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

geoffky

julieq wrote: »

Oht, not a smallish country in a populous area with immense pressure on availability of housing stock. .

WRONG... 1 million houses for sale on right move and 785158 empty homes in the uk
to me that does not make immense pressure on availability of housing stock...:rotfl::rotfl:

the_ash_and_the_oak

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%?

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?

I'll bite on this one. I think things "hit wall st before they hit main st" in essence. I think there has been a huge concerted effort to keep repossessions low and to ensure people are able to hold on to what they have (not sure why people think QE and other measures have been unsuccesful tbh). Also don't think sentiment has taken a knock really, and think there haven't really been many houses actually for sale as people are doing level best to keep what they have. All these things point to stasis rather than falls for me

Think the next leg down isn't really anything to do with current owners, I think it is all to do with an insufficient number of FTB's with the requisite funds and ability to buy at current levels. A secondary problem may well be what happens when interest rates rise (which imo will place a more stringent limit on the amount a FTB will be able to borrow)

Don't really see prices heading down with any real speed though (unless transactions increase)

Dithering_Dad

penguine wrote: »

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.

I think we're both asking the same question. If the major market forces that pushed down the housing market are gone (and as you didn't come back with an argument against this I assume you agree), and the major market forces that pushed up the housing market are also gone, what are we left with?

The answer is stagnation.

The reality is that there are still downward pressures as some people lose their jobs and homes, as some FTBers struggle to get mortgages at decent rates (or at all!) and as people wait to see what will happen with the market. However, we are also starting to see upward pressures - people are starting to see value in the market and are buying (not everyone is a destitute FTBer with a small deposit). A lot of people have had their lives on hold for a long time waiting for prices to fall, some can't waiti any longer.

I still think we have more downward pressure than upward, so IMHO I think we'll soon see a slowdown in the pace of falls until a plateux is reached - punctuated by shallow drops.

I've been saying this for a while (and also saying that it might make financial sense to buy a house sooner than later - i.e. start looking now with an eye to buying in 6 month's time - because the financial benefits of getting a good long-term fixed mortgage will more than outweigh the small continued losses in equity).

Lunar_Eclipse

penguine wrote: »

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.

Gosh, really?

I think you understood my point entirely since it wasn't hard to grasp, so there was no need for a condescending reply.

thegibdog

kennyboy66 wrote: »

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 ?

According to Nationwide they tripled between Q3 1997 and Q3 2007 (3.03x). Land Registry figures maxed out at 2.85x between April 97 and April 07.

michaels

julieq wrote: »

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.

I don't see this - consumption is the largest component of GDP and has held up remarkably well in both the Uk and US (tends to be positive yoy). Given the largest component of GDP is stable/increasing it is simply not possible for overall demand to be down 30-50% going forward (on the one hand peopel are all still buying things and yet on othe rother the suppliers are producing much less). I suspect for a few capital goods and durable goods makers there has been a big reduction in demand (eg cars down 30%) but even in these sectors I think there will be a small bounce (cars need replacing etc) and for the majority of producers (eg food, services) demand is holding up ok.

julieq

geoffky wrote: »

WRONG... 1 million houses for sale on right move and 785158 empty homes in the uk
to me that does not make immense pressure on availability of housing stock...:rotfl::rotfl:

Just because a house is on Rightmove doesn't make it unoccupied, so the first figure is completely irrelevant. There obviously are empty homes, but for the most part they're either uninhabitable or somewhere no-one wants to live at any price, or else bought speculatively and left empty deliberately. The rest is churn, homes which are between residents for various reasons.

It's also a very small proportion of the total - 20M homes.

Like it or not, and whether or not it fits the idea that there's something approaching a moral duty on homes to fall in value to levels that can be afforded that's often expounded here, there is pressure on good quality housing stock, which is one of the reasons the government are keen that more of it is built.

julieq

the_ash_and_the_oak wrote: »

Don't really see prices heading down with any real speed though (unless transactions increase)

How would increasing numbers of transactions accelerate a decline? It would imply more money going into the market, so more demand, so stablisation at least of prices as people agree in larger numbers what the baseline is.

penguine

Lunar_Eclipse wrote: »

Gosh, really?

I think you understood my point entirely since it wasn't hard to grasp, so there was no need for a condescending reply.

Do you think that your comment in your original post "be very careful what you wish for" might be a wee bit condescending?

It's a phrase that crops up on this board with tedious regularity, and can usually be translated to mean that anyone who discusses the possibility of house prices falling further is: wishing for that to happen / praying for it to happen / wishing bad things on other people / responsible for any further property price falls / responsible for the economic collapse of civilisation as a whole.

But to return to your original post, can you explain why house prices of 50% (peak to trough) would spell economic devastation for the UK?

Lunar_Eclipse wrote: »

If prices fall too far, the UK will be a very grim place to be, albeit possibly not any better than several other countries.

the_ash_and_the_oak

julieq wrote: »

How would increasing numbers of transactions accelerate a decline? It would imply more money going into the market, so more demand, so stablisation at least of prices as people agree in larger numbers what the baseline is.

at moment there is little supply and little demand (there may be plenty desire but kinda feeling thats a different thing to demand). this means stasis. no selling. no buying. its not really any kind of market imo right now

interest rates are down for many current owners, repossesions and forced sales not so high really, most sellers feeling they'll just ride it out, most buyers not really able to get the funding.

for me its only when people start having to move, whether it be upsizing, downsizing, divorce, death, new job, and start needing to sell in a larger number that we will see continued price drops imo. for me people aren't going to be kicked out of their houses by banks in any great number. but people will sell for other reasons over time (unless we are all now in our dream homes and never want to move again)

not really feeling current FTBs really have enough saved up (in sufficient number) to buy - (maybe the ones that had something of a deposit in 2006 but were priced out) but after that - no.. not really feeling that tbh.