So in such a market with sales volumes low and going lower wouldn't it be in the ea's financial interests for prices to drop to levels where sales *may* start to pick up again.
In which case when are we going to get Shipside, Wrigglesworth et al talking prices down ?
I think it's too late for that. Sentiment towards ever increasing prices has changed, £1.1trillion debt is beginning to bite, some lenders are tightening credit, and sales volumes are 30% down from last year. The importance of interest rates is often exaggerated IMO. Rates fell significantly in the early nineties but the market didn't pick up and prices didn't start rising again until 95.
Why should it be "different this time" Traditionally the long term price/earnings ratio for houses is around 3.5. It's now between 7 and 8 because of the easy availability of credit and a wave of hype. Increasing signs of credit tightening as the economy worsens and many struggle with debt will lead to a correction IMO whatever the future is for rates.
Yes "house prices" in most of the indices are "average prices of houses sold"
Good point.
I have heard suggestions that, indeed, the number of high-end sales are increasing as a proportion of the total sold and yes, it is being presented as an increase in house prices.
Some figures from Land Registry data were presented on....
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".....to demonstrate this but I do not have the exact link.
Unfortunately, it doesnt seem to work that way. They continue to overvalue, (in relation to the market), in order to get the business. As the market falls, they still overvalue to get the business.
During the last recession, I didnt get too involved in this, (mainly because I couldnt be bothered with the hassle and dissatisfaction of customers, and also because I didnt believe it worked). I told people what I genuinely believed, and left them to it. Eventually, after they had tried a couple of agents whose advise turned out to be bullshit, some of them came back to me and got realistic. At the same time, I specifically targeted those who had to sell, and wanted realistic advice.
Whilst 4 or 5 small agents around me closed their doors, I managed to survive with a bit of ducking and diving, and emerged into the buoyant market of the past 6 or 7 years.
I tell one story of a house which I valued at £50,000, (1993 or so), but which went on at £60,000 with another agent. About 6 months later I was asked back and said £40,000, and it was put on the market with another agent. I went back again in another 6 months, and suggested it was worth about £35,000. I got it to sell, and we got £35,000 for it. Had we been asked to sell in the first place, I know I would have got close to £50,000 for it and, given that they werent buying another, this was a real loss of £15,000 +/-. The same house is now worth about £225,000, having had around £40,000 spent on it.
Ah! still a specific personal reason, rather than a general time for a change thing.
You could be right and, in fairness, the Tories do tend to reign in expenditure, and only spend what they've got, or can reasonably expect to get. Whereas Brown has squandered the lot, and manipulated figures to screw us even more.
Nice bet. May have a look at that for a couple of quid. I can lay him at
1.53 as next leader on Betfair which is 1.89/1 I think.
I dont think people really consider what they might be earning in 10 years, or what interest rates might be, (when buying a house). The tendency is to say "can I afford it today" and go for it. If this wasnt the case, purchases would be based on factoring in a higher interest rate, and prices wouldnt have risen so far.
I'm not sure that prices will rise if rates fall, (unless they fall a lot)
This is the key to the housing market.
I dont think so. I think it would be represented as 3 sales at £450K, thus an average of £150K
Not sure - but I would guess that there will be a weighting of some kind.
My experience suggests that a change in interest rates has an effect around 18 months to 2 years after the change. The market in manchester did not reach its peak until 1992 when it fell through to 1994/5. It then seems to have bumbled along the bottom until mid 1998 before it started its' meteoric rise.
The thing is that we have never had sustained interest rates of around
4% or 5%. A new ratio of mortgage payments in relation to earnings seems to be applying. It used to be that once the market had reached 5 times earnings, it had peaked, but this is obviously not the case now
If they are affordable now for the majority of people who own them, and they seem to be, then why wont they be affordable next year? Do you expect an economic crash as well?
You specifically (IIRC) said that it was spin from estate agents but now you widen the field to include, well, everyone.
So now it appears that *anyone* who says anything about house prices (unless they agree with you) is lying and is in the pay/clutches/whatever of estate agents. So if they say that prices are flat, and even give a figure, based on their own experience of many tens of thousands of sales you choose not to believe them. Now either there is a massive conspiracy, involving thousands, maybe tens of thousands of people, which is easily detectable (but strangely yet not shown) using public land registry data*, or you are are simply ignoring figures you dont like by using justifications like that. I know which one I've got my money on.
And just *where* is that? What is your private data, not accessible to the rest of us, which shows this? Where did you obtain it from? Or is it just that you saw some asking prices fall where you live and extrapolated wildly?
Just proving what I said, which is that whatever anyone says, unless it fits in with what you want to hear, its a conspiracy!
a static market is, by definition, a flat market! No spin is needed.
Whereas the doom-mongers seem to be spinning that less house sales = lower house prices, but that doesnt follow at all. Though if you were right about this, agents would be talking the market *down* in order to get volume and therefore commissions. But they arent, according to your own conspiracy theories!
You seem to be saying that the local agent valued it at 10-15% more than the owner so you bid 20% less and settled for 12% off which is 1.2% more than what the owner thought it was worth.?????
Of course they are affordable for the "majority" but rising bankruptcies and repossessions suggest that for a growing minority they are becoming unaffordable and that is where a downwards correction will occur, around the edges.
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