House prices will plummet 10 percent

Running_Horse

SquatNow wrote: »

A mistake about Richard Bransons life story doesnt mean everything I've ever said is wrong.

Your always full of it.

I'll bet your not even a squatter.

IveSeenTheLight

gps wrote: »

i was just thinking how we would all afford the equivalent of 200k to £250k mortgages at the average fixed mortgage in NZ of 9% (how much would that be per month?) although i think they still get MIRAS in NZ.

A £250k capital and interest mortgage at 9% would be approx £2042 per month over 25 years
A £200k capital and interest mortgage at 9% would be approx £1634 per month over 25 years

gps wrote: »

personally i think there will not be a huge crash over here- about 3 to 5% drop next year possibly at the most.

I think you may be right. This will be the case in some areas.
A lot of experts are actually predicting a period of stagnation, although I guess in real terms this is a drop due to inflation.
I think some areas will still see a small rise.

Alot will depend on the area and it will affect these areas differently.
London will not be affected the same as Ipswiitch, Cardiff or Inverness.
Each area will be affected by its own merits

caveatvenditor

IveSeenTheLight wrote: »

Actually I didn't buy at the peak. The property rose (on paper valuation) by 35% this year.

So lets say the property price crashes, effectively it can by 35% and I still have a property valued at what I paid for it.

Oh dear the same igorance that a lot of people have.

If something rises by 35%....then falls by 35% you are NOT back where you started you have made a loss...

on the way up....
100 * 0.35 = 35 (100 + 35 = 135)
...then on the way back down
135 * 0.35 = 47.25 (135 - 47.25 = 87.75)

If you cant get that right what should I think about 'your analysis'.

The crash is coming. Expect property to be 40% cheaper in real terms in 5 years.

Anyone who's borrowed against their house - you're in serious trouble.

IveSeenTheLight

caveatvenditor wrote: »

Oh dear the same igorance that a lot of people have.

If something rises by 35%....then falls by 35% you are NOT back where you started you have made a loss...
.

Actually I was aware but couldn't be ars*d getting into specifics.
Specifically, this house price would have to drop approx 26% from todays valuation to be back where I was.

On my other property it would have to drop by 49.8%.

In both cases, I have made significant overpayments so that I would still have equity in these cases, not that I plan to use the equity.

But then again, I've always stated this is not a short term thing. Property prices may drop, many experts expect a stagnation, but in the long term, prices will recover.

Historically, house prices have doubled approx every 9 years even when crashes come around.

caveatvenditor wrote: »

Expect property to be 40% cheaper in real terms in 5 years.

Lets presume they are, do you still expect this to be the case in 10, 15 or 20 years time?
I don't believe it that they will be 40% cheaper in real terms in 5 years time and definately not in the longer term.

Lets test that though.
As an example
Property 22 Albyn Grove, Aberdeen, AB10 6SQ has the following sales (data taken from nethouseprices): -
£61,000 03/12/02
£63,511 05/08/03
£63,511 28/07/04
£131,313 07/02/07
£135,000 15/05/07
£140,000 23/08/07

UK inflation is 1.9%, compounded this £140,000 property should be £150,947 in 5 years time.
So in 5 years time, you expect this property to be in real terms 40% cheaper or £90,568 (£150,947 * 0.6)

Lets see

caveatvenditor

IveSeenTheLight wrote: »

UK inflation is 1.9%, compounded this £140,000 property should be £150,947 in 5 years time.
So in 5 years time, you expect this property to be in real terms 40% cheaper or £90,568 (£150,947 * 0.6)

Lets see

I can assure you UK inflation is NOT 1.9% and certainly not house inflation.

Do your own sums and thinking and stop believing what you are told.

Sheep. Baa.

caveatvenditor

IveSeenTheLight wrote: »

UK inflation is 1.9%, compounded this £140,000 property should be £150,947 in 5 years time.
So in 5 years time, you expect this property to be in real terms 40% cheaper or £90,568 (£150,947 * 0.6)

Lets see

Geez even this sum is incorrect.

150,947 is the compound after 4 years.

try again mister.

IveSeenTheLight

caveatvenditor wrote: »

I can assure you UK inflation is NOT 1.9% and certainly not house inflation.

Ok, did a quick search again and the Inflation at October was 2.1%, in september is was 1.8%,but it varies throughout the year. The government target is 2%. This is thrown in to try and get your "real terms" figure. Remember real terms inflation has nothing to do with HPI.

Let's go with the 2.1% figure, unless you really are struggling to have confidence of your 40% real terms quote. It may go up, it may go down, we cannot predict but lets tie you down to a price you think this property will be at in 5 years time

Average inflation 2.1%, compunded on £140,000 the property should be £154,117 in 5 years time.

Or £92470 (£154,117 * 0.6), or from todays price a 34% drop

IveSeenTheLight wrote:

Lets test that though.
As an example
Property 22 Albyn Grove, Aberdeen, AB10 6SQ has the following sales (data taken from nethouseprices): -
£61,000 03/12/02
£63,511 05/08/03
£63,511 28/07/04
£131,313 07/02/07
£135,000 15/05/07
£140,000 23/08/07

Remember these increases are during one of the fastest growth periods for property
So you are prediction that in Dec 2012, UK house prices will be circa 2005/2006 prices

caveatvenditor wrote: »

Sheep. Baa.

Hmmmm a very mature debate
:T

m00m00

anyone who thinks inflation is only at 2% obviously never sets foot in their local supermarkets, or fills their car with fuel.

I don't care what artificial figure is quoted, ACTUAL inflation is on the rise, and hitting most people where it hurts.

Generali

'Inflation' isn't 2% (or thereabouts), the CPI which is the Bank of England's targetted proxy for inflation is 2%. The Bank of England doesn't pretend they're the same thing.

We all have our own personal rates of inflation - the price of cigarettes doesn't matter to most non-smokers, the price of tsitsis isn't important to gentiles!

The best proxy for inflation IMO is the RPI. Possibly with a glance to the money supply figures (M4).

Others have other preferences - anyone remember the TPI? An attempt by the Tories to modify inflation for disposible incomes to reflect the fact that they were moving taxes from those on income and wealth to those on consumption.

Inflation in the service sector has been higher than for goods. Expect to see spending patterns starting to reflect that (restaurants and hairdressers closing for example).

carolt

IveSeenTheLight, I'm more than happy to stick my neck out and say that yes, I believe prices at the address quoted in Aberdeen will fall to at or below their 2005/6 prices. Aberdeen was one of the last places to have felt the full impact of rising prices that hit the rest of the UK much earlier, and as such, will be one of the first to fall.

But that's not what you want to hear, is it?