When will HP go back up to the mean?

crazygaijin

These 2 graphs are similar, so its easy see what the future of our own housing index in London is going to be. The only question when will we be at that stage when it starts to go back up to the mean?


As you can see, it's a virtual mirror of our own housing index (below).

Our housing market has played out right to the script. While there are some at the 'fear' stage – those that need to sell, but can't – for the most part I think it's fair to say that Joe Public is still very much 'in denial' and thinks that things are about to 'return to normal'. In other words, we are entering a bull trap – just as we did in 1991, when there was a brief rally before further declines. We are nowhere near capitulation. That is still to come.

Generali

crazygaijin wrote: »

When will HP go back up to the mean?

When people lose their jobs en masse and become forced sellers.

Maybe a year?

crazygaijin

1 year? Really? I respect what you say Generali but this time I cant agree. Although I would like to.

But I think all the Government is doing is delaying the inevitable. It would be best alround if we were to get there in 1 year then things could start to pick up again.

But I can see it taking as long as 5 years.

Generali

crazygaijin wrote: »

1 year? Really? I respect what you say Generali but this time I cant agree. Although I would like to.

But I think all the Government is doing is delaying the inevitable. It would be best alround if we were to get there in 1 year then things could start to pick up again.

But I can see it taking as long as 5 years.

Fair enough. Neither of us really know. Do you mean when will house prices bottom out or when will they return to a long term average? I think the next 12 months or so are going to be particularly bloody for the UK economy.

Wookster

crazygaijin wrote: »

But I think all the Government is doing is delaying the inevitable.

And that's the worst thing they can do! They need to let house prices fall to a sensible level and not interfere.

My money is on house prices falling for at least another 2-3 years and remaining fairly stagnant for ~5 years.

We're in for a lost decade imo.

kennyboy66_2

Not good for your buy to lets is it crazygaijin ?

robin_banks

I think HP's will be on the downslide this year and much of next, thereafter prices will stablilise for years.

penguine

I think that low interest rates are going to drag out this crash. Many of those who over-mortgaged but haven't lost their jobs and are on an SVR are doing OK now because their monthly payments have dropped.

And I think you're right about entering a bull trap, it seems around where I am a lot more houses are moving than in the last half of 2008, and the general sentiment among most people I know is that this is a good time to buy.

crazygaijin

Generali wrote: »

Fair enough. Neither of us really know. Do you mean when will house prices bottom out or when will they return to a long term average? I think the next 12 months or so are going to be particularly bloody for the UK economy.

To answer your question Gen I was refering to that graph.

I am interested in the bit after they have overshot the mean, bottomed out and go back up to the mean.

Your right no one knows but I cant see it all happening that fast. Maybe they will keep falling about 2% per month which would take years to get down this much.

Generali

crazygaijin wrote: »

To answer your question Gen I was refering to that graph.

I am interested in the bit after they have overshot the mean, bottomed out and go back up to the mean.

Your right no one knows but I cant see it all happening that fast. Maybe they will keep falling about 2% per month which would take years to get down this much.

Quite possibly you're right. We'll see.

novazombie

crazygaijin wrote: »

To answer your question Gen I was refering to that graph.

I am interested in the bit after they have overshot the mean, bottomed out and go back up to the mean.

Your right no one knows but I cant see it all happening that fast. Maybe they will keep falling about 2% per month which would take years to get down this much.

So you are a member of the 70% club.

If they keep falling 2% every month (which is very likely) then thats 24% a year. So 48% in 2 years, 72% in 3 yrs.

Looking at that graph again I`d say 70% drop would be the very bottom overshoting the mean. Then climb back up to where the market wants it to be.