UK Market to Fall?

The Independent (one of the UK's national papers) printed an article today forecasting sharp falls in property prices. It's posted on their website at:

http://www.independent.co.uk/news/business/news/how-long-can-the-housing-market-avoid-a-crash-2014108.html

The UK market has been weird for the last couple of years. Prices starting falling sharply in autumn 2007, before suddenly turning in the spring of 2009 and rising since then. I'm not sure of the exact figures, I believe that it was a drop of around 20% followed by a rise of about 10%.

In some parts of London prices are higher than they were in 2007.

I say weird because most of the rises in the last 18 months have been against a backdrop of the worst recession since the Great Depression, stagnant wages, rising unemployment, low transaction rates (less than half of what they were in 2007) and severe restrictions on mortgage availability. I'd expect falls under those conditions.
 
one of three options in my opinion

a) the wider populace are seeing property as one of the three pillars of hedging.
2) price got stupid low where it stirred the barrel of buyers.
d) cashed up folks realising the impact of inflation and deciding to park it somewhere, refer (a).
 
The Independent (one of the UK's national papers) printed an article today forecasting sharp falls in property prices. It's posted on their website at:

http://www.independent.co.uk/news/business/news/how-long-can-the-housing-market-avoid-a-crash-2014108.html

The UK market has been weird for the last couple of years. Prices starting falling sharply in autumn 2007, before suddenly turning in the spring of 2009 and rising since then. I'm not sure of the exact figures, I believe that it was a drop of around 20% followed by a rise of about 10%.

In some parts of London prices are higher than they were in 2007.

I say weird because most of the rises in the last 18 months have been against a backdrop of the worst recession since the Great Depression, stagnant wages, rising unemployment, low transaction rates (less than half of what they were in 2007) and severe restrictions on mortgage availability. I'd expect falls under those conditions.


That all worries me a bit b/c really ours has been equally as weird and it's still doing things it shouldn't be. Which is as the states b4 the biggie and is yet again right now, b4 a double dip I suspect. Although stimulus is easily explained I know .

Cheers
 
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people still like property in all societies - clearly so form the data.

why are they buying? maybe it's not even based on news. maybe they just saw a house they used to like that is now for sale, and cheap, so they buy it?

not everyone follows meso, macro and micro data.
 
i lived and had property in the uk when it halved last time ..

but i did up 600 y/o staw roofed cottage that was derilect .. so the ex wife still did ok .

oh and interst rates went form 7.5% to 15% overnight but only lasted 2 days // but food for thought though
 
It's worth remembering thet the pound took a real pummeling these last couple of years, down 30 odd percent against the $Au for instance.

So, your UK home may still be worth 1M, but the pound is more of a peso, so your nominal drops in property value are largely masked by the devaluing currency,

Mean while, the price of just about every other necessity for life in the UK has shot up, eg petrol, gas, water, food, electricity, insurance, rates etc, etc.

In my view, the initial drops in property values were effectively quickly overtaken by the drop in Sterling.

From what I hear, the general concensus is that further drops are on their way, I don't know, we'll have to see, but the economy has certainly been left in tatters by the previous Government. The last finance minister cheekily left a welcoming note for his successor stating simply that there was "no money left"
 
Bear in mind that the UK statistics are being skewed by a buoyant market London and the Southeast of England, whereas the rest of the country is showing a slight decline.

As such I think that there are three factors supporting prices:
  1. Foreign buyers (as Intrinsic Value pointed out). They've been on a shopping spree in the top end London boroughs, such as Kensington, Chelsea and Notting Hill. (The local equivalent of Toorak, but far more expensive.)
  2. The financial sector has been making massive profits off the government bailout and stimulation package. Bear in mind that 40% to 50% of income at an investment bank goes out as salaries...
  3. There's a shortage of good properties on the market right now, and a higher demand from potential buyers. So the few houses that do sell tended to get bid up.
I'm not sure how long (1) will continue. Most buyers are from the Eurozone, and that's not looking too stable at present.

Similarly, the government is winding down its support of the financial sector, and the level of regulation is going to tighten up, though maybe not just yet. That could dent profits, and (2) might be a less important factor, though other parts of the economy might take up the slack.

