Property 50% crash in real terms from top to bottom

whatismoney

The slide in UK house prices will continue for at least five more years until interest rates are back to normal and crush the value of a home by almost 50% in real terms, according to a key index of property price futures. Indications from futures trading on long term property prices shows that the average UK home will not bottom in value until 2017.

If the top was around 2007 for property in the UK, it seems a 10 year bear market will bottom in 2017 when interest rates have normalised and all the repossessions have been cleared out.

We are now around half way through the 10 year bear market in property 2007 to 2017, here in 2012 half way through and almost exactly half way through the 50% crash in real terms.

DpchMd

Can you explain why a "real term" crash is beneficial?

macaque_2

DpchMd wrote: »

Can you explain why a "real term" crash is beneficial?

I can think of two benefits

1. People won't have to make a choice between buying a home or eating.
2. The UK will be more competetive and create more jobs if people don't have to pay £10-20 a year on housing costs.

wotsthat

whatismoney wrote: »

The slide in UK house prices will continue for at least five more years until interest rates are back to normal and crush the value of a home by almost 50% in real terms, according to a key index of property price futures. Indications from futures trading on long term property prices shows that the average UK home will not bottom in value until 2017.

Why the new user name?

Any link to this key index of property price futures?

chucky

DpchMd wrote: »

Can you explain why a "real term" crash is beneficial?

I guess there will be a post shortly about Gold/Silver or Fiat currency soon.

Real house price drops help homeowners more than non home owners anyway so interested to see why it's beneficial.

Graham_Devon

The problem with this is, inflation is eating away at wages too, so it means very little, unless you are an investor.

whatismoney

This forum is all about debating house prices and the economy.

It is looking more like a 50% real crash from top to bottom everyday.

It is just a prediction 2017, but a lot depends when interest rates normalise and all the repossessions are cleared out so house values can bottom and start again.

chucky

Graham_Devon wrote: »

The problem with this is, inflation is eating away at wages too, so it means very little, unless you are an investor.

Home owners mortgages aren't affected by inflation, capital owed to the banks is inflation proof. Home owners benefit nicely from real house price falls compared to an FTB.

DpchMd

chucky wrote: »

Home owners mortgages aren't affected by inflation, capital owed to the banks is inflation proof. Home owners benefit nicely from real house price falls.

Even Graham understands that.

chucky

DpchMd wrote: »

Even Graham understands that.

Let's see if he says he agrees.... He's never agreed with that in the past...

whatismoney

chucky wrote: »

Home owners mortgages aren't affected by inflation, capital owed to the banks is inflation proof. Home owners benefit nicely from real house price falls.

This does not make any sense if property is falling in value then property owners are losing out. It is simply not true to say as you did that "Home owners benefit nicely from real house price falls."

If inflation really takes off then yes a mortgage will go down in real terms, but remember the bank always wins. They will probably revalue all mortgages to the new inflation figures or something. Do not put it anything past them.

But at this time there is deflation in the property market. Property is falling and debts are going up in value in comparison. As Mike Maloney says we will see big deflation first as we are seeing but have more to go then currency creation will be turned up all over the world to fight the deflation.