Homes could fall 40%

baby_boomer

Telegraph - generation fears negative equity trap

House prices could be at 2003 levels in 2013

Independent

"House prices could drop by a total of 40 per cent unless the Government steps in to boost lending , a report says today. The extreme scenario painted by the Centre for Economics and Business Research (CEBR) would see prices plunge by a record 25 per cent this year after last year's 16 per cent slide.

If the Government's banking bailout is able to boost mortgage approvals to 50,000 a month from the current level of about 32,000, the price fall from peak to trough could be limited to 32 per cent with values bottoming out in the first quarter of 2010, CEBR said. But without effective intervention to increase lending, the total fall would be 40 per cent with prices stagnating until 2012 and not getting above 2003 levels until the following year....."

The government's intervention in the banking sector is huge and will have far-reaching implications. To go further, and prevent the housing market finding its true level would be a fiscal risk and also deprive first time buyers of getting their own homes without a lifetime millstone around their necks.

I say let them fall!

BTW CEBR were predicting falls of only 14% as late as August 2008 :rotfl:

Click on this MSE link to see a table of different house price predictions from the "experts"

ailuro2

So if my house was vauled at 150K before, it would become worth 90K, the one I'd like to buy was valued at 250K would then be worth 150K, so I'd only have to find an extra 60K instead of 100K? That seems reasonable to me....;)

PasturesNew

Homes could fall 40% ...? No, they're called bungalows, they're supposed to look like that!

baby_boomer

:rotfl: PN

Another way of looking at the same report:

View London

"House prices will be the same in 2013 as they were in 2003 unless the government takes action, economists have warned."

But what if the "action" lands future taxpayers with more debt, and indirectly costs future homeowners more in mortgage/rental/housing costs.

There are other more important priorities than the housing market. The trouble is - as a 2010 election issue it will loom large - and so this government may take the wrong action for all the wrong reasons .

whathavewedone

The government will do what they can to encourage lending. Whether it will work is another matter. The tories would and will do the same I am sure.

There are powerful and wealthy people who bought property in 2006 and 2007, not just the "sheeple" as they are called on HPC. They stand to lose a lot if property crashes by 40% and doesn't reach 2003 levels until 2013.

The banks do need to start lending again anyway for the sake of the economy as a whole. Otherwise more businesses will go under and there will be more unemployment. It's not just about mortgages.

I don't think 125% mortgages will be making a comeback but if banks can start lending to people with 10% deposits on good terms it would be a good thing.

If prices are going to drop by 32% peak to trough even with intervention then that is still a big fall.

Taxpayers money has already been spent bailing out the banks, most people are furious that the banks aren't being forced to lend as a result.

baby_boomer

If you force the banks to make bad loans, they'll need more taxpayers' cash!

But if the government promotes loans through Councils, then it will be local authorities who take the blame and Council Tax payers (not national tax) who take the hit - Guardian

maninthestreet

I bought for £98,500 almost 12 years ago, and I owe only £60K on the mortgage. So I'm not worried.

Wookster

This can only be a good thing. Lower property prices would be excellent for people in Britain, first from an "owning your own home" and secondly lower property prices will lower the cost of living as shop rentals (and therefore the business needs to recover less in its selling prices) will be lower.

Lending will not resume normally until property prices hit the trough.

Now if Crash would just stop messing with useless, waste of money initiatives.

baileysbattlebus

ailuro2 wrote: »

So if my house was vauled at 150K before, it would become worth 90K, the one I'd like to buy was valued at 250K would then be worth 150K, so I'd only have to find an extra 60K instead of 100K? That seems reasonable to me....;)

That is exactly what happened to us in the housing downturn in the early 1990's, our house actually fell a gnat's whisker off 40% then, we sold and bought at the bottom of the market (didn't know it though), and bought a house (the current one), which we would never have bought before the crash - there was no way we would have extended ourselves to that extent.

baby_boomer

I agree with Wookster.

Higher property prices have skewed our priorities for far too long.

If property was much more affordable we could afford to make proper provision for retirement, not have to work the longest hours in Europe & not neglect our children etc. etc. just to put a roof over our heads

BTW - Just see how much CEBR has altered its stance in 6 months :eek:

Date - Organisation - Fall from peak - Date of trough - Return to 2007 prices in

08/08....CEBR(1)..............14%..........Mid 2009..................2011 
08/08....Savills..............25%..........End 2009..................2012
10/08....CEBR(2)..............25%..........End 2009..................2013
10/08....KFH, London EA.......25%..........Early 2009-2010....Recovery from 2011
09/08....Nationwide CEO.......25%..........End 2009..................201?
10/08....Knight Frank.........30%..........2009/10...................2015
06/08....Global Insight.......30%..........Mid 2010..................201?
08/08....Capital Economics(1).35%..........2010......................201?
10/08....Capital Economics(2).35%..........2009..Long,slow recovery to 20??
01/09....Capital Economics(3)........................................2032
02/09....CEBR(3)..............32%...........First 1/4 2010...........2013
02/09....CEBR(4)..............40%...........2012.....................20??

The difference between CEBR(3) and (4) depends, according to them, on whether the government intervenes to get lending flowing.

dopester

baby_boomer wrote: »

The trouble is - as a 2010 election issue it will loom large - and so this government may take the wrong action for all the wrong reasons .

There isn't much they can do to stop it, unless they can somehow pump £trillion+ of real capital worth in to the market, then forbid anyone selling below 2007 prices, and further **** up the economy with high house prices - when near everyone else is on the dole queue.

Lets take a look at the end of 2007, where despite the last few months of the year, positive HPI saw the year end up (again).

The value of the UK's private housing stock rose by an estimated 9% in 2007 to reach £4 trillion, says the Halifax.

That figure has more than tripled over the last decade, rising by 208% from £1.3 trillion recorded in 1997.

Halifax also says.

"Mortgage debt accounts for only 30% of the value of the UK's £4 trillion worth of housing assets," he added.

http://news.bbc.co.uk/1/hi/business/7183551.stm

The market went up because buyers agreed to pay more for apartments and houses, which pushed up wider house price values for all others, including those people who didn't even move for 10 years+.

Homes are for living in, not for recklessly speculating on as investments, you stupid positive HPI loving mofo politicians and electorate.