House price predictions

Realy

neverdespairgirl wrote: »

Halifax


Rightmove

Dec 2007 - 0% growth in 2008

Rightmove got it right. They have not grown at all.:D

IveSeenTheLight

Surely making a prediction is down to a bit of guesswork.
Hence an update of the prediction must be allowable. Surely people can change their views / predictions especially as new information comes to light.

Look back 18 months ago, who foresaw the extent of the credit crunch would be like it is. I didn't read about it in here.

Generali

IveSeenTheLight wrote: »

Surely making a prediction is down to a bit of guesswork.
Hence an update of the prediction must be allowable. Surely people can change their views / predictions especially as new information comes to light.

Look back 18 months ago, who foresaw the extent of the credit crunch would be like it is. I didn't read about it in here.

I predicted a credit crunch:

Generali wrote: »

Banks care a lot about risk. If house prices fall we'll probably see a credit crunch coupled with a liquidity crisis.

In a liquidity crisis, cash is all. Nobody will extend credit to you.

Look at it fromt he banks' point of view.

If house prices are rising rapidly and interest rates are low, why not lend 5x salary? If the NINJA (No Income, No Job or Assets) can't pay you back, it's ok. Just reposess and sell the house at a profit. The bank gets their money and lost interest back. Hell, it probably won't even come to that - when the schmuck that crippled himself because he lied on a self cert mortgage realises his mistake he'll sell out cheaply and pay the bank back.

On the other hand, if prices are falling what happens? Who wants to lend someone money against a depreciating asset? You need a big deposit and a big cushion. The banks definitely don't want to think about reposession when they are then going to be holding an asset that's falling in value so they only lend to the least likely to default and make them take out insurance against job loss and death.

If you want to know what a banker's thinking, it's all about how to reduce risk.

No mainstream writer predicted its severity of course.

Some friends and I were discussing the chances of a banking crisis as a result of excessive lending in late 2005. I can't link to the pub though.

IveSeenTheLight

Well done Generali, I've always enjoyed reading your posts.

While your posts mentions credit crunch it doesn't go as far as predicting one.
You use a lot of if's and those if's have come to fruition, but technically, you didn't say " House prices will fall and as a result there will be a credit crunch". That's a prediction.

Not that I would have expected you to do so, but you didn't predict either that the world governments would come together to inject liquidity to reduce the impact, that governments would bail out the banks or that there would be strong factors put in place to only repossess when absoluely necessary.

No-one can claim to know the future, they can only guess what is likely to happen which you have shown in your post as you did very well in what might happen.

Once again, well done. I can't thank you twice

neas

whats the point of predicting something if your always wrong? oO.

You should predict something 'close' to actuality... if you cannot predict to a 10-15% accuracy then don't bother predict because the predicitoon is worthless.

This applied to nearly all insitiutional predictions who have a vested interest in the market.

Their predictions are behind the drag curve.. updated X% more as X% more has been lost... its not predicting at all.. and I cant believe they are allowed to post it with authority oO./

The intelligent among us know houses will fall at least 30%+ of the peak... from historical evidence and the fact its different this time... its much worse this time.

As time goes on in this recession... wealth will be transfered partially from some of those aiming to make a quick buck. Good Example the Wilsons... no way will they get rid of 875 properties.. before they take HUGE losses on their portfolio,.... reducing their perceived MILLION+ wealth down to 0.... with a bankruptcy charge stuck to their head disabling them from financial borrowing for 6 years after.... Some of this money will be wrote down by banks... but some of it the wilsons actually had horded and this will be funneled back into the system so to speak..

The end result will be that many people like the wilsons... will lose money.... but those without property will 'gain' in a sense some of that money as houses become cheaper. Redistribution of wealth indirectly. Of course its not a 100% matter... and as a result all of us will become that bit poorer due to the fiancial crisis.

moanymoany

Back 5 years ago I worked with someone also interested in finance. I said then that the 'fantastic' British economic miracle was based on debt - I couldn't see how it could just go on and on - but it seemed to.

Last year I noticed things weren't quite so bouyant and made the decision to sell our house instead of waiting until we retired. We did this.

I can't remember where, but earlier this year I read something online that persuaded me that the world was going pearshaped, but even June/July - there were people wittering on about green shoots.

Many predicted a big crash - but what has happened!? I still can't get over people still saying that house prices are going to 'stabilise' or will only fall 15% - with what is happening in the world I can't see us getting away with less than 40% and probably more.

Good old Peston's latest offering is worth reading.

http://www.bbc.co.uk/blogs/thereporters/robertpeston/