House prices dropped again in July

[OlympicRelay]

I was just watching day break, its not looking good. There was a couple interviewed in the Midlands, with a lively home, they can't sell, its been on the market for two years despite a £50k drop in sale price.

The expert said the problem is vendors have a block on what they will accept in this falling market and they aren't realistic about the true value of their homes.

I am looking at the moment and I have found the same issue very low offers on my home and over priced houses to view. You just have to suck it up like I did.

Triggered by the Nationwide press release I guess:

www.bbc.co.uk/news/business-19069870

House prices would have collapsed completely if we didn't have rock-bottom interest rates. As it is I think we're going to see these tiny falls every month for years. Eventually they'll drop back to a level which reflects wages.

Yes it was due to Nationwide figures.

I agree house prices will no longer go up or remain stable. Eurocrisis is ongoing, we are in a tripple dip recession, IMF expects us not to recover till something like 2020, unemployment continues etc.

Why is it "not good"? Why when petrol goes up and food goes up in price then it's terrible news and when houses go up in price it's good news?

Houses are overpriced. If something is not selling it's overpriced. There are buyers out there because of the stupidly low interest rates (going to be fun to watch when rates go up again).

Yes, pretty clear the housing market needs correction, and has done for sometime. But I do get tired of the prevailing view that every homeowner is unrealistic and looking to make a killing. I am certainly not and was never in it for the quick buck.
I also dislike the 'ho ho' won't it be funny when the interests rates rise attitude, negative equity helps no one.

Not much is selling around here because it's a retirement community of low employment opportunities but the house prices are staggering. So the houses just sit and sit.

The problem is when you sell your home you at least need to pay off your mortgage. We bought just before the boom. At the peak it was worth £25k more than we paid. According to the mortgage company they reckon we are £2k in negative equity but being realistic its about £10k. Factor in estate agent and solicitors fees and that figure increases. We have ended renting it out and renting something bigger. We would love to buy but we need to at least save a deposit for another house. All the help goes to first time buyers so we are stuck in this situation for at least the next few years. I know we aren't the only ones in this situation.

The other issue is that, in areas like this, most of the vendors own outright, no mortgage, so they don't drop the price and the price they are asking is one that is too high for most buyers, for whatever reason (can't get a large enough mortgage, house too much considering commuting expenses, etc).

So the houses just sit on the market for ages.

RChesire, I agree that prices will fall back in line with income, however not so sure about tiny falls. The Nationwide has fallen six out of the last eight months, propped up mainly by prime London prices. The evidence increasingly suggests that London is now peaking so I suspect that going forward, we'll see national average falls pick up the pace.

In the absence of wage inflation, the only thing that may have prevented this - the Funding for Lending scheme - so far seems to be another damp squib, with most decent mortgage deals going to the equity-rich, not FTBs (I actually think this is a good thing is it protects potential FTBs from neg equity as prices fall).

The true measure of affordability is the comparison ratio of house prices towages. Unfortunatley, the financial boom distorted this true measure to breaking point with people taking on far more debt and bidding up house prices far beyond what was sustainable.

At their peak house prices were 6.5 times average male salary.

Historically over the last century they have average 3.5 times average male salary.

House prices either need to fall (price deflation) or wages need to rise (wage inflation) to bring the ratio back to its historic 3.5 times average. Wages outside the South East are static or falling and I suspect with the Euro crisis that will also begin to happen in the South East. It is difficult to see how house prices can rise if wages are static or falling.

The truth is that the Govt and Bank of England are desperately trying to stoke up the economy and secretly allow inflation to take off again like the 1970s. If they dont succeed - wages and hosue prices are in danger of falling a lot (deflation) and then the banks will have very little hope of ever getting peoole to pay back their mortgages once houses are worth less than the loans secured against them. The same is happening in the USA.

