Has the housing market in ED reached its bottom yet?

[nutty]

The Bank of England slashed its

forecast for economic growth and predicted that inflation will

probably slow more than needed if it doesn't cut interest rates.

Sounds like that interest rate cut isn't as unlikely as some people thought....

[macroban]

> Sounds like that interest rate cut isn't as unlikely as some people thought....

Interest rate cut, sterling falls, the 60% of food we import increases in price, household budgets squeezed, housing more unaffordable, house prices and rents fall.

But not in East Dulwich.

[nutty]

Here's the link for anyone interested...

http://www.bloomberg.com/apps/news?pid=20601102&sid=adykxOE0T9j4&refer=uk

[????]

er....the real issue that everyone seems to be overlooking is the fact that banks lending models of the past 5-10 years are bust and that they are going back to more cautious lending ways, they can't even raise money themselves to loan at the moment so the supply of cheap mortgages has dried up (that's the Credit Crunch) and this'll be the case until banks restore their balance sheets but even then they are unlikely to go back to their recent lending model as they've been badly burnt....if repossesions /unemployment rise this'll get worse before it gets better....consumer sentiment and finance is secondary to this

[local estate agent]

http://news.bbc.co.uk/1/hi/business/7528248.stm

Copy and paste the above link, it clearly shows that although prices have come down, they will be up 25% by 2013. So, if anyone is looking to buy and stay there for a few years, then get on and do it!!

[Brendan]

This just in:

"Buy a house.", says person who sells houses.

[????]

That report has been laughed at as naive and misguided by most commentators since it's publication as it's entirely based on people's desire rather than ability to pay....it's completley out of kilter with most commentators belives...and I haven't an axe to grind, although an estate agent probably has........

[Huguenot]

Local Estate Agent! That's an outrageous bit of wool pulling!

With inflation at 4.5%, then over the next five years houses would have to grow by 25% just to stay level. Anything less than a 25% change in price would be a drop in value!

[Gerrard]

I would be very surprised if we see a sustained five year period of inflation at that level.

[Rhinestone Cowboy]

Housing repossession orders are up 24% year-on-year, figures released by the Ministry of Justice revealed.

[benmorg]

local estate agent Wrote:

-------------------------------------------------------

> http://news.bbc.co.uk/1/hi/business/7528248.stm

>

> Copy and paste the above link, it clearly shows

> that although prices have come down, they will be

> up 25% by 2013. So, if anyone is looking to buy

> and stay there for a few years, then get on and do

> it!!

the prediction of a 25% rise is based on shortage of supply of housing. The only problem with the logic is that the housing shortage should have pushed up rents as much as it's pushed up prices. The fact that house prices have risen to giddy heights while rents have merely kept pace with wage inflation suggests the supply shortages isn't the underlying reason for high house prices. True cause of rampant house price inflation was cheap credit and speculative investment in property after investors fled the stockmarket around 2000.

House prices will eventually start rising again, but not until cost of buying and renting are closer to parity. That means we're in for some kind of correction that either drops house prices, raises rents (and wages), or some combination of both.

[????]

to misquote some economist or another on the flaw in that report "The problem is there aren't enough affordable Bentleys"....it's logic is based on desired demand rather than ability to pay and is mickey mouse in it's logic and conclusions, all serious analysts have laughed at it as an embarrassment

[smith]

Well, has it? I've just reduced my 3 bedroom house in St Aidan's Road to ?375k - that's from the initial valuation and market price of ?525k. One could argue that it's all relative... I make a loss on the sale of my house but I recoup that on the house I'm buying. There are plenty of bargains out there at the moment but if people can't get mortgages then the market remains stagnant. Where are all those people who bailed out at the height of the market in a bid to make a killing when it hit rock bottom?

[Jeremy]

I expect those people are still waiting, the market won't pick up for a while yet!

[SteveT]

I should put this thread into hibernation for about 5 years, then pose the question 2013.

[macroban]

This house price crash is taking place much faster than earlier ones. One reason could be that this time there is a more transparent market because of the Internet.

