Will house prices crash? Poll Discussion

Former_MSE_Lawrence

Poll Started 17 July 2007: Will house prices crash? What will happen to UK house prices over the next year?

A. Increase over 20%
B. Increase 10-20%
C. Increase 5-10%
D. Increase 2-5%
E. No real change
F. Decrease 2-5%
G. Decrease 5-10%
H. Decrease 10-20% (smaller crash)
I. Decrease over 20% (crash)
J. I really have no idea

Click here to vote or click reply to discuss.


VOTE RESULT!

See the full vote result here

House prices vote

Summary of Vote Result


You predict house prices will DROP by 0.6% over the next year.



Almost 10,000 of you voted last week to predict what’ll happen to house prices over the next year. It’s particularly interesting because public sentiment has real impact here. While more people thought it’d rise than fall, the average result was a drop of 0.6%, as many of those who thought it would drop predicted a big fall; in fact 13% predicted a crash (a drop of 10% plus).


Martin



Note: When calculating the average we take the increase or decrease of more than 20% to be equivalent to predicting a rise or fall of 25% (as over 20% could mean 30 or 40 or 50). This has been consistently worked out this way every time the poll is run. If it was calcualted by assuming it was just a vote for 20% - the average result would be a drop of 0.3%

izzybusy23

I still cannot believe people think prices are going to rise given the interest rate rises, doom and gloom in the news and houses simply not shifting.

dealornodeal_3

I think a lot of folk are going to be in for a shock then, and live with Negative Equity!

Alias_Omega

I want it to crash, crash, crash..

a) i shall be able to afford a house that i want to live in
b) i wont have to pay £750 a month for the next 30 years
c) i may have some cash left for my family (me, partner & 2 children to live off).

With house prices as they are, we will surely struggle to live on the single income and have a life of luxury. House prices need to reduce alot so i can afford the house that i may want to live in, and not some ex-council house going for over £90,000 when you could buy them 4 years ago for £20,000.

I think in reality we would be better off giving the job up, and going on benefits.

Choices, work for the next 30 years for nothing, or sit on my !!! for the next 30 years claiming job seekers allowance with a free house in and out of work.

At the end of the month, sometimes we feel like i am claiming benefits for the amount of cash is left..

Something is not right here...

eek

I voted J because while I know that in the longer term prices will fall and probably fall by at least 30%, I don't want to estimate when that crash will begin.

At least 30% off (in real terms) by 2010 seems unavoidable.

Comdot

Oops I chose B but thinking about the time period as we're already well into July now I'd go for C...

I defo see it slowing but not very much.

Comdot

Alias_Omega wrote: »

I want it to crash, crash, crash..

a) i shall be able to afford a house that i want to live in
b) i wont have to pay £750 a month for the next 30 years
c) i may have some cash left for my family (me, partner & 2 children to live off).

With house prices as they are, we will surely struggle to live on the single income and have a life of luxury. House prices need to reduce alot so i can afford the house that i may want to live in, and not some ex-council house going for over £90,000 when you could buy them 4 years ago for £20,000.

I think in reality we would be better off giving the job up, and going on benefits.

Choices, work for the next 30 years for nothing, or sit on my !!! for the next 30 years claiming job seekers allowance with a free house in and out of work.

At the end of the month, sometimes we feel like i am claiming benefits for the amount of cash is left..

Something is not right here...

I don't think they will crash and even if they were to crash, it would not be by much and it is also likely that if they did crash, they would do so in a year or so and only fall back to what they are at today. You still can't lose if you buy today rather than tomorrow, my advice would be to move yourself out from hotspots to more affordable areas, unless you can't possibly move your job.

Here are some articles from Reuters (financial news agency) from the last few days.

