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| Flogher |
on Sun 19 Oct 08, 11:54 AM to Flogher's blog.
According to press reports house prices have been crashing beyond the mere statistics.
http://uk.news.yahoo.com/5/20081014/tuk-british-...
The above claims that in some areas properties have nearly halved. As a home owner myself I should be a bit worried - however I bought mine at the bottom of a depressed market in 1992 so I still have a long way to go before my place goes into negative equity.
I would hope that this drop in house prices may yet benefit those who really need it, the people who live in poorer coastal towns who have found house prices artificially inflated by rich townies coming in to buy holiday homes and second homes.
Only yesterday I was watching 'Coast' the BBC TV series and the presenters went to a Scottish fishing port on the east coast where they found fishermen were having to live out of town and commute IN to go fishing because they could not afford the house prices. The fashionable fishing village is full of second homes or people who worked in Edinburgh and who commuted out each day to go to work.
Where my mother comes from, Wells Next The Sea in Norfolk, my father was offered a £600 property in the mid 1960s but he turned it down because he did not have the money. What was the property? THREE fishermen's cottages made of flint rubble and knapped flint. If he'd bought them, we'd be sitting on a gold mine.
Of course a lot of people did and, last time I was in Wells Next The Sea, house prices were comparable with London. The best a young family couple in that part of North Norfolk can do is get council housing (if they are lucky) or rent private. Their chances of owning are poor unless they want to move well inland. How far? Well at least 30 miles. There's cheaper homes near Norwich but, if you are a fisherman, farmer or work in Wells itself that means a 30-mile commute just like the Scottish fishermen.
The Government did promise a clamp down on second homes, higher taxes, etc, but I saw no evidence that it was working and driving down prices in Norfolk.
So while home owners face repossession for making recent purchases at greatly inflated prices, estate agents face going bankrupt because no-one is buying and the banks themselves struggle to remain afloat just remember that rural and coastal workers and families MIGHT stand to benefit if property is driven down far enough for it to become affordable for the people who NEED to live there.
Every time a Londoner or a Brummie buys a 'quaint coastal cottage' or a 'lovely barn conversion' just two miles from the cliffs it distorts the prices and hits the locals where it hurts.
I should be crying but I'm not. How long will this last? Well until the economy lasts and 'market forces' plus people's natural greed drives up the prices again.
| 19 Oct 08, 12:01 PM Sweetiejar UK(S), 11 yrs |
If you are not planning to move it really doesnt matter how far the prices fall, they will rise again and you will be no worse off. HOWEVER if you are like us and have to sell very soon then its a nightmare as I see the equity burning away. The only consolation is that I will have to buy in the same market...so it sort of equals itself out. Sweetiejar | |
| 19 Oct 08, 12:04 PM Kinky_Embrace UK(DL), 4 yrs |
Problem is though the prices may go down but if the banks aren't willing to lend the money to first time buyers - it means nothing! My house sale has fallen through 3 times now and my ex and I have decided to take the house off the market for a bit, which means financially we're both going to suffer but neither of us are wanting to go bankrupt or face a repossession. It's fallen through due to people not getting their mortgages and that was before the real shit hit the fan! I think it'll be at least 2 years before things get back on an even keel - at least i'm hoping as that's when our fixed rate ends on the mortgage! The house isn't in Norfolk but in picturesque South Suffolk and we face the same issues.
