dpb

This from ceo Nationwide ( not the ramblings of psl ..!)


- lets hope hes at least half right

cookstar

iTrader: (6)

Is that from current market prices today?

Henrik

iTrader: (5)

I hope it is, otherwise I'll forever remain without a garage

davegtt

25% down from their peak he said.

scooby L

I'm currently spending £120k extending my place.... When I did the maths 12 months ago I was generating £100k profit... now it looks more like £50k, let alone ANOTHER 10-15%... Joy oh Joy

lozgti

Thought only the people who said its never going to happen could say anything on scoobynet

I'll lose a quick £50k but it will all come back in 2011 and it was fictitious money in the first place this 'equity'

PeteBrant

If you aren't selling or remortgaging, then it's not going to affect you at all.

If you bought in the last 2-3 years, and you are remortgaging with a high LTV, then it *might* affect you.

This adjustment needs ot happen, and it is unlikely that properties will reach the same levels that they were at. They will recover to a certain extent, but not to mid 2007 prices.

Luan Pra bang

Of course it will affect people do you have no understanding of how house prices impact on consumer confidence and the economy as a whole ? Banks are already foreclosing on their higher risk debts and that will impact business and employment significantly.

dpb

2.5 million in possible negative equity Pete

i suspect this could mean more than swapping out the X5 for a hyandri tucson

cookstar

iTrader: (6)

Surely they will eventually.

PeteBrant

Negative equity only affects you if you need to remortgage or sell.

Of course there are wider issues, But strictly in terms of home owners (which is what this reports is clearly aimed at). Then negative equity need not be a complete disaster.

PeteBrant

Not without the necessary jump in wages - I.e. the ratio between salary and mortgage needs to be sensible.

It seems the ceiling is around 1:8 (Avergae wage versus average house price) Go beyond that and the system cracks, as we have seen.

David Lock

Great bit of marketing by the head of a company in the mortgage business

He might as well have said - "Don't bother buying a house for a couple of years".

House prices have risen inexorably over the last 60 years at an average of 8% per year but obviously there are ups and downs on the graph. Of course they will be back to 2007 levels, the only question is when. Unless that experiment tomorrow in Switzerland goes **** up dl

cookstar

iTrader: (6)

Well I think I have waited enough, I am going to view a house on Thursday with a view to putting an offer in.

Hope it doesn't bite me and drop shed loads of dosh

austinwrx

won't happen nationally- just say in london where the market is over inflated.

if people did take out 100% or 125% mortgages- they'll come unstuck obviously.

half the mess people are in is because they bought unwisely, were greedy etc.

only things I care about are cost of fuel- for car and house and the fact groceries are getting more expensive.

PeteBrant

Thats fine so long as you have an inflation rate that goes up accordignly, meanign that the ratio of wages to house prices is kept.

However, in recent times we have had a period of very low inflation of the course of a decade, and house prices increasing at an increased rate.

Net result was the highest disparity between earnings and houseprices in history.

The system, demonstrably, cannot cope with high levels of meduim/high risk lending, which you are inevitably going to have with a large difference ebtween hous eprice and salary. Hence we have the problems we have today.

The only way House prices will get back to former levels is if wages go up accordingly.

I'd be interested to hear what fast bloke thinks.

scooby L

And there it is in a nutshell... the impact neg equity has on the market.

Most people are reluctant to buy until the market stops falling... but the market will not stop falling until people start buying.... house builders will not build until they have buyers, tradesmen will not have work until the house builders start building... I think neg equity has a larger impact than people are giving it?

scooby L

and how am I supposed to give my men a payrise when I'm scratching around for work Pete?

PeteBrant

Erm, I wasn't telling you to do it! I was just saying how house levels will get back to thier former highs.


Put it this way.

In order to achieve the level we saw, banks had to lend money, at ridiculous multiples and with extremely high LTVs.

Now, those same banks bought what they actually thought were triple A investements, but were infact repackaging sub-prime loans.

End result was banks losing billions.

Now, does anyone really think that the banks are going to lend money to all and sundry like they did before for a second time?

If the answer to that questio is no, then you have to come to the conclusion that house prices will not rise to such level until such time as people can afford it without being a risk.

scooby L

ahh ok... point understood...

(was in a panic then)

Henrik

iTrader: (5)

25% off the peak of October 2007, eh? More like 40% off from then, at least IMO (Maybe not nominally, depending on how much inflation we get, but definitely in real terms (i.e. price to avg salary terms).

On the other hand, I'm starting to think that Gordon Brown will make sure that we get massive inflation instead, at which point it's great to hold on to lots of debt, provided that you can keep your job and service it. This is what happened in e.g. the 70's where there was high inflation, which caused a "real price" crash, where prices still increased nominally.

The problem first time buyers face at the moment is that house prices are still too high compared to how much they can borrow from the bank - Ergo no first time buyers. Almost everyone keeps squealing about how they can't get a mortgage, when the actual solution is for house prices to fall.

There' are no 100% mortgage deals available any more and you typically need 10-20% of the purchase price as a deposit, and you wont be able to lump fees onto the mortgage either. This means that to buy a 200k house, you'll need at *least* 25k saved up in hard cash before you can buy. Not many FTB's have that kind of money lying around, which leads to even fewer FTB's on the market. The only way for this to "correct" is either a) the banks lower the lending standards or b) house prices come down to a level where the FTB's available deposits are enough.

Everything's pointing down for the housing market at the moment, so to assume it's only going to fall another 12-13% from here on is, IMO, crazy (unless you have a vested interest in pushing house sale related products).

David Lock

Many FTBs have parents who live in their own houses which they plan to leave to their kids when they snuff it. Plenty of equity in these properties for parents to release and give to their kids as deposits. Just means that kids inheritance will be less but they benefit now rather than later. Do it properly and there is no real "catch" for the parent/s. dl

wiley

iTrader: (63)

thats a good thing for me, looking to buy a house in the near future
wiley

what would scooby do

Have you got a mortgage agreed then

Henrik

iTrader: (5)

Wont be quite so easy to withdraw equity when house prices are falling, though.

There is a catch, and it's that if you have to take out a second mortgage on your home (assuming it's paid off) you end up having mortgage payments to make again.

lozgti

This is where I get thicker than normal

To 'release' it presumably means they have to take out a mortgage to do that.Which I presume most older folks wouldn't fancy or wouldn't get?

I don't like the smell of those equity release things though.*Shudder*.

Any other way to do it? (not that my folks have ever or would ever be nice to us )

PeteBrant

The typical way is to downsize.

Folks no longer need the 4 bedroom detached with the ensuites, - They go to a 2 bedroom bungalow on the coast.

It's one way to avoid inheritance tax - Provided they survive another 7 years.

scooby L

A: If they can sell their 4 bed

B: If they can find a smaller place that can move on a sale ie: working chain.

PeteBrant

Of course, I mean you wouldn't do it now unless absolutely necessary.

Deep Singh

[quote=austinwrx;8120297]won't happen nationally- just say in london where the market is over inflated.

I think you are deluded mate. Which region of England do you think isn't/won't be seeing price falls then?