Hi All,

I'm sure everyone has read/heard about the projected house price falls but I wonder, is it a load of rubbish?

1% annual fall is a small percentage but I'm not dismissing it. Prices in London have still risen and other prices have fallen more than the 1%...but just what is falling?

I hear projections of a 20-30% value drop but I just can't see it happening. Why? There is still a property shortage in this country. Well, I should say, a house shortage. Over the past 3 years apartments have been built for fun and tens of thousands are sitting empty and don't seem to be moving. This, in my opinion, is where you are going to see the drops.

Apartments have a relatively small target market. My parents wouldn't dream of living in an apartment and I'm guessing many other middle aged people have to desire to either. Elderly? Nope, not much of a market for the elderly and apartments. Apartments, by their very nature, are almost always built in cities. City living isn't for everyone and you lose even more target audience. Most apartments don't have garden facilities and this is not good for people with children or pets. To be perfectly honest, the only people that find apartments attractive are young professionals either single or newly coupled. Students to a certain extent, I guess.

The 3 Bed Semi or Detached is likely going to see no overall fall (in most areas). Why? There is always a market for it. A 3 bed house is always going to be desired from middle ages people, elderly, young professionals, new couples, young families, people with pets, etc etc etc. An even bigger indicator is the rising cost of mortgages. People who were previously over stretching themselves to a 4 or 5 bedroom house now will have to settle for a 3 bedroom house, increasing the demand further.

So, I ask, is this property crisis I hear so much about a load of rubbish? I think so.

I have kept in close touch with the property market since last October. I have explored the 'housepricecrash' website all this year. I have kept a watching brief on the financial/property media like 'thisismoney' and the lead story on Channel 4 News the day Halifax announced its March (?) figures when chillingly I first heard the phrase from an expert on major news source "Nobody should be buying property now unless they have to" was used to illustrate that the market may be slipping then but this was going to gather pace at an alarming rate (remember the small % falls announced by say Halifax are based on data at least three months out of date). Finally, I have attempted to sell my home at the most realistic price possible in the area and pulled it off the market because it was quite clear that the firm buyer I had was already thinking of poor excuses to renegotiate the price almost as soon as initial letters hit the doormats.

ASKING PRICES v SELLING PRICES

One of the most unhelpful measures at present is measuring the market on Asking Prices which are set by a combination of Agents with clients having the last word. In my area taking a section of the market I know extremely well nobody including my ex Agent would deny that Asking Prices are a MINIMUM 10% above what you may be able to get IF you can sell at THAT level without the buyer haggling on the way to exchange or dropping out. You say:-

"So, I ask, is this property crisis I hear so much about a load of rubbish? I think so."

What credible research is this based on?

You just have to look what is falling. Apartments are falling quickly and house prices simply aren't. Nothing is falling at all in London and infact they are even rising (all be it slowly)

Peoples inability to get a mortgage is not an indication of a crash. Neither is the cheeky haggler who wants a bargain.

It's a prediction, just like anyone elses, but supply and demand can't be ignored. There is an over supply of apartments and they are falling fast. There is an under supply of 3 bedroom houses.

There has been a housing shortage for years and market forces have kept prices increasing at an alarming rate. The big difference now is that some buyers cannot get a mortgage and of those who can, some can only borrow less, leaving them less money to offer for their house purchase. Sellers know this, and some sit tight, declining to accept lower offers, and buyers bide their time, because in most parts of the country prices are dropping by 1-2% per year. In the meantime some people have to sell due to the threat of repossession, relocating through work, emigrating etc, and these sellers have to accept lower offers because they must sell. So the price continues to drop and on it goes.

The real term drops will occur at the end of the summer when sellers realise they have to drop the asking price or never sell. In Somerset estate agents are placing adds in the property papers pleading with sellers to accept their professional advice and reduce their asking price if they are serious about selling in the current "dificult circumstances"

I agree that supply and demand were keeping prices high.

Plus for quite a long time banks/building societies have been lending to much money to people they knew could not afford it, including not having to put down a deposit.

But now there is a far more significant factor about.

Banks/building societies will never go back to those reckless lending days. This in turn means that buyers will not be able to borrow as much, leading to lower offers and eventually much lower prices.

Which will be good news for the vast majority of people.

Hi,

I see your point. However, I think this will simply cause higher earners who previously would of gone for a 4 or 5 bedroom house to now have to settle for a 3 bedroom house.

Also, never say never. The banks were bailed out by the Government and haven't learned their lesson as a result. As soon as interest rats get between 3-4% again, it will start afresh.

thisismoney newsletter May 8 2008 - 07:09:56

"London property hits big freeze

Jonathan Prynn and Mira Bar-Hillel, Evening Standard
28 April 2008"

I have explained in an earlier thread that I have followed the property market in detail since October 2007 and given my sources. I draw attention to this article which is as relevant nationally as well as for London because, in my view, it is "right on the money". It should be of value to anyone thinking of buying or selling.

The property market is a bit volatile at the moment, my clients are getting houses down valued on a regular basis. I personally think house price growth will slow down and decrease in certain areas but i can't see a 30% drop across the board. As said above new build houses and apartments i think will be worse hit as developers have kept pushing prices up at an unrealistic rate. Add this to the fact that mortgage rates are higher and more difficult to get and i think the housing market is bound to be affected.

Hi, you say "The property market is a bit volatile at the moment, my clients are getting houses down valued on a regular basis. I personally think house price growth will slow down..."

You seem to be suggesting that house prices are going up and down which ties in with your assertion that the property market is a bit volatile at the moment. That's a very interesting few words. Is it based on anecdotal evidence? In which case I would value you expanding the words with more detail because this is, in my experience, a unique perspective at this moment in time. If it is based on published research/articles I am sure 'viewers' would appreciate a counter weight to my contributions on this post.

Many thanks

Kind regards

drumster

I am basing what i have said on the experiances i am having with the clients i deal with. I still believe that if you buy the right house at the right price then that property could well go up in value as some of my customers are acheiving, however, if you do not invest wisely you could and most probably will have a property which will decrease in value. You will see as you have highlighted in my previous post is stated I personally think... which should allow viewers to come to the conclusion this is my personal opinion and not something i have taken from any published articles etc.