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Nationwide building society expects house prices to fall 13.8 per cent this year


TheCountOfNowhere

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It will be interesting to see if/when reality hits.

There will be a long period of denial I think. The last crash in Northern Ireland  took 5 years from top to bottom, bottoming in 2012.

I think if prices do 'drop' it'll be years of people refusing to sell their house "for less than it's worth".

I'm concerned about my parents being able to sell their place; they have reached an age where they should downsize to a small bungalow. However despite there being one identical house in the street that hasn't sold for 6 months before the lock-down happened (and still hasn't sold), they wouldn't consider putting theirs on for any less.

Dad actually said to me last week that he expects a reduction in prices in certain areas but not in his house because <insert rationale here>. So I think basically they're stuck with a house that's un-sellable.

I think that's the attitude a lot of folk are going to take.

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Wight Flight

Will be interesting. As posted earlier, my landlord has accepted an offer. With the news, and the probable outcome of the survey, if I was the buyer I would reduce the offer by £100k.

He doesn't need to sell, and I doubt he will give it away.

Guess I will find out soon enough.

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Long time lurking

From the link in the OP 

tells you all you need to know 

Quote

It is also preparing for a surge in the number of customers looking for equity release products and retirement interest-only mortgages. 

 

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10 minutes ago, Long time lurking said:

From the link in the OP 

tells you all you need to know 

 

It is also preparing for a surge in the number of customers looking for equity release products and retirement interest-only mortgages.

Well .... not quite. NW is clinging to RIO now as it's one of the few products it can see.

Its traditional market of low risk southern mortgages has gone. NW cannot compete with HSBC, who are hoovering the few high earner left in the south.

Its lost its appetite for the next rung down as it has so many HTB mortgages on its book going tits up. The HTB market was only NW n HBOS.

RIO is just converting those IO mortgages NW sold in Londonn/SE from 2002ish, who are now in their late 50s and have no ability to pay back the loan.

NW are fucked.

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31 minutes ago, Wight Flight said:

Will be interesting. As posted earlier, my landlord has accepted an offer. With the news, and the probable outcome of the survey, if I was the buyer I would reduce the offer by £100k.

He doesn't need to sell, and I doubt he will give it away.

Guess I will find out soon enough.

You never know who has to sell till they do.

I know off a few households that look plum from outside who, at closer look, are rapidly running out of financial runway.

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sancho panza
2 hours ago, spygirl said:

It is also preparing for a surge in the number of customers looking for equity release products and retirement interest-only mortgages.

Well .... not quite. NW is clinging to RIO now as it's one of the few products it can see.

Its traditional market of low risk southern mortgages has gone. NW cannot compete with HSBC, who are hoovering the few high earner left in the south.

Its lost its appetite for the next rung down as it has so many HTB mortgages on its book going tits up. The HTB market was only NW n HBOS.

RIO is just converting those IO mortgages NW sold in Londonn/SE from 2002ish, who are now in their late 50s and have no ability to pay back the loan.

NW are fucked.

Heart warming tale of mutuality where the mutual prices it's members out of homes.

I'm amazed they've lasted this long tbh.The ones that really grate though are the BTL mrotgages these daft idiots have written.Look at the books of the Coventry/Earl Shilton/Hinckly&Rugby.....................net interest margin really low.

 

have hsbc really cleanred up down siouth?

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If this does happen and prices sink, will everyone here be thankful to China? I know I will. ;)

Nothing else could have done it, besides a pandemic, it would seem.

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1 hour ago, sancho panza said:

Heart warming tale of mutuality where the mutual prices it's members out of homes.

I'm amazed they've lasted this long tbh.The ones that really grate though are the BTL mrotgages these daft idiots have written.Look at the books of the Coventry/Earl Shilton/Hinckly&Rugby.....................net interest margin really low.

 

have hsbc really cleanred up down siouth?

HSBC can afford to lend at about 1% less than the rest of the UK mortgage providers.

And they offer 5 year, low rate, no fee fixes.

I've a HSBC 5 year fix at 1.90% 

If you've a good job, 40% deposit than youd  be moron to go anywhere else.

This is all Chinky savings come out of their ears.

NW have to struggle to get the cash to lend.

The BoEs Term funding scheme covered a lot of banks who were struggling to raise money.

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PatronizingGit

Taking the contrarian view, Wonder if there is actually a chance there could be a short boom in prices - i mentioned before I'm doing farm work and the other Brits there are a mix of self employed (ie likely tax dodgers) not getting any furlough money and youngsters getting furlough money but trying to make as much as possible by adding another income to that for a mortgage deposit to get out of renting.

 

Savings rate going to levels unseen in decades. Could be a lot of renters looking to buy (assuming they keep their jobs - thats a big if)

 

 

Perhaps not a likely scenario but thought i'd put it out there.

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13 minutes ago, PatronizingGit said:

Taking the contrarian view, Wonder if there is actually a chance there could be a short boom in prices - i mentioned before I'm doing farm work and the other Brits there are a mix of self employed (ie likely tax dodgers) not getting any furlough money and youngsters getting furlough money but trying to make as much as possible by adding another income to that for a mortgage deposit to get out of renting.

 

Savings rate going to levels unseen in decades. Could be a lot of renters looking to buy (assuming they keep their jobs - thats a big if)

 

 

Perhaps not a likely scenario but thought i'd put it out there.

Bless.

Thats the US not the UK.

To say the US welfare net is a but sparse for a middle income person is a bit of a over exaggeration.

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Bricks & Mortar
11 hours ago, spygirl said:

Bless.

Thats the US not the UK.

To say the US welfare net is a but sparse for a middle income person is a bit of a over exaggeration.

