Has the ED housing market reached the bottom yet ( II )

[Keef]

Thought about it long and hard, but decided winter wasn't the best time. Besides, we're on higher ground than that!

[AcedOut]

The battleships?

[EDOldie]

From the BBC

'The UK's property market has a better chance of bouncing back before other countries because "we failed" to build enough houses, Gordon Brown has said.

The prime minister told a City audience the US and Spain had "overbuilt" homes during the years of rising prices.

In contrast the UK had "pent-up demand" because not enough had been built.

He said the UK problem was not shortage of demand for homes at "the right prices" but a shortage of mortgages "at the right prices for people to buy".'

[Brendan]

How about "Not enough fucking housing for the size of the population in the first fucking place."

[EDOldie]

Whatever, but he's (and I hate saying this word in connection with GB) right. Particularly in London and the south east, theres simply not enough property to go round. Things can change very quickly and unexpectedly in the house market. For example in May 07 the current situation was unthinkable amongst buyers and sellers.

[jayes]

I'm afraid the supply and demand model will not prevent house prices in London by falling a further 20% at least.

There are so many other factors now as to why a two bedroom Victorian terrace in ED will no longer achieve ?400,000 plus. Banks and Mortage companies will no longer allow irresponsible borrowing which has been seen over the past ten years without a significant LTV ratio. There are many many jobs being lost each day, bonuses will be significantly down this year and 2010 will have significantly lower on top of that. Salaries are being restricted, money is tight and the recession that we are now heading into will not unfold and reach out to all the other businesses for a period of time yet....

I wonder if Gordon commented on sustaining a property market where the average wage is ?30k odd in London and the average house price is ?300k (10x average earnings).

[SeanMacGabhann]

But is this true? is it? I know demand outsrips supply in certain demographics but I'm pretty sure (as in vague recollection of article) there are swathes of (sepecially new-build) flats empty? But to let landlords hanging on to them rather than letting them to retain value etc etc

And people saying the housing market will bounce back as A Good Thing rather suggests the lessons of the current situation haven't really been learned either

[Michael Palaeologus]

Well demographic projections seem to say that we will continue to need new housing, especially of the starter home variety. This being caused by more single person households - which apparently is the trend.

This doesnt take into account basic economics. If people cant or wont pay the going to rate, they wont buy.

[Keef]

There have been no shortage of flats whilst we've been looking!

I have no idea if we're getting a bargain or not, I think we are, and there is a similar flat in the same block (not battle ships by the way) still on the market for over ?30k more than we're paying, so that won't sell!

[Jeremy]

SeanMacGabhann Wrote:

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> And people saying the housing market will bounce

> back as A Good Thing rather suggests the lessons

> of the current situation haven't really been

> learned either

Depends what you mean by "bouncing back". Prices returning to 2007 levels wouldn't necesarily be a good thing. But it will be a good thing when people start buying and banks start lending (albeit more repsonsibly) again.

[SteveT]

It seems that property is no longer considered to be the economy,

realistically it never was, it seems like banking is, so that's alright then.

We can sleep soundly in our beds knowing that all is well,

nothing to see here.

[Peckhamgatecrasher]

Just because one is single and trying to get on the first rung of the property ladder, it doesn't follow that one has had a good taste extirpation.

[AcedOut]

Unthinkable, really?

[SteveT]

extirpation:- act of doing away with, abolition, cancellation, eradication.

I fear PGC that there are many more in the coming months, who will savour similar taste during extirpation years 2009-14.

My first teetering steps into property were a disaster, and took several (5) years to get back to zero debt, but I fortunately did not have dependents at that time in my life.

One thing you can guarantee about life, it changes, and you eventually get back to normality within a few years

of being in the 'wastelands of extirpationville'.

But as you rightfully say PGC it leaves a lasting foul taste, plus the odour of burnt finger ends, and the remaining ordure in the mind.

I have the greatest sympathy for all who have travelled this most miserable of life's routes.

[AcedOut]

"I wonder if Gordon commented on sustaining a property market where the average wage is ?30k odd in London and the average house price is ?300k (10x average earnings)."

-- You cannot compare two averages like that! The distribution of the two is completely different. Not that it wouldn't be an interesting question to ask though.

[EDdownunder]

Jeremy Wrote:

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> I am cynical regarding people buying houses

> because it's safer than putting money into the

> bank. Despite that article.

