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Written by rosalind renshaw

Asking prices rose again in April – even though there was the biggest monthly jump in agents’ unsold stock for nearly four years.

This morning Rightmove said the 0.8% monthly rise in asking prices, which equates to an extra £4,032, was ‘misplaced’ given the property glut.

It was the fourth consecutive monthly increase in asking prices for properties new to the market.

Properties newly listed on the site have an average asking price of £235,822, up 1% on this time a year ago, and at a total disconnect from the selling prices quoted by the Land Registry, Nationwide and Halifax.

Unsold property per agent has jumped from 70 to 74 properties per branch – the biggest monthly jump since May 2007.

Between mid March and mid April, a weekly average of 28,390 new properties came on to the market. This was an increase of 9% on April 2010 and up 28% on April 2009.

Rightmove said there was a ‘clear indication’ that the number of sellers was not matched by the number of buyers able to proceed.

Director Miles Shipside said: “In May 2007, when we last saw an increase in stock levels of this magnitude, its impact was lower as mortgage financing was freely available and market conditions were more buoyant. It is against this backdrop of a substantial increase in available property supply that new sellers have pushed up their average asking prices to 1.7% higher than those recorded a month ago.

“This is the fourth consecutive monthly increase.

“With national average asking prices now 6% (£13,412) higher in the four months since the start of the year, sellers and estate agents should take serious note of the growing imbalance between seller supply and the seemingly static number of buyers who are ready, willing and able to proceed.

“While local markets may vary, the marked growth in supply is a clear indicator that fresh sellers should on average be asking less for their properties rather than more.”

Rightmove warned that a recovery in transaction volumes is not in prospect and said there could be more challenging times ahead.

London, however, continues to buck all the other markets. Shipside said: “While most of the country struggles to sell or raise deposits to buy, demand from cash-rich buyers in London has meant that sellers there can ask record prices. This is driven by London’s international status, its preponderance of wealthier buyers, and a shortage of available land and properties.”

Rightmove also warned that the unprecedented run of five bank holidays over the next two weeks could also dampen activity in the housing market.

Comments

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    Mike Wilson- your posts tend to make a lot of sense, however there is another one who talks twaddle about his poor son who hates him so much he is emigrating and then wants to blame the whole world of agency, you may want to distance yourself from that twerp!

    • 21 April 2011 16:07 PM
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    rantnrave: how perverse would that be? An HPCer -albeit a less militant one... ;op - blamed for causing the next property boom by substantially reducing supply!

    Now that WOULD make a headline, mon ami!

    Methinks you are getting jealous of Mr Hendry's unquenchable thirst for notoriety... ;o)

    • 21 April 2011 09:12 AM
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    Darn you Pee Bee. As a sign of my militancy, I'm off to go and burn something. It wont be a house though, 'cos that would only reduce the supply further ; )

    • 20 April 2011 17:20 PM
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    rantnrave - but I said you were LESS militant. (caps for impact, of course...)

    Is that still a compliment in your eyes? (it was actually meant as one...) :o)

    • 20 April 2011 16:43 PM
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    @PeeBee - Militant - I like that. I'll take it as a compliment.

    • 20 April 2011 14:07 PM
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    Dom: You will find I don't give up easily - ask Mr Hendry...

    You state "I've shown as much as I want to really. 3 bed semi, East Midlands, circa £180k." Pleanty of choice there - Rightmove quote 1000+ currently For Sale, using a 40- mile radius of Parkway Station. Like that helps? East Midlands is a LOT of turf to cover - and I bet my last penny that there are more parts of that vague locale that you WOULDN'T move to than parts you WILL!

    This is NOT the Official Secrets Act, mate. Telling us you want to be in, say, Grantham WONT get you 'offed' by a sniper cunningly disguised as an Estate Agent!

    It MIGHT just get you a house, though...

    Look. I have nothing to gain personally by asking you these questions. 1 - I am not an Estate Agent. 2 - I am not based in the East Midlands (I am a PROPER 'northerner', not one of you south-northerners that the press would lump in with us lot... ;o) ).

    You want a bargain. Fair enough - so does everyone else. It is a welcome change that the less militant HPCers like yourself, r'n'r and Sibley's... come on here and put forward your own argument in a dignified and adult manner rather than simply 'shout' and swear like certain others have been known to.

    However, you are looking at things through your own glasses. Sellers have another set that make things look totally different. AGENTS have a problem. They need to see things through YOUR glasses, while acting on the behalf of - and, by Law, in the best interests of - the seller. You see the problem?

    Rather than seeing Agents as 'The Enemy', treat them as neutrals in this. Yes, they have to try - they are empowered to; but their sole purpose is to sell - and therefore their aim is to SELL YOU SOMETHING! In order to do so, they have to either change your perspective or their seller's perspective. Sometimes it is a case of lifting one, dropping another to meet somewhere in the void.

    The trouble is, that they will not just be doing this for YOU, but for everybody. The bigger a 'bargain' looks, the more interest there will be in that bargain and unfortunately the less chance of you bagging it.

    I can pretty much guarantee that will remain constant, regardless of where prices end up.

    So, come on - open up some more. People on here want to HELP, not hinder (believe it or not...)!

    • 20 April 2011 13:06 PM
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    Dom- thats just a bad agent, if he has said its over priced, bad for taking it on but then doing an even worse job, is why he will probably not survive, nor should he.