US social safety isn't normally that good. 
But, at this time, they're handing out unemployment checks of close to $1000 / week.  Several of my stateside friends tell me they're getting more for staying home than they ever got from employment.
It's $52,000 a year.  That's slightly more than the average wage.

  https://www.cnbc.com/2020/05/18/you-have-to-pay-taxes-on-unemployment-what-you-need-to-know.html

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Orwellian Nightmare

"Some wanted to buy properties closer to high street shops. "

Well said Nationwide. That's what people should be doing. Move out of the countryside and quiet seaside locations and become townies.

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Frank Hovis

Whee!

Quote

House price forecasts

Bank of England: Fall of 16% 

Nationwide: Fall of 13.8% 

Cebr: Fall of 13%

Savills: 5 to 10% fall on thin sales

Liberum: Fall of 7% in real prices

Lloyds Banking Group: 5 to 10% fall 

EY's Howard Archer: Fall of 5%

Knight Frank: Fall of 7%

 

 

My only caveat is that there is likely to be a huge lag in these being reflected in the market because sellers have an emotional attachment to their house "values".  ("It's worth a million a tell ya!").

The 1998 crash didn't fully work its way through into a full volume house market at those lower values until 1995/96.

Though this does mean that I'm going to have to start tracking the sort of house I want (ability to launch into creek / estuary from the bottom of the garden) so that I will spot when the reduction has been fully reflected in the asking price.

 

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leonardratso
15 minutes ago, Democorruptcy said:

"Some wanted to buy properties closer to high street shops. "

Well said Nationwide. That's what people should be doing. Move out of the countryside and quiet seaside locations and become townies.

that will be those closed shops that wont be reopening i presume?

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goldbug9999
12 minutes ago, Frank Hovis said:

The 1998 crash didn't fully work its way through into a full volume house market at those lower values until 1995/96.

Good one.

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Frank Hovis
Just now, goldbug9999 said:

BTW @Frank Hovis did you say you were some sort of accountant ?? xD

it was obviously a typo.

That's the one I remember well as I knew friends who had crippled themselves in order to buy somewhere, anywhere, because house prices had been shooting up for the previous decade.

At that time those of us without the financial bacing of the BOMAD had no chance of buying but, rather than predicting falls, were openly envious.

"Wow - they own their own studio flat in Croydon at 21."   Much like today tbh.

And then it crashed but it was still a phoney war because these recent buyers could not afford to take a loss and many others were not prepared to drop their valuations.

Whilst I say 95/96 was the genuine low with the market in full operation the process of the fall in prices crystallising into sales below purchase price took, for my friends, four to five years.

This was time it took for them to get onto decent salaries and save some money such that they could then afford to pay the shortfall between the house proceeds and the mortgage that they had upon it.

I bought, fairly reluctantly tbh, in 1996.

 

I'm not saying that the timeline will be exactly replicated but the same underlying processes will be at work meaning that the coming onto market of houses at the new reduced values will be slow and the people looking to bag an early bargain will be many which will stop the falls becoming fully refelected for some time.

My vague timescale for buying somehwere with water frontage was 5 / 6 years and if these falls transpire then I may bring it in to 3 / 4 years.

Rushing to bag an early "bargain" will mean paying more than you need to pay.

 

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goldbug9999
1 minute ago, Frank Hovis said:

Rushing to bag an early "bargain" will mean paying more than you need to pay.

For sure. 

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2 hours ago, Frank Hovis said:

Whee!

House price forecasts

Bank of England: Fall of 16% 

Nationwide: Fall of 13.8% 

Cebr: Fall of 13%

Savills: 5 to 10% fall on thin sales

Liberum: Fall of 7% in real prices

Lloyds Banking Group: 5 to 10% fall 

EY's Howard Archer: Fall of 5%

Knight Frank: Fall of 7%

 

My only caveat is that there is likely to be a huge lag in these being reflected in the market because sellers have an emotional attachment to their house "values".  ("It's worth a million a tell ya!").

The 1998 crash didn't fully work its way through into a full volume house market at those lower values until 1995/96.

Though this does mean that I'm going to have to start tracking the sort of house I want (ability to launch into creek / estuary from the bottom of the garden) so that I will spot when the reduction has been fully reflected in the asking price.

 

Basically, they dont know nothing. There no science, they are just putting their finger i n the air and guessing, as they always do.

I always find the commenting on house prices by themselves nuts.

Whats drives the market is earnings and availability of credit and cost.

Once you start thinking, correctly, along those lines, it becomes brtuall.

London is going to fall under 5x earnings. It only went above 5x as they started with IO mortgages, then IO BTL.

Thats a lot of sales to roll back. And theres not been much in the way of wage increases.

In the North, where salary multiples are not too bad,the problem is lack of buyers. More nn more 65+ seller 'not giving away' as theres only ~20% of the under40s available to get a mortgage 100k+

 

 

 

 

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TheCountOfNowhere
3 minutes ago, spygirl said:

Basically, they dont know nothing. There no science, they are just putting their finger i n the air and guessing, as they always do.

I always find the commenting on house prices by themselves nuts.

Whats drives the market is earnings and availability of credit and cost.

Once you start thinking, correctly, along those lines, it becomes brtuall.

London is going to fall under 5x earnings. It only went above 5x as they started with IO mortgages, then IO BTL.

Thats a lot of sales to roll back. And theres not been much in the way of wage increases.

In the North, where salary multiples are not too bad,the problem is lack of buyers. More nn more 65+ seller 'not giving away' as theres only ~20% of the under40s available to get a mortgage 100k+

 

 

 

 

Killer Bunny on TOS is predicting rising interest rates this/next year when inflation kicks in.  That, when it happens, will single handedly destroy the housing bubble prices.  No bad thing.  For all those waiting for a bargain, I hope they realise...they're coming down and not going up in several generations. Being a homo(wner) will be no route to wealth.

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