'Will house prices crash in 2008?' Poll Results & Discussion

Former_MSE_Lawrence

House Prices Poll Result. Massive 30% sentiment swing toward house prices dropping!
There’s been a massive shift in what people think will happen to house prices over the next year since since I ran this poll six months ago. Total Voters: 10,844 this time (9.811) Average Sentiment. House prices to drop 5.5% over the next year (drop of 0.6%). Voters predicting a rise: 17.5% of people predicted a rise (48%). Voters predicting a fall: 59% of people predicted a fall (30%). Does sentiment matter? Yes, when people think prices will drop they act differently, they’re far less willing to pay higher prices, and thus there’s the potential for a self-fulfilling prophecy. Related Articles: Free House Price Valuations, Remortgage Guide.

Poll ran between 21-29 January 2008:

Will house prices crash? What will happen to UK house prices in 2008?

A. Increase over 20% - 1% (81 votes)
B. Increase 10-20% - 1% (111 votes)
C. Increase 5-10% - 4% (452 votes)
D. Increase 2-5% - 12% (1255 votes)
E. No real change - 18% (1986 votes)
F. Decrease 2-5% - 20% (2143 votes)
G. Decrease 5-10% - 17% (1865 votes)
H. Decrease 10-20% (smaller crash) - 13% (1389 votes)
I. Decrease over 20% (crash) - 10% (1040 votes)
J. I really have no idea - 5% (522 votes)

Voting is now closed, but you can still click reply to discuss below.


IMPORTANT NOTE: This issue often gets heated; please try to be polite - everyone is entitled to their opinion. The whole point of this poll is that sentiment is a big factor in house prices; therefore it's important we weigh up people's different opinions.

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pendine50

Seen evidence of drop already...walked past estate agent in my town today and over 50% of properties had had their prices reduced......scary

SarahNeedle1872

I voted for E because I still think the demand outstrips the supply....

anorthosite

They're coming down over the next few years. They're in a classic asset bubble, and bubbles tend to burst...

anorthosite

SarahNeedle1872 wrote: »

I voted for E because I still think the demand outstrips the supply....

Does it really? If there was a shortage of homes then there would be more homeless people. The problem has been cheap easy credit and people buying property as an investment or a pension has meant there's no affordable housing. With easy credit on the way out and confidence shaken in property, prices may come down sharply

moneymare

As reported on Rightmove, there was a 3.2% drop in prices in December and only a 0.8% drop in January. As we get towards Spring, traditionally sales increase at this time of the year and so I can see prices levelling off, and so I voted E - for no real change over the course of the year.
It has also been widely reported that the BoE will cut rates in February.

nimbo

anorthosite wrote: »

If there was a shortage of homes then there would be more homeless people.

but people are still living in the homes, there is just a shortage of affordable homes to buy.


i'd happily get a mortage to buy a house similar to the one i live in but where i live they don't exist unless you can view them as the come on the market.

sarah1975uk

i think its just a cycle of how things go, house prices will always go up and down over the years, just a case of being clever enough to know when to sell and when to buy, overall you will always make money on a house in the long term. Trick to ride out any down turn is to not re-mortgage to the max and dont borrow more than you can afford when first buying the house

johncolescarr

I think that the extent of any change will be dependant upon many factors, not least where you live. A change in house prices in London may not reflect what will happen in the North East for example, where house prices have not risen as much as elsewhere. Whether you live in a desirable area also plays a factor. It is widely speculated that the bank of england will cut the base rate 3 times this year to 4.75%, which will make mortgages more affordable. Ultimately, property has always been one of the lowest risk long term investments, so unless you deal in property, there is little risk in you loosing out over time. By the way, I have a 100% mortgage on my place if anyone was wondering if I had anything to worry about! I think that property will increase slightly (2-5%) in 2008, maybe not in line with inflation which arguably means property is falling in price slightly in real terms.

bulltraderpt

I'm so looking forward to large falls next year.

I think it will take at least another 12 months for sellers to realise they have their properties over priced.

This is exactly what I'm seeing in the market where I am interested in buying.

Properties are very slowly being reduced by a few percent.

Buyers must realise credit is tightening, personal debt is high, and unless you have an outstanding house, priced correctly, you better get to used to lower offers.

Good luck.

ModernSlave

Looking at all the news headlines about the market turmoil, reviewing the 2007 credit crunch, talking to people tightening their belts, looking at Christmas retail results - the boom is over and it's time for economic retraction.
Property has changed from homes to investments - it's an illiquid asset and it will, like other asset classes, be hit over the coming year. Globally. The UK may be an island but we're as vulnerable to global downturns as any other country.
Our overvalued housing market has priced out younger buyers to the benefit of those with mortgages already. So a repricing of housing isn't a negative concept anyway.
The Bank of England only has so much room to move as inflation is driven ever upwards thanks to rising energy costs, food costs etc.