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RE: House Prices in Horsham

mapp — Sat, 29 Jul 2006 11:32:38 GMT

Don't mistake highly speculative asking prices at the moment for achieved prices....
The two can often be far apart as realistically priced property sells and overpriced property stays on the market giving a false impression.
People postpone buying in the hope of a crash whilst at the same time paying rents which cost far more than a mortgage! This is great news for investment buyers.

RE: House Prices in Horsham

Tester — Thu, 08 Jun 2006 23:23:38 GMT

Well, how are house prices doing in Horsham?

Despite the headlines of prices rising nationally it is clear that many regions are experiencing falls.

Land Registry Data for Horsham (from the BBC website) Quarter/Annual figures:

All Properties: -4.8% / -0.4%
Detached: -6.2% / -1.8%
Flat: -8.8% / -11.9%
Semi: +2.1% / +4.4%
Terraced: +4.3% / +6.7%

So flats are falling significantly whilst terraced houses are on the up.

With interest rates on the rise globally and uncertainty in the global economy I am now expecting significant falls all round.

RE: House Prices in Horsham

DotNetWebs — Wed, 29 Mar 2006 15:14:29 GMT

There is another new headline today:

Multi-million pound homes investment

Apparently 1,045 new affordable homes will be built in West Sussex by 2008.

RE: House Prices in Horsham

Ernie — Mon, 27 Mar 2006 13:32:30 GMT

Interesting article Tester. I am older than a Bee but younger that a drone so I don't know what that make me:unsure:. I don't think the situation they are describing will go on forever because a lot of that new wealth will be eventually redistributed back to the younger people either by parents helping their children with large deposits or their children inheriting their parents houses.

Anyway the reason I am reviving this old thread is I noticed this link on the Horsham News Section:

http://www.horshamtoday.co.uk/ViewArticle2.aspx?sectionid=507&articleid=1403429

There have been several articles like this since this thread was started.Almost every planning application for new homes in Horsham is being rejected. The ones that are being built ( the Wimpey development Bishop's Grange for example) are selling for high prices and have certainly increased in the last six months. I know because we have been actively looking to move.

The thing that affects us the most is the fact that you cannot buy a modest family sized home in Horsham now without paying 3% stamp duty. A few years ago people could move every few years or so to progess their career, The cost of moving is probably now stopping a lot of people changing their jobs and progressing their careers. But I bet Gordon Brown is rubbing his hands in glee :angry:

RE: House Prices in Horsham

Tester — Wed, 22 Feb 2006 14:12:56 GMT

I agree so passionately with what is written in the article below that I thought some on this forum might be interested. It refers to the Irish market which is experiencing a similar property bubble to the UK. Please read and consider the long term consequences.

[b]Property buzz may yet have nasty sting in tail[/b]

Irish Independent. Wednesday February 22nd 2006

PROPERTY booms do not so much create wealth as redistribute it.

In the past few years, the great Irish housing frenzy has done more to reallocate wealth in this country than any government initiative on tax and social welfare since the foundation of the State.

The transfer has been monumental. Arguably, we have to go back to Lenin's persecution of the Kulaks to see one section of the population forced into giving so much of its wealth to another.

The major difference in Ireland is that the redistribution of wealth via property has made the old richer and, more depressingly, the young poorer.

It has created a drone class of the over-45s - Ireland's accidental millionaires - who have seen their wealth increase enormously as their houses have soared in value. These drones are financed and indulged by a worker-bee class of the under-35s who are first-time buyers and renters.

Bullied

For every four first-time buyers who are fretting in the traffic, working long hours, pinned to their collars by mortgage payments and creche fees and being bullied to part with money they don't have by the threat of "mandatory" pensions, there is a healthy 50-something couple drinking vino verde on the Algarve, sun at their back and not a care in the world.

In financial terms, Ireland is now sitting on a demographic faultline. Bubbling away underneath the tectonic surface is the overheated property market, stoked up by cheap credit, irrational expectations and the corrosive psychology of the property-ladder tyranny.

