Prices to bounce back ... in 2023

chucky

carolt wrote: »

It's based on futures contracts, which is at least people who put their money where their mouth is.

I think the point of the article isn't really to pinpoint 2023 as the point to 'get in there', so much as pointing out that it will be a VERY LONG TIME before prices recover.

So anyone waiting for prices to recover before selling, might like to consider whether they really fancy staying put for another 15 years..... whilst prices continue falling.

Just a thought.

Carol - i don't think that you at your most militant actually believes the 2023 'calculation'

WTF?_2

stevetodd wrote: »

Thanks Carol that was really funny, 2023 what a fool! I think it he will find it hard for people to take him seriously for a while after saying that

Going by historical precedent (well, the last bust anyway), 2017 is a more realistic target for prices to get back to nominal 2007 levels. Taking into account inflation, probably 2019 for 'real' prices to recover.

So, only another 9 (11 if inflation adjusted) years to wait instead of 15. Hooray!

Max_Headroom_3

Prices are ultimately underpinned by wages. What we as a country are earning pays for what we as a country can spend on houses.

Now that balance got dangerously and terminally out of kilter from about 2000 onwards, to the point whereby through "inventive" borrowing what we as a country were spending on houses was maybe double what we could really afford on our wages.

Obviously with houses at (say) twice what we could afford something had to break and it did. Spectacularly.

Ok so, eventually we'll all earn more, and therefore what we can spend on houses will be more.

So, with the average house at the peak at £200,000 and the average salary at £25,000, what you need to ask yourself is, how long (and how high) will it be before average salaries are really able to support average house prices of £200,000.

Maybe salaries will need to double before they can support £200,000 average house prices, I don't think that's unrealistic.

So what you have to ask yourselves is how long will it be, bearing in mind we're slipping into a major recession and unemployment is widely tipped to be shooting up, before the whole country is earning twice what it is now?

Work that one out and you might have some idea of when prices will "bounce back" to the ridiculously inflated rate they were last year.

And on that basis, there is an argument that fifteen years to reach that point is not as mad as it first sounds...

stevetodd

!!!!!!? wrote: »

Going by historical precedent (well, the last bust anyway), 2017 is a more realistic target for prices to get back to nominal 2007 levels. Taking into account inflation, probably 2019 for 'real' prices to recover.

So, only another 9 (11 if inflation adjusted) years to wait instead of 15. Hooray!

2017 suits me, I personally think prices will be back at 2007 levels around 2015 but I would settle for 2017 as I will probably be looking to sell up about 2018 to 2023 depending on what the market is doing

angrypirate

Lotus-eater, hes not saying house prices are going to fall for another 15 years.
He is saying once they finish falling, they wont recover to august 08 levels until 2023. Which in my opinion may not be too far out.

Assume we have another 2 years of falls and the net falls take us to approx 50%, thats around 100k for the average house as per halifax data (199k being peak). Then allow another fewof years of stagflation which is what normally happens (in the last cycle this was between 95 and 99) and then have several years sensible inflation, followed by a couple of years stupid inflation.
So thats 50% by 2010 to 100k.
Then staying at 50% for a couple of years, say to 2012.
Then 8 years of sensible inflation (lets say at 6%) takes us to 100kx1.06^8=160k in 2020.
Then 3 years at 10% takes us to 160x1.1^3 = 213k.
Seems perfectly sensible to me.

Lotus-eater

!!!!!!? wrote: »

Going by historical precedent (well, the last bust anyway), 2017 is a more realistic target for prices to get back to nominal 2007 levels. Taking into account inflation, probably 2019 for 'real' prices to recover.

So, only another 9 (11 if inflation adjusted) years to wait instead of 15. Hooray!

Originally I was going to say 2018, as you say taking into account historical prices that looks about right, However as a nation we still want to own a house, we still aspire to it, unless that changes there are alot of people like yourself waiting in the wings, that will drive prices up earlier, IMHO of course.

carolt

Lotus-eater wrote: »

Prices aren't going to continue to fall for another 15 years, get real.
Another 2 or 3 maybe.

If you bother to read the article, you'll note it doesn't say prices wil continue to fall for 15 years.

It says 'it will take 15 years for prices to return to 2007 levels'. Not the same thing at all.

So you could see, for example, a steep drop of 50% over 2-3 years, followed by 7 years of static prices, followed by 5 years of rapidly rising prices. In fact, much like we saw in the early 90's, in terms of timescale, only with steeper initial drops - hardly a total improbability, given that prices have already, in less than 1 year, fallen by more than the whole of the last crash put together!

Or you can come up with your own combination of figures.

The point is that house prices very rarely if ever go straight down and then straight up. There is usually a long period in the middle, where they bottom out, where prices are affordable, but sentiment is low and so cheap mortgages are still hard to come by, and people are wary of putting money in property, having had their fingers burned.

So I think 2023 seems perfectly reasonable, actually.

carolt

angrypirate wrote: »

Lotus-eater, hes not saying house prices are going to fall for another 15 years.
He is saying once they finish falling, they wont recover to august 08 levels until 2023. Which in my opinion may not be too far out.

Assume we have another 2 years of falls and the net falls take us to approx 50%, thats around 100k for the average house as per halifax data (199k being peak). Then allow another fewof years of stagflation which is what normally happens (in the last cycle this was between 95 and 99) and then have several years sensible inflation, followed by a couple of years stupid inflation.
So thats 50% by 2010 to 100k.
Then staying at 50% for a couple of years, say to 2012.
Then 8 years of sensible inflation (lets say at 6%) takes us to 100kx1.06^8=160k in 2020.
Then 3 years at 10% takes us to 160x1.1^3 = 213k.
Seems perfectly sensible to me.

Ta. You got there before me!

Lotus-eater

carolt wrote: »

If you bother to read the article, you'll note it doesn't say prices wil continue to fall for 15 years.

If you bothered to write properly, you would have put it down better.

What carol wrote :

So anyone waiting for prices to recover before selling, might like to consider whether they really fancy staying put for another 15 years..... whilst prices continue falling.

I happen to not disagree with the article, I was putting you right. You can thank me later.

carolt

Lotus-eater wrote: »

Prices aren't going to continue to fall for another 15 years, get real.
Another 2 or 3 maybe.

So I just imagined you wrote that?