    • 20 April 2011 13:03 PM
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    Dom, it's easy to see how people justify prices 20% above 2007 levels. Back then, prices were increasing at 10% year on year. Now we we are in the most prolonged economic slump for 80 years, vendors are quickly adjusting to the new reality and only factoring in a 5% year on year increase...

    • 20 April 2011 12:47 PM
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    @PeeBee

    I've shown as much as I want to really. 3 bed semi, East Midlands, circa £180k. I fail to see how such places can be advertised at 20% above 2007 values. Nor can anybody else, that's why it's not selling. In fact, when I spoke to the EA this week he pretty much admitted that it was over-priced. I suspect that they just don't have the balls to discuss this with the vendor and would prefer a few low offers to do the talking for them.

    If you'd like to analyse the problem in more detail have a look at the link posted by squeals below. That sums up my situation and then some.

    • 20 April 2011 11:55 AM
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    Pee Bee - I think you are on to something. There has always been those who can buy and those who can't. At the moment though, I think there are a growing number of people who can but wont buy at current prices.

    I imagine these are types who are also the most internet savvy. They are going online, finding what properties sold for in the past, comparing that to current asking prices and just losing interest.

    When I buy, it will not be to rescue someone from their poor financial decisions or to gift someone a stack of unearned equity simply because I was born in the wrong generation.

    • 20 April 2011 11:41 AM
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    Two for one...:

    rantnrave - fair point, however no doubt there will be some who query why you are even commenting if you have no intentions to buy in the present market...

    The content of your comment is a major factor I believe in the current market. There is a greater ability to buy than publicised - but this is not necessarily translated into the desire to buy.

    Those in negative equity situations are, in the main, trapped; those who have equity naturally want to maximise as much as possible in order to move further up the ladder (the usual case of "I want top dollar selling but want to bag a bargain when I buy..." syndrome), so there is a hiatus in the middle as well as the real problem at the bottom of the market with FTBs who simply cannot afford to buy where they want to live (and don't forget, I have two of my own in exactly that position...).

    Best wishes to Mrs Rave, by the way. I sincerely hope all will be well, whatever the circumstance of her treatment.

    Ps - sorry your prediction was off-mark! Pity - caps do make points where necessary. I hope you didn't miss any of those I wanted to make...! :o)

    Now to Dom: sorry - but that's a complete cop-out. If you want some credibility, at least show part of your hand...

    • 20 April 2011 11:26 AM
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    @PeeBee

    Erm not 20% more than 2007.

    • 20 April 2011 10:31 AM
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    Here's the thing Pee Bee - I'm not actually wanting to buy in the area where we are now. Next year, I plan to look for something a step above what I'm currently doing at work.

    So why don't I just start that process now I predict you typing in capital letters? Well, the job market isn't great (not sure if that will improve though!) but Mrs. Rave is also in the middle of a course of treatment that we don't want to complicate by changing local health authority. Any move would likely be significantly further away - we're not exactly in the centre of the universe here.

    To be honest, even if prices were rising now in my area, I wouldn't buy for those reasons outlined above.

    • 20 April 2011 09:55 AM
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    Dom: "Here I am, money burning a hole in my pocket and nobody will throw me a bone. All I need is a fair price and I'll be in there like swimwear."

    Please define your idea of 'fair price'. Give us a postcode/general area; a house style; and how much you would pay today.

    Thank you.

    • 20 April 2011 09:47 AM
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    rantnrave - picking you up on an earlier point:

    "So, someone who bought in 2000 for 75K can accept an offer for 125K today without fear of negative equity at all. This then sets the standard for similar properties on that street.

    Their neighbour, in an identical house, bought in 2007 for 180K. They lose their job. The house gets repo'd and is valued at the 125K that the neighbour's place just sold at."

    If only that were the case. Repo house gets shafted by the 'valuers' down to £99,950 in order to protect their PII, more like - and then gets auctioned three hundred miles away with a reserve of £75k...

    How many 'bargains' have YOU missed that way? (sorry for the caps - just wanted to emphasise the question was for you personally, and there is no ability to bold out on here... ;o) )

    • 20 April 2011 09:43 AM
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    I don't know what is the matter with agents on here. According to Assetz House Price Watch prices are going back up to 2007 levels by next year - as reported in the Daily Express today - with a nice ...

    VALUE OF YOUR HOME IS SET TO JUMP £10,000

    ... headline.

    No wonder those pesky vendors want their prices up. Shame the pesky banks don't read the Express and lend, lend, lend again (although what they would lend I don't know as they are not exactly flush these days).

    I don't know why every agent in the country doesn't email Assetz and tell them to shut the **** up. This endless ramping of a dead market does no-one any good.

    • 20 April 2011 09:08 AM
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    There is probably never the perfect time buy.

    Life goes on though, there are lots more things to worry about.

    People should just cheer up a bit and be more positive. Especially today, its 25 degrees here and the pub beer garden is calling

    • 19 April 2011 17:37 PM
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    Thanks for your time HD.

    There seems to be a lot of talk at the moment of a lack of buyers, no mortgage finance etc etc and I just find it hugely frustrating. Here I am, money burning a hole in my pocket and nobody will throw me a bone. All I need is a fair price and I'll be in there like swimwear.

    Perhaps I should call it a day, enjoy the summer, save for one more year and take my cash to the auctions. Probably won't have enough for the semi but could grab myself a terrace and keep my head down while things shake out.

