Still rising ? Eh ? quote : "It said that house prices across England and Wales fell by 1.29 per cent in 2005. It added that the average price had fallen by 4.17 per cent since the market turned in June last year." Doesn't sound like its "still rising" to me.
As for Hometracks predictions of a rise in 2006 they represent estate agents so they would say that wouldn't they ? The vested interests said the same throughout the last crash too :-)
Its just someone who's "bearish" as to the future direction of the market ie thinks prices will fall. In 5/6 years time or so I'll probably be bullish on the market.
Sit tight for now and then buy at or near the bottom I suppose ?
Its a cycle so patience and timing are important. I've seen some sellers drop their price by 15 to 20% so far (while others have hardly budged....so far)
IMO they have much further to fall.
"Crowley" wrote
Exactly - That bit is talking about *asking* prices, isn't it - not *selling* prices (values).
Note that their terminology changes from "prices" to "values" when they stop talking about falls and start talking about rises!
Thats right but if asking prices are falling then it follows that selling prices are too as nobody is paying over the asking price anymore and ,apparently, are paying on average 93% of asking price (particularly in a "buyers market" with completions down 30% from last year according to Rightmove)
Correct but the only "rises" they refer to are their "predicted" rises for 2006 ie 'estate agents spin' : "Hometrack in customary fashion manage to distil this news by claiming a rise in values of 1% for 2006"
"Crowley" wrote
Glad you agree!
"Crowley" wrote
Not so. They could have been paying 92% of asking prices previously and now paying 97% of asking prices?
Eg was asking 100K and selling at 92K, now asking 96K and selling at 93K.
That would mean asking prices fell
4% (100K to 96K) while selling prices rose 1.1% (92K to 93K).
"Crowley" wrote
Yeh, and the *only* figures they give for selling prices are *rises* !
Maybe or maybe not but the most recent figure I heard was completion prices are 93% of asking price. In a buyers market with sales volumes collapsing YOY by almost a third its likely that buyers are driving harder bargains than ever. They should be.
But they're not "selling prices" they're "*predicted* selling prices" for 2006. Big difference.
"Crowley" wrote
Yeh and all the quotes of falls are not for "selling prices", they're for "*asking* prices". Big difference!
I can see your 'proposition' is mathematically possible but I consider it extremely unlikely that selling prices are *rising* while asking prices are *falling*. It seems quite ludicrous in fact ;-)
"Crowley" wrote
Look at Halifax & Nationwide's figures - those are closer to "selling" than "asking" (b/soc so mortgage figures) ... [Still quoting small rises.]
HomeTrack are estate agents => asking prices. [These are the main ones quoting small falls, aren't they?]
"Crowley" wrote
Not really. A year ago, after massive earlier rises, people may have been inclined to ask for inflated asking prices.
Now that prices have levelled-off, there's no need to increase a current realistic valuation by so much (for the time between going to market & actually selling). In fact, it would be "quite ludicrous" to think that everyone would continue adding 10-20% to a realistic "current" valuation... ;-)
Why "=>"? Estate agents don't just market properties, they're involved in negotiating the sales. Surely they must therefore also have real selling prices in their records to quote, and there is no good reason to publish asking prices, which are after all basically meaningless.
It is ludicrous, if sellers have had a realistic pre-sale valuation done, to be adding anything at all to it to arrive at an asking price. Then they'd stand a better chance of achieving a selling price which is 100% of the asking price, or indeed, as in God's own country (aka the Frozen Wastes), more.
Prices were 'inflated' alright and still are (around twice the traditional price/earnings ratio) Thats one reason they're dropping.
I'm sure there's some kind of twisted logic in there somewhere ;-)
It certainly would be 'quite ludicrous' particularly when a 30% collapse in sales volumes suggests that current valuations are far from 'realistic'. It would take falls of 30 to 40% to restore the traditional average p/e ratio.
Signs of credit tightening suggests that the tap which allows borrowing at the levels that maintain house prices at these high ratios is now being turned off.
"Crowley" wrote
Problem is, there is no price level that will restore *both* traditional average p/e ratio,
*and* traditional average "cost of mortgage" /earnings ratio (with interest rates that differ from the "traditional average").Why should it be the former that is restored rather than the latter?
"Ronald Raygun" wrote
True, but HomeTrack do quote *asking* prices, don't they?
"Ronald Raygun" wrote
Exactly!
"Ronald Raygun" wrote
AIUI, it is quite common - in a rising market - to ask for an amount higher than the current realistic valuation. If most sales take 6 months from first being put on the market to completion, then shouldn't you expect the seller to ask for the likely value in 6 month's time?
Interest rates are traditionally low at present (while debt is at an all time high !) but history proves they go up aswell as down. What do you think UK rates will stand at in a years time, 2 years time, 5 years time ? or at any other time during the course of someones mortgage ? How many heavily indebted mortgagees could cope with just a 1% increase in rates never mind 2 to 2.5% increase taking us to more traditional levels ?
The pendulum swings one way and then the other and equilibrium is always restored at some point in the cycle.
I've no idea and don't care, I'll take your word for it. I'm just saying what I think they *should* quote, and you seem to be with me on this.
It may be common, but it is wrong, and perhaps if houses do take 6 months to sell, the blame for this deserves to be laid partly at the door of this daft practice.
Emphatically not, particularly in a rising market. A market rises because there is a lot of demand, which means that properties for sale should come to the attention of prospective buyers very quickly, because they are actively hunting. If the price is right, this should lead to a reasonably quick sale, given depressed supply. So if it doesn't sell quickly despite high demand, this is usually a hint that the price is not right.
To put it another way, if you market the house for what it will be worth next year, then don't expect to sell it before next year.
If a house does not sell, the first thing you do to get things moving is to revise your price downwards, not upwards. Well, either that, or decide not to sell. :-(
Also, the final price is fixed at exchange, not completion. If the two are close together, this distinction is perhaps not too important, but if a long delay is expected from when the sale is irrevocably agreed until it is actually completed, then I agree it would make sense to add something on during the final price negotiation, but this is not something which should happen at the marketing stage. This is to compensate the seller for losing out on possibly finding a higher from a buyer keen to complete sooner.
In message , Crowley writes
Not if you are an estate agent dealing with people who believe that their houses are worth much more than they are.
After the last boom, I think it took about 2 or 3 years before most people on my patch got the message. As a consequence, sales volumes fell dramatically, and asking prices remained static then fell slowly.
But I would still suggest that there is a significant difference this time, which is a lack of desperation to sell.
In message , Ronald Raygun writes
I banged my head against a brick wall on this issue for 17 years
To get the business, you have to give the seller a suggested asking price which they want to hear. If you dont, another agent will - and if it's not on the books, you cant sell it. Once it's on the books, the job is to get the asking price down to a level at which it would sell. You won some, and lost some.
No matter how hard some agents work at being realistic - you cant beat the dickheads who tell them what they want to hear, so you have to join them.
Most sellers dont actually understand this. If they did, they would expect their own property to sell in 6 months, but for its 12 month forecast value,
Qui bono ?
Well over 50% of people live in owner occupied houses. Therefore if house prices go up more than half the population may feel the "benefit", and the only ones to be disadvantaged are those who seriously want to get on the housing ladder, but haven't yet done so, a relatively small number. True those who want to move up the ladder will need more cash, but that's just an "investment", as is buying your first house, touch wood you can always sell up and get your money back, perhaps even make a profit.
As regards wages, If one sector's wages go up, the chances are it's not mine, so I won't benefit from it directly, but if it's car workers, dockers, council workers, whatever, chances are the increased cost will work through the system and affect me adversely eventually to a greater or lesser extent.
DG
Er, yes, if you're happy to live in a cardboard box.
Owning the house you live in is part of your "cost of living", so a rise in house prices is a rise in your cost of living as well as a rise in the value of your "investment". The two cancel each other out - until such time you move downmarket, move abroad, decide that renting is better value than owning, or die. And if you're looking to move upmarket, your investment is rising more slowly than your future cost of living.
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