Lenders axe house price forecast

carolt

Here's next year's predictions, from those NOT too scared to give them, thanks to The Times:


"Viewing not recommended for those of a nervous disposition

Nationwide (prediction made in September)
House prices will fall 25 per cent between 2008 and 2010, according to Graham Beale, chief executive of the United Kingdom’s biggest building society

Barclays (December)
Fall of 15 per cent next year. John Varley, chief executive of Barclays, which owns the Woolwich mortgage brand, said that prices would fall by between 10 and 15 per cent before the end of the coming year

Lloyds TSB (December)
Fall of 10 per cent in 2009. Sir Victor Blank, the chairman of Lloyds TSB, which is taking over HBOS, said this week that house prices would fall by another 10 per cent in the next year

Halifax (December)
Fall of 20 per cent over 2008 and 2009. Martin Ellis, chief economist for Halifax, owned by HBOS, said at the start of this month that he thought house prices would fall about 20 per cent over 2008 and 2009

Capital Economics (October)
Fall of 35 per cent between 2007 and the end of 2009. The consultancy believes that prices will drop 35 per cent from the peak in 2007 and will not begin to show growth until 2011

Knight Frank, Savills (December)
Fall of 15 per cent in 2009. Both estate agents believe that prices are halfway through a fall of 30 per cent from peak to trough. Savills expects prices to begin to recover in 2010

Winkworth (December)
Fall of 10 per cent in 2009. Dominic Agace, of Winkworth, the estate agent, said that sales prices were down by 20 per cent this year and that prices would fall by a further 5 to 10 per cent in 2009

Rightmove (December)
Fall of 10 per cent in 2009. The property website has released a report predicting that house prices will decline by another 10 per cent next year

Kinleigh Folkard & Hayward (October)
Fall of 5 per cent in 2009. Lee Watts, the managing director of the estate agent, blamed irresponsible lending for a 20 per cent fall in prices this year and predicts that there will be a further 5 per cent decline next year"


http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5372549.ece

IveSeenTheLight

Generali wrote: »

True but the rate of change has been pretty consistant across the 3 indices. I think the difference in average price reflects the 2 companies' strengths in different parts of the UK.

So which is better for showing the UK average?

Halifax
Nationwide
or
Land Registry?

Generali

IveSeenTheLight wrote: »

So which is better for showing the UK average?

Halifax
Nationwide
or
Land Registry?

My feeling has always been that the Land Registry would be the most accurate as they capture the largest part of the market. However as all three are in line in terms of rate of change (LR with the other 2 with a 3 month lag) suggests to me that either all three are equally right or equally wrong. The latter is possible given that all three may be missing a lot of distressed sales.

Presumably it would be possible to strip the interest rate impact out of the RPI figures but frankly I can't be bothered.

mewbie_2

Generali wrote: »

Presumably it would be possible to strip the interest rate impact out of the RPI figures but frankly I can't be bothered.

The exact figures don't seem to matter very much any more. We have moved from they always go up, to they've stopped going up, to they're dropping. The only vague question now is are they dropping at a 'reasonable' rate, or a frighteningly off a cliff sort of rate. And I'm not sure how much that matters anymore. We seemed to go from house prices to !!!!!! happened to the world economy in a very short space of time.

Let's hope we go back to the normal discussion equally quickly.

Generali

mewbie wrote: »

The exact figures don't seem to matter very much any more. We have moved from they always go up, to they've stopped going up, to they're dropping. The only vague question now is are they dropping at a 'reasonable' rate, or a frighteningly off a cliff sort of rate. And I'm not sure how much that matters anymore. We seemed to go from house prices to !!!!!! happened to the world economy in a very short space of time.

Let's hope we go back to the normal discussion equally quickly.

Don't hold your breath. Unless you believe that Government borrowing is going to be a panacea this time despite never having prevented a recession before (that I'm aware of at least) then we have a recession to deal with before things get better.

IveSeenTheLight

Generali wrote: »

My feeling has always been that the Land Registry would be the most accurate as they capture the largest part of the market. However as all three are in line in terms of rate of change (LR with the other 2 with a 3 month lag) suggests to me that either all three are equally right or equally wrong. The latter is possible given that all three may be missing a lot of distressed sales.

Presumably it would be possible to strip the interest rate impact out of the RPI figures but frankly I can't be bothered.

But we were not discussing rate of change, we were discussing UK average house price.
Don't get caught up with the way people on here twist things to proove they were right.

Generali

IveSeenTheLight wrote: »

But we were not discussing rate of change, we were discussing UK average house price.
Don't get caught up with the way people on here twist things to proove they were right.

Well as it goes, I have been talking about rate of change. It explains a lot about why I didn't quite follow some of the replies!

The actual average house price differs substantially between Halifax and Nationwide as you pointed out. According to the Nationwide, they are different as they are measuring different things:

http://www.nationwide.co.uk/hpi/method_qs.htm

Why are our house prices different to the Halifax's?

• Over long periods the Halifax and Nationwide series of house prices tend to follow similar patterns
• This stems from both Nationwide and Halifax using similar statistical techniques to produce their prices
• Our average price differs because the representative property we track is different in make up to that of Halifax

BTW, they also specifically state that the difference isn't because they are stronger in the SE than the Halifax. I have no idea which 'average house' is the more average. All the indices have their weaknesses (eg LR not including repos and new builds, Haliwide only capturing part of the market).

I'm not sure that the actual average price matters so much anyway as prices are set at the margin not at the average.

carolt

And some more house price forecasts from the less bashful:

http://www.guardian.co.uk/money/2008/dec/23/house-prices-market-business-society1

House prices in the UK are likely to fall a further 13% over the next two years as banks and building societies continue to tighten lending conditions, according to property consultancy Hometrack.

Following an estimated drop of 9% this year, prices are forecast to fall 10% next year and 3% in 2010, the consultancy said yesterday. This would mean a peak-to-trough fall of 22% between 2007 and 2010.

Richard Donnell, Hometrack's director of research, said: "For homeowners, who tend to base price changes against what they believed they could have put their home on the market for in 2007, it will feel more like a 30% fall once asking prices are taken into account."

The group said the projected drop in house prices next year would put affordability, in terms of debt servicing costs, on a par with the lows of the early 1990s.
....

Property firm Chesterton Humberts gave a much gloomier forecast for next year, saying house prices would fall by 40% peak to trough. Robert Bartlett, chief executive, said: "The market is considerably further down than the house price indices are signalling. The physical evidence, completions, indicates falls of 30%-35% to date."

IveSeenTheLight

Interesting

ess0two

IveSeenTheLight wrote: »

Interesting

Yeah same people still waiting for the crash that has passed.