Why house prices are certain to fall

Thrugelmir

IveSeenTheLight wrote: »

Very true, but it does show an upward trend in nominal prices.

In case you think it's selective dates (started at earliest point in the graph), I've carried out the same using the latest date in the graph

1978 Q3 = £15,912
1988 Q3 = £54,352 (a 3.4 multiplier than 10 years previously)
1998 Q3 = £66,366 (a 1.2 multiplier than 10 years previously)
2008 Q3 = £166,188 (a 2.5 multiplier than 10 years previously)

Both these sets of 10 years price points have an average multiplier of 2.44 and 2.38 over the 10 year period

So using the historic multiplier what would the forecast average house price be in 2018 ?

IveSeenTheLight

Thrugelmir wrote: »

So using the historic multiplier what would the forecast average house price be in 2018 ?

It's in no way detailed or accurate enough to know as I'm sure you realise.
It's just an ad-hoc moment in time comparison.

I would think they will be higher than the 2008 price though

chucky

Thrugelmir wrote: »

So using the historic multiplier what would the forecast average house price be in 2018 ?

looking at historical averages they will probably be at least 50% above of what house prices are now non-inflation adjusted of course

mewbie_2

chucky wrote: »

looking at historical averages they will probably be at least 50% above of what house prices are now non-inflation adjusted of course

Does that mean 30% above the peak? Or are you ignoring the 20% drop?

Thrugelmir

IveSeenTheLight wrote: »

It's in no way detailed or accurate enough to know as I'm sure you realise.
It's just an ad-hoc moment in time comparison.

I would think they will be higher than the 2008 price though

You need to understand the underlying reasons for the change in prices over the past 20 years. For the figures to be understood. A whole combination of factors impacted on the market. Mainly at the macro level.

Using your 1998 -2008 figures. Thats still over a 9% per annum compound rise. Far in excess of wage inflation. This in itself points to a longer term correction to come.

As for future prices, factoring in interest rates at over 5% with wage inflation at say 1-2%. Property doesn't hold great attraction in terms of leveraging up.

Generali

chucky wrote: »

you sometimes sound quite inteligent and sound like you do know what you're talking about.
what kind of inflation do you mean? Demand-pull inflation, Cost-push inflation or Built-in inflation for this adjustment

Why does what reduced the purchasing power of money matter? I don't understand.

chucky

Generali wrote: »

Why does what reduced the purchasing power of money matter? I don't understand.

i wouldn't worry neither does mewbie

bigheadxx

http://www.globrix.com/property-details/13898023-lower_high_street-conwy-ll32-3_bed-semi_detached_house

If we focus on these figures for one specific area we can see the folly of using the current "average price" as an indicator of which way the market is moving.

We see that according to these figures the price of a detached house increased by 240% from September 2008 to October 2008!!. However by having the actual house sales figures we see that this information is based on two sales and then just one sale, not a great basis on which to form an opinion.

http://www.globrix.com/property-details/13898023-lower_high_street-conwy-ll32-3_bed-semi_detached_house

What is also interesting is that whilst there has been some activity over the summer (just concentrating on this postcode) there are now 85.7% fewer properties added to the market in September compared to August.

I would therefore conclude that house prices are not increasing but appear to be because there is so little activity for any figures to be accurate.

Market activity is way down on its peak and we will not have comparable data for several years.

There is nothing to prop the market up in the long term but several things in the short term. It is therefore highly probable that prices could fall another 15 to 20% and activity will remain low in the short to medium term until people have built up enough equity in their property to make it worthwhile moving.

chucky

bigheadxx wrote: »

I would therefore conclude that house prices are not increasing but appear to be because there is so little activity for any figures to be accurate.

Market activity is way down on its peak and we will not have comparable data for several years.

There is nothing to prop the market up in the long term but several things in the short term. It is therefore highly probable that prices could fall another 15 to 20% and activity will remain low in the short to medium term until people have built up enough equity in their property to make it worthwhile moving.

i'd use a better market indicator than Globrix for a start

bigheadxx

chucky wrote: »

i'd use a better market indicator than Globrix for a start

http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=145&a=10106

http://afullerview.wordpress.com/2007/10/30/news-international-invests-in-globrix-a-new-property-search-engine/

http://en.wikipedia.org/wiki/Globrix

Why?