:money:

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=propertyNews&storyID=2007-07-16T115207Z_01_NOA642672_RTRUKOC_0_HOUSE-PRICES-CML.xml

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=propertyNews&storyID=2007-07-13T130108Z_01_NOA346189_RTRUKOC_0_BANK-OF-AMERICA.xml

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=propertyNews&storyID=2007-07-13T060337Z_01_NOA321583_RTRUKOC_0_ANALYSIS-SURVEYS.xml

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=propertyNews&storyID=2007-07-16T072420Z_01_NOA626557_RTRUKOC_0_CITYWIRE-BUYTOLET.xml

Comdot

Not forgetting from Friday:

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=propertynews&storyID=2007-07-13T143428Z_01_NOA346506_RTRUKOC_0_BRITAIN-LONDON.xml

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=propertynews&storyID=2007-07-13T060337Z_01_NOA321583_RTRUKOC_0_ANALYSIS-SURVEYS.xml

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=propertynews&storyID=2007-07-13T055842Z_01_NOA321452_RTRUKOC_0_FACTBOX-HOUSE-SURVEYS.xml

smala01

I am always amazed at the general optimism of the housing market these days.

The question of course is that it depends. In the short term you probably will not see a significant rise or fall, but longer term the bubble WILL burst.

1) House prices have been rising for the last ten years. Markets NEVER continually rise without a fall
2) House prices ARE overvalued – using whatever measure you care mention (Price Vs Earning being my personal favourite)
3) Many first time buyers are now priced out of the market. This severely limits future price growth (i.e. no kick from the bottom)
4) Gordon Brown promised to increase supply of starter homes. Increased supply = decreased price (see point above)
5) Growth in the economy = growth in house prices. Don’t underestimate the link between the US economy and Britain. The US economy is in unprecedented levels of debt. Sooner or later this debt will have to be re-paid shrinking the economy. If the US economy slows so does ours. Houses become less affordable and prices fall.
6) China, India and Brazil are consuming natural resources at ever increasing levels pushing up prices. It now becomes increasingly expensive to a manufacture in these countries. It means that the prices in our stores will rise, meaning we have less money in our pockets (see point 5)
7) Interest rates are rising, partly due to 6) above. Again less money in our pockets.
8) Buy to let landlords now struggle to yield over 5% - you can get better returns in a bank account. These will be the first out of the property market.

Regrettably the world economy is top heavy and on a knife edge. One trigger (like Sept 11) in the USA is enough to trip up the economy. When it starts to topple it will crumble.

I challenge you. Search on Google for forums during the Dot Com boom in 2000 and 2001 (or any other market bubble in the last 300 years). Compare the comments then to the comments today.

“Prices will never fall below such and such level”… “X is the best bet for your pension”…. etc

Negative equity is a nasty thing...

Romani_Ite_Domum

I voted I (over 20%) but thinking about it, the poll question is unclear.
Over the next year could mean many things. I believe that YOY HPI will be nominally negative by January 2008 although it will not be evident until a few months later.
If the poll means YOY July2008 then we are more likely to see 5-10% negative.

maybird_2

I wish there would be some kind of rationalising of the housing market. I'm a homeowner but I feel a real fear about what my kids' chances of ever owning a home are going to be.
On the other hand, when people say prices don't rise indefinitely I find that a bit weird too. As far as I can tell, apart from blips of relatively short duration (months, a year or two at most), house prices, like every other price, have gone up and up throughout history. Else why would they have mansions worth £40,000 in the seventeenth century that are worth £40 million now?
My parents house - bought in 1966 for £2000. Now worth £175,000.
Our house - bought in 1993 for £65,000. Now worth £200,000.
Where are the downturns there?? Surely, as an investment, property is one over which you have to take the 'long term view' ie, the duration of the mortgage - 25 years. If you can't take a long term view, then maybe property isn't the right investment for you. Rent and use your money in other ways. In 25 years time will our house be worth more or less than the £200,000 it is today? I'm betting yes. But if it isn't, who cares? We'll own it, we'll be living in it, and we might not leave our kids with an inheritance tax bill! And if it's worth nothing at all then the state can pay for our nursing home. Win win I reckon.