At least a decade for prices to return to 2007 levels.

neverdespairgirl

mitchaa wrote: »

Many think it will be a much longer drawn out process, simple answer is, no-one knows

Don't think we didn't notice the change from "25%" a few days ago to "25 to 30%" now....

Cannon_Fodder

mitchaa wrote: »

So you accept that it may not be 10 yrs, more like 6-7yrs should the bottom be reached 2010/2011?

Is this best scenario in your view? You really think another 24-36 months of continual drops/stagnation?

Not disagreeing with you, i dont know, just intrigued as to why the long time frame?

based on past history, I would have gone for 8 years myself...but this whole credit crunch/deep recession makes me wonder if that is optimistic...this is beyond anything in the 90s, 80s, 70s...

I don't think I said 24-36 months of drops...and it doesn't have to be dropping for us not to be getting to peak...could have +2%, +4%, +6%, +8%, +10%, for example...neither stagnation, not getting quickly back to 2007 peak. those figures are the 8 year scenario.

(earlier post's dates/figures were used to demonstrate your example, how I interpreted you to be thinking the number "might" come round...)


as per the next post I made, the market will simply not go from stagnant to 10%+ in one year.

sentiment/people late spotting the bottom, a variety of factors will hinder such a quick "bounce".

mitchaa

neverdespairgirl wrote: »

Don't think we didn't notice the change from "25%" a few days ago to "25 to 30%" now....

I have already stated my opinion on that NDG, 25% with the LR, 30% perhaps by 1 of the mainstream lenders.

To give an exact % on a prediction is a bit like predicting the lottery results....Practically impossible. There needs to be an approximate range in there and overall i am in the 20-30%, more so now 25-30%

At first as back in March/April, i suggested 20-25%. I have learned a lot more since then, trends from the past, the overshoots and obviously now the economy worries so instead of 20-25% i have moved slightly now to 25-30%.

Not a great deal as 25% is still a common factor either way;)

A much better estimation would have been 20-30% down and you wouldn't need to go and be so anal as to search through every single 1 of my previous posts:p

You wake up on the wrong side of the bed again this morning NDG:p

amcluesent

IMHO depends how quickly the inevitable inflation comes and how high it goes.

Assuming inflation get back to 10% in 2010, peeps will think it's madness not to buy a tangible asset when houses are so cheap (relative to 2007). Of course at some point, unless we accept third-world status, sound money has to be reestablished and interest rates will sky-rocket...

PasturesNew

One bunch of people that won't be returning to the market in any hurry are the sort of quick relationship house flippers. Meet him on the Monday, 3rd date is out looking for a house to buy before prices go up. Until now when they've split up less than 18 months later they could sell at a profit. That won't be happening.

I think a lot of FTBs in the last 8 years or so have been people newly met rushing into buying a house before prices go up.

besonders1

I think the prices will drop sharply next year but then believe that they will rise again up to about halfway mark e.g. 2003/4. something more affordable and stay at that level for a few years as banks will be more cautious about lending.

Max_Headroom_3

mitchaa wrote: »

The old banks dont have any money argument

95% mortgages are already back, quite a few of them aswell. People have been saving good size deposits the last 12-18mths or so and are just looking for the bottom of all of this in order to buy.

As soon as that happens, great influx of buyers, houses start to rise again. Times have moved on from the last crash that many refer too, we are a lot more greedy now and our attitudes to housing over the last 10yrs or so have changed 10 fold.

Massive numbers are awaiting the bottom, many of them will have saved considerably.

Who knows eh, my guesswork is only as good as the next persons;)

I don't know if you noticed, but when banks were lending amounts that funded 2007 house prices, many of them actually collapsed!!

It will be a long long time before they're able to lend at those levels again, and wages are able to support them (rather than the fresh air of more borrowing and the hope that prices only ever go up).

It's interesting that you quote 95% mortgages being back as reason to suggest this will fund 2007 levels. The percentage is irrelevent if they're only prepared to lend (say) half as much.

Or to put it in numbers, they might have been prepared to lend me £190K to buy a £200K house last year. But if this year they're only prepared to lend me £95K to buy a £100K house, then they're still offering me a 95% mortgage, but my spending power has halved.

michaels

penguine wrote: »

Logically, house prices would rise at a rate comparable to inflation + increases in average pay.

Logically? Your arguement assumes that:
1) The interest cost of having a mortgage remains the same - if interest rates fall affordability increases...or prices rise so that 'affordability' remains the same
2) The proportion of income that people are willing to spend on housing remains constant. With people giving up smoking and other things (electical goods etc) getting cheaper people may be willing to spend a higher proportion of their on housing
3) Supply and demand remain in the same balance. Increases in population (for example from migration and from people looking for a home for their savings when pensions are not performing) may push up demand much faster than the stock of available houses (supply) can adjust (after all new build is only a very small proportion of the total number of properties). If there is an imbalance demand for housing is likely to be very price 'inelastic' - not many people are going to move out of their house because the mortgage has got more expensive but instead will cut back elsewhere.
4) House price expectations play no role in setting prices. Part of the reason for not buying a property now even if the mortgage cost is less than the equivalent rental is that the generally held expectation is that prices will fall further. The reverse may hold true when prices are rising.

So I wold contend that 'logically' whilst average earnings are one factor driving long term house prices there are other factors that especailly in the short and medium term are likely to have a much larger impact on house prices.

besonders1

Max_Headroom wrote: »

I don't know if you noticed, but when banks were lending amounts that funded 2007 house prices, many of them actually collapsed!!

It will be a long long time before they're able to lend at those levels again, and wages are able to support them (rather than the fresh air of more borrowing and the hope that prices only ever go up).

It's interesting that you quote 95% mortgages being back as reason to suggest this will fund 2007 levels. The percentage is irrelevent if they're only prepared to lend (say) half as much.

Or to put it in numbers, they might have been prepared to lend me £190K to buy a £200K house last year. But if this year they're only prepared to lend me £95K to buy a £100K house, then they're still offering me a 95% mortgage, but my spending power has halved.

Very good post, I would also like to know what the criteria and chances of successfully getting the 95% mortgage, with the high unemployment figures. I think banks would have leanrt their lesson now on lending out at 2007 levels.

skap7309

Max_Headroom wrote: »

Or to put it in numbers, they might have been prepared to lend me £190K to buy a £200K house last year. But if this year they're only prepared to lend me £95K to buy a £100K house, then they're still offering me a 95% mortgage, but my spending power has halved.

A very good point there and one to think about past the '100% mortgages are back' headline. Back they may be but if you are only granted 3.5 x your income (rough average UK wage 26k or so = 91k or 130k for couples) it will certainly not stop the crash.