House prices..

[nucastle]

Negative equity is a BIG problem if you mortgaged yourself to the hilt on the assumption you could could hop around mortage products to take advantage of artificially low rates.

.... With LTV's of 85% now the norm on the small numbers of mortgage products left, then negative equity suddenly becomes a BIG problem if all you can do is stay on an SVR of 7.5% and your mortgage payments suddenly go up 50%.

For the tens of thousands of people who this WILL hit HARD, then the downward pressure on the market from forced sellers who cant meet payments, drags everyone else down.

Once again, another reason why lax regulation has been behind this whole house of cards. If banks and building societies had insisted on solvent people, putting down deposits, we might not have the DISASTER we have right now.

 

[player]

...

Once again, another reason why lax regulation has been behind this whole house of cards. If banks and building societies had insisted on solvent people, putting down deposits, we might not have the DISASTER we have right now.

But then again, those that wield the power are the ones who have made millions during the boom, and the ones least effected by the impending downturn.

 

[nucastle]

Exactly. We are pawns in all of this

The only way to win the game, is to know your being played in the first place, and then wait for the big boys to turn the taps off and crash the markets .... like they have done over and over and over.

 

[jamief]

most poeple who bought back then at 100% will be looking (i would have thought) to stay put for 10+ years

Totally disagree I'm afraid - a lot of people who bought at 100% were those who wanted to get onto the ladder and are looking to move within 2-3 years (I know a few people in this exact situation). They are the ones who'll be in trouble now - not able to sell their homes and no hope of getting a new mortgage.

 

[Stinky]

Totally disagree I'm afraid - a lot of people who bought at 100% were those who wanted to get onto the ladder and are looking to move within 2-3 years (I know a few people in this exact situation). They are the ones who'll be in trouble now - not able to sell their homes and no hope of getting a new mortgage.

I assume they will sit tight then untill its over?

 

[jamief]

I assume they will sit tight then untill its over?

Who knows! They'll probably have to. I think a lot of people bought at 100%, assuming their houses would go up in value, meaning they could sellin 2 years, pay off the mortgage and have a deposit to put down on somewhere else. They are now in the situation where they have negative equity - who knows what they'll do.

 

[Sagalout]

As said above though, its difficult to sit tight when your other situations change. Not much fun in a tiny house if you want to have kids, and you dont even have the option to rent because you literally cant afford to sell your house, or as also mentioned, the rates go up so much that you cant afford to keep up the payments but also cant afford to sell it.

People that stretched themselves to buy at the top of the market are really going to be caught between a rock and a hard place.

 

[clv101]

People that stretched themselves to buy at the top of the market are really going to be caught between a rock and a hard place.

Yep. Buying at the not was never going to be a finically viable thing to do. I On average, think the "top" is quite a broad area coving the three years 2005-07. On average people buying in those years will now be looking at losses by the time they could sell.

 

[HangTime]

I'm now pretty much resigned to the fact that by the time we sell our house bought nearly 2 years ago, it will likely be worth less (in real, if not nominal terms) than what we paid for it. We did actually buy it with the intention of potentially living here a long time (3bed, good schools nearby, and part of a decent sized city) but circumstances change and we are looking to move.

I don't view this as a major issue though, as the LTV was under 75% even when we bought it and of course falling prices means that our next house will be cheaper than it otherwise would have been. It is far to say however, that in hindsight we would have been better off renting.

 

[rossyl]

maybe so.

but i still think 50% decline is a awful lot!

i agree but then, i'm young as well!!

However i believe the prevous house crashes the falls were sub 20%. Whilst the boom may have been very high, I don't see the value falling to that exent. Further in places such as london, where there is still demand and still extortionately priced hosing still being sold, i think it's even less of a problem.

 

[carpmaster]

I see 23,200 are already in negative equity. Not good.

http://news.bbc.co.uk/1/hi/business/7445324.stm

Yes indeed. 23,000 people in negative equity already, but what this doesn't highlight very clearly is the fact that this was the situation as of end March 08. Since then house prices have tumbled in April, and May so the reality is that there are already hundreds of thousands more who are in negative equity already.

As has been said, it doesn't matter too much being in negative equity if you're not moving, and when you do move, the house you move to will have fallen by the same amount. However you'd certainly feel a little bit foolish if you bought somewhere in the last 3 years or so as a FTB, and paid twice as much as a FTB who comes along and buys next door for half what you paid.

 

[Dolph]

Yes indeed. 23,000 people in negative equity already, but what this doesn't highlight very clearly is the fact that this was the situation as of end March 08. Since then house prices have tumbled in April, and May so the reality is that there are already hundreds of thousands more who are in negative equity already.

