The 70% club

dopester

ad9898 wrote: »

however 70% down is huge

Tell that to holders of many other types of investments. Like RBS shares down from 600p this year to 50-60p range. Even ten years ago they were in the 200p ish range.

HBOS shares down from 1000p in 2007 to a 59p low and trading currently below 100p.

These banks, and others, fuelled your precious HPI over the last 11 years.

The world has changed. Welcome to unemployment, welcome to pay-cuts, welcome to deflationary pressures that will melt your mind.

greggymagic

macaque

Over what time scale do you believe this will happen?

Kenny4315

:rotfl: It prefer to start at the mile high club ... but I hate flying :rotfl:

mitchaa

macaque wrote: »

The term 'loony bin' is a colloquial term for a type of building. Remember the first law of holes. When you are in one, stop digging.

Term of phrase, where i live in the country, we refer to persons as loony bins

IveSeenTheLight

macaque wrote: »

In your panic to retaliate, you failed to read the link I posted didn't you.

Your link quotes: -

Average prices drop, more to come
Average UK house prices peaked at just under £200,000 in August 2007, according to the Halifax. Prices in October, at £168,000 were 16% down from this, matching levels last seen three years ago.
Nationwide, the largest building society in the country, reckons prices will fall by 25% in total, and there may be no bounce-back before 2010, according to chief executive Graham Beale
Based on the Halifax index, that would put average prices down to £150,000. However, it could easily be a lot worse because of the size of the bubble that preceded the August 2007 peak and the severity of the current economic downturn.

If they were to drop 70%, average prices would drop to £60,000.
Do you really honestly think that average UK house prices will drop to £60k?

This is roughly what they dropped to during the crash of 1989 - 1995.
You can see below that this would overshoot the long term trend by far more than it has overshot by.



I therefore very much doubt 70% is even a remote possibility, but if they do, I'll buy 3

Kenny4315

70% is way over the top.

I expect the house I sold last year to drop down to the 240,000 mark, probably at its peak it got up to 335,000, so that's an £95k, or about 30% from its peak. I bought it for 120 in mid 2000, although it needed work so done it would have been say £150k, coming out of the previous slump, you could expect a £90k return over 8 years, if folk had used any sense. If it dropped 70% then it would be less than 2000 which in itself was a just coming out of the previous slump. 30% to 35% is a relistic across the market drop. Some will fall more and some more unique propery will fall less.

dopester

IveSeenTheLight wrote: »

If they were to drop 70%, average prices would drop to £60,000.

Yes. That light must be bright and directly in your eyes if you can't see the wider themes of a downturn of this severity after such an epic boom.

FoxtonsRIP

macaque wrote: »

http://money.uk.msn.com/investing/articles/nicklouth/article.aspx?cp-documentid=10924988

A year ago I suggested that a house price correction in the region of 70% might be on the cards. People's reaction to this was ridicule and contempt. With each passing month however, more and more people have been joining the 70% club.

Whilst this is not particularly welcome for home owners, (and a catastrophy for heavily leveraged BTLs) it is good news for the country. High house prices have been socially divisive and damaged the long term stability of our economy.

I'm in the 80% club myself. You get a much more discerning sort of member there I find

fatpig_2

I'm a long-standing member of the 60 percent club. Once we were but a few, but now our clubroom is besieged by vast hordes demanding to be let in :rotfl:

Ewarwoowar2

IveSeenTheLight wrote: »

Your link quotes: -


If they were to drop 70%, average prices would drop to £60,000.
Do you really honestly think that average UK house prices will drop to £60k?

This is roughly what they dropped to during the crash of 1989 - 1995.
You can see below that this would overshoot the long term trend by far more than it has overshot by.

If you look at that graph, the bottom of the troughs appear to be:

1978 - £58k
1983 - £65k
1996 - £69k

Based soley on this graph, if this crash follows the same trends as the previous crashes, I'd predict a bottom of about £75 - 80k. Which is a drop of approximately 60%.

Given that we're being told that this could be the worst economic crash since WW1, the crash in property prices could be worse than the 1970's, 1980's and 1990's. Therefore, the above logic would suggest that a crash of 70% is not a foolish perdiction.

Anyone care to point out why the above is incorrect?