House prices 'will fall up to 10% next year and take years to recover'

Pobby

Just had my latest copy of Property Auction News. Very bullish, well was. Some surprising stuff not moving. Looking at rental yields could blow your socks off. I have seen stuff that has not been sold at auction with yields of 14.5%. When I think that a few years back people were getting into yields of below 5%, it really is shocking.

I have an Irish mate who has a approx a subsidy to his tenant of 700 euro a month. Not the best btl deal I have heard of. The folks who live next door to me have bought a btl but at least the rent covers the mortgage bar £100 a month.

HAMISH_MCTAVISH

worldtraveller wrote: »

Capital are about the only firm of economists that I take any more than a glancing notice of and who have been, IMHO, nearer the mark with their analysis throughout the financial crisis. The rest of them are pretty pointless. I'd broadly agree with them on the above, with a larger fall expected in 2011.

:rotfl::rotfl::rotfl::rotfl:

OK, who wants to post the Capital Economics forecast history....:D

I think theres even a nice pretty chart showing just how wrong they were.

I'll let someone else post the chart, but I just found the CE forecast history.....

The evidence says they were as wrong as it's possible to get.....

BBC December 2002 - Capital Economics warned that the UK property market was severely overvalued, and that prices could fall by up to 30% over the next few years.

BBC October 2003 - House prices are set to fall by 20% in the next 18 months, a leading economics firm predicts. - Capital Economics argues that central banks in both the US and UK have fuelled the housing bubble by keeping interest rates deliberately low, and house prices are now at "dangerously high levels." It predicts that average house prices will fall from £135,000 in 2004 to below £110,000 in 2007, before beginning a more gradual recovery.

BBC September 2004 - Capital Economics is not predicting a sudden drop in prices, but a slow 20% grind lower over the next 2-3 years.

BBC May 2005 - Economic forecast group Capital Economics, which has predicted that house prices could fall, reiterated that the market had reached an "impasse", with buyers and sellers unable to agree on prices. "We expect the pace of the slowdown to pick up as the year progresses, in line with more gloomy reports from surveyors and housebuilders," Capital Economics said.

Independant Nov 2006 - Capital Economics Giving up on House Price Crash - Ed Stansfield, property economist at Capital Economics, said: "I cannot see 2006/2007 being the time we look back on and say 'yes, that was the start of the housing market crash'."

BBC April 2007 - Capital Economics Turns Bullish - Capital Economics, which in 2003 famously predicted that the UK was headed for house price falls of up to 20%, broadly agrees with Mr Boulger's upbeat analysis. "It gets to a stage when you can't keep saying a crash will happen while prices keep on rising," Ed Stansfield, analyst at Capital Economics, admits.

Guardian November 2007 - So, what are the experts saying about 2008? The bleakest assessment (if you are a homeowner, that is) comes from Capital Economics, which says it expects house prices across the country to fall by 3% during both 2008 and 2009.

3% ? Is that all ? After years of forecasting 20 to 30% drops now Capital Economics is down to a absymally poor forecast of 3% per year for 2008 and 2009, AFTER house prices had already peaked and fallen !

Telegraph- November 2008 - "This housing market correction has already overtaken the 1990s crash and, with the economic slump deepening, it is set to get worse. Interest rate cuts will not be enough to stop the correction, nor slow the pace of house price declines. We expect house prices to fall a further 20pc in 2009," said Seema Shah, property economist at Capital Economics.

And instead, house prices rose by several percent in 2009......



Capital Economics are without a doubt the WORST forecasters in UK housing history.

GeneHunt_2

carolt wrote: »

I don't know. Is it a riddle?

What's the answer?

You tell me.

PS The answer to the first part is 'a 10% drop'. I got that.

I suppose I was trying not to be rude. So I will try being direct.

Why didn't you buy decades ago?

You must regret not buying a lot.

You would have been half way through paying off a mortgage by now.

A 10% drop seems like poor consolation for such a financial faux pas.

kabayiri

carolt wrote: »

No.

Do tell.

Oops, I got called away. Apologies!

What is the definition of lecturing?

It is the transfer of information from the lecturers' notes to the students' notes without going through the brain of either.

worldtraveller

HAMISH_MCTAVISH wrote: »

:rotfl::rotfl::rotfl::rotfl:

OK, who wants to post the Capital Economics forecast history....:D

I think theres even a nice pretty chart showing just how wrong they were.

I'll let someone else post the chart, but I just found the CE forecast history.....

The evidence says they were as wrong as it's possible to get.....

BBC December 2002 - Capital Economics warned that the UK property market was severely overvalued, and that prices could fall by up to 30% over the next few years.

BBC October 2003 - House prices are set to fall by 20% in the next 18 months, a leading economics firm predicts. - Capital Economics argues that central banks in both the US and UK have fuelled the housing bubble by keeping interest rates deliberately low, and house prices are now at "dangerously high levels." It predicts that average house prices will fall from £135,000 in 2004 to below £110,000 in 2007, before beginning a more gradual recovery.

