How far will house prices fall [volume 4]
Discussion
Al U said:
Can you read?
Er yes, how does what I ask differ from your statement.
"If all the newspapers were saying brexit will have and has had no effect on the market all of the buyers in this thread me included would be continuing on our merry way."
That reads to me, that if newspapers didn't tell you what to think then people would be unaware of the risks and 'continue merrily on your way'.
Edited by V6Alfisti on Saturday 25th June 08:44
V6Alfisti said:
Er yes, how does what I ask differ from your statement.
"If all the newspapers were saying brexit will have and has had no effect on the market all of the buyers in this thread me included would be continuing on our merry way."
That reads to me, that if newspapers didn't tell you what to think then people would be unaware of the risks and 'continue merrily on your way'.
It comes back to the self fulfilling prophecy theory. In answer to your question, yes I knew that property would be affected, that was one of many reasons I voted remain."If all the newspapers were saying brexit will have and has had no effect on the market all of the buyers in this thread me included would be continuing on our merry way."
That reads to me, that if newspapers didn't tell you what to think then people would be unaware of the risks and 'continue merrily on your way'.
Edited by V6Alfisti on Saturday 25th June 08:44
Al U said:
It comes back to the self fulfilling prophecy theory. In answer to your question, yes I knew that property would be affected, that was one of many reasons I voted remain.
That is a theory but in all honesty some papers have been warning of property crashes for a while (although others not) but the public sentiment of 'house prices always go up' have largely kept them 'up, although volumes have fallen off a cliff. That is a simplistic statement, there are many factors that have kept house prices up such as cheap/easy money, short termist view of the purchase, HTB, BTL demand not being pulled in (historically), massive investment from China/Russia (historically)e.t.cThe drop in prime london started months and months ago with 10% plus drops, and was spreading out to the North and West (London).
The difference now is (and actually before brexit) that the voices and sentiment that 'house prices always go up' had started to reverse and now gone into reverse post brexit.
The interesting point is that if house prices hadn't have got so ahead of themselves in recent years, and with the recent changes for BTL, change in circumstances for Chinese/Russian e.t.c then if prices were already at far more reasonable levels, then I doubt there would still be this same level of 'fear' around house price drops. The problem now is, people have alot more to lose and the risk factor is too high.
e.g. Using an example of a small zone 4 house in London between 2013 and 2016. If a £380k house drops 20% (purely an example for those who jump on any figure!) then that's £76k, if that same house which is now £700k drops 20% then thats £140k . Some may accept the trade off in risk if the value is lower, but when the property starts at such a level - people are naturally risk adverse.
I am interested that among your reasons for voting remain you chose to do so so that house prices would stay high. I guess because the presumed assurance of house prices staying high to you, was more important than a correction? Even though a mortgage ties you in for 25 years at extraordinary debt levels?
From my perspective (also a FTB), I would prefer that the market finally corrects itself before I buy and lumber myself with a £400k plus mortgage.
The last year has just felt like such a poor time to buy, with the foundations of property resting on jelly and sentiment. It might now actually find it's true feet and the hot air finally escape. There is also the possibility that volumes will collapse even further and prices stay stagnant, who knows but based on what I have seen pre brexit with some large (but rare) drops to 2013/14 levels...I am betting on falls.
Edited by V6Alfisti on Saturday 25th June 09:28
V6Alfisti said:
Al U said:
It comes back to the self fulfilling prophecy theory. In answer to your question, yes I knew that property would be affected, that was one of many reasons I voted remain.
That is a theory but in all honesty many papers have been warning of property crashes for a while but the public sentiment of 'house prices always go up' have largely kept them 'up, although volumes have fallen off a cliff. That is a simplistic statement, there are many factors that have kept house prices up such as cheap/easy money, short termist view of the purchase, HTB, BTL demand not being pulled in (historically), massive investment from China/Russia (historically)e.t.cThe drop in prime london started months and months ago with 10% plus drops, and was spreading out to the North and West (London).
The difference now is (and actually before brexit) that the voices and sentiment that 'house prices always go up' had started to reverse and now gone into reverse post brexit.
I am interested that among your reasons for voting remain you chose to do so so that house prices would stay high. I guess because the presumed assurance of house prices staying high to you, was more important than a correction? Even though a mortgage ties you in for 25 years at extraordinary debt levels?
From my perspective (also a FTB), I would prefer that the market finally corrects itself before I buy and lumber myself with a £400k plus mortgage.
The last year has just felt like such a poor time to buy, with the foundations of property resting on jelly and sentiment. It might now actually find it's true feet and the hot air finally escape. There is also the possibility that volumes will collapse even further and prices stay stagnant, who knows but based on what I have seen pre brexit with some large (but rare) drops to 2013/14 levels...I am betting on falls.
