House prices to fall back to 2002 levels, says Savills

wotsthat

http://www.telegraph.co.uk/finance/economics/houseprices/8882407/House-prices-to-fall-back-to-2002-levels-says-Savills.html

House prices are set to drop 11pc in "real" terms in the next five years, leaving them back at 2002 levels when the impact of inflation is stripped out, according to property broker Savills.

The average house price will be £170,000 in 2016, compared to £161,000 today, and £184,00 in 2007, according to the agency's forecasts.
That signals that prices will rise just 6pc over the next five years in nominal terms, representing a "real" fall of 11pc when adjusted for the impact of inflation.

Quite a detailed forecast with specific numbers and dates.

6% nominal increase and 11% real fall don't seem that dramatic.

If this was accurate (I think it's over bearish) then now seems like a good time to be an owner occupier paying down capital rather than rent.

MrRee_2

Indeed .... all indications point to a steady, level, market.

No price drops, no price rises to speak of - just flat.

And, as you rightly say wotsthat - a fantastic time to be owning and clearing the Mortgage ... money has never been cheaper.

But, we must not forget the renters - they are stuck paying money for nothing - it cannot be a pleasant place to be.

paulmapp8306

depends where you take the "real terms" from. If its inflation then there probably right. if its regards to income then it will still probably mark a rise in real term prices, as wages seem frozen or are being reduced at present.

Do you gague it next to the cost of other things, or what people have to spend?

wotsthat

paulmapp8306 wrote: »

Do you gague it next to the cost of other things, or what people have to spend?

I suppose you have to take a view by using different data.

To me nominal value is the most important. It would be bad for the economy if people felt poorer as a result of house prices coming down. Banks balance sheets would also be adversely affected.

However, on a month to month basis I only care about mortgage costs vs. income.

nembot

MrRee wrote: »

Indeed .... all indications point to a steady, level, market.

No price drops, no price rises to speak of - just flat.

And, as you rightly say wotsthat - a fantastic time to be owning and clearing the Mortgage ... money has never been cheaper.

But, we must not forget the renters - they are stuck paying money for nothing - it cannot be a pleasant place to be.

If you had your opinion without slagging renters off, you wouldn't come across as such a kn0b. Money has never been cheaper, jesus christ.... kn0b is almost a compliment.

paulmapp8306

He wasnt slagging off renters - he was saying if your trapped in the rent circuit (particularly with high rent, and high deposit needed for mortgages) then he feels sorry for you.

Im renting - though very cheaply, but looking to buy. I can only afford to due to a decent sized inheritance making it possible to offer a 40-%+ deposit.

drc

What is actually going to push prices up? All those new, well paying jobs and easy access to large mortgages? All those rich Russians and Chinese just wanting to live in the ever more populous UK?

MrRee_2

nembot wrote: »

If you had your opinion without slagging renters off, you wouldn't come across as such a kn0b. Money has never been cheaper, jesus christ.... kn0b is almost a compliment.

That's a funny comment, funny as in strange ...... I was just saying that I was feeling for those who have to rent and cannot take advantage of the current market and cheap money ...

Yes, CHEAP MONEY!! I was paying a Mortgage of 15% back in the day ....... good grief, buyers have never, ever, had it so good!

paulmapp8306

The problem is - you only really have access to that cheap money - if you have money.

Always been the way and sadly always will.

MrRee_2

drc wrote: »

What is actually going to push prices up? All those new, well paying jobs and easy access to large mortgages? All those rich Russians and Chinese just wanting to live in the ever more populous UK?

Interest Rates are key ... and, it has been quite clearly stated by all concerned, that they will not be changing for many, many years.

Cheap money means that buyers will buy, why rent at a higher cost than buying? So prices remain firm.

Expensive money would drive buyers away from the market, but, as I said - cheap money is here for a long, long time.

MrRee_2

paulmapp8306 wrote: »

The problem is - you only really have access to that cheap money - if you have money.

Always been the way and sadly always will.

Well, money goes to money ...... I'm not sure that's the same as borrowing cheap money?

Just a 15% Deposit will secure a historically very cheap mortgage.