What I don't get is the vendor wanting top wacky for a very dated property they probably bought for £5k yonks ago. They are going into a nursing home, they won't keep all the money from the sale as it will go to pay nursing home fees, I simply don't get people like that.

That's about the only sort of vendor around here, Olympic!

Similar round us too. Lots of old people living in one room in large but very squalid houses they cannot afford to maintain or to heat but refusing for year after year to sell at anything less than 2007 peak price.

Common story:"I won't sell for less than it's worth" - it's worth what someone will pay for it, not the sticker price a few years ago...

I have had 3 calls today already re price reduced houses near me. For the 1st time I think the govt may have to let them slide as they have lowered IRs to silly levels and pumped money into the economy and it has no effect. The best mortgage deals need huge deposit and arrangement fees and people just can't afford it. They kept the whole thing going for years as it makes people feel rich if they have equity and so the spend on credit but that has stopped now,

Wow Noddy, will you bite? Where in the.country are you based?

It's negative equity people I feel for, not bizarre bought cheap, overpriced going into a carehome people.

Looked (on RM) at another place today. On for 550. Bought 2007 for 430. New kitchen, some decorating.

What kind of dreamworld do these people live in? Do they genuinely close their eyes to the negative economic, employment and housing news and believe the agent trying to get them onto the books?

Then act surprised when in 3 months the agent suggests "given the difficult climate" a reduction to 500. Then act more surprised/offended when offers come in somewhere between 400 and 450.

I despair sometimes.

No I have found somewhere but not made an offer yet as am waiting for them to reduce a bit. Don't like any of the ones that have been offered! I am in the SE definitely nothing moving here and it is a v popular place to live.

Negative equity is related to falling house prices not rising interest rates

All I can say is what great news and about time too, interest rates long term average is 5% or greater

Savers are being hammered to perpetuate the myth that high house prices are making us rich, all they are doing is impoverishing the young, we are handing on a terrible legacy to the youth of today

IMHO of course!

Northern Rock have released a statement saying they have at least 100k mortgages at risk where people are missing payments. Really precarious situation in this country with lending way too much hoping for a rising market

That's a lot of people from one lender on the verge of loosing their homes.

I am wondering now if I should forget buying and go into rented.

We sold and rented for 3 years which I loathed before buying last year at 20% under the original asking price.

Agree a lot of the vendors were just unreasonable and putting their houses on at 10% above the highest valuations according to local friendly estate agent.

I still get rightmove updates and see the same properties that have been on for 2-3 years at teh very same price. Utterly pointless.

One agent rang me today to say a house had been reduced 15% and would still take an offer. It has been on 6 weeks only so I think some of the 6 months plus ones are going to have to budge if they want to sell. I have been buying at the bottom and renovating and selling at the top for several years and can get a feel for the pattern and we are about to go back down again I think xmas I might buy again. Have decided not to buy teh one we saw last week as I know we can get better

Noddy do you go into rental in between?

not seeing any real sign of a fall here as such. i am seeing houses come to market as repo/ probate/ exrental and sell in days (one i rather liked went on the day it came on - didn't even get a viewing in!) so maybe cash buyers are shifting bargains quickly, where non-budget houses you can't add much value to are sitting -

there is a yearly seasonal downturn towards the end of the year anyway..couldn't find stats but it looks like July is best time (so actually sold late spring?) and Xmas worst.

we may come off the market for winter if we haven't sold in the next few weeks, this weather isn't helping me present the house in its best light and i'm sure it keeps buyers away...(the sunny week we had 4 viewings!)

Sometimes I do. I am renting atm and have seen a real shift the last few weeks. Lots of re available which I think is due to mortgages not being easy to secure. Cash will get a bargain for sure. The seasonal trend has not really been in evidence since 2007/8 when prices fell the first time. Most agents I know say it is different now. The spring 'bounce' never happened. Usually people keen to move by Sept for schools so buy in March April or buy in Sept/Oct to be in for xmas but that hasn't happened this year