TBH you sound like a tyre kicker, who is unlikely to ever put his money where his mouth is because there is never a perfect time to buy.
cashmax said:
You think the papers have any idea? They have been warning about a property crash for 100 years straight. Hardly surprising they get it right once every decade or so.
TBH you sound like a tyre kicker, who is unlikely to ever put his money where his mouth is because there is never a perfect time to buy.
Not really but this was referring to the posters comment about self fulfilling prophecy rather than my own point about papers. Economists, banks (Look at UBS) e.t.c have been predicting it for a while now however. The difference being the last few years have seen very cheap money, massive BTL investment e.t.c which has completely distorted the market.TBH you sound like a tyre kicker, who is unlikely to ever put his money where his mouth is because there is never a perfect time to buy.
Nice theory but back in October last year I actually reserved a plot and was due to hear in April the final price, then it moved to June, now likely July. If the final price doesn't represent the current sentiment, then obviously I won't get ahead with it.
There is never a perfect time to buy, but also I can't recall a worse time to buy in my living history.
Edited by V6Alfisti on Saturday 25th June 09:36
One interesting thing is that a lot of young people are blaming the oldies for the exit and that they have screwed the younger generation despite having everything "perfect" for their whole life. The irony is that this may wipe a lot of value off the places owned by the older generation and really help the younger generation FTBs.
Al U said:
V6Alfisti said:
Al U said:
It's all ironic really because if none of the high profile figures were saying that prices would go down if brexit happens then when brexit happened there wouldn't be the uncertainty now. If all the newspapers were saying brexit will have and has had no effect on the market all of the buyers in this thread me included would be continuing on our merry way.
No offence but really? You wouldn't have an inkling that property would be affected?NRS said:
One interesting thing is that a lot of young people are blaming the oldies for the exit and that they have screwed the younger generation despite having everything "perfect" for their whole life. The irony is that this may wipe a lot of value off the places owned by the older generation and really help the younger generation FTBs.
However I observe the younger generation do not share their parents obsession with home ownership and seem to have less material aspirations.In that context this gracious act of altruism you highlight may not be interpreted in the manner you suggest.
Oh and btw, I'm not 100% convinced the oldies marched off to the polling booths with the aim of lowering the price of their assets for the benefit of others - most people appear to have voted in an entirely selfish manner as is the norm.
DoubleSix said:
NRS said:
One interesting thing is that a lot of young people are blaming the oldies for the exit and that they have screwed the younger generation despite having everything "perfect" for their whole life. The irony is that this may wipe a lot of value off the places owned by the older generation and really help the younger generation FTBs.
However I observe the younger generation do not share their parents obsession with home ownership and seem to have less material aspirations.In that context this gracious act of altruism you highlight may not be interpreted in the manner you suggest.
Oh and btw, I'm not 100% convinced the oldies marched off to the polling booths with the aim of lowering the price of their assets for the benefit of others - most people appear to have voted in an entirely selfish manner as is the norm.
It's interesting that people think a large house price drop will cause housing to be magically cheaper and availability to go up. It's logical, but actually doesn't happen when you have a market currently owned by a lot of people with very little equity at the lower end of the market.
There will obviously be a sudden influx of repossessions, as people with little or no equity cannot possibly sell a house for far less than they owe. If someone has a house that they bought for 450k, and they owe 400k, they can't sell it if it suddenly drops to £350k. They have to sit in it, and continue to pay the Mortgage, often for years. Living with negative equity, probably paying a mortgage at an unfavourable interest rate, until the market turns enough, or until they eventually go under. During the last recession there were far fewer repossessions by the banks, because they knew that the repossessions wouldn't cover the debts, and that people would go bankrupt before they paid the bulk of the money back.
Additionally, If there's a sudden massive market turn, the banks will dramatically tighten their lending criteria and the house you think you can afford now becomes unaffordable as you can no longer borrow at the favourable terms.
There will obviously be a sudden influx of repossessions, as people with little or no equity cannot possibly sell a house for far less than they owe. If someone has a house that they bought for 450k, and they owe 400k, they can't sell it if it suddenly drops to £350k. They have to sit in it, and continue to pay the Mortgage, often for years. Living with negative equity, probably paying a mortgage at an unfavourable interest rate, until the market turns enough, or until they eventually go under. During the last recession there were far fewer repossessions by the banks, because they knew that the repossessions wouldn't cover the debts, and that people would go bankrupt before they paid the bulk of the money back.
Additionally, If there's a sudden massive market turn, the banks will dramatically tighten their lending criteria and the house you think you can afford now becomes unaffordable as you can no longer borrow at the favourable terms.
spikeyhead said:
Surely the major factor that started the 10% drop in prime London was building eleventy hundred flats in ten elms and similar not quite so great locations.
