If house prices fall another 37% ...

penguine

... from current prices, then they will reach the house price to earnings ratio of 3.12 seen in 1995, at the end of the last housing crash.

(That's the lowest ratio they've reached in the past 25 years.)

There is not much in this article that we didn't already know, but that's an interesting figure.

Indeed, were the HPER to fall back to match its low of 3.12 in 1995 (at the end of the last housing crash), then house prices would have to fall by nearly three-eighths (37%) from here, assuming no change in earnings. So, either wages have to soar (which is most unlikely, given weak economic demand and low inflation), or house prices still have further to fall. Given the weak outlook for employment and earnings, I'm betting that it will be the latter.

Yakubu22

The article certainly reads very well and seems logically argued. But is it really that simple? Is the market likely to drop another 37%. Im no expert but I just can't see it going that low...

Really2

penguine wrote: »

... from current prices, then they will reach the house price to earnings ratio of 3.12 seen in 1995, at the end of the last housing crash.

(That's the lowest ratio they've reached in the past 25 years.)

There is not much in this article that we didn't already know, but that's an interesting figure.

Or We have added a good few mor million people to the island but not built enough houses.

penguine

Really2 wrote: »

Or We have added a good few mor million people to the island but not built enough houses.

Ah, the supply and demand argument. Nice to see that old chestnut hasn't gone away yet.

penguine

Yakubu22 wrote: »

The article certainly reads very well and seems logically argued. But is it really that simple? Is the market likely to drop another 37%. Im no expert but I just can't see it going that low...

If the money isn't there anymore, then it seems altogether possible. It was easy lending that pushed prices up to the giddy heights of the past decade.

agent_orange_2

Yes I think it will get so bad, people owning their own house(no mortgage) will actually
choose to give it away, rather than pay someone to take it off them.

There you go boys, you have your worse case scenario - should keep you happy

mitchaa

57% down from peak across the whole country.

Remember what the word average means, some places will need to drop a lot further to maintain that figure.

Wishful thinking for those of you in rental at the moment, pigs might fly

Really2

penguine wrote: »

Ah, the supply and demand argument. Nice to see that old chestnut hasn't gone away yet.

So we can still have an expanding population without building then.

The population of the UK as increased 3 million in that time have we built 1 million homes in that time?

Is it not the amount of homes in certain areas? If not why is london not the same price as the rest of the UK?

Kenny4315

Even Mr Clown & Hs Darling aren't stupid enough to allow house prices to fall by 57% on average. This would result in the country being unable to pay for the daily allowance of MP's !!!!!!.

wolfplayer

The average salary has further to fall. Much further.

It has already begun in the private sector and the public sector will need to undergo
much needed surgery to reduce costs.

The average weekly wage for a private sector worker fell by 3.4 per cent in January to £448, compared with a year before when it was £463.80.

http://www.telegraph.co.uk/finance/5048647/Wages-fall-in-private-sector-for-first-time-but-rise-for-public-sector-workers.html

Jim_B_3

Kenny4315 wrote: »

Even Mr Clown & Hs Darling aren't stupid enough to allow house prices to fall by 57% on average. This would result in the country being unable to pay for the daily allowance of MP's !!!!!!.

Yes. They were quite happy to allow the tube bombings but they'll definitely stop short of the 57% average drop mark.