How long will this last?

Dan:_4

Hello all!

I think it is time for another poll: when will the average house price return to 2007 levels?

ad9898_3

2019+

I think in real inflation adjusted terms, 2007 prices will never return, the evidence required for me to say that is all around us. The credit will never be available again to support 6x,7x etc multiples of income. After all the bubble has almost collapsed the entire economy, and still might.

Edit, I had to vote 2019+ because 'never' was not an option.

Dan:_4

2016

2019 is a long time dudes...

skap7309

2012

Ignore my input, its late and i thought it was when they would bottom out lol! To answer the poll i would say 2017 before 2007 prices reappear. Give or take a year. Or two.......

ad9898_3

2019+

Dan: wrote: »

2019 is a long time dudes...

Not sure if I made myself clear, if a house had 250k on it in 2007 and sold for that, then the price of 250k would probably come round again in about a decade I would guess, however wages would have probably risen by then making 250k more 'affordable'. But like I say if we use inflation adjusted, then the prices will not be seen again, in my opinion of course.

Pound

I think it's going to be a lot longer than most people think.

As well as us being in an economic crisis we're also in an energy crisis. Industry depends on energy for transport and to keep the factories running and with the natural energy sources running out the prices will just keep on getting higher making it harder for industry to recover.

Also, the governments attempts at bailing us out is very risky. They're having to borrow huge amounts of money to fund the bank bailouts. If it doesn't work we could end up in the same position except with a huge amount of debt hanging over our heads.

Radiantsoul

2017

Hard to say really. Assume prices drop 40% peak to trough then then the issue is how many years will it take for prices to rise, that assumes that a £200k house will fall to £140k.

I have assumed that price rise 5% per year from 2010 onwards which will lead to prices returning to £200k in 2017. In terms of sensitivity a 3% increase from 2010 onwards sees prices return in 2019 and a 10% increase will see prices return by 2014. It strikes me that increases of -5% per year to +10% per year for the early part of the next decade are plausible scenarios.

bubblesmoney

2018

ad9898 wrote: »

I think in real inflation adjusted terms, 2007 prices will never return, the evidence required for me to say that is all around us. The credit will never be available again to support 6x,7x etc multiples of income. After all the bubble has almost collapsed the entire economy, and still might.

Edit, I had to vote 2019+ because 'never' was not an option.

the last time i think house prices took 9y to recover in nominal terms but in inflation adjusted terms it took 14y to equalise to previous prices before the bust.

never say never. greed can be incredibly blinding and deafening and keeps memories short. as long as man lives there will always be booms and busts as they are caused by human sentiment and greed and thats not about to change for a long time to come. one cant legislate against that unfortunately!

stevetodd

2019+

I voted 2019+ Dan didn't make it clear in his poll whether he meant 2007 in real terms (taking inflation into account) or merely hit that headline 2007 figure again. In my vote I have assumed he meant in real terms, so it's only going to be at the very top of the next HPI that this would ocurr, and most likley would fall short. If the poll was 'not in real terms' I would have voted 2016. The inflation factor is a significant question in itself

dealsearcher

2014

I went for 2014. The reason being when these crises come upon us we think and feel they will last forever. In fact the real downside usually takes around 3 to 4 years to get out of the system in a very bad turndown. Then extreme pessimism turns to cautious optimism and things start to turn around.

bubblesmoney

2018

a lot of money has been lost on the stock market and in pension funds and people have that much less to spend. they will take a long while to recover those losses and that will have an impact on house prices as well. this time it is a global problem like some of the previous major downturns and it might take much longer than projected in this poll reason being what is projected below in the graph for shares as people will have lost loads of their assets down there. how do people even recover from losses of that magnitude quickly. after the great depression property prices in america fell well below the long term mean of property prices. infact for almost half a decade property prices were about half of the long term mean for property prices and took a while to even return to the longterm baseline.

bubblesmoney wrote: »

you can see how our present problems compares to the past ones on this and remember we are no where near the end of the present problems. so we might touch or beat the 89% loss of share market as happened in the great depression