Don't judge me until you've walked a mile in my shoes, and I shan't judge you! | |
| 19 Oct 08, 12:26 PM Flogher UK(RM), 9 yrs |
Indeed there are many aspects to this problem and reliance on 'market forces' alone (in my opinion) is inadequate. One solution might be to 'cap' property price rises and falls to no more than 10% per annum but I can't see a mechanism by which this might be workable. Estate agents will always find a way around it. As you may have noticed I have always had a special sympathy for working people in places like Norfolk who cannot live where they want to simply because out-of-towners have distorted the property market. Flogher - I cane, I whip, I cuddle | |
| 19 Oct 08, 12:36 PM simonelibra UK, 5 yrs |
I agree with you there, maybe the out-of-towners will find it hard to maintain two properties due to loss of bonuses and big pay rises with higher cost of living and sell back the properties to locals at a lower price, of course they may be renting them to local people in the Winter months at a high rent to pay the second mortgage, I really don't know but lets hope the siuation improves for us all Do not follow the path, go where there is no path to begin the trail - Ashanti Proverb | |
| 19 Oct 08, 12:37 PM xxx_adeena_xxx 4 yrs |
Property on average has dropped 15% since this time last year and the forecast is that the market will not recover for 2 years. It is a fantastic time to buy, prices will continue to drop by about 1% a month for the next 6mths on your home, but as you rightly point out, gone are the days when you can walk into a place and come out with a no deposit mortgage. Banks are lending, but the best rate is currently the Nationwide at 4.5%....but only if you have a 25% deposit. Some lenders are now starting to demand that all your loans are settled in advance of signing the mortgage. They are taking an average deposit of between 5%-10% and 100's of AIP's are useless as the lenders are failing to offer cash based on the higher bad credit risk applicant. Estate agents are trying to encourage vendors to offer a vendor gifted deposit to help buyers meet the high deposit requirements. 5% is the recommended amount to out up as a carrot. Meanwhile, the bottom feeders, the investors are having a field day, reaping fantastic bargains because of the 1,000's of repossessions that are beginning to hit agents property boards.
Edited 19 Oct 08, 1:15 PM by xxx_adeena_xxx | |
| 19 Oct 08, 1:11 PM subdg 8 yrs |
I totally agree with the comments re: Londoners and holiday homes- There's a few villages near me which have become virtual ghost-towns (or ghost-villages maybe?!?), the few locals rent, and the holiday home owners you speak to complain because the villages aren't the 'little models of community life they expected them to be!' Dropping house prices don't mean jack to me though; They're going to have to go a lot further before I can get a mortgage... Life is like a game of poker: Sometimes you've just got to make the best of a bad hand. | |
| 19 Oct 08, 1:24 PM Flogher UK(RM), 9 yrs |
Thank you, I think you picked up on the real message in my weblog. My mother used to phone her cousin in Wells Next The Sea around Christmas time and often she was told that one end of the village was a 'virtual ghost town' as few homes were occupied during the winter... which is another reason for explaining the national shortage of homes. I see one TV investigator estimates that - at any one time - as many as a million UK homes are not inhabited for various reasons. I wonder if he included holiday homes and second homes in his figures? Flogher - I cane, I whip, I cuddle | |
| 19 Oct 08, 1:24 PM Prunesquallor UK(RG), 7 yrs |
Well, exactly. For the person with only one home it makes no difference at all, apart from the fact that in a depressed market there will be fewer people chasing properties so you will have more choice. The only people to be affected are those who wish to buy cheaper and use the remaining money, and those who speculate in property. There are many bad things happening owing to the economic crisis, but I can't get too worried about falling house prices. For years people have been complaining that they have been inflated beyond reason. Now that has come to an end. | |
| 19 Oct 08, 1:55 PM Flogher UK(RM), 9 yrs |
Indeed, you can only inflate a balloon so far - it has to burst eventually. Clearly few remember the South Sea bubble. http://en.wikipedia.org/wiki/South_Sea_Bubble#To... for more on that old story. Flogher - I cane, I whip, I cuddle | |
| 19 Oct 08, 4:36 PM SueMtv UK(NG), 7 yrs |
Which is where the big difference between now and the last boom/bust of '87-90. Then I just lost out getting onto the 'market' as I got "gazumped" and the chain fell through. After that it was spiralling upwards, so I pulled out and tried 3 years later. But you could still get silly mortgages with little or no deposit. It's not hard to see how a 25% deposit today means that prices need to fall by that amount before you even things out again - that deposit has to come from somewhere. Will it recover? Yes, eventually as (it is said) demand of homes will outstrip future supply, especially as they have almost stopped building new homes. As for my home, I purchased it as somewhere to live, not an investment.
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