brian pearson

The many thousands of 'buy to letters' whose rent is barely covering the mortgage payments will look to dump their properties as prices start to fall. If they have seen their properties increase in value by crazy amounts over the last few years they will be happy to offload them at a lowish price before the market grinds to a halt.

The problem really starts when prices start falling month on month and prospective buyers decide to 'wait a bit to see if they will reduce further'. The opposite happens when prices are rising and buyers are desperate to purchase.

If I was a first time buyer I would sit back and wait. As these are the lifeblood of the market sales could stagnate.

Todays interest rate cut will not make any differance to the housing market short term but could have serious consequences for the economy next year.

A cynical attempt to keep us all spending.

Little Englander (sour)

For this cynical ruse to work in my house, they would have to raise the pension.

brian pearson

Afraid your pensions gonna get eaten up with inflation. Will be worth diddly squat soon, but as long as the property speculators and bankers are happy.

Mikeuk

Major bank? NR were a 'tiddler' building society who got too big for their boots. Their 125% mortgages and other such 'products' may have had a marginal influence on house price inflation but in the long run their disappearance will make little difference to the property market.

What is all this tripe about hurt pride in Newcastle? The city has a respectable and well-run lending institution in the Newcastle Building Society. Incidentally when the Portsmouth Building Society was bankrupted by management incompetence about 15 years ago I don't recall any such sentimental drivel.

I think it's possible to argue that prices in South Hants and West Sussex have fallen 5% from their peak and I'm dealing with a fair number of repossessions at the moment. However the conditions for a 1989-style crash simply do not exist.

All I would say is that there's no need to rush to buy since prices won't be going up again for many months. OTOH if someting you want is available and you are in a position to buy I wouldn't be put off buying by scare stories.

A a matter of fact I'm looking round now for another holiday cottage. I may buy on the IOW.

Despite 30+ years as a qualified surveyor, landlord and occasional dealer/renovator/developer it's obvious that I am totallly outgunned by Brian Pearson. It would be interesting to know the track record of this indispensible oracle of the property market.

C_steam

I agree with Mike. Don't let the hyperbole of the tabloids affect this!

Don't forget, essentially house prices only move downward slowly, simply because in the main the housing market is in the hands of people who don't have to sell.

The other factor is that the value of a house is artificially decided by - essentially - the valuers. It is not in their interests or anyone elses to suddenly devalue a house overnight!

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brian pearson

The only time I have ever bought a house Mike it was to live in. Not too many other countries have so many amatuer property developers, speculators, or gullable people who are prepared to mortgage themselves to the hilt to buy a house assuming that it will continue to rise in value infinitum.

My angle is the question of debt and the reliance on it to keep the economy growing. Yesterdays interest rate cut was an attempt to keep people spending and buying houses. Shouldn't they be looking more closely at inflation ?

I have never speculated on the housing market and have no wish to but lets face it the way prices have rocketed in the last ten years anyone in that line of work should be millionaires by now. A few hundred thou invested ten years ago and offloaded just before the current 'blip' would set you up for life.

I don't think that I have said a crash is a given either. Just asked what people like you, in the business think. Although I must admit I have always taken the advice of experts with a degree of caution. Dishing out 125% mortgages, creating instant neg equity is barmy. Just like throwing millions at kids with a computer during the dotcom madness.

Maybe sentiment is the prime driver when it comes to house prices and the feeling I get on my travels is not too positive. Time will tell.

Mikeuk

Well it's not difficult to be a millionaire these days especially if you bought even quite modest property in London a few years ago. I suppose I must be a millionaire too. The word has lost its meaning. Only billonaires count as seriously rich these days.

One could write screeds on this subject and then consign the whole thing to the wastepaper basket. However, unless very large numbers of people are forced to sell at unwelcome prices - and for this you would need 1988-style rates of interest and levels of unemployment - property will simply not come onto the market at ruinously lower prices.

Certainly many inflationary mortgage products have been withdrawn. At least one British lender (Victoria) has folded, several major institutions have closed their specialist lending arms to new business, and even Kensington say they no longer intend to lend to the sub-prime market. However, this does not mean that the price inflation to which these products and lenders have contributed will suddenly be reversed. People will not take losses unless they are forced to and the fact that so many people are obsessed with the alleged value of their homes will add to this ratchet effect.

So I anticipate a fall of no more than 5-10% followed by a lengthy plateau. In the meantime wage inflation will continue and so in real terms a fall in values will take place during that stagnation.

But there is nothing new about this scenario.

Mikeuk

Yes, very true.

I would like to think that most valuers, like myself, start by assuming that a genuine market transaction provides prima facie evidence of value before considering whether the property should be valued at a lower figure (eg because of some defect unknown to the buyer). Some people believe that we magically conjure up the truth about property values from our inner selves, and in the past there have unfortunately been a few valuers who gave credence to that view.

These days the requirement for evidence of comparable sales deflates the mystique and reduces instances of gross unfairness to borrowers. Incidentally I once made a formal complaint - which was upheld - on a valuation conducted on my own home by a brother surveyor sent from some far distant location.

However I have for some years been unhappy about the liberal not to say lax approach the profession has in the past adopted to contract prices on new estates, where large discounts and other incentives are frequently given.

This year the RICS has rightly tightened up the approach and many buyers of new homes will find availability of funds for this purpose less freely available than in the past.

cookie65

I am currently buying a house and have been having major problems because of a poor valuation by my mortgage companies surveyor.
He has undervalued the house by 40K and committed me to 15ks worth of mainly unnecessary building work.
There is not a lot I can say about this as in the current climate there are very few lenders offering the product I require.

Mikeuk

If he downed it by £40,000 we must presumably be talking about a fairly high price to start with.

What works are included in the £15,000 retention?

Of course you can complain about the valuation if you think it is unfair, but haven't you thought about using it as a weapon to beat the price down? Also, dont exclude the possibility that the valuer may be right and you wrong, although I'm bound to say that I can't recall an occasion when I downvalued by that amount on an armslength sale (is that the case here?). If I did I would be waiting for a major flak barrage right now.

Have you gone through a broker or direct to a lender?