House price fall picks up pace – Nationwide

Hmmm....maybe I will actually be able to buy a house before I am 40?

"Hmmm....maybe I will actually be able to buy a house before I am 40?"

But, would you want to?

It amazes me that anyone expects house prices to do anything other than fall. The price of housing is determined by the amount of capital available to buy it. With buyers no longer able to borrow as much as seven times their income they cannot afford what is being asked and prices will have to fall. There are some absurd suggestions that vendors will "refuse to sell" but if they adopt this line they will never sell at all and their executors will one day do so for them. There is always an number of distressed vendors who have to sell and it takes no more than about 5% to bring the market down. We are very near to that time and the impending spending cuts and job losses will bring it closer.

depends on when you ar turning 40! :) I am in exactly same boat though ;)

well ill go to the foot of our stairs im shocked (NOT)

I totaly agree with Ian above

The market has got to fall and it wont get better for a long time

It's disgraceful that the shortage of housing in this country is not being as a big problem. The baby boomers who are in control of our society have created a NIMBY society that enslaves the younger generation. Until we realise, as a society that the shortage of housing will create massive civil and social unrest, we will continue to see the erosion of moral and ethical standards and an increase in crime. More houses is not a nice to have, it is everything our society should be investing in.

While I agree the housing market needs to fall, Using August data to say this is happening is pure sensationalism - Maybe citiwire should comment on how many prices rises have been recorded for the month of August in the last 20 years.....

I turned 40 last year. Graduate, self employed. I still see little point in borrowing five or six times salary to buy something that my wife and I will outgrow as soon as we have a child. We're moving to Brasil as with what we've saved we can buy outright there with no mortgage. And it's got a future.

Don't forget it was August when the markets always slows due to holidays and the silly season when no ones at work to do the legals etc. Wait and see!

Oh no, at this rate people will start to realise there isn't a housing shortage! How will the estate agents and meejah ramp the market up then???

PS there has been a shortage of houses to buy over the last few years because of buy-to-let speculators crowding out first time buyers. There is no shortage of houses to live in, as shown by the failure of rents to go up by more than general inflation. Should be obvious really........

John Wombwell,

Don't forget the numbers are seasonally adjusted!

Oh, and I agree that anybody thinking of buying a house should 'wait and see' - I think you'll find that's exactly what most prospective buyers are doing at the moment, and will continue to do so as the market crashes,,,,,,,,,

Regardless of when the data is from, prices surely need to fall. I work with people who are going to the bank with two decent salaries, a £30k deposit and are still struggling to buy a £290k flat.

Do we still think that the Capital Gains tax rise will encourage second-home selling?

Why serve a life of servitude in chains just for the pleasure of have to buy machinery to maintain the garden and then pay for it to be painted repaired and maintained until you die. Houses here in the uk are built buy large businesses that built as cheap as possible and sell has high as possible and all are sailing in the same boat.

You my friend are very wise England is like Rome, dying from the centre. Should you stay the next ten years will be very very tough for joe public not your elected member of parliament he will vote himself a fair few pay rises in the preceding years to make sure he only buggers your life up not his or hers ( must be politically correct : must we not. )

Go to Brazil it’s got a future this old country past it’s sell by date after the 1944 war.

Go and enjoy a good life. Do not be deterred by people who have never been their. Just go. I did, I sold up and moved on. People always assume things will get better and sometimes they do; you only have one life live it. No heating bills..

According the land registry house prices rose in July by 0.1%

It just shows the price of houses is driven soley by the amount building societies will lend. They will drop to the level that building societies will lend or people can save.

The summer months have always had the most activity and if house prices have not moved up as expected over the summer, There is a higher probability of a bigger decline going into Christmas.

You also have to take a closer look at the main pillars that drive house price. The first is the loss of confidence workers have over pay rises and job security. The second is the lenders faced with stagnation in asset prices, need to reduce risk and to reduce lending. The third being interest rates under pressure to rise as inflation rises.