    Have a good evening.

    • 19 April 2011 17:31 PM
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    Dom;

    Well in that example I do agree with you, that does seem crazy.

    I can only speak for my own areas we cover, which are back to around 2006 prices, and a lot is selling.

    I think you will find though (as I do) that people in 2007 that bought and now want to sell are stuck. Mortgaged to the hilt with potentially a small deposit, and as they have no equity feel there only route is to try and acheive an unrealisitc price.

    I think you will also find that it is the majority of the vendors that will inflate these prices out of desparation to sell.

    Example

    Couple of days ago went to see a couple, bought their home oct 2007 £315k. Before I even got to my valuation they told me they wanted £330k. Told them it was unrealistic and my value was £290k. We talked and they said they would use me if I went at their price. I said No, but to call me if they change their mind.

    Its today gone on with another agent at £330k ( I call that type of agent instruction takers).

    We don't take properties on, on other peoples instructions and in 8 weeks time I will give them a call, but they propabably won't move as their testing the market.

    Unfortunately there are many vendors out there like that, from a buyers point of view I can sympathise to an extent

    • 19 April 2011 17:24 PM
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    When people buy a property they rely on the valuation of the lender to justify or legitimise or reinforce their decision to buy.

    Heaven knows the pile of bricks, plasterboard, timber and roof tiles is not WORTH 250 thousand pounds but, if a bank or building society - that is IN THE BUSINESS of lending money to buy property, secured against property, says 'we'll lend you 220 thousand pounds' the victim, sorry buyer, is (in my opinion) justified in placing some sort of reliance on the lender's valuation.

    If, a couple of years later, having lost his job and been unable to keep up the mortgage payments, the house is repossessed - any shortfall between the sale price and the outstanding mortgage should be at the risk of the lender. Anyone would think lenders are putting themselves forward as people who know nothing about the value of the securities they are lending against.

    Whatever happened to mortgage indemnity insurance. A bank repossessing a house and selling it for whatever it can get - who cares they'll chase the borrower for all eternity for their losses - is a morally repugnant spectacle.

    If banks were liable for the losses we'd have no boom and bust in the housing market, much fewer repossessions, much less human misery and a more stable market because, of course, they would lend sensibly and not put themselves at risk.

    The banks got us into this mess - the banks should pay the price.

    • 19 April 2011 17:13 PM
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    @RnR

    Fair point but the vendor in this case has been there for donkeys years.

    • 19 April 2011 17:13 PM
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    @HD

    East Midlands. I went to see one at the weekend, semi, identical place next door sold for £150k in 2007. Asking price for this one in the same state of (dis)repair? £180k. It's on it's 2nd EA although same price as previously.

    • 19 April 2011 17:11 PM
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    Dom - I don't think that paints a complete picture. I know friends who bought in 2007, would like to sell now, but would very likely result in negative equity if they sold at current prices. So, they have their price on at a level that isn't attracting any interest. This is a point that Ray has made below and I wouldn't exactly say it is the EA's fault.

    Whether the bank should have lent them a 115% mortgage in the first place is a different story.

    • 19 April 2011 17:06 PM
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    Dom:

    Where are you looking at purchasing at the moment?

    • 19 April 2011 17:06 PM
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    @HD

    I disagree. The slow market is entirely down to EA over-pricing.

    1. I have a mortgage offer at an attractive rate.
    2. I have saved for years and accumulated a substantial deposit.
    3. EA's are pricing well above 2007/08 peak prices.

    • 19 April 2011 17:01 PM
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    Its amazing how many people that don't work in the industry love to throw their two pence worth in and love to offer their advice on how to run an estate agency.

    Yes there are properties that are on the market that are on for too much, guess what, they won't sell.

    Bottom line is correctly priced properties will sell, over priced won't.

    EA that solely over price properties will eventually come un-stuck. Over pricing is not the sole reason the market is slow.

    The banks need to be less risk adverse in lending and offer more competitive rates, people looking to buy need to save harder (rather than rely on mum and dad), and properties need to be priced correctly.

    • 19 April 2011 16:56 PM
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    Ray - the banks have been under political pressure to hold off repo-ing those behind with payments. But for how much longer? If prices are seen to be in a downward spiral, banks will want out sooner rather than later, thus reinforcing the falls.

    A case study from the news today:
    Couple's anger after bank cuts house value by 50%

    http://www.thisisstaffordshire.co.uk/news/Couple-s-anger-unfair-house-price/article-3414605-detail/article.html

    • 19 April 2011 16:51 PM
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    @rantnrave

    Yes, some but in my view still a minority. The majority are still surviviing. If interest rates take a real hike there will obviously be more.

    However, there is human nature to consider as well and the fact remains that most who retain a job and can pay their mortgage will stick it out rather than sell at a major loss without a huge reduction in their new buy so they will delay.
    I cannot see a new builder who is asking £250,000 to make a reasonable profit building any more if he has to sell (as several suggest) at a little over half - costs would not be covered. There is a limit on cutting costs..

    Maybe (I have no crystal ball) a more balanced market will not be this year if the economic recovery is not forthcoming, so it could be next. 'Liar' loans were a problem and some will become distressed sales or repo's. There are very few new ones now.

    It is time for EA's who post here, and those who do not, to be reaonably 'realistic' in their advice but more positive in general attitude to the market.

