Predictions of 50% falls now hitting mainstream in the Independent

WTF?_2

http://www.independent.co.uk/money/mortgages/few-signs-of-light-in-gloomy-housing-market-1213432.html

'It's always darkest before the dawn" is a well-worn phrase, and those involved in the UK property market – estate agents, developers and sellers – hope that it proves true as they prepare to bid goodbye to 2008. The housing market, it seems, has never been in such a parlous state. Officially, prices are about 15 per cent lower than they were a year ago but the reality on the ground is probably more akin to a quarter knocked off property values since their height in the third quarter of 2007.

Henry Pryor, an independent housing-market analyst who successfully called the top of the market in 2007, reckons the 15 per cent fall recorded by the Halifax is an underestimate. "This figure reflects only a fraction of the few sales which are going on at the moment. We have homes sold at auction. We also have – in central London – buyers from abroad who are beginning to take advantage of sterling's slide against the euro. For these buyers, prices are not 15 per cent lower than they were a year ago. They are closer to 45 per cent lower, when currency moves are taken into account."
..
But how low could prices sink? It is from the City that the best answer may come. "The median prediction among traders is that from peak to trough we will see house prices fall 46 per cent. The height was reached in the third quarter 2007 when average UK house prices were around the £200,000 mark by 2010/2011. This is predicted to be £109,000," said Peter Sceats, director of real estate derivative broker Tradition Property.

Looks like the outlook is getting worse for house prices.

edinburgher

A couple of bones to pick with that article: the bit about international buyers doesn't affect most on these boards and is essentially superfluous!

Also, I'd definitely not trust derivatives traders to offer the most accurate predictions in the market, as they're gamblers by nature! Setting predictions for up to 10+ years in many cases is not an exact science..

While I agree that the market will get much worse, articles like this take a range of sources that may not be the best available and then predict them as dead certs. The market is definitely going down, but let's not speed things up more than we need to.

Statistics and commentary are freely available from Nationwide, Halifax, Hometrack, the government and my current employer, the Royal Institution of Chartered Surveyors (among others). I prefer a slightly more balanced overview of market conditions.

Thanks for posting it tho !!!!!!? I'm not moaning at you doing so, just hoping that others won't panic unduly at it's contents

WTF?_2

edinburgher wrote: »

Statistics and commentary are freely available from Nationwide, Halifax, Hometrack, the government and my current employer, the Royal Institution of Chartered Surveyors (among others). I prefer a slightly more balanced overview of market conditions.

Thanks for posting it tho !!!!!!? I'm not moaning at you doing so, just hoping that others won't panic unduly at it's contents

Previous RICS predictions:

Sept 2007, for 2008 prices:
http://news.bbc.co.uk/1/hi/business/7000598.stm

Rics has lowered its expectations for house prices over the next 12 to 15 months to no change from 3% growth.

To be fair, they did admit there was a 10% chance of a significant fall. :cool:

They were starting to catch on a bit by Feb 2008, but not much:

http://uk.reuters.com/article/summitNews/idUKL1863404220080219?pageNumber=1&virtualBrandChannel=0

Rubinsohn told the Reuters Housing Summit on Tuesday the influential industry body was sticking with its zero percent house price forecast for 2008 but that he was mindful of growing risks in light of recent falls in new buyer enquiries.
"They (our models) are suggesting that the risks are on the downside of zero," he told the summit in London.
However, he added that the probability of a 1990s-style UK housing crash was still about 1-in-10, in line with a previous forecast made in September.

edinburgher

I've no problem at all with you picking fault with the sources I've suggested. In fact, it supports my argument :beer:

Informed readers shouldn't be trusting any one source for how they expect things to pan out in future. The newest release from 'my mob' is minus another 10% for next year.

I never said at any point that they were infallible and it's no skin off my nose if they make mistakes (I'm not an economist!)

mean_momma

"We also have – in central London – buyers from abroad who are beginning to take advantage of sterling's slide against the euro. For these buyers, prices are not 15 per cent lower than they were a year ago. They are closer to 45 per cent lower, when currency moves are taken into account."


I read into this that buyers from abroad are paying the price - motivated by the weak pound, but still paying the UK price, just as the Brits did in other parts of the world when the £ was strong.

As for traders, I wouldn't trust their judgement! Apart from the obvious example, they view houses as mere commodities, not taking into account other factors that contribute to the urge to buy.

ad44downey

!!!!!!? wrote: »

http://www.independent.co.uk/money/mortgages/few-signs-of-light-in-gloomy-housing-market-1213432.html

Looks like the outlook is getting worse for house prices.

Surely you mean better?

tradetime

I agree the bit about currency fluctuation is somewhat irrelevant, but it does make for good newspaper reading as they get to say prices have already fallen 45%.
As to traders, well that's a dubious metric to use, because if they are trading some sort of house price derivative they have a vested interest in talking the market down, just as EA's, and anyone who earns their living from a stable property market, and anybody trying to keep the economy afloat has a vested interest in talking it up. There were an awful lot of speculators long commodities and oil at £147 when the US decided to turn off the "apparent inflation" driving it.
I personally would expect average house prices to retreat to the historic level they should be at calculated off the long term trend, whatever that might be.

Conor_3

50% drop eh? Ah well..even if I sell at the bottom, I'll double my money. Oh the joys of buying in 1999.

edinburgher

Conor wrote: »

50% drop eh? Ah well..even if I sell at the bottom, I'll double my money. Oh the joys of buying in 1999.

Congrats mate {now where's that 'jealous' smiley? }

jungli_jim

My Ex will be p****d she bought May 08 for 180K and has to fit new windows and kitchen.
Larger neighbourhood property ,with added conservatory on rightmove for £169k

I am renting pension payable at 40, (13K a year)Gratuity of 55K and 30K in the bank.

Offered on Xmas eve 85 against a 135K asking price

edinburgher

Pension payable at 40? How come?