UK house prices: history suggests it won't be until 2016 that they recover to pre-boo

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We all know that pre-boom levels will take a decade or so, but an interesting article nonetheless.

When might house prices bottom? The future won’t be exactly like the past, but after the Lawson boom it took 14 quarters for house prices to trough. If that pattern were repeated, house prices would bottom this time late in 2010 – which seems plausible – and return to their 2007 level by 2016. History, not having been learned from, would have repeated itself.

I think the message is keep saving for a smaller mortgage. There is plenty of time yet.

http://www.telegraph.co.uk/finance/financetopics/recession/5823728/UK-house-prices-history-suggests-it-wont-be-until-2016-that-they-recover-to-pre-boom-level.html

Masomnia

I guess the one thing we learn from history is that we never learn anything from history!

I consider myself fairly bullish, and 2016 for a recovery sounds optimistic even to me.

crazygaijin

What will the bottom be by next year?

Anyway in real terms even if officially bottomed by end of next year there will be bargins about for years.

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crazygaijin wrote: »

What will the bottom be by next year?

Anyway in real terms even if officially bottomed by end of next year there will be bargins about for years.

Of course, what we have to remember is the bottom came within 14 quarters, then you have several years of stagnation With all the fluff in the media, the bulls believe we have hit the bottom now, I fundamentally disagree.

Graham_Devon

Whereas BBC radio this morning had estate agents on saying landlords are now buying up "bargains" as they can see profit margins and affordability for first time buyers had them flocking through the doors, with lack of sellers pushing prices up.

The agent did get slightly stuck on a couple of questions though and simply refused to answer

HAMISH_MCTAVISH

ad9898 wrote: »

Of course, what we have to remember is the bottom came within 14 quarters, then you have several years of stagnation With all the fluff in the media, the bulls believe we have hit the bottom now, I fundamentally disagree.

I doubt very much all the bulls think we have hit the bottom now.

I have said repeatedly that we will have further, but much smaller, falls over next winter. However whether the absolute trough was reached in February of this year, or whether it's reached in Q1 next year, the end result will be much the same.

Prices were at 147K (nationwide) in february. They are around 156K today. They may well drop to the mid 140 range again by next feb. Either way, the worst of the falls are behind us and prices should now fluctuate within a 10K to 15K range over the next couple of years. Hence the "bumping along the bottom" phase.

In some areas of the country, it will emerge that the bottom has already been reached. In others, it won't have.

But in most, we're close enough as makes little practical difference.

The biggest factor influencing purchase now should be interest rates and bank margins rather than a futile attempt to time the exact month of the absolute bottom.

Rates will now be a bigger impact on lifetime costs than the further small fluctuations in purchase prices for most people.

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Graham_Devon wrote: »

Whereas BBC radio this morning had estate agents on saying

This is the problem, there is virtually no balance in the media, the surge we have seen has been been built on nothing but this kind of thing, scratch the surface and the fundamentals to support any rise in prices simply is not there.

What the government/media have done over the past few months is collectively stuck their fingers in the public's ears and shouted......... lalalalalalala. It will work in the short term, but in the medium/long term it's likely to make things a whole lot worse as peoples hopes of a recovery are dashed.

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HAMISH_MCTAVISH wrote: »

Prices were at 147K (nationwide) in february. They are around 156K today. They may well drop to the mid 140 range again by next feb. Either way, the worst of the falls are behind us and prices should now fluctuate within a 10K to 15K range over the next couple of years. Hence the "bumping along the bottom" phase.

You know Hamish if the economic fundamentals were heading in the right direction I may agree with your above statement, the problem is they are not, they are just being staved off until the next election with QE and borrowed money, both of which will come to a grinding halt in the not too distant future, we are in the 'finger in the dam phase'. Let's see what happens over the next 12 months hey.

chucky

ad9898 wrote: »

This is the problem, there is virtually no balance in the media, the surge we have seen has been been built on nothing but this kind of thing, scratch the surface and the fundamentals to support any rise in prices simply is not there.

What the government/media have done over the past few months is collectively stuck their fingers in the public's ears and shouted......... lalalalalalala. It will work in the short term, but in the medium/long term it's likely to make things a whole lot worse as peoples hopes of a recovery are dashed.

not true - 'House prices dived in June' when it's only a 0.4% drop and only Rightmove stats
http://www.guardian.co.uk/business/2009/jun/22/house-prices-rightmove-halifax-nationwide

there are plenty more...

HAMISH_MCTAVISH

crazygaijin wrote: »

What will the bottom be by next year?

Anyway in real terms even if officially bottomed by end of next year there will be bargins about for years.

Will there? I don't know that this is true. Last time around, prices rose by between 3% and 7% a year for the first few years of recovery. This year, prices have already risen by £9,000 since february.

Last time around there was certainly not the shortage of supply, QE, lowest rates in history, etc, that we see today, all of which could spur recovery far faster than last time.

This crash does seem to have been time compressed so far. I see no reason why the recovery would not be time compressed as well, given all the external factors at play such as low rates, QE, population growth, and a more severe (and getting worse) underlying shortage of housing than last time.

IveSeenTheLight

ad9898 wrote: »

Of course, what we have to remember is the bottom came within 14 quarters, then you have several years of stagnation With all the fluff in the media, the bulls believe we have hit the bottom now, I fundamentally disagree.

ad, be very careful when looking at UK averages and expecting that to be the same throughout the UK.

If you want to look at history, it can be shown that SOME AREAS RECOVERED FULLY WITHIN 1 YEAR.

http://forums.moneysavingexpert.com/showpost.html?p=18398993&postcount=72

Obviously other areas took longer, hence the UK average, but if you were to have a blinkered view that it will be at least 14 quarters again this time in all areas, you could be missing what is happening under your nose