As has been said, it doesn't matter too much being in negative equity if you're not moving, and when you do move, the house you move to will have fallen by the same amount. However you'd certainly feel a little bit foolish if you bought somewhere in the last 3 years or so as a FTB, and paid twice as much as a FTB who comes along and buys next door for half what you paid.

Depends which survey you use for april. The department of local government survey (that actually uses prices for houses sold, rather than asking prices) shows a rise in prices between march and april (although only a small one).

http://news.bbc.co.uk/1/hi/business/7445324.stm (towards the bottom of the article).

As for how I'd feel if someone bought the house next to mine for less than I paid for it (not likely unless prices drop by 40% nominal), I'd say good on them, while being satisfied with my own purchase which is probably costing me about the same due to getting a much better mortgage deal

 

[Stinky]

Depends which survey you use for april. The department of local government survey (that actually uses prices for houses sold, rather than asking prices) shows a rise in prices between march and april (although only a small one).

http://news.bbc.co.uk/1/hi/business/7445324.stm (towards the bottom of the article).

As for how I'd feel if someone bought the house next to mine for less than I paid for it (not likely unless prices drop by 40% nominal), I'd say good on them, while being satisfied with my own purchase which is probably costing me about the same due to getting a much better mortgage deal

good point lol

 

[clv101]

House prices 'to fall 9% in 2008'

HBOS, the UK's biggest mortgage lender, has forecast that UK house prices are set to fall by 9% this year.

http://news.bbc.co.uk/1/hi/business/7462773.stm

9%? When we’re already down around 7% since the turn, down 4.7% in the five months to May? They are talking rubbish – just check out their track record kindly provided by the BBC:

In February, HBOS said house prices would be "flat" in 2008. Then, in April, the Halifax house price survey predicted "a mid single digit percentage decline".

They were dead wrong in February and April, what makes them right now, especially when predicting an improvement in the current rate of decline?

 

[Stinky]

9%? When we’re already down around 7% since the turn, down 4.7% in the five months to May? They are talking rubbish – just check out their track record kindly provided by the BBC:



They were dead wrong in February and April, what makes them right now, especially when predicting an improvement in the current rate of decline?

are you saying its going to start falling quicker?

 

[GuruJockStrap]

I think he's just saying that they get their predictions wrong and that we shouldn't take what reports the banks put out as absolute fact. HBOS and Nationwide (2 biggest mortgage lenders) have both made incorrect forecasts this year, but then again, I suppose its in the banks interests to paint a better picture of the housing market.

 

[Stinky]

I think he's just saying that they get their predictions wrong and that we shouldn't take what reports the banks put out as absolute fact. HBOS and Nationwide (2 biggest mortgage lenders) have both made incorrect forecasts this year, but then again, I suppose its in the banks interests to paint a better picture of the housing market.

thats what i've been saying all along. i haven't believed anything that's been in the news.

it annoys me that so many people take the media as fact

 

[Dolph]

9%? When we’re already down around 7% since the turn, down 4.7% in the five months to May? They are talking rubbish – just check out their track record kindly provided by the BBC:

They were dead wrong in February and April, what makes them right now, especially when predicting an improvement in the current rate of decline?

Still sounds better than the track record of those going on and on about house price crashes for the last 5+ years

As for the surveys, Surely it depends which survey you're using, whether your looking at asking prices (which have shown huge drops) or completion prices (which haven't dropped anywhere near as much and still show annual growth rather than decline and a 1% decline for the three months to April, as opposed to 3.2% for the nationwide survey of asking prices)

 

[Haircut]

Still sounds better than the track record of those going on and on about house price crashes for the last 5+ years

As for the surveys, Surely it depends which survey you're using, whether your looking at asking prices (which have shown huge drops) or completion prices (which haven't dropped anywhere near as much and still show annual growth rather than decline and a 1% decline for the three months to April, as opposed to 3.2% for the nationwide survey of asking prices)

The Nationwide and HBOS surveys aren't asking prices, they're mortgage approvals.

 

[clv101]

thats what i've been saying all along. i haven't believed anything that's been in the news.

it annoys me that so many people take the media as fact

No. Other way around. The reports from banks etc. are unrealistically rosy. They could be said to represent the best possible scenario - not the most likely scenario.

The fact is that prices have fallen 4.7% in 5 months, if that rate of fall continues it equates to around 11.5% in 12 months. HBOS have underestimated the falls twice this year already and are now predicting the rate of fall to slow. This seems illogical. Especially as the last two months falls have been the fastest, during the spring when prices usually pick up a bit.

A few months ago I suggested 10% falls this year, I now think that's conservative and the reality will be closer to 12%. I also predict we'll have another story from HBOS changing their forecast for the year for a third time, maybe from 9% to 12%!