    • 19 April 2011 16:46 PM
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    Estate agency is such a passive industry. You lot never seem to grasp the bull by the horns and do what is needed to keep yourselves in business, instead choosing to ignore the reality of the situation you find yourselves in. It's almost as if you can't help yourselves during the good times and forget that sooner or later, it'll all come crashing down around your ears.

    Whats the transaction level lately? Dropped a bit? a lot? Wanna know why? You probably know this already but have painted yourselves into the corner somewhat. THE CREDIT BOOM IS OVER, THE ECONOMY IS FUBAR AND YOU ARE STILL LISTING HOUSES AT UNREALISTIC, UNACHIEVABLE PRICES. You can have that 'insight' for free, btw.

    And another insight before the next boom - Excercising a little restraint might assist in the longevity of your businesses.

    • 19 April 2011 16:41 PM
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    Ray - your points seem to assume that people are able to make their mortgage payments. Even with 0.5% interest rates, it is clear that that many people who overextended themselves / lied about their income are struggling.

    So, someone who bought in 2000 for 75K can accept an offer for 125K today without fear of negative equity at all. This then sets the standard for similar properties on that street.

    Their neighbour, in an identical house, bought in 2007 for 180K. They lose their job. The house gets repo'd and is valued at the 125K that the neighbour's place just sold at.

    Someone opposite them though, with decent equity in their property, has secured a new job in another town and needs to sell-up, so they try to attract a buyer by putting their house on for 120K...

    Further down the street, Mrs Bloggs has finally moved on to a better place. Her son urgently needs some cash to pay off his debts and needs a quick sale. He goes for 115K...

    • 19 April 2011 15:33 PM
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    EA over-pricing is soley responsible for the current stagnant market. As an FTB I'd like to buy but not at any price and examples like that of squeals below are sadly all too common. I am minded to save for another year and cut the monkeys out all together by buying for cash at auction.

    • 19 April 2011 15:29 PM
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    People most definitely do change their views. Last year a colleague was spouting how property investments are the best hedge against inflation going. He was unaware of any indices that showed prices had been falling - until I pointed them out to him. He has since noticed that the identical house next to one of his properties that he rents out is on the market and not selling for a price less than he purchased.

    He is currently house-sitting for relatives and needs to move when they return at the end of this year. He had hoped to buy and now admits that he will rent instead since banks are no longer lending at the levels they were and he is likely in negative equity in one if not both of the properties he owns.

    I'd call that a pretty big turnaround.

    • 19 April 2011 15:19 PM
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    Vendors will not sell at a greatly reduced price if they have a mortgage that cannot be discharged (probably cannot afford to if they purchased during the last 5/10 years on a 25 year mortgage).
    Builders will not build unless they can sell at a reasonable profit.
    House prices can only fall so far and we are approaching that level of actual selling prices this year.
    Discuss!

    • 19 April 2011 15:18 PM
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    Do Jehovah’s Witnesses work on Good Fridays? this iste will be pretty dead if the do..........

    • 19 April 2011 13:28 PM
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    A property is only worth what the buying market does. i.e. Wants to pay or more importantly at this time, can afford and that is going down, so Shipside is correct.

    We are seeing vendors insisting on prices which are higher than 2 years ago. This seems to be fuelled by Rightmove stock of over priced properties ..... "I have to sell for this, as I can't afford that". We are walking away as it hasn't a chance of selling and certainly won't value on survey.

    BUT the corporate agents continue to go ahead and list, adding it to the stock of over priced properties which as well all know contribute to Rightmove. (hit my listing target boss, do I win the bubbly this week!). That then gets thrown in our face at the next valuation.... "xyz agent is putting them on at that price, so why won't you?"

    I wonder how many people know that most corporates didn't sell 50% of their stock in the 1990's and of those that agreed sales, commonly 50% fell through!!!!!!!!!

    • 19 April 2011 11:00 AM
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    @Squeals

    You say fair enough but I'm not so sure. In my view that ugly kitchen and conservatory detract from the value. I might go £150k at a push.

    • 19 April 2011 10:29 AM
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    I have been told by a friend at a big corporate that they are trying to squeeze as many little guys out of the business as possible by pushing stupid vals and very low fees

    So if the little guys follow then they will succumb to the big boys deeper pockets policy

    • 19 April 2011 10:23 AM
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    Check this one out from Beals in Fareham, Hampshire:

    Bought for £168k in 2006. Fair enough the vendors are obviously Sarah Beeney wannabees and they've spent a bit of money decorating but the place is on a main road and near a sewage works so the large rear garden stinks of faeces. Current asking price? £315k. Ridiculous over-pricing.

    http://www.beals.co.uk/NormalHomes/NewPropertyDetails.aspx?propertyId=10795

    • 19 April 2011 10:16 AM
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    James - given the need for increased sales volumes, surely it is EAs who join the overvaluers that are more likely to vanish into the ether?

    • 19 April 2011 10:16 AM
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    Agents are becoming stock collectors rather than actually offering serious legitimate advice

    Being more worried about having the board up at any price, rather than at the price that recent comparable evidence suggests is a sure fire way of undermining credibility

    The trouble is that when several agents adopt an over-pricing policy in a given area, those who do not usually do the same are forced to join them, so as not to vanish into the ether

    • 19 April 2011 09:54 AM
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    This is so funny, any mention of property prices and those have not managed to buy talk them down and are happy to pay every increasing rents and those that do have a property argue those poor souls are wrong! Why do you guys insist on the JW route and try to force your opinions down peoples throats?

