Another 50% to fall off property - Robin Griffiths (Expert Economist)

Jonbvn

Dan: wrote: »

Confidence is the key to the housing market, everyone knows that.

Confidence is the key to economics and all markets.

Dan:_4

FoxtonsRIP wrote: »

Dan, you're funny. Which part of your GCSE woodwork exam makes you think that we should all heed your opinion that house prices can only ever fall by x %? You'd think you were Warren Buffet or something, haha

I've said prices are likley to fall another 10% before hitting the bottom.

That will be around 30% down from the highs of 2007 - is it really not enough for you FTBers?

Ant_Lyons

My own sujective viewpoint is that prices will most likely continue to fall in some areas but in others they may well have bottomed out. If you could buy a flat for 50-60k and finance it at 90% LTV at around 5% it is substantially cheaper to buy than rent.
Lack of availability of finance has been the main driver in decreasing demand but we are now starting to see some lenders returning to lending (anybody else seen the ads of prime time TV offering to pay your council tax for 6 months when you take a mortgage with them).

However my point here is not about house prices it is about the return that property can give as an investment.

Of course it is not always the easiest or least hard work but anybody who is looking for a return for putting in no work and undertaking no due diligence should not be suprised when their investment does not work out as they had hoped.

There are ways to mitigate the level of work once you have purchased an investment property - for example I let a number of my properties direct to housing associations on guaranteed rental contracts. I am able to do this as I undertook the time and effort to find out that this is possible.
Managing 15-20 properties per month probably takes no more than 3-4 hours per month.

In returning to house prices (briefly) once again it depends what you have, where it is and what demand is like in the LOCAL area. I own a number of properties on a development where a large MOD base is being built - I very much doubt that in this area house prices are likely to fall due to the upsurge in local demand.

Sweeping generalisations about house prices in general are irrelevant to an investor.

Dithering_Dad

We've had a drop that is about 25% from peak. In that time we saw the banks practically go bust - HBOS was rescued by Lloyds (who in turn was rescued by the government), Northern Rock was taken over by the government, Leyman went bust, I could go on but I'm sure we all remember what's gone on....

My question would be, if it took all of that (practically a financial meltdown) to drop us 25%, what is it going to take to drop us a further 25%?

I'm sorry, but things seem to be settling down in the financial markets and banks are starting to either make a profit again or at least get back onto a securer footing. The ftse has been climbing consistently and is up 125 points today (the last time I looked anyway). Even the GM car company looks as though it will creak along with a takeover from Fiat.

I'm not saying we're seeing 'green shoots' but things do seem to be stabalizing or bottoming out. Where is the remaining 25% fall going to come from?

kennyboy66_2

carolt wrote: »

Er...yes, they did.

Carol,

You claim that house prices tripled nationally in 10 years. I am assuming you are talking recently and not some measure say from 1979 - 1989.

I am really struggling to find 2 data points in a 10 year period in the Land Registry figures where prices tripled nationally.

Can you point me to the two months and years you are talking about ?

julieq

The FTSE rise is highly speculative. In the current environment where companies are seeing 30-50% reductions year on year on order books, I think a lot of companies are gambling on maintaining capacity against the idea that taps will be turning back on again before too long. So things probably seem better than they are. You could see sentiment turning very fast indeed if things don't improve and redundancies really start, you need actual earnings growth.

There's also a good argument for saying that the leaner fitter competitiors from lower down the food chain (i.e. not in the FTSE index) may well come out of the recession strongly sooner, because they can move faster than the larger companies and vigourously attack them.

Conrad

Extreme opinion is rarely on the money. The middle view tends to prevail. Pessimists told us for decades that an area of rainforest equivalent to Wales was being destroyed monthly, so by now the planet would be totaly deforested.

julieq

dopester wrote: »

julieq.

All that may be so about Dubai. Yet UK "population", "shortage of stock", "demand", "smallish country" and all other similar silly arguments you rely on to justify extreme house prices in the UK...

Well I guess that told me, and a graph too... how very dare I think differently? :rotfl:

Who said I was justifying extreme house prices? I'm arguing here that you can't extrapolate from Dubai to here. You can't extrapolate from the US to here either, it's a different structural situation.

What I have said, and I stand by, is that two further years of decline followed by recovery to current levels in a further 5 years makes BTL a better investment than most for anyone with cash because of the rental income. That's not a "silly" analysis, that is highly conservative. On the other hand, "silly" is a word I'd use for anyone who makes confident statements on the way a market will or will not go based on a few newspaper articles and doomsday scenarios.

Where does your expertise come from exactly? Do you invest for real or do you just catcall from the sidelines? If you actually believe there will be "shock and awe" falls, then it's time to sink your cash into short selling everything you can find. Good chance to become very rich :rotfl:

penguine

Lunar_Eclipse wrote: »

As the saying goes, be very careful what you wish for. If prices fall too far, the UK will be a very grim place to be, albeit possibly not any better than several other countries.

You may not have realised, but what we wish for doesn't really have anything to do with it. The opinions of the people on this board don't actually translate into a supernatural power to influence the direction of house prices.

penguine

Dithering_Dad wrote: »

My question would be, if it took all of that (practically a financial meltdown) to drop us 25%, what is it going to take to drop us a further 25%?

Personally I'm not sure we're going to see falls of 50%, but I wouldn't rule it out. However, I think you're asking the question the wrong way round. If house prices are now (on average) back to round about 2004 prices, what is it going to take to keep us at those (already inflated) levels -- given that levels of lending, despite increasing recently, remain very low compared to previous levels?

It's not about economic forces pushing the housing market down. The economic forces that pushed the housing market up have now gone, probably for a very long time.