I don't believe nine elms is included in 'prime', it is more Westminster/Kensington e.t.c and it dropped because of the increased stamp duty and issues at home for the Chinese and Russians.Burwood said:
It's nonsense that all experts are reporting a fall. Many have reported tiny negative reactions by amateur buyers.the same agents report increased enquiry as the vote result removes uncertainty. Life goes on.
Who said all experts? Certainly a number of them are.Tiny negative reactions? Like pulling out of chains and seeking discounts.
Who do you define as amateur buyers? FTB/home movers/general public? I do believe these make up the majority of the residential buying market.
DoubleSix said:
However I observe the younger generation do not share their parents obsession with home ownership and seem to have less material aspirations.
In that context this gracious act of altruism you highlight may not be interpreted in the manner you suggest.
Oh and btw, I'm not 100% convinced the oldies marched off to the polling booths with the aim of lowering the price of their assets for the benefit of others - most people appear to have voted in an entirely selfish manner as is the norm.
http://www.telegraph.co.uk/news/2016/03/29/getting-on-property-ladder-now-more-important-to-young-than-marr/In that context this gracious act of altruism you highlight may not be interpreted in the manner you suggest.
Oh and btw, I'm not 100% convinced the oldies marched off to the polling booths with the aim of lowering the price of their assets for the benefit of others - most people appear to have voted in an entirely selfish manner as is the norm.
It is ranked as the most important life milestone by more of the young than getting married or having children.
Many cant afford it, which is a different issue entirely.
SidewaysSi said:
If was abroad,I would be looking to hoover up London property if the Pound falls. I don't see the London market falling significantly.
You would think so at first thought, but investors hate uncertainty and high risk.I saw an article yesterday quoting Henry Prior, one of his clients was from Singapore buying a £35m property but pulled out for exactly the uncertainly reasons. Just because sterling/USD fell 8% or so, doesnt mean everyone will jump in when there is a risk of bigger drops. Let alone the stamp duty on top.
Although I bet there will be a few that still do.
In fact some quotes from estate agencies. Source: https://www.estateagenttoday.co.uk/industry-views/...
“It is hard to see any good side of the Brexit result in the near term except that the fall in Sterling will give any overseas buyer a window of opportunity to buy cheaply. The most likely scenario is one that we have seen before in other times of dislocation - 1987, 1998 and 2008 - a period where the market seizes up and the only activity is between the brave and the desperate” says Charlie Ellingworth of the buying agency Property Vision.
“A Vote for Leave unfortunately creates uncertainty because the eventual result of the negotiations, and the UK’s economic position in this new world, are (at the moment) unknowable. There is therefore likely to be a period of nervousness in the housing/mortgage markets which could last for a number of months – for instance, we could see a reduction in housing transaction numbers until consumers/borrowers are more certain of what the position is” says Eddie Goldsmith, chairman of the Conveyancing Association.
“Whatever result you were hoping for, it’s hard to argue against the fact that this result will bring further uncertainty and also creates far more questions than it answers in terms of what happens next as Britain extricates itself from the continent in terms of procedures and processes” according to David Brown, CEO of Marsh & Parsons.
“The chances of a technical recession, as business investment is curtailed, is high, and exporters and financial services firms will be in the forefront of the downturn” argues James Roberts of Knight Frank.
“The vote to leave the EU presents the UK housing and mortgage market with a number of potential risks and challenges simply because of the uncertainty we are now faced with” admits Rob Clifford, chief executive of CENTURY 21 UK.
Edited by V6Alfisti on Saturday 25th June 14:36
JagLover said:
DoubleSix said:
However I observe the younger generation do not share their parents obsession with home ownership and seem to have less material aspirations.
In that context this gracious act of altruism you highlight may not be interpreted in the manner you suggest.
Oh and btw, I'm not 100% convinced the oldies marched off to the polling booths with the aim of lowering the price of their assets for the benefit of others - most people appear to have voted in an entirely selfish manner as is the norm.
http://www.telegraph.co.uk/news/2016/03/29/getting-on-property-ladder-now-more-important-to-young-than-marr/In that context this gracious act of altruism you highlight may not be interpreted in the manner you suggest.
Oh and btw, I'm not 100% convinced the oldies marched off to the polling booths with the aim of lowering the price of their assets for the benefit of others - most people appear to have voted in an entirely selfish manner as is the norm.
It is ranked as the most important life milestone by more of the young than getting married or having children.
Many cant afford it, which is a different issue entirely.
digimeistter said:
Well I took on three new instructions today and had a sale agreed on another pretty close to asking price, all my sales already in hand are still proceeding, not a single wobble, just a grass roots observation. Not bad Brexit +1
Whereabouts, roughly?Edited by digimeistter on Saturday 25th June 16:14
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff