Which destroys the integrity of the NAEA -
"Rules of Conduct
RULE 7
Do not seek business by improper means.
Rule 7(1)
A member shall not seek business by methods which are oppressive or involve dishonesty, deceit or misrepresentation."
Daytona
I think he had in mind an admittedly rather garbled image of house prices being buoyed up by a rising tide of prices and then, when the tide stops rising, you're stranded on an atoll. You needn't be marooned for very long, of course, because you can always get off the atoll by dropping your price a bit.
Steve
Which is one of the reasons I never made any attempt to join the NAEA.
It's actually a bit of a joke of an organisation as far as I was concerned. Bit like a government quango - Ofcom, Ofwat, OFGAS etc. - No teeth, or not prepared to use them. I actually suspect that there are vested interests which preclude serious investigations.
In fact, if some of the major chains of agents were investigated in relation to the Code of Practice, they would be closed down.
"Crowley" wrote
Mebbe, but only when(if) interest rates return to "long term average" levels.
Affordability is key in the
*current* environment...
Won't happen. Prices are rising again and seems as though interest rates will be cut further. There will be no house price crash. At least not for a very long time.
"abelard" wrote
I once heard an interesting strategy when selling your house, which goes something along these lines:-
Estate agent says: "yes, sure we'll be able to sell your house easily, for loads-a-dosh!"
Get the estate agent to suggest a selling price (let's call this P), associated commission level (let's call it C) and a target date for completion of sale (call it D). If you are happy with all these, then suggest that you'll pay commission of C
*if* completion occurs at date D with a sale price of P. *But* :- - If final sale price actually exceeds P, then for every 1,000 that actual sale price exceeds P, the commission will be increased by (say) 100 (that'd be 10% of the difference); - If final sale price is under P, then for every 1,000 under, the commission will be reduced by 100 (again 10% of difference); - If sale occurs before target date D, then for each day early you'll pay an extra (say) 10 commission; - If sale occurs after target date D, then for each day late the commission will be reduced by (say) 10.Then, if C was (say) 1% of P, the commission would be reduced to zero if actual sale price fell below 90% of P (for completion on D). Similarly, if completion occured 100 days "late", then commission would be reduced by 1,000...
FINALLY - ask the estate agent whether, in the light of this proposal, they'd like to adjust their figures for P, C and/or D!!
First time buyers (the crucial bottom rung of the ladder) are now down to 9% of buyers compared to 35 to 40% 3 or 4 years ago. So prices are clearly not "affordable" for them. Buy to let'ers filled the gap for a while but their numbers are receding now that capital gains are unlikely.
Without these groups who is going to prop up this house of cards ?
Perhaps it's "Prudence" Brown himself, either that or some desperate estate agent sat twiddling his thumbs in his empty office ?
Yet we see inflation easing - down to 2.1%, and property prices going up again:
My hazy crystal ball suggests...
1) The BTL boom has pretty much dried up already. 2) Massive amounts of BTL-oriented flats are still being built. 3) Oversupply (in *flats*) will suppress prices and bring some FTBs back. 4) Rental sector gets more competitive as FTBs start to buy. 5) 1000s of Badly geared BTLs have to sell. 6) General house prices follow flat prices downwards. 7) Inertia. As Japan proved for 15 years, why buy today when tomorrow things will be cheaper?Andrew McP
In message , Crowley writes
Why does it have to be a house of cards?
It will only collapse if there are many more people who are FORCED to sell than there are buyers willing to buy.
If this doesnt happen, those who would merely LIKE to sell wont bother, and those who feel a NEED to sell, either wont bother, or will find an alternative, (like letting, or letting and refinancing, or something else). As a result, volumes will fall, but prices/values wont and, even if they do, (fall), most people wont be affected because they wont be selling.
I remember someone saying that the only people who lost money after the Stock Market crash in the late '80's were those who sold. If you didnt sell, the market recovered and you started making money again.
It's only a profit when you take it, and its only a loss when you take it.
You can't expect markets to move monotonically.
If anyone knew how to time ajor crashes, they'd own the planet by now.
It needn't happen that way. The Japanese house price crash (really a credit bubble bursting that brought down house prices) just took 'em down 6% a year for a dozen years. No major one-off crash, but overall a pretty big drop by the end of it.
I believe we've had a credit bubble rather than a housing buble, but I can't say whether it will slowly puncture a la Japan or whether there'll be some convulsion in the credit markets that brings down the whole house of cards more quickly.
Retail is very overbuilt in the UK and has seen a great deal of the jobs growth in the past decade. Much or the rest has been soaked up by the buyilding and property markets or by government spending. I expect all of these to go into reverse.
FoFP
What price do you think houses would carry if nobody could get credit?
If *one* person is forced to sell, then that's the guy who sets the price for all the others, just like the top price sets the prie on the way up.
The problem with the credit bubble is that for ordinary oiks, the credit they can usefully raise is based on their house price. If prices aren't rising, the credit engine dies for lack of fuel, and the retail markets and property speculation dependent on it withers too, with the redundancies and bad debts that comes with it.
About one person in 5 of my friends weren't involved with prperty (other than as resident owners) ten years ago and became involved in it as the bubble grew. I suspect they'll all have to find day jobs again soon, or be unemployed.
Yup. the same was true for stockholders in the 1929 crash who broke even if they just held on, ....until 1992.
That's not true when you base buying on leverage. The creditor can close you down.
FoFP
Agreed - but if nobody can get credit, we are all in a mess, and the only people who will survive with any level of lifestyle will be those with cash, (or effectively cash). If you are right, we should all sell our property quickly, for whatever we can get, but the would create a self fulfilling prophecy.
Agreed - but it doesnt mean that it will collapse if people arent forced to sell.
Agreed - see above.
Are you suggesting that things are so bad that "cash" is the only sensible holding? (Actually, I think you have been saying this for several years). I am guessing that holding property, (and some other things), without debt would not be too bad a thing either?
I agree 100%.
It's aready happening where I live.
The 1000 new BTL style flats that have just been completed were 70% sold off plane when the foundations were being laid. Now they are finished, they are 70% sold and very empty.
Looking for the prices to drop over the next 12 months.
tim
This get's my vote as well
tim
Do you 'trust' the CPI and RPI figures ? I don't. Just because the price of Chinese DVD players are coming down to approaching zero doesn't mean real inflation is falling.
As for property prices going up again, it's just sales patter designed to sucker-in the 'greater fools' before the bubble bursts.
Personally I've only been "doom-mongering" for about 12 months during which time prices have been falling according to Hometrack.
Unemployment has risen in each of the past 10 months and seems set to continue as the record £1.1trillion of debt, which kept the economy afloat, starts to bite. There's always 'forced sellers' in any market, divorced, bereavement, job move etc and 'financially distressed' sellers will be joining them in increasing numbers as their debts 'bite'.
And "greed and fear" applies on the way down just as it did on the way up
That'll be in Sweden, then?
I suppose if they're being sold out of aircraft, and just chucked out, a "housing crash" is exactly what you expect when they land.
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