Housing market getting weaker

[Mike Mitchell]

I am seeing increasing signs that many properties are just not selling. Apart from my own house, which has still not attracted any buyer despite two price cuts, I am getting feedback from a number of sources that potential buyers are becoming increasingly worried about an imminent crash. The number of properties on sale in my village is disappearingly small, compared with, say, 18 - 24 months ago. Several houses have been on sale for 6 - 9 months. My own property has been on the market since the end of March, whereas exactly the same style of property as mine typically sold within a week or ten days of coming on to the market.

Now I have had occasion to speak to agents further afield, and yesterday one in Lincolnshire (on the coast) admitted that the market had become much quieter in recent weeks.

So, it looks like I shall have to reduce the price again in order to attract reluctant buyers for my property.

MM

[Mary Fisher]

That will be good for the buyer and no problem for you since the whole range of prices is coming down ...

The market has been ridiculous.

Mary

[RichardS]

Only once the 'correction' (if indeed one is coming) has bottomed out - a falling house market is neither good for buyer nor seller whilst it is happening.

The buyer may lose the anxiety that comes from desired houses rising out of their reach whilst they're in the buying process, but they gain the anxiety that could come from potential negative equity once they own the house.

True, but we've not been alone in suffering rampaging house markets.

-- Richard Sampson

email me at richard at olifant d-ot co do-t uk

[Andy Hall]

Yes and no. There are several factors.

One is fear of the unclear. I'm quite sure that yesterday's announcement from the Bank of England was to create just that effect in the housing market and perhaps reduce the rate at which interest rate rises become necessary because those create other problems.

Another is interest rates, but only to a point in so far that people's ability to pay is affected. However, mortgage lenders have become far more flexible in terms of available products and restructuring of loans if necessary. Life is now very different to when I had my first mortgage in the 70s and had to go cap in hand to the lender.

A third is that ability to pay is linked to the local economy, which is why there are regional differences on house prices and on their rates of change. There may well be larger changes in some areas than others. Remember that the U.S. economy, which the UK largely tracks with about a 40% drag factor, is generally improving.

If there are regional variations of pricing and change of it, this will have the most effect, for better or worse, for people wanting to move from area to area, for those entering the property ladder and for those cashing in some or all of their chips.

.andy

To email, substitute .nospam with .gl

[Mike Mitchell]

This could be true... I received yet more property details this morning (from Lincs), and the agent had crossed out the price and entered a lower price (by five grand) by hand - as if in a panic, perhaps!

However, I still feel that prices in some parts of the country are rising faster than in other parts.

True.

MM

[Mike Mitchell]

Where else is it as hyper as the UK?

MM

[Tony Bryer]

Australia. But the market has turned, leaving those who bought off plan in the hope of a quick profit looking very unhappy

"buyers are claiming [so far without success] a legal loophole to avoid settlement on properties they say are now worth less than they had contracted to pay."

[Pete C]

Hi,

The housing market might be a bit illiquid as it's summer. Whatever happens, make sure you have a plan in case things don't work out the way you hope they will.

cheers, Pete.

[Mary Fisher]

Am I alone in finding this post incomprehensible?

Mary

[Pete C]

Hi,

Sorry, illiquid meaning there's not many buyers or sellers. Is the rest incomprehensible too?

cheers, Pete.

[Mary Fisher]

Thank you. It's not a word I've come across, what's its etymology?

Well, a plan isn't suggested - or what the plan should guard against.

Mary

[Pete C]

It comes from investment and trading, the usual meaning is something that can't be converted to cash and back easily, but it's also used to describe conditions where there are few buyers and sellers.

Depends on the individual and their circumstances, but as humans we don't like uncertainty, and so may only think about what happens when things go the right way. Trouble is if they don't it becomes harder to take action, so a good plan should cover these possibilities.

cheers, Pete.

[Mary Fisher]

Hmm. Interesting, thanks.

:-)

Mary

[mogga]

[Bob Mannix]

Interesting that the first article on the referenced site is about the Cumberland BS "putting aside money to cover mortgage defaulters in the event of a crash". These would be the same people who lent too much in the first place, I guess!

The market isn't ridiculous it's just a (free) market. That's how free markets work - totally determined by availability of stock and availability of buyers and funds to buy it. As we are seeing now, there's no such thing as a house that won't sell, only one that is overpriced and houses are "worth" whatever someone is willing to pay at that instant.

One may feel (quite reasonably) that the provision of housing (or loans) shouldn't be governed by a free market but that would mean going to a control economy in these areas which has its own problems (in some people's eyes). A half way house might be to leave the housing market free but legislate on the provision of loans - in the long term we would be less prone to disaster and the hosusing market would have to follow the availability of funds but in the short term it would cause a huge retail recession and cause problems for first time buyers. Nevertheless it is the course I would favour.

[Peter Taylor]

Mike Mitchell wrote

I thought, according to IMM, there were millions of homeless people all wandering around trying to buy houses. What's happened to them all?

Andy Hall wrote:

I'm not sure this is a good thing. The ease of borrowing money today that you can't afford to repay is the main reason prices have skyrocketed.

Peter

[IMM]

This so-called free market works within a frame that is rigged. An artificial shortage is here because the planning system will not allow us to build on the 92.5% of the land which is not built on.

Such complications. Just allow people to build on the land and the market will sort itself out.

[The Natural Philosopher]

I found it perfectly comprehensible.

[IMM]

What the hell are you on about?

Make land available for people to build on and as more houses get built the relative cost of a house will fall. This will sort the problem out without government intervention, building council homes (or subsidising housing associations, which is the same thing) at taxpayers expense. Then the private sector will supply the need and sort out the ridiculous house prices as land prices will fall as supply is plentiful, so will the end house price. Currently 2/3 of the average Uk homes value is the land value. Get land prices down and house supply in order and all will be pretty well sorted.

[The Natural Philosopher]

Its very much in common use in financial circles.

Liquidity refers to cash or asset value that is highly convertible.

E.g. cash is the most liquid asset there is.

Shares in a private company are not at all liquid.

Shares in a large public company are highly liquid.

A house has been fairly liquid: The poster was pointing out that this is no longer the case. If there are no buyers, the value of an asset is at best indeterminate, and at worst zero.