I am looking for the decline to accelerate as the government spending cuts and the banks unwillingness to lend to small/medium businesses take effect over the next 18 months.

I also have no doubt that the property cheerleaders will be out be in force trying to trick the not very bright into borrowing more than 3X salary

Those who think there will be a "market crash" where they will be able to buy houses at bargain prices are self delusional. While we have next to no building and an increasing population the laws of supply and demand will ensure that prices remain high and tend to the upside. Should prices temporarily fall sellers will withdraw from the market just as they did in 2008 and prices will rise again The current glut of sellers is almost certainly more to do with the abolition of the ludicrous HIPS than anything else , a temporary blip..

The three factors that determine house prices are:

Supply/Demand

Affordability

Sentiment

There is a shortage of houses, probably most acutely of good family homes, see the Barker Report for an interesting chart that shows completions have roughly halved since 1970. This should result in an constant upward pressure on prices. However the other factors have a profound effect, if people wanting to buy their first property don't want to even think about buying because prices are beyond what they can borrow as 6 times their salary has become impossible, prices will fall. In the past a couple buying would get say two and a half times the man's income plus his wife's income. In view of the current potential supply shortage I find it hard believe price will fall that much. Or are we now in a very different world, where higher multiples are acceptable. Anyone under 30 will not have seen what real economic hardship looks like in this country, during my working life I have seen the 3 day week and power cuts as OPEC jacked up the price of oil after the 1973 Yom Kippur war. I have seen rubbish piling up on London streets as inflation eroded public sector pay and there was no more money for pay awards. PM Calaghan lost the 1979 General Election to the "Free Market" philosophy of the Tories led by Margaret Thatcher. Then interest rates in double figures as Paul Volker at the US Federal Reserve tightened the money supply to kill inflation. It was painful for anyone with a big mortgage. How many re-possessions would there be now if interest rates went to 12% or even 15%?

By the way, a move to Brazil might be a very smart move, if the Tupi Oil Field boosts the Brazilian economy in the next 10 years you could be well set up for a very prosperous life - I take it you speak Portuguese.

Well we bought our first house when I was 22 years old back in 1971.......... and that was then considered the norm. I left home at 17 and lived in digs until I had saved enough for a deposit.

You are too focused and missed the big picture the country has many natural resources and land for food to be grown etc etc.; I particularly refrained from saying agriculture. Land is worth getting your hands on to be able to enjoy its ever increasing value.

Population are growing around the world so be smart and buy where it buggers some one with meger plans for expansion up. Then they will buy you out, remember to say you are eco friendly and only want to hold on to it because you love mother earth. Then you get 40% increase just to get rid of you. They cannot comprehend nutters who think mother earth is important and have no answer as you have not told them you believe it’s worth more ,so you look daft and smile. It’s a win win situation. Been their done that.

Sorry old boy I retired 12 years ago and am old and happy just to enjoy the women and the good life. My main enjoyment is S. S. S. Just go.

Why buy anyway? Rent and invest wisely elsewhere until the housing market corrects, it it doesn't correct, rent and invest wisely elsewhere. Buying a house and seeing it's value tumble outside of your control is a risky strategy in current times, a correction could see you in negative equity for a decade or more. Our obsession with buying our own homes is, in part, what got us into this mess.

I too have lived through the 3 day week and what amazes me is the panic that grips people these days. I bought my first house in 1969 and have seen several periods where house prices have stagnated or fallen for several years. This will always happen. Over the last twenty years society in this country has had no idea of hardship compared to that of our parents and their parents. Go and see what happens if Tesco shuts for a day. People panic like mad and shop for a week. We have turned into a nation of winging wimps whose teddy bears have been taken away from them. We are led by the nose by the sensationalist drivel of the media.

