House prices to crash

[Uncle C]

rightmove and other similar data has to be taken with a bucket of salt, their prices reflect asking prices not actual real prices. there can be a considerable difference between the two, with fluctuations in that gap. asking prices could drop to reflect sellers realistic view of the market, while the actual prices sold for still increase. one area/market might get 7% less than the asking price, while another gets 15%.

altogether, i wouldn't trust rightmove or similar as a source.

We'll beg to differ on this one then.
If you want to know whether to buy or sell shares (for instance) you dont look at how they were performing three months ago. You find the latest bang up to date information. Same with house prices. Rightmove trends may be flawed but at least they are topical not historical.

 

[Uncle C]

1. I know next to nothing about being a BTL Landlord, but surely an "Empire" would have been created over a considerable period of time, when mortgage rates were much higher, but properties were cheaper to buy. Therefore, the rents should have covered the repayments on those mortgages, so theoretically, the BTL Landlords could actually be banking money at the moment because of the low interest rates.

There are a number of reasons why BTL are having it tougher, but that another whole discussion. you are right that landlords build up their portfolio over many years but that doesn't make them immune when the banks come calling.
Here is a prime example:
http://www.thisismoney.co.uk/mortgages-and-homes/buy-to-let/article.html?in_article_id=499590&in_page_id=56


2. The banking collapse was caused by loans to private purchasers in the USA who should never have been lent money in the first place. Presumably your reference to commercial debt also relates to the USA, so are you saying that billions are owed by insolvent companies that are still trading? Seems unlikely.

I hope to track down a really good article on this and will post when I find it.

Here is a snippet to be going on with:
"King Sturge estimates that £22.7bn of commercial property debt will reach maturity in 2009 and require refinancing. JP Morgan estimates that, overall, £148bn of debt will mature over the next five years, peaking in 2012. This is coupled with a 31.5% fall in the value of commercial property since the peak of the market in 2007 according to Investment Property Databank, which has put loan-to-value covenants at risk."

4. The property market is hardly buoyant at the moment so it stands to reason that less money will need to be made available for BTL.

I think this is all about cause and effect. The banks wont lend to BTL so the market becomes depressed. Not the other way round.

As I said I have not had or will not have any involvement in the BTL market, so have no axe to grind one way or the other. I do, however, have issues with those that seem to delight in talking down the economy at every given opportunity, it's one of the reasons I've given up buying newspapers.

I have no axe to grind either but am sick of Estate Agents and everyone else with a vested interest talking up the housing market and wishing a return to the very circumstances that nearly caused a global collapse last time

........

 

[beorhthelm]

We'll beg to differ on this one then.
If you want to know whether to buy or sell shares (for instance) you dont look at how they were performing three months ago. You find the latest bang up to date information. Same with house prices. Rightmove trends may be flawed but at least they are topical not historical.

if you want to contrast with share pricing, rightmove's (or rather estate agent's) prices are like a broker's target price. its a forecast, prone to subjectivity, not a factual peice of data. i completely agree there is a considerable lag and is retrospective, but then all real data is historic.

 

[Uncle C]

if you want to contrast with share pricing, rightmove's (or rather estate agent's) prices are like a broker's target price.

Wrong. Share prices and house prices (with negotiation) are what you pay. Broker's target prices are what they believe it will be worth sometime in the future

 

[beorhthelm]

Wrong. Share prices and house prices (with negotiation) are what you pay. Broker's target prices are what they believe it will be worth sometime in the future

come back when you find an estate agent that prices properties at exactly the same value as they eventually sell for. my whole point above which you miss is that asking prices are not the same as house prices. (and note the word "like" i wasnt saying they were exactly the same).

 

[Uncle C]

come back when you find an estate agent that prices properties at exactly the same value as they eventually sell for. my whole point above which you miss is that asking prices are not the same as house prices. (and note the word "like" i wasnt saying they were exactly the same).

They are nothing "like" the same thing.

And how exactly did I miss your point when I specifically made mention of price "with negotiation."

Is anyone dumb enough to believe that Estate Agents dont try for every penny they can get in the asking price. Hence the fact that these 'inflated' prices are still going down just underpins the arguement that the current direction of the housing market is down.

 

[Uncle Spielberg]

Mortgage brokers were 32000 in 2007 and are now 10000 and expected to be around 6000 by the end of 2011 after the FSA's MMR has been implemented.

 

[Uncle C]

Mortgage brokers were 32000 in 2007 and are now 10000 and expected to be around 6000 by the end of 2011 after the FSA's MMR has been implemented.

You will soon become a collectors item

 

[Uncle Spielberg]

I hope to last until 2012 but its touch and go. The last 2 years have been something I would not wish on my worst enemy.

 

[Westdene Seagull]

US.

1. BTL landlords are in many cases being saved from disaster by historically low interest rates. When these go up (not if) many BTL empires will collapse like a pack of cards.

3. Many BTL landlords have built up huge empires based on rents just being able to pay mortgages, but with appreciating house prices being the icing on the cake that has lured many in. With property prices about to fall and rents unable to rise to compensate, they are on dodgy ground with the paper value of their properties unable to match the mortgages.

