So when will House Prices Hit the Bottom?

setmefree2

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5779248.ece

Money invited a panel of property experts to give their opinions on the state of the market. Most see at least some green shoots

geoffky

the real experts predict

City traders have started betting the property market has bottomed, a reversal of the downward trend that has lasted almost a year The property derivatives market — where traders bet on what will happen to house prices — is still indicating a 44% fall in property values from peak to trough, more than even the most bearish economists.
However, that is not as bad as it was just a few weeks ago, according to broker Tullett Prebon.
At the beginning of February, the market was pricing in a 47% fall in the Halifax index — or a further 31% decline on top of the 16% so far. The market is now pricing in a smaller decline of 28% before a trough is predicted in 2011.

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5779222.ece

geoffky

44% DOWN/// that will take twenty years to get back to 2007 levels ..

what the above has missed out is the 44% down at least bit..

moonrakerz

Should I buy my dollars this week or wait ?

whathavewedone

My money's on Autumn 2010 but I think things will stay at that level for a while.

ad9898_3

When we look at the evidence of previous crashes we see that the peak price of a boom is not achieved again for around a decade or so, as an anecdote I have personal experience of this, my mum and dad sold in Aug '88 for 68k, in Oct '98 the same house sold again for 75k.

This crash isn't like the others though, this boom has got so out of hand it's collapsed major institutions, therefore I believe in real inflation adjusted terms, 2007 prices will never return. Bottom of this crash is likely to be 2010-2011, with stagnation for a 3-4 years then maybe steady 1-2% increases.

I don't buy the argument of 'cash rich investors' ready to swoop, there will be some for sure, but not enough to make any significant difference. BTL on the scale that proped the market up from 2004-2007 is dead, the finance has gone, and it won't be returning, the amount of credit required no longer exists and in real terms it never will again.

piggeh

I reckon end of 2010, deposits will have been saved, new employment would have been found for skilled workers (like me ), banks lending again.

Although if QE !!!!s things up then maybe 2020.

Cat695

Just for people who thought it was a good idea to buy in 2007

The bad news, however, is that buyers who bought at the peak in November 2007 may have to wait several more years for property values to get back to where they were — even with a sharp rebound.

pyewackitt

I often refer the HPC people to his OECD document from 2005:

http://www.oecd.org/dataoecd/40/6/35816576.pdf

Page 29 lists the historic data for downturns.

The UK average is 16 quarters and the longest downturn is 25 quarters.

Assuming that the crash began in summer 2007 the crash is likely to bottom between 2011 Q3 and 2013 Q4 - but because the length of this rise was unprecidented it may even continue decline beyond this.

Gangstabird

I can't comment on this too much as I am not an economist nor a fortune teller.

But will someone please tell me where these first time buyers are that are going to get the market going. No one can borrow 100/95% any more which is what held up the markets for eons.

So, since I imagine, about 70% of first time buyers were on these deals, you are down to 30% (these are very rough figures) of the FTB market. Therefore, they will be pickier and more choosy and prepared to bargain. In fact, most will back out before exchange as they will have seen someone more desperate getting a better deal. Hypothetical I know.

If this happens, then the rest of the ladder is incomplete because every chain has to have a first link.

So then you are down to private buyers with cash. They are not going to buy all of the market. Therefore, people desperate, once again to sell, will sell at lower prices.

I just can't see the point where all of these people (loads of redundancies, people being more sensible) are going to come from. There will be a brief respite as the cash buyers make a point but after that........

exil

The average deposit is now 18%. The number of FTBs is now about 20% of what it was at the peak - but there are still some, even though prices are currently heading downwards. As soon as they hit the bottom there is a huge latent demand and we will soon be back in the world of gazumpers and irritating "how to make a million from property" TV programmes.

Don't ask me when that will happen - but it will.