House prices will FALL by up to 10% in 2010, top economists warn

carolt

http://www.dailymail.co.uk/news/article-1237769/House-prices-FALL-10-2010-economists-warn.html

HAMISH_MCTAVISH

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

They are saying Capital Economics are "top economists"........

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

Even by the Daily Mail's low standards of churnalism, that one takes the cake.

One more time with the Capital Economics house price forecast history.....

The evidence says they have consistently been 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.

Gaurdian 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 as we now know, prices rose in 2009 by a whopping 10% in the last 9 months)

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

So if they are predicting a 10% fall, it's safe to say prices will be rising.

HAMISH_MCTAVISH

And the article lists 4 predictions, from 4 sources.

2 predict rises, 2 predict falls.

:rolleyes:

Spartacus_Mills

carolt wrote: »

http://www.dailymail.co.uk/news/article-1237769/House-prices-FALL-10-2010-economists-warn.html

This is not going to help either.

http://www.telegraph.co.uk/finance/economics/6866817/Charles-Goodhart-warns-of-return-to-recession-as-bank-lending-falls.html

Professor Charles Goodhart, a former top official at the Bank of England now at the London School of Economics, said policymakers have neglected the flashing danger signal of the monetary data.
"What has happened to all the monetarists? Growth in money holdings and lending has plummeted. Thirty, or 40, years ago they would have been forewarning doom and destruction at this juncture, and casting anathemas at the authorities," he wrote in a consultant report for Morgan Stanley.



"There is a danger that markets and authorities become obsessed about the fiscal implications of the crisis at a time when the real worries should still focus on private sector access to credit and money."
The exception is China, which has the opposite problem: monetary growth is running at 30pc a year. Beijing will have to slam on the brakes soon. "When that happens the locomotive will slow, and probably reveal a string of non-performing loans; it has always been thus," he said. Prof Goodhart said it was too early for the world's central bankers to congratulate themselves for averting a slump.
The US Federal Reserve has stopped publishing M3, which covers a broad range of deposits. This may have been a blunder. The data gave advance warning of bubble trouble in 2006-2007, and again before the US economy crashed in late 2008. Some blame lies with Fed Chair Ben Bernanke, a New Keynesian openly scornful of monetarist thinking.
Reconstructed data shows that M3 shrank at an annual rate of 7.2pc in the three months to November. Bank loans have fallen from $7.1 trillion (£4.4 trillion) to $6.75 trillion since the end of May.
In the eurozone, M3 has fallen slightly since February. Professor Tim Congdon from International Monetary Research said credit contraction on both sides of the Atlantic has been the steepest since the 1930s, risking a slide into deflation next year.
Banks are tightening credit for two reasons: losses from the crisis, and tougher capital adequacy rules imposed by regulators. Mr Congdon said it is bizarre that the European Central Bank (ECB) seems unwilling to take steps to prevent a monetary implosion in these circumstances.
Optimists say that "portfolio shifts" by investors may have distorted the M3 data. If so, there is little evidence in ECB or Fed reports that they have delved deeply into this issue.
They also argue that falling credit is benign because it reflects lower demand by borrowers, not a lending crunch. Professor Goodhart said this line of argument is "not terribly comforting". Businesses stop taking out loans when terms are punitive. The economy is damaged either way.
Mr Goodhart is best known around the world as the author of "Goodhart's Law", which posits that an indicator ceases to be much use once it becomes a target.

In spite of being bailed out Lending has dried up from the banks. So mortages are bound to become less available and that will, again, have a negative impact on the price of housing as well as rents.

It is going to be tough next year.

Graham_Devon

HAMISH_MCTAVISH wrote: »

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

They are saying Capital Economics are "top economists"........

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

Even by the Daily Mail's low standards of churnalism, that one takes the cake.

But RICS seem to be ok for you? You based a thread on what they said today.

Dec 20, 2007:
Dec. 20 (Bloomberg) -- Pent-up demand and interest-rate cuts will prevent a slump in U.K. house prices next year, the Royal Institution of Chartered Surveyors said.
``RICS does not believe that any drop in house prices will be extended in duration,'' the lobby group for about 150,000 property surveyors said in an e-mailed statement. While ``the market could experience some near-term weakness,'' home values will probably be ``broadly unchanged next year.''

HAMISH_MCTAVISH

Graham_Devon wrote: »

RICS does not believe that any drop in house prices will be extended in duration,''

Well they were absolutely right about that, this crash lasted less than 20% of the duration of the last crash

While ``the market could experience some near-term weakness,''

They were right about that too.

home values will probably be ``broadly unchanged next year.''

And that bit, not so much.....

Still, two out of three is at least 200% better than CE's history.:D

Graham_Devon

LOL, hang on Hamish. You have just said on another thread, you only deal in facts.

HAMISH_MCTAVISH wrote: »

Hamish only does facts.

Now, you take a quote, and apply that quote to "a previous crash", which RICS do not mention, but you have just applied on your own, and then you have applied your own timescale.

So do you only deal in fact, or not?

Then you go on to say a fall of 20% is merely "near term weakness"? The lowest numbers of mortgage approvals, EVER recorded, is "near term weakness".

What are you trying to do hamish? Have a giraffe?!

Emy1501

HAMISH_MCTAVISH wrote: »

Well they were absolutely right about that, this crash lasted less than 20% of the duration of the last crash



They were right about that too.



And that bit, not so much.....

Still, two out of three is at least 200% better than CE's history.:D

RICS also said at the end of 2008 that prices would fall by 10% in 2009 so they were wrong again.

You have to make your mind up Hamish. Personally I believe all these predictions are nonsense but you cannot pick and choose the ones you believe in based on whether they support your needs. Therefore either accepts all of them or ignore all of them as I doubt any of them have predicted correctly over the last 2-3 years.

lynzpower

http://www.dailymail.co.uk/debate/article-1237865/SANTA-SPEAKS-Its-interview-wanted-But-JAN-MOIR-whos-good-girl-year-bagged--guess-Mr-Claus-isnt-cuddly-youd-think.html

Elsewhere on the daily mail. ....

System

HAMISH_MCTAVISH wrote: »

And the article lists 4 predictions, from 4 sources.

2 predict rises, 2 predict falls.

:rolleyes:

I wouldn't expect anything less from the Daily Fail.

Really2

Graham_Devon wrote: »

But RICS seem to be ok for you? You based a thread on what they said today.

TBF I think a Chartered Surveyors would know more about valuing houses than most considering that is their Job.
Also they will have more hands on experience on what the market is doing in areas.

All predictions are usually wrong but RICS I think have been a lot better than most.
TBF Capital Economics predictions have most probably been the worst, especially when they turned bullish at the peak.