BBC September 2004 - Capital Economics is not predicting a sudden drop in prices, but a slow 20% grind lower over the next 2-3 years.

BBC May 2005 - Economic forecast group Capital Economics, which has predicted that house prices could fall, reiterated that the market had reached an "impasse", with buyers and sellers unable to agree on prices. "We expect the pace of the slowdown to pick up as the year progresses, in line with more gloomy reports from surveyors and housebuilders," Capital Economics said.

Independant Nov 2006 - Capital Economics Giving up on House Price Crash - Ed Stansfield, property economist at Capital Economics, said: "I cannot see 2006/2007 being the time we look back on and say 'yes, that was the start of the housing market crash'."

BBC April 2007 - Capital Economics Turns Bullish - Capital Economics, which in 2003 famously predicted that the UK was headed for house price falls of up to 20%, broadly agrees with Mr Boulger's upbeat analysis. "It gets to a stage when you can't keep saying a crash will happen while prices keep on rising," Ed Stansfield, analyst at Capital Economics, admits.

Guardian November 2007 - So, what are the experts saying about 2008? The bleakest assessment (if you are a homeowner, that is) comes from Capital Economics, which says it expects house prices across the country to fall by 3% during both 2008 and 2009.

3% ? Is that all ? After years of forecasting 20 to 30% drops now Capital Economics is down to a absymally poor forecast of 3% per year for 2008 and 2009, AFTER house prices had already peaked and fallen !

Telegraph- November 2008 - "This housing market correction has already overtaken the 1990s crash and, with the economic slump deepening, it is set to get worse. Interest rate cuts will not be enough to stop the correction, nor slow the pace of house price declines. We expect house prices to fall a further 20pc in 2009," said Seema Shah, property economist at Capital Economics.

And instead, house prices rose by several percent in 2009......



Capital Economics are without a doubt the WORST forecasters in UK housing history.

Before jumping in 'like a bull in a china shop', it may possibly be worth actually reading my post #3 and taking in the general point (ie. none of them are much good, indeed mostly pointless!); post # 8 by StevieJ (yours is basically a copy of his and so you obviously did not make any effort to read the thread) and my reply post #19 (which reiterates my original point about Capital Economics "throughout the financial crisis", not during the 2002-2007 period that your article largely covers. :rolleyes:

Also Capital do not of course only comment on the housing market, and, although it probably was not entirely clear in my first post, my point was about their general analysis on the UK economy throughout the financial crisis, being better than others (but, as stated, they are all pretty pointless).

Eric_Pisch

kabayiri wrote: »

The Romans pretty much thought they had this bridge building process worked out.

Move forward nearly 2000 years to the 1940s, when that American suspension bridge collapsed due to 'the wrong sort of wind'.

I think as a species we humans like to think we are smarter than we really are. Complex problems, like big IT systems or global financial systems, still have plenty of opportunity to prove us wrong.

They could hardly computer model to the bridge to work out its resonance frequency which would of showed at what wind speed aeroelastic flutter occurred back in the 40s.

There are many huge IT systems that work near perfectly, some of them immense, your using one as you read this The main large IT systems that fail have one thing in common they are run by politicians and civil servants.

The banking IT system worked perfectly, what failed where the regulators and financial monitoring authorities, they even ignored the lessons learnt from the 30s. Bankers are greedy, they worship money, they will do anything within the framework of rules set by the relevant authorities to make money.

wageslave

Eric_Pisch wrote: »

Bankers are greedy, they worship money, they will do anything within the framework of rules set by the relevant authorities to make money.

Substitute the word bankers for people and you are describing just about everyone I know. Certainly everyone I know in the business world.

real1314

kabayiri wrote: »

What is it with percentages on here?

A house worth 5 times what you paid for it has not increased by 500%.

Start>Programs>Accessories>Calculator

50,000 x 500%

What answer are you getting?

Eric_Pisch

At its most simplisitc over view the housing market is not over inflated, there have been reports that between 3-5 million imigrants / migrants have moved to the UK over the last few years, the government themselves have said there is a housing shortfall of 2 million houses in the UK.

Land is very finite resource in the UK especially in the south east (the Mayor of London has said there are 1 mill new people in London alone).

With so many new people and such a short fall in property I would expect year on year increases (Certainly in the SE) until such time as inflation gets out of control (helped by the free money the BoE are printing) and interest rates rise.

Ignoring interest rates, as time goes on I expect banks to be sitting on ever bigger piles of money, eventually they will have to do something with it as they need to make money so the amount of dosh available will go up. As time goes on and stability returns many more people will stop "battening down the hatches" and start to look at moving. This will all push up prices.

Eric_Pisch

wageslave wrote: »

Substitute the word bankers for people and you are describing just about everyone I know. Certainly everyone I know in the business world.

I would agree most people have some greed to them but its a matter of scale, big business and bankers tend to use wealth as a measure of there winky size

but not everyone is, I certainly would not screw over any one just to get money.