The property boom is well underway now.

twadge_face

Kohoutek wrote: »

Yeah but nearly 20% is still an awful lot - that's a house valued at £200,000 where it should be valued at £160,000.

Alas, not quite. This is the same as when the 2.5% VAT change didn't actually equate to a direct 2.5% drop in prices of VAT-able items, but 2.1% instead (whoop-de-do!), as stated here: http://news.bbc.co.uk/1/hi/business/7757854.stm

That chart shows property as 20% overvalued on the basis of an index of 100 (where 100 seems to be considered to be the "correct value"... the bulls here would argue that overpricing would go on forever and ever amen, but I imagine the banks such as Credit Suisse are a little bit more skilled and learned in this area).

Anyway, your £200,000 property example would run like:

(200,000 ÷120) x 100 = £166,666.67

And this means the actual reduction necessary to get back to the correct/fair value would be:

(200,000 - 166,666.67) ÷ 200,000 = 16.67%

But that of course is based on selling prices... no reflection on the ambition of sellers' asking prices!!