House prices 'to fall by 20%'

DaddyBear

HAMISH_MCTAVISH wrote: »

I've quoted Bootle on interest rates..... But credit where credits due, his record on that topic is very good.

Their record on house prices, well, see above.....

Purely by chance they will eventually be right......

Sir_Humphrey

B_Blank wrote: »

On the whole economists think prices will decrease by 5-10% this year. So this guy is an anomoly, and there are plenty of economists who think prices will stay flat or go up slightly this year - which is the other side of the consensous 5-10% fall in prices

Capital Economics actually say 20% over two years.

Another 10% drop this year would be excellent for me, as the area I am interested in would then have fallen about 20-25% from peak (nominal).

brit1234

HAMISH_MCTAVISH wrote: »

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

Would you want to bet on that Hamish? Really want to bet on that?

I just want to put up 2 organisations who have been far more out and these are CEBR and Housing Federation, the same 2 you surprising quote all the time.

You may slag off Capital economics but they are right that housing is very overvalued and will fall. The only thing they have got wrong is the timing but that is an incredibly hard thing to work out when such extreme measures have taken place to prop it up.

On top of that housing has been falling for months now and the size of the falls is set to increase.;)

planemad

We are a small Island with a high population. Sellers/owners are and will remain in control for a long time to come.
If prices start to fall, then owners take their property off the market causing a shortage with in-turn keeps the price drops minimal.

A drop has been spoken about for the last 4 years and nothing has happened to really effect anything.
I do feel sorry for people trying to get on the ladder but we have to look at this realistically.

Asheron

smeagold wrote: »

Homeowners should brace themselves for a "short, sharp shock", with house prices set to fall by up to 20% over the next two years as rising unemployment and public spending cuts take their toll, experts are warning.
The cost of the average home fell by up to one-fifth between mid-2008 and the end of 2009 as the credit crunch gripped the mortgage market, but then regained about half of that ground last year, aided by record low interest rates.

With the Bank of England's policymakers locked in an acrimonious public row about whether rates should start rising again to choke off inflation, analysts say prices now look too high to be sustainable.
"Prices are trending slowly downwards at the moment, but our view is that this is really the start of the second leg of the correction, and we expect prices to fall significantly further," said Paul Diggle, property economist at consultancy Capital Economics.

He calculates that the average home remains up to 20% overvalued by historical standards – and with the mortgage market still tight and unemployment rising, 2011 could bring prices crashing back to earth.

Andrew Brigden, of financial research group Fathom, agrees that homeowners can expect a rough ride. Fathom reckons house prices are 20%, perhaps even 30%, too high relative to average wages.

http://www.guardian.co.uk/money/2011/feb/19/house-price-fall-20-per-cent

:j

I told you already 40%

brit1234

planemad wrote: »

We are a small Island with a high population. Sellers/owners are and will remain in control for a long time to come.
If prices start to fall, then owners take their property off the market causing a shortage with in-turn keeps the price drops minimal.

You miss two big issues here.

1, The money for the 2007 peak is gone, the banks don't have the cash to lend to that level. 100-125% mortgages are gone, people now need big deposits. Self cert/liar loans which made 40% of the peak market are pretty much gone and remaining bits being clamped down on with increasing amounts of the dodgy brokers and surveyors receiving criminal prosecutions.

Buyers can't get the funds to match the prices. You may say sellers will not sell but through divorce death, increased children and repossession there will be says at a lower level. This will reduce land registry prices making it harder for those holding off selling to get re mortgages especially as interest rates go up. Infact rising interest rates will be a significant reason for people be forced to sell.

2, There is no shortage of property in the UK for sale, this is compounded by the lack of people being able to buy. The UK property bubble like USA and Australia was formed by lose finance not shortage of land, the other two were short of land are they. We have also large landbanks which we can build on, don't believe me then look at the end of year reports of the likes of Barratts or Permission.

Prices are falling back to normal levels and there is nothing left to stop it now.

Turnbull2000

brit1234, you missed the most important aspect - people don't have to sell below peak value. The only way we'll achieve a 20% fall from here is through inflation. But even then you'll not get a return to historic 'norms', as modern mortgages are based on two-full time incomes and affordability criteria, ensuring that prices will remain around 5x single income at least.

abaxas

Turnbull2000 wrote: »

brit1234, you missed the most important aspect - people don't have to sell below peak value. The only way we'll achieve a 20% fall from here is through inflation. But even then you'll not get a return to historic 'norms', as modern mortgages are based on two-full time incomes and affordability criteria, ensuring that prices will remain around 5x single income at least.

The market is not defined by those who dont want to sell, it is defined by those that do.

Graham_Devon

planemad wrote: »

We are a small Island with a high population. Sellers/owners are and will remain in control for a long time to come.
If prices start to fall, then owners take their property off the market causing a shortage with in-turn keeps the price drops minimal.

And what happens when the sellers put their houses back on the market? Or is "they will take houses off the market" as far as the thought process goes?

You'll have more and more potential sellers all waiting for a rise in prices.

Prices rise, a glut of sales hit the market, prices fall.

Apparently, sellers will just keep pulling their house off the market again and again. However, in real life, people need to move.

Turnbull2000

abaxas wrote: »

The market is not defined by those who dont want to sell, it is defined by those that do.

And those that do tend to be the one's lucky enough to achieve a good asking price, with the price indexes consequently remaining high, but based on far fewer transactions. So still no cheap housing.

Only mass distressed sales would achieve what you're after. Long-term ultra low rates and persistent government intervention will prevent this from happening.