As the property mania reaches fever pitch, this rumbling instability - like its geological equivalent - naturally leads to political, financial and social tremors.

Tremors

Like the citizens of San Francisco, we know our economic San Andreas fault-line is vulnerable, but all of us ignore the possibility that the next one could be the "Big One".

At the moment, there is an uneasy truce between the competing demographic of haves and have-nots but the problem for society is that, while an unforgiving meritocracy governs the lives of the worker-bee generation, the drones live in a pampered world based on equity releases and rental income.

This is not sustainable.

Take, for example, a not-untypical middle-of-the-road office worker of the 1970s and 1980s. Although he now plays golf off seven, like the Monty Python sketch of old he reminds his office juniors how hard times were in the 1970s, how people had little money and few expectations.

He probably bought his house in 1975 for £10,000; it is now worth €1.3m . He has no debts, a well-financed pension, annual clean bills of health, a subsidised VHI Plan A scheme and an early retirement scheme that is just about to kick in.

With his enormous pile of equity, he took advice from an accountant mate and bought a couple of places off plans in the late 1990s. The (only recently declared) rental income nets him €3,000 a month, which more than covers his mortgage on the golf resort town house in Quinta da something. He is one of Ireland's accidental millionaires and he is not alone.

According to the census in 1990, there were just over one million private households in the country. For these people, as prices have risen, the most telling indicator of wealth is not brains, hard work or entrepreneurial ability but the year they were born. Those 1990s households born in the late 1940s, 1950s and early 1960s are on the right side of the demographic faultline and are likely to be sitting on enormous property wealth.

Those worker bees, born in the late 1970s and 1980s - the productive core of the economy - are now the ones paying exorbitant house prices via 35-year 100pc mortgages or they are renting. A major determinant of whether you are a drone or a worker-bee is the date you were born.

Lottery

So the main redistributive mechanism in our economy works like a demographic lottery which is heavily weighted against the young.

It is, of course, natural that the 50s generation will be the ones in power, but because of our population structure, they are much less representative of the general population than they would be, for instance, in Britain, where they constitute 27pc of the population, or in France and Germany, where they're over 30pc.

Here, those in their 50s only represent 11pc of the population and yet they are being enriched constantly every time house prices rise.

Each notch upwards in house prices adds to the wealth of the drone class and the worker bees' debts. We live in a society where the young work to excess to make the middle-aged rich via house prices.

The big banks tell me that house prices are going to rise by 10pc this year. Quite apart from being a grotesque scam which lines the Government's pockets, enriches developers and drives up the share price of our money-lending banks, it is sowing the seeds of a demographic civil war.

Every 10pc rise in the price of houses is equivalent to a 10pc tax hike for the young who are trying to get into the housing market.

Another way to look at it is that every 10pc increase in the price of houses adds an extra 10 miles of commuting on to the day of the next batch of the dormitory-town-dwelling tribe.

In contrast, the same 10pc price hike adds 10pc to the wealth of the drone generation and 10 more days in the Algarve.

What does this mean for politics? Well, if the outcome of government policy has been to enrich one section of the population at the expense of another, it isn't surprising that the hardest working sector of society opts out politically.

By stoking up the property market at the behest of its paymaster - the construction sector - this government has engineered the progressive indebtedness of our under 30s and the relentless enrichment of our over 50s.

In the last election, the worker bees did not turn up. They see what is happening and are profoundly cynical about national politics.

They couldn't be bothered.

So a bachelor farmer from Achill or a 50-something from Sandycove, Foxrock, Terenure or Clontarf is twice as likely to vote as a suburban, double-income worker-bee family with kids.

In fact, the two areas of Ireland where the under-35 worker bees are present - the new suburbs and the inner cities - vote least. This opting-out trend contrasts with the rest of Europe where voting patterns follow education.

In Ireland, it's when you were born, rather than letters after your name, that's much more likely to determine whether you vote or not.

This is because the older you are the larger your stake in society and the more the present status quo suits you.