4. Banks are already massively reducing the amount of money they will feed into BTL. Perhaps they know something we don't.

As a BTL landlord I have to disagree.

1. On my BTL mortgages I've had to show that the rent more than covers the mortgage.

3. That's what LTV is all about an I challenge anyone get a decent BTL mortgage at anything greater than 75% - I've even been offered them at 40% recently !!!! That said, if the value does drop, it is purely on paper and has no effect on my ability to pay the mortgage - it just gives me less choice when or if I re-mortgage.

4. Not found any problems so far but then I've never used the high street banks such as Lloyds as they are a complete rip off.

 

[Uncle Spielberg]

TMW are now doing 80% BTL mortgages.

 

[Uncle C]

As a BTL landlord I have to disagree.

1. On my BTL mortgages I've had to show that the rent more than covers the mortgage.

3. That's what LTV is all about an I challenge anyone get a decent BTL mortgage at anything greater than 75% - I've even been offered them at 40% recently !!!! That said, if the value does drop, it is purely on paper and has no effect on my ability to pay the mortgage - it just gives me less choice when or if I re-mortgage.

4. Not found any problems so far but then I've never used the high street banks such as Lloyds as they are a complete rip off.

There are many sensible BTL landlords and it sounds like you are one of those who are there for the long haul.

Set against this, are many that were drawn into the BTL market with offers of massive returns on escalating house prices. This includes speculators with big mortgages who bought up small flats with promises of big returns.
Then there are the reluctant landlords that could not sell their property so went into BTL to wait for the improvements in house prices. There will be chilly winds blowing through these empires.

 

[Uncle Spielberg]

We are all doomed, doomed I tell you.

 

[Uncle Spielberg]

If your Doomsday scenario happens how is that going to help the UK or anyone in general ?.

 

[Arthritic Toe]

There are many sensible BTL landlords and it sounds like you are one of those who are there for the long haul.

Set against this, are many that were drawn into the BTL market with offers of massive returns on escalating house prices. This includes speculators with big mortgages who bought up small flats with promises of big returns.
Then there are the reluctant landlords that could not sell their property so went into BTL to wait for the improvements in house prices. There will be chilly winds blowing through these empires.

... and then there are the Wilsons, who were allowed to buy half of Kent, because the sh1t-for-brains banks did not see any risk at all in lending millions upon millions of pounds to one couple....

http://www.thisismoney.co.uk/mortgages-and-homes/buy-to-let/article.html?in_article_id=499590&in_page_id=56

... and because Gordon sh1t-for-brains Brown turned his blind eye to this massive credit bubble.

 

[Uncle C]

If your Doomsday scenario happens how is that going to help the UK or anyone in general ?.

I don't think this is a doomsday scenario. House prices have dropped before by about 25% in the UK and I don't remember anyone dying.

We all need a big dose of reality and to view houses as places to live in and not as assets that drive up in value faster than inflation.

Home owners have become speculators, wooed by TV makeover programs, and everyone else with a vested interest such as Estate Agents have helped themselves to a bit of the action.

If a few fingers are burn whilst house prices return to normality (mortgages no more than 3 times average wages) that's a hard lesson but one that has to be learned.

If people want to speculate then buy shares, gold, baked beans or rare paintings and leave houses alone.

Just my opinion like.

 

[Gwylan]

... and then there are the Wilsons, who were allowed to buy half of Kent, because the sh1t-for-brains banks did not see any risk at all in lending millions upon millions of pounds to one couple....

If they were buying in Gillingham, shouldn't that read "lending hundreds upon hundreds of pounds"?

 

[El Presidente]

... and because Gordon sh1t-for-brains Brown turned his blind eye to this massive credit bubble.

It's irrelevant who was in power, no party would have interfered with the lending decisions made by the finance sector.

 

[hitony]

I hope to last until 2012 but its touch and go. The last 2 years have been something I would not wish on my worst enemy.

I agree, the last 2 years have been an absolute torrid time for me (and no I am not a Mortgage Broker) but I was involved in senior management with developers, I say was, because at my age I have no chance of getting back into it, and my personal finances are not good either

 

[Uncle Spielberg]

I don't think this is a doomsday scenario. House prices have dropped before by about 25% in the UK and I don't remember anyone dying.

We all need a big dose of reality and to view houses as places to live in and not as assets that drive up in value faster than inflation.

Home owners have become speculators, wooed by TV makeover programs, and everyone else with a vested interest such as Estate Agents have helped themselves to a bit of the action.

If a few fingers are burn whilst house prices return to normality (mortgages no more than 3 times average wages) that's a hard lesson but one that has to be learned.

If people want to speculate then buy shares, gold, baked beans or rare paintings and leave houses alone.

Just my opinion like.

the 3 x earnings mantra bears so relevance. It should be based on affordability and ability to pay and 3 x income with rates historically low bears no relation or logic to 3 x income when rates were 15%. The future will be based more on income and expenditure rather than an income multiple plucked out of the air for no good reason.