In not understanding why house prices aren't plummeting?

[Hammy02]

I don't understand how house prices seem to be staying static/just dropping a few percent. With the amount of uncertainty about jobs, people having less disposable income and the end to 100% mortgages, how can people afford to get onto the housing ladder? And yes-I am one of the bitter people who wishes they'd bought 15 years ago when prices were at a sensible level!

Well we're looking to buy - good position as in rented at moment and I'm actively put off properties that seem ridiculously priced.

Just gives me a bad feeling about the vendors but that could just be me and my picky/choosey ways.

The English are so rubbish at negotiating, i always look at house priced 25% more than I can afford on the basis that my offer may well be accepted and that was even in the heady days of 2004.

Well I'm currently in the looking at lots of houses that vaguely meet criteria/budget to see what I realistically think we can get for our money.

I was so naive a few years back that I never thought people put houses on at more than they were valued at so felt guilty making low offers - not anymore

An interview on Today programme this morning about house prices was interesting - construction industry bloke saying they will just not build any more houses until people start buying again.

I hate to agree with the lack of supply myth but in areas like where we are, there is a huge shortage of family houses - hence anything coming on the market for a 'reasonable' price (note I didn't say affordable) gets snapped up.

Is taking a long time for sentiment on house prices to shift if indeed it ever will. Whilst renting remains shite for tenants, people will want to buy houses if they can!

That's true MintyFresh, they are bastards, they have the land and they will not lower the price, they can sit on it for 10 years if need be to get the price they want for the houses that have or have not been built yet, talk about dog in the manager

"These stats don't lie"

Heh, you don't think a site called "House Price Crash" might have an agenda...?

As for supply, there's actually more than 2 bedrooms for every person in the country, it's just the shocking number of housing left empty where it all goes awry.

I was just flicking through some of the old postings and found this. My advice to anyone is to be very careful before buying into the current market. All this talk of no double dip and current recovery is meant to get people spending their money on housing and everything else. Bad decisions involving a purchase of a house can often take future choices away. Anyone buying a house should factor in base interst rates going to at least 4%, maybe more. The quantitive easing programme we have just been through has put £200bn extra into the economy, which needs to be taken back - starting in 2012, which will take money out of the economy. Of course, they may start up the QE again - which will put more 'unearned' money into the economy before then (very confusing) and distorts the true position. Basically, and others may disagree, the banks are artificially keeping house prices high to make their books look solvent. At the same time they are restricting mortgages to those with very high deposits so if anyone takes a hit, it wont be them. The QE programme is nothing but a fiddle which allows the banks 'socialise' their losses. I am afraid thats coming to you and me. Sit it out a bit and hang onto your cash is my advise to any house hunters! House prices are in for a bumpy ride when they can fiddle no more.

simple supply and demand from what I understand

Know what put us off buying for months?

The talk about how it's impossible to get a mortage unless you've got a massive deposit.

We took the jump, applied, got a 90% one accepted on first place we tried (Post Office of all places who seem to be being really good toward FTBs). Yes, in the short term prices might drop a bit - but we're buying a house to live in, not as some kind of investment, and in time they'll recover eventually anyway (tram links to our area have finally been put back on go which I think will help prices stay fairly OK here to be honest).

We're buying - I'm sick of six tenants chasing every private rented property available, I'm sick of landlords not doing repairs, I'm sick of the stress of praying something's not going to go wrong in the house and the LL will refuse to repair, I'm sick of the sodding colour magnolia. Prices have dropped to where we can afford to buy - we've factored in the fact interest rates can only really go up, yes the theoretical value of the house may go down before it bounces back up but it's all fantasy money until you come to sell anyway... I'm not going to have someone try to put a dampner on the fact that we're finally going to be no longer at the mercy of crappy amateur wide-boy landlords - sod that.

If you've got a decent credit history and aren't asking for stupid income multiples like in the idiot days - there ARE mortgages out there, this talk that you can't get a mortgage is, quite frankly, bollocks.

As for supply, there's actually more than 2 bedrooms for every person in the country, it's just the shocking number of housing left empty where it all goes awry.

the rate of dereliction in some areas is very small indeed - as after all there are strong financial incentives for owners to run around housing for occupation quickly.

The mass migration South has left the worst areas of the North empty (i'm thinking the boarded up houses in some city no-go areas)
geneally in the South, if a house is empty, there is a very good reason why.

That stat also forgets that a five bed house occupied by a single person isn't 'derelict' but will still tip the stats.

Josie - I remember the heady days of ERM, and the day that interest rates went up to 18%, so base rates rising to 4% isn't a massive worry.