Unless there is a disasterous undershoot SE22 prices should stabilise when one bedroom flats with a reserve of ?100k do not fail to sell at auction.

[indiepanda]

smith Wrote:

-------------------------------------------------------

> Well, has it? I've just reduced my 3 bedroom house

> in St Aidan's Road to ?375k - that's from the

> initial valuation and market price of ?525k. One

> could argue that it's all relative... I make a

> loss on the sale of my house but I recoup that on

> the house I'm buying. There are plenty of bargains

> out there at the moment but if people can't get

> mortgages then the market remains stagnant. Where

> are all those people who bailed out at the height

> of the market in a bid to make a killing when it

> hit rock bottom?

Do many people really do that? I happened to get out of the market early last year when I moved to London, was intending to have bought again by now, but obviously put it on hold, so I may well benefit. But I wouldn't have sold my home and gone into rented if I wasn't moving to a different area, I like having my own home too much - rented, no matter how nice, never feels the same.

[????]

Well maybe Inde - but I moved here at the peak with quite a lot of equity. Now, If i'd have had hindsight, I could have stuck my money in the bank, rented a house like I have (just on the interest payments), had all my salary as spare money to spend or save, not paid a few 10s of thousands in stamp duty/solicitors fees and then bought a house now for ?50K less. and maybe ?100k less in a year. All in all, and with the benefit of hindsight, I'd be about ?100k better off!I could live with being a renter for two years or so for that! Still, If i'd known who'd win the Derby and Grand Nationl every year I'd be a millionairre!

[indiepanda]

Oh I am well aware you can end up a lot better off. That's pretty much the game I am playing, leaving my equity in the bank, renting somewhere a bit more modest than I will buy (I want it to feel special buying my own place which it won't feel so much if it's no better than I rented) and saving money towards the new place for when the market seems to have bottomed out.

All I meant was I wasn't convinced people were getting out primarily because they wanted to do this, assumed more people were having a reason to sell (divorce, relocating for work etc) and then choosing to rent though they could afford to buy and waiting until the market has corrected itself to re-buy

[AcedOut]

macroban Wrote:

-------------------------------------------------------

> This house price crash is taking place much faster

> than earlier ones. One reason could be that this

> time there is a more transparent market because of

> the Internet.

Very interesting point. I suspect the transparency in house prices has contributed considerably, but the economic 'crash' this time around is also quite different than before in that the bank lending was cut off dramatically, rather than interest rates increasing overnight.

[SteveT]

I always believed that money was there to improve your lot and make life more comfortable.

Renting when I can afford to buy is something I would not be interested in.

It reminds me of the cash rich tax avoiders living on an island 5 miles by 3 miles off the coast of France, or putting up with the crap weather on the Isle of Man to save money which they are obviously not short of, yet live in solitary exile.

My home first and foremost is a residence for my way of life.

Secondly it is an investment, or at worst is a hedge against inflation with tumbling pounds.

Sadly or misguidedly, property has taken over the reigns in the life of many.

[smith]

This 'recession' at least provides many people with the opportunity to catch up and jump on the property roundabout. I'm not quite sure what you mean by "Sadly or midguidedly, property has taken over the reigns of the life of many."? Surely it's only a problem if you bought at the height of the market and need to sell in this depressed market. But it will come to pass - property prices will increase again and it is a great time to snap up a bargain! East Dulwich (up and coming, trendy) is now awash with affordable property.

[Moos]

It will be a problem if people are struggling to pay mortgage bills for a house that's worth less than their loan.

[SeanMacGabhann]

Don't knock renting - renting for most of my life has enabled me to move around and be much less tied to situations I'm glad to get away from.

Not for the first time it's worth noting that most other European countries have traditionally had a much more relaxed attitude to house ownership although I believe this is changing (now that we have started buying up their property for "speculation")

[SeanMacGabhann]

How so? What has changed in their circumstance? They had x money for a y mortgage - they felt they could afford it. Unless x has dropped as well, or they NEED to sell, they should be able to carry on as normal, with teh probability that the property will within a couple of years exceed the mortgage value