    Has any single poster changed their views, has anyone converted to become a J Witness, no of course not.

    Come on guys and girls get real, get on with your job if you have one and make money to spend, lose anyway you chose, either in rent or mortgage, its your choice.

    Me, I am lucky enough to own a small portfolio, capital values a bit down from their peak, but well above what I paid for them and they are all in prime locations so not too bad, but my rents are up, not selling, so in reality quite happy. Mortgage free, all profit, nice.

    Praise the lord!

    • 19 April 2011 09:52 AM
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    MW - ...and in denial about why house prices reached the levels they have.

    • 19 April 2011 08:53 AM
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    @Brian Deed

    You said: "If were not carefull well be talking ourselves down, and failing to achieve any healthy growth in the market."

    When you say 'healthy growthin the market' do you mean 'a healthy growth in transactions' or do you mean ' a healthy growth in house prices'.

    Because, if you mean a 'healthy growth in house prices', I think you must be detached from the economic reality this country faces.

    • 18 April 2011 23:38 PM
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    @ Brian Deed

    I quite agree, I'm an uber-bear and think we're due a huge correction but find HPC utterly dull, Global House Price Crash was much better, this forum isn't half bad.

    • 18 April 2011 21:37 PM
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    If were not carefull well be talking ourselves down, and failing to achieve any healthy growth in the market. This is perhaps the last forum left for healthy debate - try getting a contrarian view to the gloomsters on HousePriceCrash without being censored because you disagree with some mono-sylabic yoof idiot who's still got skid marks in his short trousers.

    • 18 April 2011 20:42 PM
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    @bored.com/nonagent

    Cheers mate I like to 'add value' , bit like an estate agent does.

    • 18 April 2011 19:47 PM
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    keep prices real we all want houses to sell, not trophys on our walls and in our windows

    • 18 April 2011 19:20 PM
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    Ray Evans said: "Why is it that most posts equate the 'value' or 'correct' price of a property based on a purchasers income?"

    Errr, is that a serious question? The vast majority of houses cost too much for the vast majority of buyers to buy without a loan - you can only pay so much interest out of your take home pay - so of course the 'correct' value of property (in general terms, of course) is based on income and interest rates.

    The sad fact is that between 1997 and 2007 common sense was thrown out of the window and loans that are too big to service at normal interest rates were used to drive the housing market up.

    Which is why it will either fall back - or we'll have 20 years of inflation to bring house prices back in line with 'affordability'.

    The way things are - the current young generation between the ages of say 20 and 35 will probably never own a property.

    Which kind of begs the question, who will buy them as, over the years, more and more baby boomers die?

    • 18 April 2011 19:08 PM
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    @ Hants EA - Spot on!

    Too many estate agents for the market - especially all those bone brained pushy spivs that took out franchises - paying sign on fees and commission to the franchsor based on turnover not profits FFS.

    Just give it up & go. Please.

    • 18 April 2011 18:37 PM
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    Don - I didn't realise you were an estate agent?

    I'm scared of the properties "pilling" up though - sounds like a lot of these houses are being used to store dangerously high levels of E.

    Another, jaw dropping piece to add to the discussion. Thanks Don.

    • 18 April 2011 17:34 PM
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    God, Estate Agents must be utter retards. Still with unsold properties pilling up in their books, lots will go bust and a crash looks more likely every day.

    • 18 April 2011 16:45 PM
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    There are too may estate agents for the market as currently sized so to win an instruction EA's look to conform to the sellers notion of unreality - as a tactic to get the property on their books.

    There is then a hope that either the property will by some fluke sell, or more likely that the EA can wear the seller into climbing down as time goes on.

    Prices will fall and some Ea's will go bust. Just like any other recession.

    • 18 April 2011 15:32 PM
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    “While local markets may vary, the marked growth in supply is a clear indicator that fresh sellers should on average be asking less for their properties rather than more.”

    As my teenage daughter would no doubt say: ''Duh!''

    • 18 April 2011 14:20 PM
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    These unrealistic asking prices are a very good thing for HPCers because they are causing the absolutely necessary glut of unsold properties. The pathology of a systemic fall in house price falls, looks something like this:

    Too many houses for sale on the same street

    Someone on the street actually wants to sell, so they reduce their price to below the other asking prices

    They therefore sell their house because it was the best value on the street

    House valuing is always done on recent comparables, so the building society valuer automatically reduces his valuation on the whole street

    Someone else wants to sell, so they reduce their asking price to below the newly reduced value

    And so on

    • 18 April 2011 14:17 PM
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    @Ace of Spades

    Yes actually the x3 income or x3.5 joint is a sort of rule - it''s the rule of common sense if you don't want massive arrears followed by possessions during periods when interest rates are higher than roughly 8% - 9%.

    It is based on the old one in four rule that one week's income (or joint income) is for paying the mortgage (or rent?); another week is for housekeeping, utility bills, C Tax and any other direct housing and work related costs (like ground rent and above all service charge if buying a flat) and petrol or a rail ticket etc; week 3 is for all other unavoidable costs such as alimony, credit cards, higher purchase; pension contributions (!!) and so on; fourth week is meant to be spare and ideally for saving.

