Hey Property Doomsayers! "House price downturn worst since slump of 1990s, surveyors report"

[WideWebWitch]

here, The Times today

propertysnake, 50% reduction in Acton (Chiswick borders hmm)

Estate agents have been over-valuing for years though.

My friend put her house on mkt for £1.2million. OK, it was a unique property but I wasn't really surprised that it had to fall by over 300k before they got a viewing.

A 25% reduction in price or a correction?

House on our street on for £695k for ages and ages. Sold for £627k. Amusingly it sold TO an estate agent.

the amounts borrowed now are colossal and most people borrow their absolute max so if rates rise they are doomed.It is not all about houses though Everything has become more expensive and housesa re no longer the cash machinme they were.It is over just need to accept it now After 10 yrs buying and selling and doing well I sold up last summer and am so glad I did.

If people could still afford higher payments there wouldn't be the huge increase in repossessions.Most people are at theitr max at current rates

well we're moving. We have to - the family just doesn't fit in this house anymore. But - we will be staying in the new house for at least 10 years - can't bear to move any sooner than that - we've been here 9 years and as for interest rates - we are fixing at a rate we can afford for five years. In five years time, dd3 will be at school and I can work all week to pay the mortgage if needed. Though of course - I'd rather buy shoes )

I think people with plenty of equity who can still afford their mortgage even if paymetns go up a lot will be fine. But petrol prices are up, so's wheat...

I write about property WWW and from my conversations with professionals in the industry(and I don't mean greasy suburban estate agents) there doesn't seem to be a huge panic on. the general concensus seems to be that whilst there is definitely a down turn happening and plenty of people who gambled will lose out, those who bought/borrowed wisely will be fine as long as they sit tight for a few years.
People who have been in the business for a long, long time are perhaps less alarmed by the credit crunch because they have been through it before and their investments have been informed by the knowledge that property prices can go down and interest rates can go up.

I think anyone who is in it for teh long haul and doesn't have huge overheads will be fine and when things improve the same sort of houses will be desirable BUT it is what happens now that will dictate and many people can't live on debt while tehy wait as a lot of the feel good and spending has been done on the back of increasing house prices.I think we should stick our necks out.I say 25% down by this time next year and over 5 yrs 40%.I really think it will be 10 before we see growth again in property which is higher than inflation

Payments only triple if on interest only.

If on repayment it doesn't work like that e.g.

100k over 25years

6% = 651.88
12% = 1062.49
15% = 1289.16

Sue - if I was going to be on a variable rate your sums would still scare me witless!!!

Ok SueW, double it

Carmenere, I didn't know that, I thought you were a food /chef type person! Interesting!

I am that too

Here I am www, been busy doing some RL doomsaying, you know how it is.

Thought about doing a AIBU thread: "to think it's GREAT that house prices are falling"

but then chickened out as most people on here probably own property.

We've recently changed the area we're looking in, and are going to see a house there tomorrow! It's at least £50k over our budget but since the EA suggested it and knows our top price I am assuming he thinks they may take a painfully low offer. It's been on the market for quite some time, is empty and looks like a property developer.

We are only in the market for eyebrow-raisingly-cheeky offers, and tbh I doubt we'll get anywhere till this time next year.

Of course, Alistair Darling says the housing market will be FINE, so we can all stop getting excited.

I really can't see how anyone can say there will not be a downturn. We went to see a house two weeks ago which was on at £900,000 on the estate agents recommendation even though she knew our limit was £100k below that.

I wish the reporting would just stop for another week though. We were supposed to exchange contracts ten days ago but our buyers are on holiday and their solicitor had a "minor point" she forgot to check with us so its been delayed until they get back. lets hope they don't now get cold feet

Hi sparkley was wondering about you today and how the move is going.

Isn't that what agents do anyway? Each time we've moved they have sent us details of stuff that is 10-20% above what we have given them as an indication of price.

And see my note below re friend's house going on at £1.2m and dropping by £300k to get a nibble.

I'm quite happy for it to correct a bit - we are very low LTV - but fortunately no plans to move.

Good luck with your buyers. How's school hunting going?

lol southutsire at rl doomsaying!

I read The Standard prop section on Weds for a laugh and found myself automatically knocking 40% off every price tonight. By the end of the paper I'd convinced myself we could afford something ok in Islington

Throw my hat in the ring and agree with Carmenere. Things will level off but not the drops that some people seem to be hoping for. When the market stagnates, the only people desperate to sell are those that need to for whatever reasons, i.e. job moves, divorce, etc. This in itself is not enough to cause a huge cut in prices generally.

Those that don't really need to move just won't.

The housing market in the UK is strong.

it's strong so long as inflation stays somewhat level and employment stays high and no huge natural disasters or acts of terrorism knock on the door.

just one of those elements is enough to send it into a tailspin, however.

Buy to let is an additional factor this time and will tip the balance

Nothing been propping up the market except easy credit and speculation. Just look at the way "supply and demand" was said to be a strong underpinning of the market - until demand dissolved away.

The idea that only forced sellers will sell is true - for a short time. People don't put their lives on hold indefinitely. Once it becomes clear that this is a downturn and not a 'blip', people readjust their expectations and get on with moving where they want to be. And it's the forced sellers who set the price in an area, not those who don't sell. Those who want to move but hold on for a while in hopes things will be better in a year's time just end up capitulating at a lower price.

So many people have got into buy-to-let the past few years it's hard not to see it as a typical speculative bubble. Once everyone you know is thinking about doing it, you know there's no longer any money to be made. As my mum used to say "Money doesn't lie in the street for long!"

I think there could be a whole heap of buy-to-let properties coming on the market in spring as (a) owners find it harder to remortgage to cover costs (b) capital gains tax is slashed so that selling up makes more sense. If there is a glut, prices will fall.

it is just one big pyramid scheme.

lol www @ affording something in islington! there's hope for me yet! the N4 properties have gone down a bit - single figs - but in areas further from tube eg N16 stokey they are into double figs. let's hope my bijou flat holds onto its value

I definitely agree its going to be more than just a correction. If bank won't lend people more than 3-4 times their salary, then prices will have to drop or the market will just grind to a halt. Don't forget that people who have already borrowed more than 4 times their salary will soon struggle to re-mortage on a good deal and will be left paying SVR which is about 6.5-7% at the moment.

Buy to let city centre appartments will be hit worst, I think, but that will have a knock on effect

A house on our street has dropped its price by £50k this week. (Thank God says Sparkley whose house is better and bigger with more land and went on the market at £80k less!) Ours sold quickly and I was worried that we'd undervalued it. Actually I think ours was on at the right price and some people are just being greedy. Their house was bought for less than £200k and they were trying to sell it for £500k.