Monday, May 16, 2005

UK Market Set For 'Hard Landing' : Rightmove

The British property sales website Rightmove is seeing the stalemate between buyers and sellers developing into a crash. "Rightmove, which claims to advertise about 50% of all homes for sale in Britain, said the figures show both the volume of property transactions and the annual rate of increase heading for their worst levels for a decade."

"It said the data undermined arguments that the housing market was undergoing a soft landing. 'We anticipate..little movement upwards until buyer affordability improves. With sellers not prepared to lower prices by enough to make properties more affordable, a gentle fall in prices would mask a collapse in the number of sales and a 'hard landing' for the market as a whole, it argued."

"'Sales are only likely to recover if buyer affordability improves through lower prices, rising wages, or falling interest rates,' a spokesman said."

"Miles Shipside, the chief executive of Rightmove, warned that people selling houses were often unrealistic about the value of their homes. 'We are heading for a nasty low that sellers seem to be oblivious to,' Mr Shipside warned. 'House prices have risen so far that they are no longer able to pay through the nose."

13 Comments:

At 8:16 AM, Anonymous Anonymous said...

Ben, could you find some more stories about the australian housing bubble bursting?

I've heard snippets that prices in the larger cities like syndey have dropped nearly 40% in the last 6 months alone.

Is this true? Is it happening nationwide or just in sydney?

 
At 8:25 AM, Blogger Ben Jones said...

8:16 anon,
I don't think it has fallen 40%nationwide, but after a long pause, Sydney is in a freefall. Melbourne is falling too, I believe.

The info is getting more sketchy out of Australia, so it has been hard to track. If you come across any links, please post them or email them to me.

There is a report out that the AU home builders are taking in less. I get the impression that Australia is a few months ahead of England in the price cycle, so I do watch that market closely. Thanks for commenting.

 
At 8:32 AM, Blogger goleta said...

One news link: Sydney RE crash ( reqistration required to see the news and it's free

Excerpted from the news:

Sydney house hunters looking for quality properties have never been so spoilt for choice.

A report by Home Price Guide exclusively for The Sun-Herald reveals the price of hundreds of properties across Sydney on sale since before September have dropped by as much as 40 per cent.

In Dulwich Hill, a three-bedroom terrace was first listed for sale last May for $980,000. Now it's a bargain buy for $580,000.

In Double Bay, a luxury apartment on Carlotta Road first listed in March 2003 for $2.79 million is for sale for $1.95 million - a fall of $840,000.

In Hunters Hill, Ellie and Kevin Allen's Euthella Avenue home is for sale for $1.15 million - $800,000 less than it was first listed last June.

 
At 9:07 AM, Anonymous Anonymous said...

As for the Australian housing Market......
go to MSN scroll to the botom for MSN World- go to MSN Australia-
when the page comes up go to Housing and renovation. Here you can see properties listed all over the country. I do monitor this on a regular basis- even though I am in the states- and have noted a drop in prices since last autumn.

 
At 10:57 AM, Anonymous Pamela said...

Well, I thought I'd put my two cents in regarding housing abroad. We've lived in Brussels, Belgium now for about 8 months (I follow this board every day, even though I'm hours ahead!). I had a conversation with my French teacher last week regarding housing prices, as she is looking to buy. She said with all the new EU countries, and people needing to relocate here (to work for EU) that prices are very expensive. We live just inside the Brussels city line, and the house up the street from us is going for over $1 million euros. Anyway, I asked her if that is a fact of why housing prices are climbing so high (all these families) or is it something that the real estate people are saying-kind of like all the boomers buying, or immigrants in Florida stories. She stopped for a minute and said, "you may have a point". I told her what's going on in my old stomping ground of San Diego, and she was shocked. She said no-money-down loans would never fly here. But, this is Brussels, it's old Europe, from what I understand. I guess time will tell here, too, whether there's a bubble or not. And I still have lots to learn.

 
At 11:49 AM, Anonymous Frank said...

Belgium has enormous taxes and fees on houses. I think the transaction cost is something like 20-30%!!! The Econmist's housing bubble articles have discussed this. So this keeps out speculation, but neighboring Holland and now France have serious housing booms. Pretty much all of W. Europe except Germany is facing a serious housing bubble. But these fees have probably tempered the bubble somewhat compared to Holland, which is comparable to hot markets in the US. The high population density in Holland probably makes it susceptible as there is high intrinsic demand.

I have a friend in Belgium and when I visited 6 months ago he was very pleased by the appreciation that he got on his TH since he bought a few years ago.

If opening up the EU is an excuse for the housing boom, especially in the higher end, then it's the lamest thing I have ever heard. It's as stupid as thinking that poor (often illegal) immigrants from Central America are behind the housing boom in DC.

But then again I read an article about how difficult it is for your average El Salvadoran to buy a house since many don't have any credit rating or more importantly bank accounts!!! (I nearly fell off my chair.) Then there was a story about a house cleaner getting buying some crappy part of MD for a 1 BR condo for $200+k. Welcome to the American Dream..... foreclosure.

I think it is cruel when people like this get sucked in.

 
At 11:54 AM, Anonymous Frank said...

Ok, so it's the new bureaucrats that are driving up the prices in Brussels..... that's more feasible. You probably have noticed that there a lot Poles in Brussels. I was thinking on the low end of the market.

But you have to step back and think that the price level in Brussels has always been high. This is what I call intrinsic demand.

No, what you are seeing is part of the worldwide housing boom that has affected every rich country except Japan and Germany.

 
At 12:18 PM, Anonymous Melissa said...

Pamela,

Thanks for your input from Belgium. My friends from Belgium and Holland are shocked at the huge homes here in Northern VA.

My friend from Holland has always complained about our luxury homes but is now buying one (at the top of the market here IMO) as her desire got the better of her. Welcome to America, I guess.

 
At 1:10 PM, Blogger Ben Jones said...

Pamela,
Thanks for telling us about your area.

 
At 5:59 AM, Anonymous Anonymous said...

Can anyone advise me about housing in the UK for Key Workers? What are the advantages/disadvantages?

 
At 5:59 AM, Anonymous Anonymous said...

Can anyone advise me about housing in the UK for Key Workers? What are the advantages/disadvantages?

 
At 6:00 AM, Anonymous Anonymous said...

The main reasons that housing sales have slowed down are compounded by the very slow English conveyancing system and the hopless estate agency industry underneath. The English estate agents by and large cannot and do not know how to sell. They merely present and market and arrange for buyers and sellers to interact. This is not selling depsite owner's hopes and agency's misbelief. Compared to the Canadian system this English one, steeped in history as it is, remains altogether hapless.

 
At 3:47 AM, Anonymous Pete said...

Hi
I'm a uk speculator with a reasonable portfolio of properties.
There is no problem with the English conveyancing system, the problem lies with unscrupulous estate agents.
I am currently buying properties and find that no sooner do I get an offer accepted than the estate agent miraculously finds a higher offer within a few days.
I then find myself in a bidding war with another buyer who probably isnt even in a position to complete the transaction.
All that would be required to resolve this farce would be to make an accepted offer a binding contract-so simple.

 

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