So the worker bees who toil hardest, commute longest, pay most taxes, have the biggest mortgages, have children, pay exorbitant creche fees and keep the profits of multinationals operating in Ireland sky-high, participate least in politics. But they won't remain docile forever.

This vacuum is potentially explosive because, when you live on a faultline, the potential for eruption is never far below the surface.

RE: House Prices in Horsham

Ernie — Mon, 30 Jan 2006 13:20:36 GMT

It may be unhealthy but it is still be driven by market forces at least round here anyway.

For example yesterday I received a leaflet through my door from a local estate agent requesting I submit my property for evaluation. I get several of these each week by the way.

This particular leaflet read:

This is a genuine enquiry.

My Name is ******

I have asked:

****** Estate Agents

To find me the following property:

Location <where I live>

Type <my house type>

My mortgage is agreed in principle

I am keen to view a suitable property.

If you are considering selling then please contact the Horsham branch of ******

They will be happy to arrange a free market appraisal.

Supply definitely still exceeds demand on this estate at least. This leaflet could obviously be estate agent hype but judging by the way properties are still moving on this estate I doubt it. The only real solution around here is too build more houses but that is a very contentious issue in itself.

RE: House Prices in Horsham

Tester — Fri, 27 Jan 2006 16:08:21 GMT

There is some good news though.

The average age of the First Time Buyer has never been higher; it is now 34. They now form 7% of buyers if you believe some of the statistics. That is down from over 50% in the last decade. Therefore, as many are priced out of the market there will be relatively few affected by a large price correction.

But, do you see why the market is unhealthy?

In recent years the housing market pyramid has been supported by investors not First Time Buyers. Now there are better returns elsewhere the serious investors have moved on leaving only the amateurs buying. More people now have multiple properties and therefore more exposure to any asset price falls. If you are buying a property to let out then you may be part of the problem. You have inflated prices and maybe deprived a youngster the opportunity to buy.

What I do not understand is the general acceptance of the situation. It makes me angry that people seem happy that prices have tripled whilst their offspring have little prospect of buying.

The market will correct - it always does - it's just the rate that is the question.

RE: House Prices in Horsham

Tester — Fri, 27 Jan 2006 15:41:19 GMT

Ernie,

It is the recent First Time Buyers I feel most sorry for.

The data shows that if you bought at the peak of the market in 2004/05 in West Sussex you are already in negative equity. Who is to blame?

The Estate Agents have priced the property based on market conditions. The sellers have aimed to achieve the highest price possible. The Banks have loaned money based on prevailing interest rates and affordability measures. People have bought in the belief that house prices would continue to rise - many as an investment rather than a home. All are to blame.

In a Capitalist society "Caveat Emptor". Type "House Prices" into google and you can find out what your neighbour paid for their house. Search for "House Price Crash" and read the research. There really is no excuse anymore for anyone to pay bubble prices with so much information out there.

I feel it is disgraceful that someone should have to pay £169,000 for a flat when 10 years ago they were £50,000. It is wrong that a few have made vast amounts of money out of such a basic need. That is why I am writing now ... to warn others to do their research.

RE: House Prices in Horsham

Ernie — Fri, 27 Jan 2006 09:16:03 GMT

[quote]Who would lose out? Think about it.[/quote]

What about the recent first time buyers that may have saved for years or used their inheritance to purchase their property. Would you plunge them into years of negative equity and all the misery that goes with it?

RE: House Prices in Horsham

Tester — Thu, 26 Jan 2006 21:39:09 GMT

Why am I wrting this stuff?

There seems to be a belief that high house prices are a good thing. But, they do more harm than good. Evan Davis from the BBC puts it nicely here: http://news.bbc.co.uk/1/hi/business/3701070.stm

The world has seen a bubble in asset prices. The UK in particular has seen massive rises in house prices supported by nothing more than unprecedented debt. Anyone who pays these bubble prices is setting themselves up for financial disaster.

