2004...My Ar*e....Make Your Predictions...

Generali

Kenny4315 wrote: »

House price inflation is also driven by other factors such as population growth, lack of building land, etc. It is inevitable that over the long period it will be in excess of 'normal' inflation.

If you understand compound interest they you must know that the price of houses can't rise by more than wages indefinitely. Just do the sums of wage inflation @ 3% pa and house price inflation at 4% pa over 10, 50 and 100 years to see what I mean.

Let's take a high earner, GBP100k pa and a cheapish house worth GBP200k.

...................Income............House.....House/Income
10 years .......104k..............296k...........2.20
50 years.........589k.............2.1mn.........3.57
100 years.......11.3mn.........106mn.........9.38

So after 50 years, an easily affordable house becomes a stretch and after 100 years is a distant dream. That seems untenable to me.

beingjdc

Kenny4315 wrote: »

House price inflation is also driven by other factors such as population growth, lack of building land, etc. It is inevitable that over the long period it will be in excess of 'normal' inflation.

That's what they said about Japan, then house prices fell for 18 years in a row.

Kenny4315

I still see average house prices somewhere near the September 2007 level by about 2013. In other words the house I sold back in September 2007, will have recouped back all the losses, which is more than inflation. The other thing is houses are emotional, while a tin of beans isn't.

I have a knack with property, and just seem to get it right, whether or not the maths adds up. I bought one last year in April, which is worth £350k more than cost plus refurb, even with a bit of a hit in recent months.

Maybe I just know when to buy and when to sell, and what price to get them for.

Zagu

beingjdc wrote: »

That's what they said about Japan, then house prices fell for 18 years in a row.

Wow, I didn't know that. Looks like they are at about 1980 levels at the moment.

Kenny4315

Have we got a long term graph for the UK say since 1970 ? Would be interesting to compare House Prices / Inflation / Salaries anyone got one ?

beingjdc

Kenny4315 wrote: »

Have we got a long term graph for the UK say since 1970 ? Would be interesting to compare House Prices / Inflation / Salaries anyone got one ?

Not a very good one - the problem is with choosing the right start and end point.

For what it's worth, housing bottoms tend to be around in line with inflation, but the peaks keep accelerating higher. So an average house was worth 278 times the RPI at the 1977 bottom, 304 times at the 1982 bottom, and 341 times at the 1991 bottom.

Arguably we may have had a one-off gain from interest rates - it feels unlikely that they'll ever go back to 10-15%, and if so house prices can stay somewhat higher as a multiple of earnings, as the total cost is lower.

Otherwise, I guess average prices would go down to maybe 370 times the RPI, which would currently be £80,000.

neverdespairgirl

Kenny4315 wrote: »

That puts the average at somewhere around the £120k to £128k mark. I don't often get it wrong and I ain't going to be wrong this time either, as usual I'll be backing up my views with hard cash investments and NOT hot air, and I never lose on my investments.

Wow, talk about offering a hostage to fortune!

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neverdespairgirl wrote: »

Wow, talk about offering a hostage to fortune!

I agree, sounds a bit like a Grant Bovey comment, we know whats happened to him.

beingjdc

mitchaa wrote: »

When we look at the Nationwide house price information, a different picture is painted....

2008 Q4... £153,048
2008 Q3...£165,188
2008 Q2...£174,514
2008 Q1...£179,363
2007 Q4...£183,959
2007 Q3...£184,131
2007 Q2...£181,810
2007 Q1...£175,554
2006 Q4...£172,065
2006 Q3...£168,460
2006 Q2...£165,035
2006 Q1...£160,319
2005 Q4...£157,387
2005 Q3...£157,627
2005 Q2...£157,494
2005 Q1...£152,790
2004 Q4...£152,464
2004 Q3...£153,482.... Where We Are Now
2004 Q2...£148,462
2004 Q1...£140,225
2003 Q4...£133,903
2003 Q3...£129,761
2003 Q2...£125,382
2003 Q1...£119,938
2002 Q4...£115,940
2002 Q3...£110,830
2002 Q2...£103,501
2002 Q1...£95,356
2001 Q4...£92,533
2001 Q3...£91,049
2001 Q2...£87,638
2001 Q1...£83,976
2000 Q4...£81,628
2000 Q3...£80,935
2000 Q2...£81,202
2000 Q1...£77,698

Oopsy! So much for not going back to 2004.

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More bad news coming through this morning from M&S and Debenhams, the good news is house prices are going back to 2001 at least, the issue is, will you have a job to take advantage ?