When do you think the property market will bottom out?
Follow this topic
Q&A » Buying and selling property
Retweet
Comments (
FacebookComments (13)
-
824MikeGG1 postedThere are signs that it is happening already, but I don't think we are there yet. However, I think falls will be more gradual and I also believe that the bottom will occur at different times in different regions.
Provided that there are no further major catastrophes, I reckon there should be improvement in most areas by Spring 2010.
Mike
Posted on 27 May 2009 |
Love 0 loves
Report
-
14GrandJury posted
I echo MikeGG1, house price trends can fluctuate a great deal depending on region and even 'very small regions'. I read an article that house prices are remaining strong at the moment within catchment areas of decent state schools. I think you can take that with a pinch of salt but the point is valid, some areas will be able to withstand the recession better than others.
A lot of analysts are also pointing out that the dip in house prices so far has been as a result of the banks being broken and bing unable to sustain heavy mortgage lending. There could be a second whammy on the way as widespread unemployment starts to make an impact on the economy.
Finally a *big* indicator will be the return of competative 90-95% LTV mortgages and more secured loan products. They're both still virtually dead at the moment indicating a) a lack of cash and b) low confidence in house prices.
Posted on 27 May 2009 | Love 1 love
Report
-
1
-
11Johnny5 posted
I suggest rather than get differing opinions on here you get in your car and drive around and note how many sale boards in your chosen area have sold on them !
I did in Egham, Staines, Ashford, and Shepperton in the South East. I am sure i didn't see all the boards as it's a big area but for every 5 boards i saw 3 were sold. This has all happened in the last 6- 8 weeks. There are a shortgage of houses on the market because many sellers won't sell. It's still a buyers market but there aren't a lot of quality properties available.
Try it because here you'll get a mixed set of opinions. Personally i think it has already undershot ! How can it not in a time of low rates and lck of properties. You will never judge the actual bottom exactly unless it's a fluke and that's not a good way to do business.. I'd say we have undershot, it ain't going much lower when you can borrow 200k for less than renting. I am sure NickPike and Bimber will hove into view with the usual stuff for why we are all doomed and property will soon be cheap as a cod dinner.
Posted on 27 May 2009 | Love 0 loves
Report
-
44bimber posted
The problem we have at the moment is that interest rates are being kept artificially low by government policy. They're trying to maintain the housing bubble but interest rates can only go one way from here and when they do prices will have to come down.
Something big happened in the US today - treasuries fell A LOT, which means their yields rose A LOT, which means mortgage rates rose A LOT. Whereas yesterday you could get a 30 year fixed rate for 5.08%, today you will pay 6.52%. This reduction in affordabiliity equates to a fall in house prices of 15% (this may not actualy happen and will not be immediate!). The rates may come back down a bit for a while but the trend is up, because the US has too much debt and people don't want to lend it any more. We are in the same mess so expect the same problems over here soon.
http://www.market-ticker.org/archives/1066-It-Is-Failing-ALL-OF-IT.html
Forget about supply and demand of houses, it's supply and demand of credit which moves the housing market! Don't expect to see the bottom any time soon.
Posted on 28 May 2009 | Love 0 loves
Report
-
272Swarbs posted
One important point, which many people seem to have missed, is that most of the falls over the last year haven't been driven by residential sales - they have been driven by distressed developer sales. Property developers have to sell enough of their newly built homes soon after finishing them, or they incur huge losses on all their construction finance. As such, for the last year they have been heavily discounting by up to 50%. This has helped force the 'market' down and distorted much of the overall picture - some of the areas with the hardest falls are the ones with the most newly built houses.
Ultimately, this may mean that the market appears to stabilise or even bounce in the next few months, as developers stop flooding the market with distressed sales. However, this doesn't necessarily mean anything. Prices could still fall further, as mortgages get more expensive; they could stay flat as sellers who don't have to sell refuse to drop their prices; or they could even rise as LTV requirements fall and potential buyers who have saved up over the last couple of years think the bottom has arrived and jump back into the market. No one really knows what will happen, as no one can truly predict what interest rates and banks will do, and how buyers and sellers will respond to this.