Imagine if every buyer offered 30% below asking price tomorrow. Houses would be sold and the economy would get moving again. Who would lose out? Think about it.

RE: House Prices in Horsham

Tester — Thu, 26 Jan 2006 21:17:53 GMT

The BBC report also quotes Capital Economics who expect prices to continue falling.

The truth is that despite poor economic fundamentals that scream of a crash there is one unknown which the Economists find difficult to factor: Confidence.

In the past few years many have stretched their finances to buy property as they believed prices would continue to rise. They have been lulled by low interest rates and an economy supported by high public sector spending.

Now, confidence has fallen and the market has stalled. The mortgage companies and estate agents are unleashing a spin campaign to re-ignite that confidence. Count the number of time you see "House prices 'set' to rise this year!".

It is rare to see much coverage of falling prices. For example, on 24 Jan 06 the Halifax released their Quarterly House Price data. West Sussex houses fell by £16,000 or 7% over the year. Kept that quiet didn't they!!

See: http://www.hbosplc.com/economy/includes/UKQ42005.doc

RE: House Prices in Horsham

Ernie — Tue, 24 Jan 2006 07:18:08 GMT

This (just published) report from The Centre for Economics and Business Research suggests the market will slow down but not crash. Eventually it will gradually rise again due to supply exceeding demand. I know a lot of people are hoping for a crash. I personally would benefit from a crash but I think those waiting will be disappointed.

http://newsvote.bbc.co.uk/1/hi/business/4638802.stm

RE: House Prices in Horsham

DotNetWebs — Fri, 20 Jan 2006 23:04:10 GMT

Also see this headline:

http://www.horshamtoday.co.uk/ViewArticle2.aspx?sectionid=1953&articleid=1322082

A lot of potential new houses in Southwater and Horsham have ultimately had their planning permission rejected in recent years. That has probably had an effect on house prices in the area.

RE: House Prices in Horsham

DotNetWebs — Fri, 20 Jan 2006 22:52:01 GMT

I saw an ad for 1 bedroom apartments in Crawley today. STARTING at £169,000:crazy:

RE: House Prices in Horsham

Tester — Thu, 19 Jan 2006 19:58:44 GMT

Kaletsky always makes interesting reading!

"The average British family earned £2000 in the first week of this month".

That figure came from Rightmove the online estate agent. The £2000 is the increase in asking price on average for newly listed Rightmove properties.

Here is an analogy. My neighbour has a car, identical to mine, that he couldn't sell last year. I decide to sell mine now and advertise it for £1000 more than his. Great!!! I'm £1000 better off. Ok ... so my other neighbours have decided to sell their cars as well ... no problem ... I'm rich!!

Rightmove are owned by four of the largest Estate Agents in the UK. Salespeople are there to sell. Remember that when you read the full report here:

http://www.rightmove.co.uk/pdf/p/hpi/HousePriceIndex16January2006.pdf

RE: House Prices in Horsham

DotNetWebs — Thu, 19 Jan 2006 17:57:22 GMT

The is a very interesting article on this subject in the Times today:

http://www.timesonline.co.uk/article/0,,1061-1995647,00.html

Regards

RE: House Prices in Horsham

Tester — Tue, 17 Jan 2006 21:58:30 GMT

By the way, this is a world wide problem:

http://dailytelegraph.news.com.au/story/0,20281,17854374-5001021,00.html

RE: House Prices in Horsham

Tester — Tue, 17 Jan 2006 21:45:22 GMT

As I said, things are different this time!

We have record levels of debt - unsustainable levels. The National Debtline is having it's busiest month since it's creation in 1987: http://portal.telegraph.co.uk/money/main.jhtml?xml=/money/2006/01/15/cndebt15.xml&sSheet=/money/2006/01/15/ixcitytop.html

The Governor of the Bank of England said in 2004: "House prices are a matter of opinion. Debt is real". If one house on the street has sold a year ago for a riduculous price does that mean all the others that don't sell are worth the same?

