City says housing recovery is in sight

chucky

obviously not what everyone wants to hear but what most people are expecting

The housing market slump is close to ending, with prices set to bottom out later this year and begin rising again by 2011, the City is predicting.

A growing majority of economists are calling the end of a housing crash that has so far wiped about a fifth, or more than £40,000 on average, off home values.

A poll of economists by Reuters found a consensus that house prices will drop by 8 per cent this year — having so far fallen by about 3 per cent since January and by 16 per cent during the past year.

“We will get a few more month-on-month negatives but it is pretty flat from here,” Alan Clarke, of BNP Paribas, the leading City bank, predicted.

http://business.timesonline.co.uk/tol/business/economics/article6579493.ece

inspector_monkfish

it doesn't say which City?


could be the underground city of atlantis

Really2

Yes if that is the case future drops will then have to come in real terms (House price stagnation, wage infaltion) like the 80/90's not in nominal terms.

michaels

chucky wrote: »

obviously not what everyone wants to hear but what most people are expecting






http://business.timesonline.co.uk/tol/business/economics/article6579493.ece

Would be interesting to see the track record of this 'consensus' forecast before ascribing it undue weight.

Someone who has the time should pull up the graphs of growth, unemployment and house prices. we know that unemployment is a lagging indicator and it is easy to see a theoretical mechanism where by increasing unemployment could drive further house price falls - what does the historic data say?

It still feels like despite the fundamentals (last year and on going the unavailability of credit; going forward increasing unemployment) only drive the market in as much as they impact on price expectations and that going forward there is enough pent up demand to ensure that if expectations do move decisively back to rising prices then prices will rise whatever the fundamentals.

pizzagirl

If the 'city' and other vested interest 'housing experts' keep predicting a recovery for long enough then sooner or later they'll be correct. But that'll probably won't be until some time around 2019 I'd have thought. :j

chucky

michaels wrote: »

Would be interesting to see the track record of this 'consensus' forecast before ascribing it undue weight.

Someone who has the time should pull up the graphs of growth, unemployment and house prices. we know that unemployment is a lagging indicator and it is easy to see a theoretical mechanism where by increasing unemployment could drive further house price falls - what does the historic data say?

It still feels like despite the fundamentals (last year and on going the unavailability of credit; going forward increasing unemployment) only drive the market in as much as they impact on price expectations and that going forward there is enough pent up demand to ensure that if expectations do move decisively back to rising prices then prices will rise whatever the fundamentals.

the interesting bit for me on the article was that it was only claiming 2% growth in 2011 and no HPI rises until then, which sounded quite reasonable - they seem to think that unemployment and any other factors will have a lesser impact or will be manageable by then.

pizzagirl

chucky wrote: »

A growing majority of economists are calling the end of a housing crash that has so far wiped about a fifth, or more than £40,000 on average, off home values.

How many of these 'economists' saw the credit crunch coming? Their combined opinion totals diddly squat based on their past performance.

1echidna

pizzagirl wrote: »

If the 'city' and other vested interest 'housing experts' keep predicting a recovery for long enough then sooner or later they'll be correct. But that'll probably won't be until some time around 2019 I'd have thought. :j

Interesting with the city being a vested interest and the taxpayer propping up the banks it is the tax payer who also has a vested interest and anyone with equity based investments including pension funds. Perhaps we don't want a further collapse of the housing market? Whatever will be will be of course.

Thrugelmir

chucky wrote: »

the interesting bit for me on the article was that it was only claiming 2% growth in 2011 and no HPI rises until then, which sounded quite reasonable

I would say that this is hedging their bets...... As a 2% rise over 2 years with rising interest rates will of course mean a negative return in real terms.

You'd be better off holding cash on deposit in that timeframe. No rush to buy.

chucky

Thrugelmir wrote: »

I would say that this is hedging their bets...... As a 2% rise over 2 years with rising interest rates will of course mean a negative return in real terms.

You'd be better off holding cash on deposit in that timeframe. No rush to buy.

i agree and the comments in the article sounded quite reasonable.
do you think an increase in rates/continuing to rent would offset the holding the cash in savings against HPI being flat?

wolvoman

Thrugelmir wrote: »

I would say that this is hedging their bets...... As a 2% rise over 2 years with rising interest rates will of course mean a negative return in real terms.

You'd be better off holding cash on deposit in that timeframe. No rush to buy.

What if fixed rates in 2 years time are 7% and not 5% as now?

Will your numbers still stack up?