Thursday, 29 May 2008

Fonzwulli & mortgages (again)

Saw this furniture at the ICFF. Made by a guy called Fonzwulli - he doesn't have a website (yet) but here's his phone number if you're in the USA and you need some quirky, handmade furniture: Tel 1-845-343-0900. Must admit it was quite humbling to actually talk to someone at a stand who designed and made their own stuff, and who then was right there selling it. I felt bad that my own bedroom storage options are all mass produced items from Ikea or Habitat.

In the news today is the story that house prices have had their largest fall since 1991, 2.5%. Where do I start? If valuers are deliberately down-valuing houses to try and stop people from getting mortgages then yes, their value will be recorded as lower. Down-valuing prevents people from getting mortgages because vendors are unlikely to drop the price to match the valuation (as happened to us with our new property, which came in £45K below the asking price) so unless you have the extra funds to pay the difference between what the bank will loan you and what the vendor wants, you can't buy.

Secondly, 2.5% off a £400,000 home (which is not an unreasonable price for a house in central London) is £10,000. People are reluctant to list their properties because they think that they'll lose £10K, and buyers are sitting tight while believing all this media hype about falling prices, but come on, who the heck actually pays the full price? We got our new house for £15K below the asking price back in October! [NB it's nearly June so you can imagine my frustration] Though after the valuation (see above) I would've liked to have gotten it for much less. And our current flat (which was bought six years ago) cost us £7,000 less than the asking price.

And to all those doom and gloomers who bang on about "negative equity": you'll only lose if you sell your property for less money than you owe on your mortgage, so if you are facing negative equity, don't sell it.

It looks to me that the mortgage industry has perpetuated it's own implosion - by making it difficult for people to get mortgages and buy properties there will be fewer sold. This isn't to say that there aren't homes available to buy (there'll always be someone who gets relocated/divorced/dies/falls on hard times etc) but there are fewer people out there who have the approved funds.

No comments: