‘Greed’ pushed up house prices
Saturday 20th September 2008, 9:57AM BST.
GREEDY sellers asking unrealistic prices for their homes are responsible for artificially inflating the housing market, according to a leading estate agents and a mortgage expert.
They say that prices will almost certainly have to come down as a consequence. And they have admitted that the market has started to slow down. The managing director of the Mortgage Shop Plus, Peter Seymour, said that prices would not drop across the board, but some vendors would have to ‘adjust’ their asking prices.
‘It is now coming down to a more realistic level,’ he said. ‘Vendors were being a little bit ambitious. They would see their neighbour’s house for sale and try to sell theirs six months later for £25,000 more.’
Director of Broadlands Roger Trower said that the market was becoming more static, but said Islanders would not fall into the nightmare of negative equity, as seen in the UK. ‘Are we seeing a downturn? No,’ he said. ‘The market is stabilising. It is flattening out. People can’t be immune to what is going on around them but Jersey is a unique market.
• Picture: Roger Trower (left) and Peter Seymour
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Oh dear me, yet another ‘expert’ in need of basic lesson in economics; ‘supply and demand’.
The Jersey economy is fuelling deposable income to be spent on housing; this fuels immigration and population growth. If there is an undersupply of housing stock, prices will go up; if there is an oversupply of housing stock, prices will go down.
No amount of pontificating or tinkering will diminish a fact of life that has existed for millennia. Jersey is an island with an immovable constraint; the sea.
To solve this problem we need a lot more land and cost effective housing. Preferably tomorrow, if that were possible.
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the estate agents over here are following the uk step by step just 6 months behind. first it’s a case of “no, house prices are fair”. then it’s “house prices are fair, it’s just people cannot get a mortgage”. and now finally they admit “house prices are overvalued”.
and they only admit this now because they need to get the market moving because when buyers refuse to drop prices to realistic levels there are no sales and the poor estate agents don’t get their £50k commission for putting a piece of paper in a window and meeting someone at a house and showing them where the toilet is.
of course house prices in jersey are overvalued. just consider the average income to average house price and you will see they are 50% more overvalued than in the uk.
so why do jersey house prices appear more resilient. because even more than in the uk there is a mentality of “ooh, i must buy a house”. perhaps because their friends have one or perhaps because of the local residency laws. or perhaps rather sadly just because house prices have always seemed to go in one direction. greed exceeds intelligence it seems.
over the next 5 years there will be a massive depression a la 1930s. so many people have been saying this since 2000. there have been books galore written on the subject. just a shame tony, gordon, et al dont read much.
assets under management, structured finance, property portfolios will slowly decline. one of the local legal firms will try and sell the fund admin business to staff who are again too stupid or greedy to understand why its being sold.
and eventually house prices will overshoot on the way down just as they have overshot on the way up.
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Nothing to do with estate agents valuing properties unrealistically high then?
Glad to see that all the blame for the current climate is falling back at the feet of the average taxpayer and that all the Investment Companies, Banks and Estate Agents involved are blameless!
Are these people living on a different planet?
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Never believe a single word that comes out of an estate agent’s mouth.
Of course they don’t want to admit the market is slowing – it’s not in their interests.
Estate agents have been responsible, more than anybody else, for the greed surrounding rising house prices
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And of course estate agents aren’t at all responsible or greedy.
I am sure they are disgusted with the extra commission they make when a house is sold for a higher price.
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And who has been encouraging these ambitious vendors over the last few years?
The estate agents.
They have been delighted by the fact that everyone has been desperate to jump on the housing ladder while even the lowest few rungs were within reach.
There are some people in this island who are stretched about as far as they can go with debt; huge mortgage, car loan and credit card debt.
If the bonuses and overtime do not keep coming in then they are going to be in dire straits.
Then we will see how unique the island housing market is.
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To be honest there’s not much you can do to solve this. Build more houses and you become overcrowed and have all services busting to the brim, and because you can not build any more the prices continue to rise. Stop building and the prices rise.
My advice: if you can get on the ladder then get on it. If you can not get on the ladder in Jersey then look at buying in the UK or France and have a property as an investment or even further a field.
I keep using Bermuda as an example but they are over crowded and prices are rising. The locals are priced out of the market and crime has started to rise quicker than normal.
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We need to ask the Senatorial candidates what they would do to help address these problems. First time buyers can only dream of owning a home, rents are far too high and ordinary people are having to have their income supplemented just to keep a roof over their heads. This support is paid for from the public purse, but in fact, it means that wealthy speculators and landlords get rich twice over by charging high rents and seeing their property increase in value by amounts like 28% in a year.
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There is one thing you can do – introduce a flat fee system for estate agents. Then house prices will reflect true market conditions rather than the one that the estate agents use to hype the house values and up their fees. £3,000 flat fee to sell a house, no more, no less. Then see what happens. On another note, is there a new hypocrisy award that I haven’t heard of ? Estate agents condemning greed and politicians admonishing people for their lack of morality. Whatever next?
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We are currently in a GLOBAL economic crisis due to the ‘greed’ of individuals and institutions, that were not sufficiently regulated and left to continue to maintain an artificial market where there was a perception of wealth and everything was always on the up. Sound familiar in relation to our housing market? Are you telling me that the banks in Jersey will not be reviewing their lending criteria, that individuals will not be affected by dropping share prices in their investment portfolios, company share schemes and pension portfolios? Also there is a high level of personal debt in the Island. It is known that Jersey always sees a time lag between what is happening in the UK/global economy. Globally all asset values are being re-looked at. Also the main issue in this crisis was the lack of transparency and responsibility of the lenders and sellers of the debt. Do you not think more transparency and more regulation will follow on a global scale and there will be more pressure on offshore financial centers. I am sure Jersey will meet that challenge the trouble is as usual middle Jersey will pay the price as we are the only ones that pay the majority of tax with no income support or support of the elected representatives.
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Bruce, you’re hitting the nail on the head far too much for one day!
Be glad you don’t have Scotland’s ‘offers over’ system that has helped inflate house prices even more there. However, the majority of the problem has been from wealthy people buying themselves a ‘country retreat’ in Scotland ultimately chasing the locals out of the area they were born and grew up in. Arran is one island that can no longer keep its youth for people buying second homes.
At least in Jersey you have some legislation about who can and can’t buy, Scotland is subject to the British system so we are not allowed to protect our island from the English/European rich buying second homes. It is slowly destroying the islands and the Government doesn’t care!
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Agree with comments about estate agents, you can’t blame vendors when estate agents promise they can get them this or that.
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When even the estate agents and mortgage providers cannot ignore the reality any longer and are willing to admit publicly that house prices are overrinflated you know the game is up. Turkeys voting for Christmas eh ? The house crash is just about starting in Jersey and it will be more painful than the UK as prices are even more out of synch with wages here and Jersey is massively dependant on the finance industry which is at the centre of the meltdown.
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Jersey and greed i am surprised – not!
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How many new developments have been sold to Outside Investors? Terry Le Main says that he is not unduly concerned about that but that reduces the number of units available for first time buyers. The cheapest new developments should be available, freehold, to first time buyers with qualifications only. Some years ago the States also fixed the amount that a property which was bought under these conditions could be sold for and restricted the resale to first time buyers. How about bringing this back and stopping the people who are just wanting to make a quick buck? Our youngsters will have no choice but to leave the island if they want to be home owners at this rate.
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As a non-Jersey person I can say that I’m totally with you ‘fed up local’ and I don’t think any outsider (or Jersey person who already owns a property) should have a problem with that. I wish we could do the same in Scotland, but alas we are attached to England so that scuppers that!
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