(As an aside, the collective stupidity of the investment banking industry is staggering. They have shown no remorse for a problem they facilitated in growing, and continued to pay massive amounts for "the best and the brightest" during the crisis. A little restraint on remuneration would have put them in a better place politically.)

The third is what most economists consider to be the driving factor. A lot of property on the market isn't shifting (I heard 83% aren't selling in a reasonable time), and much of it seems to be expensive.

As an anecdote, my brother made an offer on a house 18 months ago, and was rebuffed because the vendor wasn't considering any significant cut on the full asking price. It had been on the market for some time when he expressed an interest, and is still for sale.

The supply side is improving. The new government has scrapped Home Information Packs (HIPs) which sellers had to provide before listing at a cost of around $500 to $600, and these put some owners off marketing a property. And the rumours that preceded the rise in capital gains tax also encouraged some PIs to reduce their portfolios.
 
The supply side is improving. The new government has scrapped Home Information Packs (HIPs) which sellers had to provide before listing at a cost of around $500 to $600, and these put some owners off marketing a property. And the rumours that preceded the rise in capital gains tax also encouraged some PIs to reduce their portfolios.

interesting... I wonder if the sustainability statements here in oz will crimp supply? I could easily envisage that happening.

the UK has several things going for it... in a world that could go nuts it is a stable english speaking trading nation with strong commercial law. if the USD (and hence the empire it supports) collapses then the UK could benefit. unfortunately australia missed the opportunity to fill that role - we never grew quick enough. we may regain that opportunity when war and famine ravage the northern hemisphere but who knows if this country will survive that era anyway.
 
interesting... I wonder if the sustainability statements here in oz will crimp supply? I could easily envisage that happening.

Good thought, but I wouldn't say so, as if you don't know the answer to one of the questions, you just leave it blank, whereas over in London, I had to pay for 'some guru' to go out and assess my property.

As part of the HIP, they had a section on sustainability and environment. (Or an Energy Performance Certificate)

The homes performance was rated in terms of the energy use per m2 of floor area, energy efficiency based on fuel costs, and environmental impact based on CO2 emissions. It estimates the energy use for the home, and gave a report card as well.

F
 
Good thought, but I wouldn't say so, as if you don't know the answer to one of the questions, you just leave it blank, whereas over in London, I had to pay for 'some guru' to go out and assess my property.

from what i have read, the new reports will cost around $4k per property
 
from what i have read, the new reports will cost around $4k per property

Ouch.

Have been away from forums for a while, so will start getting up to date.

It was only a few months ago, that it didn't seem to onerous. Oh well......I guess it will be third time lucky for the government. (Maybe if they consulted with the wider public and housing bodies in the first place, it would have been sorted in one attempt??)

F
 
Im based in london atm, read an interesting article a few days ago. It related to the fact that the higher end properties >£1m in the posh areas of london took an absolute beating the last couple of years but these same properties are showing faster growth than mid and low end properties. London market seems to have its own behaviour, a bit like canberra back in Aus.
 
Im based in london atm, read an interesting article a few days ago. It related to the fact that the higher end properties >£1m in the posh areas of london took an absolute beating the last couple of years but these same properties are showing faster growth than mid and low end properties. London market seems to have its own behaviour, a bit like canberra back in Aus.

Same happened over here.

The higher end took a dive (well....more of a dive than the lower end), and then recovery of top end housing in SEQld also outshone the lower priced properties
 
Personally i cant see house prices performing even in London in the near future. Most people wont be willing to make any major financial commitments. This is realted to the new government's austerity measures which will result in a sizeable increase in unemployment. Most people with a job can forget about any sort of pay rise for at least the next 3-4 years.

Add to this that unlike australia migration in the UK will has been reduced dramatically from previous numbers. A lot of EU migrants have stopped coming to the UK for work and those that are here are going back. The government has also reduced the number of international students and skilled migrant visas.
 
this is where the theft of all equity comes into play.

there's nothing left to take, govts out of cash, people out of cash.

if there's anotrher downturn, it's all over. values will plummet and that equity has to go somewhere.
 
Investing in the UK

Has anyone bought an investment property in the UK and, if so, could you please advise how you obained finance to do so. I have made some enquiries and it sounds like it is difficult for Aussies to get a mortgage in the UK. I'm told a quirk of current international banking law makes it impossible for UK lenders to recover any residue debts in default that arose from lending to Australian residents who do not work for international companies.
 
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