And yes, there are mortgages available, and it wasn't ever that easy to get an over-the-odds mortgage. I certainly didn't find it easy to find a lender willing to lend us enough to buy our house back in 2006.

also, there is much money syill in the economy - and if i had a large amount of cash to buy something with right now, property would look like a good option - short term the value may decrease, but long term it will rise, and in the meanwhile it has a rental value.

Round here instead of taking low offers, vendors are choosing to rent out their homes.

Yep - the house we're currently renting the guy had tried to sell and couldn't, but the rental sutff is in such short supply that houses go let within 2 days of hitting the market.

If you have to buy now, drive a very hard bargain and dont fall in love with just one house. Find two and put some pressure on between sellers. My argument is that there is a setup going on here and QE and zero interest rates are part of it(not just in relation to housing either). I know its hard waiting. I hate to see young families pay the price but that is what they are being asked to do.

They are dropping somewhat.

The RICS survey came out at a very bearish negative 49% yesterday (surveyors seeing rises -surveyors seeing falls).

Low interest rates and weak sterling are supportive, especially in London where there are foreign buyers. There is a lack of supply in desirable areas which helps.

However, the direction is downwards.

They may yet plummet once more job losses have occured and the interest rates have risen. The drops in sale price vary regionally too.

The direction is only downwards until the backlog of people either wating to get on the housing ladder, needing to relocate for their job or trade up to house an increasing family etc. decide to take the plunge and go for it

"banks are artificially keeping house prices high "

House prices are determined by supply and demand, not banks. If a house isn't selling, the seller will accept a lower price. If three people want the same property, the price stays strong. No bank will lend money on a property that is grossly over-valued...

• limited number of houses
• growing population
• planning laws that limit new house building

On average houses prices have fallen. Across the country Land Regsitry data implies around a 15% drop from peak (2007 or 2008 depending on where you live).

Teh primary driver of houses prices is the cost and availability of credit. House prices will probably fall further but its not clear how that fall will be manifested.

It could be that nominal prices drop. It could be that real prices drop as inflation erodes the value. Or it could be that sterling drops in value, so that UK house prices fall further in foreign currency terms.

Remember that the reason why prime (£1m+) real estate in desirable part of London went up was due to foreign buyers. Between 2007 and 2009 for a European buyer, London property fell around 30%. For a US$ buyer it was 25%. So essentially house prices did crash in central London for foreign buyers just not in sterling terms!

Chil, If there are loose monetary policies in operation in the economy (QE) the pound you had before the programme was worth more than after £200bn was pumped in to dilute your pound. So you should need considerably more of them to buy an asset, like a house, while this QE is going on. When they take this 'extra' money out of the economy, as they have to, your pound (if you still have it) rises in value. How they will take the extra 200bn out will be with the crude instrument of higher interest rates. Holding down interest rates and pumping in fake money makes asset prices artificially high. A rotten trick. It is wrong to deceive hardworking people with this con and I am very sceptical of people who insist house prices will carry on upward.

Because when house prices go down no one moves.

Josie,

You are a little confused re QE. It is separate, although closely related, to interest rate policy. They will take it out by selling securities outright from the BOE balance sheet.

QE does genuinely help assets if you are funding them in GBP, though. The asset goes up (in GBP terms) but the mortgage does not. QE is more a rotten trick to those on salaries or fixed pensions.

All I know is that I have no longer paid the most that anyone has ever paid for a house on my street, so I will feel a bit better when they all crash down.

Zoopla seems to think that my house has gone UP £100,000 since June 07.

Demand and supply - some areas there will be a high demand - supply might be low if people bought at the top of the market don't want to sell for less so don''t sell at all. That still means that there will fewer properties to buy.

The rental market looks bonkers. In my area property priceshave fallen a teeny bit (noting I live in the catchment area for a popular school and that keeps it high) - but rentals have gone through the roof- horrible, horrible properties and they are being rented for lots of money. The landlords are having a laugh.

I predict prices in my area will fall a bit more as job losses mean people selling up to move out to cheaper areas or to pay off debts. There seems to be more on the market now than this time less year.

Larry, I think maybe it is you who is confused or seek to confuse. I am not talking about an existing mortgage. I am talking about how asset values are being artificially pumped up. Dont worry about me. I understand the stages of QE (starting with the purchase of government debt). I am fed up with each younger generation having to work harder and harder for less because of the 'genius' new monetary policies invented to defraud them. The banks are probably mostly insolvent. The biggest offenders should be made face their bankrupcy. protecting depositors but letting shareholders and bondholders take the hit. And the rest of the banks - maybe that would focus their minds.It is morally wrong to watch each new generation pay the price (and I am middle aged). Have you ever thought of what the phrase 'Let the dead bury the dead.' means?