    That fourth week is the saviour when interest rates get into double figures. The other measure of affordability is to imagine the interest rate is 3% higher than the rate you are actually lending at and seeing if the borrowers can still afford it.

    Building Societies used this formula for donlkeys years and there were very few possessions and very low arrears. How anybody can seriously afford x5 salary on a single income defeats me - presumably they don't eat, never go out, don't have any transport costs getting to work and so on.

    • 18 April 2011 14:13 PM
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    Ray - Or one can lie about one's income on a self-certification mortgage, as 40% of loans granted between 2005 - 2007 were.

    • 18 April 2011 14:09 PM
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    Precious few agents have any real USPs, so they price high and offer cheap fees when listings are scarce as the only way they can win business from the better agents.

    • 18 April 2011 13:34 PM
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    Why is it that most posts equate the 'value' or 'correct' price of a property based on a purchasers income? What has it got to do with that? (cars depreciate by 50% during a normal loan period) Income is only used by a lender to assess the risk of lending against a product and the ability to repay. Even then a job can be lost the day after completion! One can either afford to buy or not.
    Just a jumbled thought! ;0)

    • 18 April 2011 13:13 PM
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    @PeeBee - takes me back you talking about 3 bed semis for 30k.

    I remember a site I worked on in Bushey, Herts in the late 1970s - probably 1977-78.

    The site was on a steep hill and the houses at the top were done first. They were 3 bed terraces - nothing special - and the first phase of about 11 houses sold for between 18k and 22k.

    Within 9 months, the ones at the bottom of the hill were selling for 40k. We used to chat to the people who bought the first ones - they used to come out of their houses each morning almost doing cartwheels. Whenever they saw one of us who worked 'in the office' (i.e. were 'in charge') they used to ask - 'what will the next ones be selling for'. They really couldn't believe their luck. No-one could really. Rates went up on the site and two one hour long card-playing breaks in the canteen became the norm.

    The people that owned the company were two blokes who used to run a little building company - moved into developing a few houses a year and, somehow, stumbled into the big time with a site of about a 100 units.

    Despite making money hand over fist on that one, they went broke in the early 90s. On a lot of sites I worked on in those days we used to forward order the bricks for the whole site at agreed prices - to avoid getting caught with our pants down, as it were.

    • 18 April 2011 13:09 PM
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    All hail the mighty Shipside!

    The Lord has spoken. We agents must all 'take serious note'.

    Act Now! Do not incur the wrath off the Rightmove Commercial Director!

    Fresh sellers: You should 'on average be asking less for their properties rather than more' or you will the reap the Master's displeasure!!!

    All hail the mighty Shipside!

    • 18 April 2011 12:58 PM
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    Mike: You could well be right that vendors would simply add on to reduce (but then isn't that how the whole market works already...) - however I would argue that sensibility would hopefully prevail with regard to SDLT and the urge to do so would be seen as a pointless exercise. It is a tax, pure and simple - and adding here and deducting there still means it gets paid one way or another.

    I remember 'back in the day' when the company I was working for resisted putting their three bed semis up over £29,950, as having to pay Stamp Duty over thirty grand would put buyers off! The market had found not just a glass ceiling - but a reinforced one at that!

    Then, the price of bricks went up three quid a thousand - and the same three bed semi prices went to £32,500 overnight to counter rising costs!

    There were 8,500 bricks in a semi - you do the maths...

    • 18 April 2011 12:45 PM
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    MW - You are no doubt right. Indeed, according to much of this country's media, house prices move in one of two directions - up quickly or up slowly.

    • 18 April 2011 12:36 PM
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    @PeeBee

    I guess you're right. If Stamp Duty was 1% I'd have probably ended up giving the 14k to the vendor.

    Seems that there as an immutable force at work - I and my money will be parted.

    If they dropped Stamp Duty to 1% every house in the country above 250k would probably put their prices up by 2%. Such is life.

    • 18 April 2011 12:24 PM
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    Please do. Absolutely.

    A property purchase is a home, not an investment. If you have seen some of my other posts relating to this, you will know I am a great believer of this attitude.

    In my experience a few agents have promoted this in the past (certainly not the majoirty though).

    This attitude has also been adopted organically by the public, who bought a house in the mid 90's then saw the price shoot up before their eyes, thinking thats how it always works.

    Some had teenage kids at the time who witnessed this too and now expect this in today's world - some of these teens are now FTBs looking to get on the ladder and work their way up with the equity.

    The public are greedy - buyers and sellers. If your parents had to sell their house tomorrow, for whatever reason, would you want them to sell for 50% of what it could fetch, or would you want them to sell it for what a buyer is willing to pay? I think I know the answer..

    ..and that's it. If a buyer is willing to pay XXX that is the value of the property. Just like any other industry.

    Yes, volumes are down. Just like many/most other industries. We are creeping out of a recession, volume is not going to jump up overnight, just like prices won't 'crash' over night.

    • 18 April 2011 12:22 PM
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    @AceOfSpades

    You said: "Just because a house used to be 4 x average salary, this is not a rule, trend or obligation of today, or the future."

    Actually, it is a sort of rule. If you break the 'rule' and start lending massive salary multiples at what are historically low interest rates, then you are creating the conditions for boom and bust.

    Look what we have now as a result of 'over' lending - a market with half the transactions of a normal market. And, in due course, if and when interest rates go up, we may well have another 'crisis' - systemic banking failure or a deep recession caused by people have to use so much of their disposable income to service mortgage debt.