>

> Aren't all accounts now guaranteed by the

> government up to ?50,000? If that's not enough for

> you, you can split your money between different

> banks. If that still isn't enough for you, you can

> put your cash into an Irish bank, where all of

> your money will be guaranteed by the Irish

> government. And if you are still in doubt, buy

> gold.

>

> Buying a house (which will almost definitely go

> down in value in the short term) purely as a way

> of storing your money seems rather daft to me!

Well said Jeremey, the cash buyers afraid of losing their money in the banks is almost laughable....if the major banks crash and everyone loses ALL their money, you think having bricks and mortar will mean anything....you will be better off with a tent, a fishing rod and a box of matches if it all came to that.

[benmorg]

Michael Palaeologus Wrote:

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> Well demographic projections seem to say that we

> will continue to need new housing, especially of

> the starter home variety. This being caused by

> more single person households - which apparently

> is the trend.

the demographic trends are assumed rather than proven. They are based on the assumption that foreign workers will keep coming to the UK for work (unlikely in a recession) and that more people want to live in single person households, which looks decidedly questionable:

http://www.thisislondon.co.uk/standard/article-23564666-details/More+extended+families+sharing+home/article.do

The truth is that there isn't a dire shortage of property. If there was, rents would have risen faster than wage inflation, as sale prices have. In reality, rents have kept pace with wage inflation. The reason for high house prices was not undersupply but cheap credit and lax lending by the banks, causing a runaway bubble. We all know that the bubble has now burst.

The most likely outcome from the house price crash is that values will return to historic income multiples. The only thing that could sustain prices at the current level would be a return to irresponsible lending, which aint gonna happen. Or soaring inflation. But with recession and unemployment looming we're more likely to see deflation next year than inflation. Arguably the deflation has already started with the housing market.

[Jeremy]

Most high street banks have only been offering 4 to 4.5 times salary, so I don't really buy what you're saying.

House prices have been large dictated by investors... shortage of property to buy, excess of property to rent, etc.

[AcedOut]

I don't think the salary multiples will change that much, but I do believe that lower LTV's will become the norm. Higher LTV's will exist (probably 90% max), but the rates will be so high that repayment affordability would be an issue. This will mean larger deposits will be required, thus slowing the demand.

[Jeremy]

OK... yeah the 100%+ mortgages were madness.

How do you know that the rates will be high? They're still historically pretty low.

[local estate agent]

Hope??

http://www.thisislondon.co.uk/standard/article-23572439-details/London+house+prices+cut+by+20+per+cent/article.do#readerComments

[benmorg]

local estate agent Wrote:

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> Hope??

>

> http://www.thisislondon.co.uk/standard/article-235

> 72439-details/London+house+prices+cut+by+20+per+ce

> nt/article.do#readerComments

look more closely.

"Purchasers have been told that now is their best time to close a deal before the Government's ?37 billion bank rescue restores confidence to the market."

told by whom? Answer: estate agent Peter Rollings, managing director of agents Marsh & Parsons.

Not that estate agents would try to talk up the market...;-)

[benmorg]

... and speaking of London estate agents, this is what Knight Frank says:

http://www.thisislondon.co.uk/standard-business/article-23572535-details/London+home+slump+%27will+go+on+next+year%27/article.do

"London home slump 'will go on next year'

14.10.08

House prices in London will continue to fall next year and not return to last year's peak until 2015, estate agent Knight Frank warned today, adding that "there is more pain to come" for the housing market.

"Banks won't lend to each other because they don't know if they will be repaid, and consumers find it hard to get mortgages," said researcher Liam Bailey. "With the UK entering recession, unemployment is likely to increase, and disposable income and household budgets will fall."

Knight Frank said houses in Greater London will slump by a total of 25.2% from their 2007 peak by next year."

[*Bob*]

Good God..

GET A ROOM, you lot.

[benmorg]

Jeremy Wrote:

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> Most high street banks have only been offering 4

> to 4.5 times salary, so I don't really buy what

> you're saying.

but first-time buyers are now borrowing only about three times their salary:

http://ftadviser.com/FTAdviser/Mortgages/News/article/20081014/43666f0a-99cd-11dd-8351-00144f2af8e8/Lending-for-house-purchases-hits-sixyear-low.jsp

and that isn't going to change any time soon.