The Director of the Countrywide group of Estate Agents said recently that 2005 was the worst year for the housing market in 30 years. He said those that say differently " ...either do not have all the facts or are lying!". Ask those who cannot sell their house if there is a supply problem!

I do not believe that buyers are now financially any more clued up or cautious than they were in the run up to the last crash. For example, I believe that the fallout from "interest only" loans will be worse than the Endowment scandal of the 80's/90's.

It is undeniable that houses are overpriced. The question is will that particular asset see falls or will wages rise to make them affordable again? Once again, Mervyn King raises the issue here: http://news.ft.com/cms/s/56794786-86c8-11da-8521-0000779e2340.html.

When Mervyn is concerned ... I am concerned!

RE: House Prices in Horsham

Ernie — Wed, 11 Jan 2006 10:00:10 GMT

All of your points are true but I still think that people’s attitudes are different than last time.

When Nigel Lawson announced the end of dual MIRAS people where rushing out to buy houses with each other to beat the deadline. Young couples that would not of otherwise bought a property suddenly decided that had to buy. Groups of friends who barely new each other clubbed together to get a mortgage. Some of these people where still teenagers. I personally know several people who where in this situation. Mortgage companies where falling over themselves for their business. Knowing that the supply of first time buyers was about to dry up they offered ridiculously high amounts to try and secure their business. I know people that where told by mortgage brokers to lie about their incomes. Remember this was also the days of endowment misselling. People where being told that if they did not buy now they would have missed the boat.

When the crash came it came quick. Certainly where I lived anyway. On the day dual MIRAS ended first time buyers started to dry up. Then interest rates started to rise and some people wanted out. People who barely new each other but had bought houses together suddenly wanted out. Unfortunately supply now out numbered demand and prices began to fall. I personally know people who where in this trap. They had bought houses with girlfriends / mates etc but now wanted to move on. Some had to sell for large losses and where stuck with negative equity for up to 10 years.

I think this time people are a lot more cautious. People like yourselves and various experts are advising caution. I do not see the mad bubble inflating frenzy that we saw in the 1980s. People are not buying for speculation they are buying because they need a home. The inflated prices are largely due to demand exceeding supply.

RE: House Prices in Horsham

Tester — Tue, 10 Jan 2006 22:36:12 GMT

I do not want a crash but people should be aware of where we are in the current cycle and a correction is due. Therefore, I would warn that now is the wrong time to pay over the top prices.

I also believe high house prices are bad for the following reasons:

First Time Buyers are priced out the market which means my children cannot afford a house of their own - something I took for granted.
Parents may be forced to finance the housing of their children so they can "get on the ladder".
The rungs of the ladder get further apart. ie. if my house increases by 10% so does the one I'd like to buy next so how have I won by higher prices?
People have less disposable income as mortgage payments become a greater proportion of their earnings. Therefore, the economy suffers as the consumer spends less.
The cost of moving increases ie. higher prices mean more stamp duty and higher estate agent fees.
Inheritance tax becomes a factor for average houses. When is more tax a good thing?
The work force becomes less mobile as moving house becomes more and more expensive.

So when are high house prices good? Well it makes people "feel" wealthy so they spend more - the debt/wealth illusion.

The mortgage companies love high house prices - it's great for their profits.

RE: House Prices in Horsham

Ernie — Tue, 10 Jan 2006 22:00:44 GMT

You are obviously very passionate about this. Would I be right in assuming your are HOPING for price crash?

RE: House Prices in Horsham

Tester — Tue, 10 Jan 2006 20:54:20 GMT

Why is it much worse this time?

Speculation and debt!

Speculation has seen many jump on the property bandwagon. That means the consequences of a property slowdown are felt by many more. Investing in property at the right time has seen outstanding returns. The right time as long since passed. Easy finance with interest only loans coupled with low rental yields has seen many buy property "as a pension" or "long term investment". Losses in the short term are seen as acceptable by these amateurs. Monthly rental may not cover the Landlords mortgage payments - even when interest rates are historically low. Interests rates may trickle down in the short term but long term the trend is up.

