Buyers left in the lurch as lenders shut up shop

Gary, your argument makes no sense.
They work hard to save a substantial deposit, buy a house, and then watch their hard work just flitter away as they slide into negative equity. I don't follow this. Is there supposed to be some advantage?

• 08 July 2009 21:45 PM

This shows King's complete lack of economic education. Credit is collapsing, so there is very little to lend, regardless of what this hopeless government cannot do anyway. If they print money, inflation will also effectively reduce hose prices. Either way, they have to fall. To afford a house, the lending criteria has to be reckless. When are those in the housing market going to wise up. Prices have to fall another 50% before the system adjusts properly.
This latest EA scam regarding lack of supply is nonsense. There is still thousands on Rightmove in my county, yet hardly any buyers, so how can there be a shortage.

• 08 July 2009 21:36 PM

PBK should shut up and stop trying to pursuade lenders to resume irresponsible practices. All that has happened is that the wholesale market for mortgages (which drove NR and B&B etc.) has completely dried up. So now lending is purely based on UK deposits. This is how it always was until the house price buddle (which is only 50% deflated). So GET USED TO IT PETER. The wholesale market is not going to come back until the next bubble...

• 08 July 2009 10:12 AM

Well Gary good luck with your BTL 'portfolio'. Your 'profits' (whatever you mean by that) are magnified 10 times but so are your losses. It is interesting that you are going to sell them all quite soon - at a time when interest rates will be MUCH higher than they are now. You and all the other BTL ers who will be making monthly losses on their portfolios (after interest charges) will all be heading for exit at the same time. Sorry to say that the 'good times' are unlikely to come under this scenario.

• 08 July 2009 10:07 AM

Scary stuff. And with the Halifax down -0.5 looks like doom and gloom over the rest of the year.

• 08 July 2009 09:36 AM

UK estate agents should read widely about what is happening worldwide.
Asset values and wages are falling. The UK as part of the global economy cannot escape this is in any sustained way because to create employment in the West we have to be able to compete with emerging Asia where houses and wages are much lower, so ours have to fall. The world economy is currently going through a difficult rebalancing process.


There are plenty of house sellers out there who bought years ago who can afford to take a drop in price but you are trying to prop a market up this year with higher asking prices that cannot be propped up. In addition there are cash buyers out there who will buy up fairly discounted property - many of them sold up with losses already and are not prepared to pay higher prices than last year so are sitting on their hands. Your big mistake was to encourage higher asking prices this year.

Encourage people who can to buy and sell cheaper to get the market going in a sustainable way.
I cannot understand why you are having difficulty with this - you did it in the last recession very effectively. Better a lower priced market that keeps turning over that people can trust than one that booms back up to unsustainable levels and busts again. At the moment many cash buyers feel uncomfortable about committing.


Whether you try to resist it or not lower prices will happen anyway. Wage cuts are already happening and lenders have already been making their lending criteria tighter and raising interest rates on mortgages. Taxes are going to rise after the next election. We have to have higher interest rates and taxes due to the high national debt (the bond markets want higher interest rate to cover risk and to repay the debt we have to pay higher taxes). That will squeeze buyers' wages more and lead to further house price falls.

We were better off last year. Sellers could sell off with a bit of a loss on boom price knowing that they could buy a bit later when they found what they liked. Now people want to sell and buy at the same time - they want a higher price and to get in a chain the other side incase they lose out by just selling. Amazing how many of these people want a good old cash buyer at the bottom of the chain at a higher price than last year to service their need to complete the chain. I don't think so!

Don't forget there are a lot of buyers out there who can check out land registry selling prices from the last few years and want a good deal. They can wait a few months till the bad economic fundamentals reassert themselves.

The lesson for the UK and QE is no government can control the world's financial markets. You have to let then adjust themselves. If you try they just adjust in spite of you evenutally.

• 08 July 2009 09:23 AM

The current, very slight, uptick has been caused by cash rich investors buying property rather than getting 1% in the bank. It is NOT caused by an increase in the number of First Time Buyers able to buy.
With interest rates at a 300 year low, there is only one way they can go. When the current bit of cash going into the market dries up, the housing market will resume its downward course - back to normal levels of affordability.
If you 'own' 10 properties now (presumably the banks own a high percentage of each property) I would advise you to sell them now, while you still can.
In a couple of years time they will be worth 40% less than they are now and you won't be able to sell them for love nor money.
When you think about it (and, let's face it, who does actually THINK about it) - where is the money going to come from in the future to push prices back up? As I say, the cash rich investors buying now will soon run out of money (most of them can only afford one property) and the insane lending practices that pushed the market to ludicrous highs are not coming back for at least a generation, if ever.
Only today, new restrictions on the banks are being announced. Face it gentleman, the party is over. The sooner we get back to sensible prices (50% falls from today) the sooner the market will return to a normal volume of transactions.

• 08 July 2009 09:21 AM

Gary, Your 10xBTL also means your losses are multiplied by 10x with the risk of complete capital loss. With unemployment heading for 3+million, I would be concerned that further house prices falls are the most likely scenario.
Your 2 year timescale would put you right in the middle of the worst unemployment figures for a generation.

I'm selling 3 properties at the moment and will be pleased to be out of the market.

You seem to be suggesting that young people should work harder and take a second job to fund the capital gains on your BTLs. That isn't much motivation for them is it?

• 08 July 2009 09:10 AM

The housing market is picking up though, prices are now rising according to the Nationwide.

I have 10 BTL properties so my profits are multiplied by 10 times.

We need to inform young people today that they need to invest their time in working hard. They should take a second job and increase their hours in their primary job too. They need to spend less money on booze and deigner fashion so they can save up for a decent deposit. If they do as we inform them they may actually be able to afford one of my BTL properties when i come up to sell them in two years time when the green shoots will be frmly estabished and flourishing strongly.

The good times are coming rejoice!

• 08 July 2009 08:42 AM