With the US subprime crisis spreading to Europe, shockwaves in Northern Rock which would spread to other banks, UK economy growth not looking healthy, increasing trade deficits, sharply rising mortgage costs, falling corporate profits and job cuts especially in the City, and as market turmoils escalates, housing price which shows a first drop of 2.6% (from Rightmove last month), this are the signs of the beginning of a housing crash. PROPERTY SHARES ARE A SELL!

Wolseley downgraded - MoneyAM

Credit Suisse has today downgraded shares in Wolseley to 'underperform' from 'neutral'.

The brokerage also dropped its target price to 850p from 1,150p, citing a continued deterioration in the US housing market.

In a note published this morning, the broker said it has also lowered its full-year 2008 and 2009 estimates for the specialist trade distributor of plumbing and heating products and supplier of building materials by 11% and 7% respectively, noting that it feels that while the share price may still present longer-term value, the operational hurdles faced by US Building Materials in the coming months skew risk to the downside.

The broker noted that its full-year 2008 profit before tax amortisation estimate of 751m for Wolseley puts it 14% below company-guided consensus, but added that the share price has underperformed the FTSE100 by around 8% since early August, suggesting the market has already priced in a downgrade.

Credit Suisse added that, while it remains broadly in-line in terms of the upcoming full-year 2007 numbers, its updated full-year 2008 forecasts also place it 14% below consensus estimates.

Hammerson, the FTSE 100 property developer, has warned that the City office market is in danger of being damaged by the fall-out from the continuing turbulence in the financial markets.

The warning from the developer of the old London Stock Exchange building will send shudders through Britain's 700 billion commercial property market as it marks the first time a large UK commercial developer with a direct vested interest in the capital has raised the red flag over its health.

The warning from Hammerson comes just days after The Times revealed that property industry experts have pencilled in a significant risk of the City vacancy rates doubling next year if banks suddenly pull their requirements for new space in the face of falling profits.

It would, in turn, cause the last two years of soaring City rent rises to come to a halt or even trigger rent falls by 2009. Since then Macquarie, the Australian bank, has put its search for new City premises on hold.

A fall in rents could also trigger falls in capital values of buildings where cheap borrowing had until this spring unleashed unprecedented demand for buying commercial property.

As illustrated in most of the charts above people have been selling for months.

are you always six months late with your threads - what a waste of space

Well, I have been shorting some of these for the past 4 months.

More shorting on these...it has been worthwhile.

Course you have Hlyeo, of course you have, so unlike you to keep quiet for so long. Ever thought of becoming a stock ambulance chaser?

hehe I can see someone is caught in the web.

HYLEO ..... not clear if you mean "sell prop SHARES" or "sell physical houses" ..... if you mean the latter, then for sure you are talking bollocks ....... it would comne as no surprise if house prices in general stagnated or even fell back a little, for it is (imo) self-apparent that the rises over the last few years are unsustainable .... however, quality property in the right location will always be in high demand, even if selling them takes a little longer than of late

this child needs sending back to the dark side!

I've believed for a couple of years that house prices will crash. It's only a matter of time IMO.

AL .... too sweeping a statement .... crash by how much and for how long?

They will fall, certainly, but Cynics is a fair question.
The other question is what the catalyst will be.
Tougher lending? Possibly. Higher rates? Seems unlikely for some time.
Higher unemployment? Perhaps, but the current unstable and low paid jobs culture hasn't done it.
Lower demand. Definitley. But this also seems unlikely unless the government does what people are demanding and creates massive investment in social housing and cheaper private housing. Those same people who demand that will the demand the PM's balls on a platter because there has been a housing "crash" and they are in negative equity.
Who'd be a politician?
Alan

Big Al,

Sooner or later you're bound to be right if yiu keep on saying it long enough!

Actually the last 'crash' was far from that, more of a slow downward spiral which lasted a few years.

Another random thought on house prices.
Your view on the direction is often driven by your own hopes for them, and that differs very much by life stage.
As a FTB, I would be hoping for a crash and looking for the signs, so I could afford to get on the ladder.
As a growing family in a small semi, I would be looking for stability so I could save up and move on, but a crash is no good as my equity would be swept away and I would be stuck.
As I reached retirement and the family moved on, I would desire a boom before I downsized, so that I had more equity than ever before to ease my life in retirement.
Whatever happens with house prices, some will be delighted, others horrified. Classic no win.

I think 30% is not unlikely with little or no recovery until 2015 or thereabouts.

Andy - the last crash was a crash and make no mistake. I know someone who bought in Norfolk in '88 having knocked around 20% off the asking price and he was still in negative equity for alomst all the 90's.

This time around you hear of 9x multiples being lent with interest rates being their lowest in 40years in 2005. Anyone who thinks a crash is not on the cards is a helluva dumb-ass IMO.

BTW, I've no properties in my investment, having sold up some time ago. They were bought 94/95. ;-))

i happen to own my house, which we bought in 1986 at what we thought to be absolute top dollar, but that has increased 6-fold and perhaps more ..... it happens to be in an ace positon and, for various reasons, almost unique (for lack of a better word) ...... even if prices fall, and our house is included, i'll not care much, for if we move then it will be to downsize.

i also bought a small freehold off Portobello Market in 1978 for what is now a risible sum ...... that has risen exponentially and for various reasons has further still to go . ..... by miles the best investment i ever made, though did not realise at the time.

point i am trying to make is that with property, quality and location (location, location) will always be a sound investment ....

though beware of companies who try to drag you in on that, for we also got totally screwed on a couple of EIS deals where the commercial properties, allegedly bought on the cheap, seemingly did no better than stand still over a number of years.