Debt: never has so much been owed by so many! Let the statistics speak for themselves:

http://www.creditaction.org.uk/debtstats.htm

RE: House Prices in Horsham

Tester — Tue, 10 Jan 2006 20:35:41 GMT

As I said, circumstances between this crash and the last differ; this time it is much worse!

MIRAS withdrawal was one of the factors that led to the last crash which, in fact, saw prices fall over a prolonged period between 1990 and 1996. The slowing housing market resulted in a recession in 1991. Note that the housing market slowed first, then recession came, not the other way round!

A property obesssion, distrust of the stockmarket and Buy to Let Investors coupled with historically low interest rates have resulted in a the average property trippling in price since 1996. The party finished last year. Prices are considered to be 20 to 30% overvalued. Paying top of the bubble prices now may well mean negative equity.

But the mortgage companies and banks are saying prices may be on the up again you say. Well, guess what! They said that in 1989 too; they need you to be in debt so they can make money! See below:

The Times
THU 09 NOV 1989
House prices 'to rise'
Property prices in London, the south-east and East Anglia will recover next year and begin to increase by about 10 per cent a year, according to Morgan Grenfell, the merchant bankers, in a report on the housing market published yesterday. The recover...

RE: House Prices in Horsham

Ernie — Tue, 10 Jan 2006 17:33:04 GMT

Prices are high but some new sources suggest the market may have bottomed out:

http://news.bbc.co.uk/1/hi/business/4594200.stm

http://today.reuters.com/business/newsarticle.aspx?type=realEstateRestaurantsHotels&storyID=nL09772924&imageid=&cap=

The 1989 crash actually happened quite quickly. It was largely due to Nigel Lawson scrapping the dual income mortgage tax relief. This lead to a lot of people rushing to buy properties together to meet the deadline. When the deadline came the number of first time buyers was vastly reduced and the market was sent quickly into reverse.

RE: House Prices in Horsham

Tester — Tue, 10 Jan 2006 16:46:30 GMT

I think many would agree that house prices have reached ridiculous levels. Average house prices are now close to 6 times average salary. The long term average is around 3.5 times avarage salary. At the beginning of the last crash in 1989 the number reached 5.

Things are different to 1989 though - they are far worse! Despite historically low interest rates consumer and manufacturing organisations are now calling for cuts to stimulate money supply. However, in recent years this tactic has produced record levels of debt. The debt burden has more then doubled over the past 8 years (now above 1.1 trillion pounds!).

In the past few years investors have taken the place of First Time Buyers which has supported the foundations of the housing pyramid. Investors are now returning to the stock market for better returns. Hence, houses further up the price scale are failing to sell as money is not pumped into the lower levels.

The housing market is like a super tanker changing direction: it takes a long time to happen. We may well look back at 2005 and say that was the year the crash started.

Nationwide today released their regional house price data. Prices in southern West Sussex have fallen by 6% in real terms over the year. Given that only the best houses are selling I think we will see the Super Tanker pick up speed ... backwards!

RE: House Prices in Horsham

Ernie — Fri, 06 Jan 2006 08:42:23 GMT

[quote][b]Tester (05/01/2006)[/b][hr]House prices have risen hugely in the area since the mid-1990's.

Selling prices reached a peak in 2004 and they are now on the way down. I see many houses that have been up for sale over 6 months and some for over a year.

Is this the start of the much talked about house price crash?[/quote]

I think the very fact that they peaked 6 months ago and are GRADUALLY falling means there will not be a crash. They will probably slowly fall a bit more then level out before gradually creeping up again. The difficulty, for anyone wishing to get the first foot on the housing ladder, is knowing when it has bottomed out.

House Prices in Horsham

Tester — Thu, 05 Jan 2006 21:58:21 GMT

House prices have risen hugely in the area since the mid-1990's.

Selling prices reached a peak in 2004 and they are now on the way down. I see many houses that have been up for sale over 6 months and some for over a year.

Is this the start of the much talked about house price crash?