    Whichever way you look it is there is a sort of 'rule' about lending and if you allow the banks to break the rules so that some muppets in the city can help themselves to multi million pound bonuses - there is a price to be paid. Unfortunately it is we who are paying the price and not the muppets with their ill gotten gains.

    • 18 April 2011 12:16 PM
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    PEE BEE - THANKS FOR THE CORRECTION.

    AoS - if we're doing away with long-held perceptions re the housing market, can we scrap a few others too? I nominate 'house prices double every seven years' and 'house prices only ever go up'.

    • 18 April 2011 11:52 AM
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    Mike Wilson: Firstly, I wholeheartedly agree with you regarding the 1% blanket on SDLT. Have said it myself many times before on here and other platforms...

    Secondly, with regard to the SD you paid on your most recent purchase. 14K is a mighty chunk. More than some will pay in their entire homebuying lives, I might add. However, would you agree that it simply formed part of the 'price package' you put together when offering on the property?

    In other words - had the SD been payable at 1%, then you would have had another ten grand or so at your disposal, which may well have either gone into the homeseller's coffers, or allowed you the leeway to have looked at a slightly more expensive property...

    • 18 April 2011 11:49 AM
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    rantnrave: "...SINCE you so LIKE making your POINTS with capital letters, I feel OBLIGED to do the same."

    However, you then DIDN'T follow on. There were FIVE words you SHOULD have capitalised in order to achieve the necessary impact... ;o)

    • 18 April 2011 11:38 AM
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    [*1st Quarter 2010, FSA estimates as many as 43% of housing loans were liar loans.
    **HBOS whistleblowers state liar loans were endemic, and up to 80% of mortgage loans were liar loans.]

    Grand Larceny has been rewarded.

    • 18 April 2011 11:35 AM
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    As one cannot start new threads here - perhaps I can ask (or pose) a question here.

    At the moment I would suggest one of the factors stranging the market is stamp duty. I bought recently and handed 14k in cold blood to the government. The way things are at the moment I'd like to move again in a couple of years - when the youngest goes to university. But, I'm blowed if I am going to give them another chunk of my hard earned. So, I'm thinking ... 'stuff it, I'm going to stay here for 10 years to get some sort of 'value' out of the 14k tax I paid'. I wonder how many others feel the same? Now the days of bonkers lending are over that big chunk of money suddenly seems very real.

    The banks are not going to start lending (like they used to) again in a hurry - why isn't the industry lobbying for stamp duty to go back to 1% for all sales?

    At the moment stamp duty is raising just a fraction of what it was in the bad old days of 2007. Surely the argument is unanswerable - lowering stamp duty to stimulate the market must increase tax revenues in due course as a healthy housing market (one with high transaction levels) generates loads of extra spending ... (on estate agents, solicitors, removal companies, storage, skips, garden clearance, carpets, building work etc. etc.)

    Why is the whole industry - estate agents, solicitors and surveyors lobbying for a reduction in stamp duty to help kick start the market and, in due course, generate more tax.

    • 18 April 2011 11:32 AM
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    In 1997, according to the Office of National Statistics, the national average wage was £16,666.
    According to the Nationwide Building Society the Average House price in 1997 was £55k.
    £16,666/£55,000 = 3.3x salary.

    By 2007, at the peak of the boom [according to the Office of National Statistics] the national average wage had risen to £23.5k
    The Average House Price in 2007 was £185k.
    £185,000/£23.5k = 7.8x salary

    Conclusion:

    The national average salary in the UK has risen by 41% from 1997 to 2007.

    The average House Price rose by a staggering 236% over the same ten year period. [From £55k to £185k]
    [*Other Sources, I.E. The Halifax, has the AHP rising even higher than £185k*]

    And yes, there are many examples of 300% increases.

    *Interestingly, the average house price rose by only 33.3% from 1987 to 1997. [From £40k to £55k]

    ** The Average FTB mortgage in 1997 was just £41.5k [Council Mortgage Lenders]

    The ONS annually releases 'The Effects of Taxes [AND BENEFITS] on household income'

    At the Bottom of the .PDF's, are tables of Household Income by Decile.

    From which the Median household income can be extracted. [Have a look at this data]

    Contains articles and data looking at how taxes and benefits affect the income of households in the UK. The analysis provides estimates of household incomes, including the average amount of taxes that households pay, and the value of benefits that they receive. The articles highlight the level of inequality across households and look at differences between retired and non-retired households. An article is published annually and has been undertaken most years for 50 years.

    Median Household Income 1997 was £13,917.00
    Median Household Income 2007 was £19,808.00

    The Median UK Household Income has risen by 42.3% over ten years.

    **Remember Over two thirds of the UK earn less than average wage.
    In 2008 an ONS survey showed that over 6 million people earn £10k per annum or less. These included Hairdressers and Cleaners.

    ----------------------------------------------------------------------------------------------

    Conclusion:

    Yes one of the features of the bubble has been the increase in two income families.

    But as you can see from the figures.

    This has not particularly made houses more affordable. We are still in a 'false economy' .

    I.E

    It is clear that if prices fall to the same level of affordability relative to median household income earnings and interest rates, as they did in the mid-1990s, we would be looking at a 50% + fall, from 2007 peak prices.

    • 18 April 2011 11:29 AM
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    Rant - that's like comparing the average wage to anything and saying the price of product XXX is too high, petrol being the obvious one.

    Just because a house used to be 4 x average salary, this is not a rule, trend or obligation of today, or the future.

    • 18 April 2011 11:27 AM
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    Pee Bee - SINCE you so LIKE making your POINTS with capital letters, I feel OBLIGED to do the same.

    By what % did salaries increase in the 1970s relative to the increase in house prices? How does that figure compare to the salary house / price ratio from 1997 - 2007?

    • 18 April 2011 11:18 AM
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    Peter 'Chips' Redeye: You state "From 1987 to 1997 the average house price rose by circa 33%. From £40k to £55k.

    From 97-2007 there are countless examples of 300% increases."

    I respectfully suggest you are skewing figures to suit your argument, Sir. A "300% increase" as you put it INCLUDES the original figure - thus the ACTUAL INCREASE is a 200% price rise, not 300% as you state.

    Look deeper: 1987-1997 - +37%; 1977-1987 - +229%; 1976-1977 - +241%.

    Here's one you REALLY won't want to see or admit to the existence of...:

    1970 to 1980 - +419%!!

    • 18 April 2011 11:08 AM
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    Edit to add - Ros, the % number in the article is wrong - should be up 1.7% this month. The 0.8% increase was last month's % figure (although the nominal increase in price that is quoted is correct).

    • 18 April 2011 10:45 AM
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    Pee Bee - solved it, the MoM figure was up 0.8% in March. It's up 1.7% in April.

    • 18 April 2011 10:42 AM
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    Pee Bee - Is seasonal adjusting the missing element in the calculations?

    • 18 April 2011 10:40 AM
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    From 1987 to 1997 the average house price rose by circa 33%. From £40k to £55k.

    From 97-2007 there are countless examples of 300% increases.

    Get it through your thick heads.

    House prices could drop by 50% and they would still be OVERPRICED.

    • 18 April 2011 10:40 AM
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    Yet another instance of the magical 'national average...' being used.

    But... HANG ON...:

    "This morning Rightmove said the 0.8% monthly rise in asking prices, which equates to an extra £4,032...."

    I know I failed my maths 'O'-Level (I maintain through choice...) - but isn't 0.8% of £235822 only £1887?

    • 18 April 2011 10:21 AM
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    It strikes me the 'no-sale, no fee, we price higher than anyone else to win the instruction' business model will, in the current situation (which is going to go on for years) put half the estate agents in the country out of business.

    I remember in the early 90s putting a house on the market. Well, I put it on the market several times with several agents as I chased the market down. 2 years into that particular house price correction, my local town (at that time Marlow in Buckinghamshire) was down from 13 agents in the boom of the late 1980s to 6 agents by 1991.

    What a difference that made. When I was moving on to my fourth agent the chap who came to value it said ... "I'll put this on the market for £150k and not a penny more. If you want it on higher you can find some other mug to do it. I've already got plenty of overpriced properties on my books that I can't sell - I don't need another one"

    "Fair enough", I said - and he had it sold within 2 weeks - after 18 months on and off the market previously.

    Time for a bit of realism to creep into valuations and, if you don't win some, fine - this is survival of the fittest time. If you have some cash reserves you'll be able to wait out the ones still over valuing because, sooner or later, they are going out of business.

    • 18 April 2011 10:19 AM
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    @Anonymous Coward

    So you are happy to take on a Client for a fee that is only worthwhile if you achieve £200k above asking price, an asking price that is already too ambitious?

    Death wish.

    • 18 April 2011 10:13 AM
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    Oops - hardly 'likely'

    • 18 April 2011 10:10 AM
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    This news is hardly like to inspire FTBs...

    • 18 April 2011 10:09 AM
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    Don't just blame estate agents - vendors are perfectly complicit in the process of over pricing. The number of times that an owner has agreed with me about how good my service is, that they want to instruct me but they want to ask my price +£20k / +£50k, etc.

    The worst case recently I turned round to him to say no, but we could perhaps do a guide price of £1.5m he said ok and then proceeded to propose a commission structure based on performance - which I am happy with, but the commission was only worthwhile if I achieved £200k above asking. I think the house is worth £1.4m - if he is lucky, but £100k negotiating room is the same as £10k at £150k so not an outrageous OOT asking, but his expectations are mental.

    • 18 April 2011 09:48 AM
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    There are so many EA's who are not getting the triangle right. For those who have no idea what I am talking about read carefully, understand and implement.

    1. Right reason for selling.
    2. Right price.
    3. Right fee.

    Just get 2 of these 3 and you will not go far wrong.

    Obviously there are a lot of idiots out there and I know you all see them and you may even be one of them yourself. Get realistic on prices and fees and 1. on the list above matters not.

    • 18 April 2011 09:42 AM
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    At the end of the day you can ASK what you like for your property - whether you get it or not is of course a different matter!

    • 18 April 2011 09:26 AM
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    It is truly unbelievable that so called "professionals" are trying to win business with higher asking prices in the hope that the client stays long enough to reduce and sell.

    On top of this why not slash fees - and hasten the day you go out of business?

    The number of new instructions is low, but the number of new buyers is even lower - wake up

    Get fees up, and asking prices correct

    • 18 April 2011 09:25 AM
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    Estate Agent delusion rises 0.8% MoM. We really must have a death wish.

    • 18 April 2011 09:00 AM
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