The “crash” is over – now how long before prices fully recover?

nollag2006

Might be a bit up and down, but should be back by the end of 2010

Thrugelmir wrote: »

In answer to your original question. Average mortgage interest rates over the same period were 7.1%. On current house prices this would mean 37% of disposable income being used to repay a 75% LTV mortgage.

I saw a quote on here recently showing that monthly mortgage payments were closer to 30% now, and below historic averages.

Some may think that this will change as interest rates rise over the next few years, but I wouldn't be so pessimistic.

As money flows back into the mortgage market, with the creation of these new lending banks, this should exert downward pressure on mortage rate yields thereby cushioning the impact of rate rises when they come in late 2010 / 2011.

So we should, hopefully, continue to see price rises in the housing market over the next couple of years. Having said all that, there may be a few falters en-route, as noted by the slight wobble in asking prices during the depths of mid-Winter from Rightmove. (But what do they know - those scurrilous VI's ???)

HammerSmashedFace

The “crash” is over – now how long before prices ...

Just studying the title of this thread, it seems the OP has little grasp on reality, the crash is far from over, not one single economic fundamental has returned to 'normal', therefore we can confidently say that the correction of house prices has also not reached its conclusion.

Considering the bad news that is likely to to come our way over the coming years (tax hikes, public spending cuts, higher IR's, inflation in energy costs etc etc), all of which are highly likely to lower house prices I can't fathom for the life of me why 'the crash would be over ' ?

Unless of course its just wishful thinking by the OP, which wouldn't be a great surprise as thats all we've been force fed buy the media/government over the past 8 months.

macaque_2

nollag2006 wrote: »

how long will it take for prices to recover to their late 2007 level?

2007 was a bubble so to answer your question, we need to study the recover processes of other bubbles:

Tulip mania 1637
The South Sea Company 1720
The silver bubble 1980
The Japanese Stock Market bubble 1989

So if I can find out how long it took for those bubble prices to be revisited, I will have the answer to your question.......

Hmmmmm ......... I have a problem: None of these bubbles have returned to peak prices yet. So hmmmmm ah I know how to work it out. Bear with me while I do some calculations:

2009 - 1637 = 372

Therefore your answer is:

The evidence of history suggests that it will take at least 372 years before the main body of the population can be tempted into speculating as recklessly as they did in 2007.

My answer might seem laced with irony but it is not. You posed a question based on an unjustified assertion (that "the crash is over"). There is no rational justification for this statement. The reality is that house prices are screamingly far above long term affordability levels plus we are faced with biblical levels of debt (private and public sector) falling disposable incomes and rising unemployment. It is only 1/2% interest rates and QE that is keep the roof from caving in. Once people recognise the millenium bubble for what it truly was, 2007 prices will never be revisited.

Thrugelmir

nollag2006 wrote: »

As money flows back into the mortgage market, with the creation of these new lending banks, this should exert downward pressure on mortage rate yields thereby cushioning the impact of rate rises when they come in late 2010 / 2011.

Why are mortgage rates going to fall? Any bank entering the market is going to want a good return on its money.

Rates of below 2% above base will be not be a reality for the next generation of homebuyers.

StiflersMom

Recovery is gaining pace – within 6 months

Looks like the recovery has come way sooner than expected!!

http://www.housepricecrash.co.uk/forum/index.php?showtopic=132335

:beer:

sabretoothtigger

Probably by the end of 2011

macaque wrote: »

Tulip mania 1637
The South Sea Company 1720
The silver bubble 1980
The Japanese Stock Market bubble 1989



The evidence of history suggests that it will take at least 372 years before the main body of the population can be tempted into speculating as recklessly as they did in 2007.

Each generation tends to repeat some of the mistakes of the last, it wont take that long.

It wasnt the main body of the population which caused this bubble anyway, it was funded and still is by government so we the population are only involved in that we elected and allow politicians to borrow on our behalf and thats likely to continue forever it seems.

As far back as the roman empire, currency was diluted in order to pay government bills and 'support' the economy.



Heres the Japanese bubble compared to now for anyone interested, the blue line would be roughly similar to the FTSE





The silver bubble of 1980 is likely to repeat to some extent in the coming years. The reason is the market always overshoots on big moves, the price always goes higher then it should or lower then it should because of fear and greed.

Its possible silver will transcend from an industrial and minor jewellery metal to common currency internationally, thats a massive change and its very likely the price will overshoot and we will see a silver bubble of some sort.

Thats only 30 years to repeat and it stems back to nixons actions in its source in deregulating gold and silver worth so has some fundamental foundation just like the housing bubble was backed by government also to some extent