It’s not the baby boomers fault. Ten years ago the banks were looking for ways to make more money out of ordinary people .The simple way they did it was to pump up the prices of housing by allowing cheap re circulated bad money into the system . It created a housing bubble. The system is artificially full of this bad cheap money propping up house prices with the banks all having a vested interest in keeping it that way. Oversupply and a downward price on housing is the last thing vested interests wants because the whole market would collapse .Droves of people are on the verge of serious financial negative equity problems and the banks know that with luck we might pull through if things don’t get any worse .If not it will be the banks who will carry the losses again. The same goes for commercial property.

Once again people are getting in a lather about something which is inaccurate. The Nationwide HPI is not based on actual sale prices. For these you need to go to the the Land Registry HPI which shows a modest (0.4%) increase for July, August data is not yet available, up 6.7% this year. So not all bad news then...

Don't panic. When you get on in life you have seen house prices fall and recover many times over. House prices were in continuous decline for nearly ten years not so long ago (1988-1997). Houses today are overpriced and a lot of the blame can go to all those amatuer buy to let landlords. I cannot believe the rents people pay these days - people paying £1500 month in rent for a grotty area - if you are going to pay that why not start to buy and have something to show for your money at the end of the day. Now I am retired on a weak pension I am so glad to have the security of living in my own home where the mortgage is paid off.

The only people who ever claim that this country needs more new houses are those who live in the south east. But the fact is you don't have any space for any more.

What needs to happen is more decentralisation of our london centric economy with more job creation and infrastructure investment in the regions. Economics will eventually force this as houseprices int he southeast have already pushed up salaries there to a point where smaller companies (AND the government) will be forced to relocate.

House prices generally have no choice but to fall. Banks have reduced there levels of gearing significantly and there is no more capital to lend. All new lending seen over the past 24 months was simply the result of recycling debt that had been repaid. Sooner people accept that the capital has left the country the sooner prices can correct and we can move on.

Land Registry figures in the South West shows July up 2.2%. For the 12 months leading up to July the figure is up 8.7%. National figures do distort the picture, regional variations its back to location location.

Why do people think that rising house prices is a good thing? I have a large house but unless I sell up and live in a field it's of no interest to me.

House prices will slowly degrade until they are affordable which means about 3 times salary for a starter home. End of story.

John Womble

Funny how as soon as the Nationwide figures go negative people like you start spouting Land Registry data which actually relates to prices agreed four months ago!

LR data is indeed the most accurate, but it is only telling you what was happening in the market months ago, before the election, emergency budget, austerity drive, massive increase in houses for sale........

If you think house prices are going up go ahead and buy. It's your money!

I'm renting. Planning to buy mid next year (best guess). Paranoid wife as we don't own anywhere. Keep having to explain that owning an asset that's going down in value isn't the best thing in the world.

Could be worse; could have bought Ocado shares at flotation!

House prices remind me of the marbles in a game of kerplunk.

Good. Lets hope the prediction of a modest fall is wrong - the bigger the better - especially holiday homes depriving locals of a roof over their head.

The small country/immigration/under supply argument is bogus where there is not enough capital to lend in sufficient amounts to maintain prices at these levels, look at all the foreign lenders no longer plying their trade in UK mortgage market domestic lenders cant take up the slack even if they wanted to which they dont, yup a house in Mayfair will attract a buyer at a premium ditto a nice cottage in a grade 'a' village in rural chesire but they are not 'the market', the problems hit in a tough market mainly in the suburbs, usually the newer ones, where there are multiple houses of the same design competing against one another for a dwindling supply of buyers, these houses are identical with the exception of decor and a little bit of plot/aspect, it becomes a downwards armsrace on price with the most desperate leading the way, I'm looking at you matrimonials/probate/job move...............................................

House prices always boom in Jan, then Feb, Mar, etc until June & Jul when they ease off up until December. Strangely this is reported to be the first fall since last July, a year ago. Nationwide figures aren't seasonally adjusted so this is just plain sailing for the housing market.

Every year the press start's banging their drum about house price crash at this time of the year. Makes for good headlines to scare the ill informed.