was actually the time taken, but given that chains are falling through all the time it was at least a much less stressful period.

Edited by fido on Wednesday 20th August 11:45

Im glad it worked out for you, however I would hazard a guess that historically more people have lost out by this method than gained. I know a couple who sold up at the 'crazy prices' this time last year roughly, they are currently renting whilst waiting for their dream house to come up at a price they can afford, they are having to change their search area, and not for the better. They would now struggle to buy back the flat they sold.

[okgo]

Yes, Gibbon, that was indeed asking price data.

Clapham, I'm sure you saw the article on telegraph and guardian etc about the last two months of dropping in asking prices, August being the biggest ever, it is just asking prices at this point, but its just the start of the negative press that I think will begin to fuel the decline rather than all this st about housing shortage, I don't buy that as the reason that anything swings up or down.

I'm willing to bet money on it, as I will be waiting patiently before I buy the next place as I don't think it can keep going up around where I am, and indeed its not, things are coming down quite dramatically after the initial few days of no biters at dreamland asking prices, or sitting there not selling.

[W124]

I just ran into a friend of mine, an estate agent and a decent chap - we know each other outside of the mad world of houses and I asked him what he was doing sitting in Cafe Nero in a Wednesday Morning. His answer? "Staring into the centre of an invisible abyss". Tongue in cheek, yes, but from his perspective the drop in London asking prices is very serious indeed. You don't need reports, facts, figures, numbers or any concrete data to see which way the wind is blowing. Sentiment is a colossal driver of the market in this country.

[NomduJour]

Seems that Grosvenor might have correctly called the prime peak.

[Fotic]

I'll be interested to see what happens once the holidays are over - they always slow the market down and it's no surprise this 'cooling' is happening in August.

Might be the start of something but I don't think it is.

[TLandCruiser]

Could the slow down not be due to stricter lending and mortgage rules that were implemented in April, which has only now started to effect the housing market?

Edited by TLandCruiser on Wednesday 20th August 12:32

[Melman Giraffe]

TLandCruiser said:

Could the slow down not be down to stricter lending and mortgage rules which has now only started to affect the housing market?

Yes and the fear that rates will increase. I was an agent for 22 years up until 6 months ago. Best thing I've done is change my profession so no longer have to deal with the ups and downs of the market.

And most agents are WS

[Melman Giraffe]

lepetitoeuf said:

Melman Giraffe said:

And most agents are WS

I think that's a little bit unfair.

Shouldn't it be dishonest, deceitful, obnoxious, two faced s?

Yep. Like I said I put up with 22 years of it, thank fk I out of it now

[ClaphamGT3]

okgo said:

Yes, Gibbon, that was indeed asking price data.

Clapham, I'm sure you saw the article on telegraph and guardian etc about the last two months of dropping in asking prices, August being the biggest ever, it is just asking prices at this point, but its just the start of the negative press that I think will begin to fuel the decline rather than all this st about housing shortage, I don't buy that as the reason that anything swings up or down.

I'm willing to bet money on it, as I will be waiting patiently before I buy the next place as I don't think it can keep going up around where I am, and indeed its not, things are coming down quite dramatically after the initial few days of no biters at dreamland asking prices, or sitting there not selling.

Yes but I don't tend to put too much store in rather sensationally written articles or in one-month data on asking prices. Historic data and look-forward indicators continue to point to continued growth, albeit at lower levels than seen over the last 18-24 months as the market has corrected from a number of years of suppressed growth.

Sentiment is a factor in the retail residential market but, at the moment, in London and the South East it is more than counterbalanced by shortage of stock which, despite your undoubtedly well researched and professionally informed opinion, is a major determinant of value.

A word of caution; over the years, I have known several people who have thought that it would be clever to sell 'at the top of the market' and rent to cash in on falls. None of them have succeeded and one guy - a commercial estate agent who really ought to have known better - found himself renting for 13 years because he couldn't afford to get back into ownership of a house big enough for his wife and four kids and had to wait until the children started leaving home until he could get back into owner occupation. They sold a lovely five bedroom end period home in North Suffolk in 2001 and have just moved into a hideous new build estate house on the outskirts of Bury St Edmunds