Oh, and bimber, the US treasury market is simply retracing back after hitting stupid highs last year. Everyone stuck their cash into US treasuries and forced the yields right down in the belief that the US was the only truly safe place to put said cash. However, that the ratings agencies have ticked the US off, people are pulling their cash out of treasuries causing the yields to rise again. The UK was never seen as a safe haven for cash, so the bond market wasn't forced up as much, and is unlikely to have as far to fall as the US - our 30 year gilts are still at 4.6%.
Posted on 28 May 2009 | Love 1 love
Report
-
44bimber posted
Swarbs, I know about the deleveraging last year but the more important aspect of the recent bond market activity is their course since the beginning of QE. Governments are trying to keep rates down to keep the bubble inflated but they can't. When they finally lose control it could be like a beach ball held under water being released.
The US is not such a bad proxy for the UK, it could well be a glimpse of our future.
http://www.fixedincomeinvestor.co.uk/x/bondchart.html?id=170&stash=C52E2A0&groupid=8
http://www.fixedincomeinvestor.co.uk/x/bondchart.html?id=172&stash=C52E2A0&groupid=8
The BOE is plotting a course between hyperinflation and a deflationary spiral and probably the best it can hope for is massive uncertainty. That's not an ingredient of a recovery in house prices.
Posted on 28 May 2009 | Love 0 loves
Report
-
49peepobaby posted
In nominal terms, 2011-2019. It will be a long bottom. In real terms, house prices will be eroding during that period as long term inflation increases to nearer 5%, not 2%. I don't think there is actually a reason for residential property prices ever to grow again in real terms.
Posted on 28 May 2009 | Love 0 loves
Report
-
44bimber posted
Johnny5, please do not spread lies about other people's opinions. I do not think we are doomed and I do not think that houses will cost as little as a cod dinner. If you want to debatge someone then be brave and do it in response to their post instead of hiding your insults where their targets may never see them. But most importantly, make sure you understand your antagonist's position. Some of your posts are so ridiculous that I can only assume you have to deliberately misunderstand an opinion you don't like because you don't have the capacity to argue against it and can only ridicule it.
In any case, if I did think prices would go that low then I would consider us anything but doomed because there would be an opportunity to buy a few frozen cod dinners, keep them in the freezer for however long and swap them for some houses. Cod is becoming rarer so may rise in price but it is easily substituted so the price is limited. If you think people should take you seriously then you'll leave out the lies and personal attacks.
I've responded to you a number of times, when you claim that I hold the "doom" position, to explain that I do not. Also I recall that you've claimed a few times to come to these forums to learn! I see no sign of you doing that.
My opinion in general is that property still has some way to fall (in real terms) considering the current economic conditions and that there are much better investment opportunities elsewhere. No gloom, no doom just pragmatism and optimism.
peepobaby, you say property prices will never grow again in real terms. An opinion like that needs some reasoning to go with it don't you think?
Posted on 29 May 2009 | Love 0 loves
Report
-
49
-
85
-
85
-
49peepobaby posted
Since recent property prices are driven mainly by massive credit availability at low interest rates rather than supply and demand, they won't stop falling until prices hit their natural supply/demand level or recent credit availability at low interest rates comes back. The chances of credit coming back are very low and even it does it will be at much higher interest rates than it has been. More likely is that prices will fall back to a natural supply/demand level. When that is doesn't really matter because as soon as they hit that point, there will be massive housebuilding that will suppress prices. Housebuilders have got to do something and they won't be building social housing because there isn't the funds to do it.
Posted on 13 June 2009 | Love 0 loves
Report
Post an answer
Sign in or register to post an answer.
Something you're dying to ask... or answer?
Register with lovemoney.com to start asking and answering questions on Q&A.
Get started nowSign in for a better Q&A
Registered already? Great! You can just sign in to ask and answer questions.
Sign in