Nationwide. 29 May 2008. -2.5 (month) -4.4 (year)

WTF?_2

Generali wrote: »

My guess (and it's only a guess) is a real fall of 30% on average over 2-3 years. Gross rental yields need to get to about 8-10% I guess before proper investors, as opposed to One Man and His Mortgage, start buying.

I would expect nominal falls of 25-30% from peak over three years.

Then I'm guessing we'll see a long period of stagnation.

This whole thing will be against a background of high inflation (but probably not high wages rises) so real drops could well be in the order of 50% six years down the line.

House prices have been escalated beyond all sense of reality thanks to reckless lending which is now being withdrawn as a result of the credit crunch. These prices have to normalise somehow if the market is to get going again. There's almost certain to be a nasty recession shortly, too. That means substantial real falls over the longer term and noticeable nominal falls in the shorter term.

obsessed_saver

"First, fewer homeowners bought at the top of the market in this cycle," she said.
"This means a much smaller proportion of borrowers face the full effect of falls in prices than was the case in the 1990s.

So basically she's vindicating people who chose not to buy in the past year or so... and telling everyone that it's not a good idea to be buying now.

Paul_N_4

Some quick stats here.

Firstly, spare a thought for the property 'investors' out there. The average monthly percentage price increase from Jan 07 - Oct 07 was +0.6%. So the investor's projection this month would have been about +4.5% from peak in Oct 07. What they've got is -6.7% from peak. So that's down 11% on expectations.

Secondly some stats from the start of the last cra...correction at the start of '89-'90. These are annual HPI figures for the quarters. Source:
http://www.nationwide.co.uk/hpi/historical.htm

1989 Q4: +7.4%
1990 Q1: +0.1%
1990 Q2: -5.2%
1990 Q3: -8.8%
1990 Q4: -10.7%

And todays:

2007 Q4: +6.9%
2008 Q1: +2.2%
2008 Q2: At least -4.4% as we know but probably over 5%.

Is it different this time?

obsessed_saver

!!!!!!? wrote: »

Then I'm guessing we'll see a long period of stagnation.

Maybe the Government now will include house prices in their inflation calculation, because that'll be the only thing that's deflating! :rolleyes:

neas

I wonder what pickles will say :P.

I want to ask him how it feels to loose 2.5% in one month on his properties....

In all honesty he prob wasnt bothered because his properties have risen so much since he made a lucky gamble back when he was 18.

obsessed_saver

Paul_N wrote: »

Secondly some stats from the start of the last cra...correction at the start of '89-'90. These are annual HPI figures for the quarters. Source:
http://www.nationwide.co.uk/hpi/historical.htm

1989 Q4: +7.4%
1990 Q1: +0.1%
1990 Q2: -5.2%
1990 Q3: -8.8%
1990 Q4: -10.7%

And todays:

2007 Q4: +6.9%
2008 Q1: +2.2%
2008 Q2: At least -4.4% as we know but probably over 5%.

Is it different this time?

Good stats! Are these Quarter-on-Quarter figures?

I gotta write down that Oct 07 peak figure some where, and see how far we go.

JonnyBravo

obsessed_saver wrote: »

I gotta write down that Oct 07 peak figure some where, and see how far we go.

Somewhere you don't wash too often???

Paul_N_4

obsessed_saver wrote: »

Good stats! Are these Quarter-on-Quarter figures?

I gotta write down that Oct 07 peak figure some where, and see how far we go.

No they are annual.

See here: http://www.nationwide.co.uk/hpi/historical.htm and choose UK House Prices Since 1952 from the second drop down menu.

WTF?_2

obsessed_saver wrote: »

Maybe the Government now will include house prices in their inflation calculation, because that'll be the only thing that's deflating! :rolleyes:

I'm pretty sure they will. Anything to try to justify lower interest rates to stimulate the economy, at least in the short to medium term.

However, they won't help anyone but the chronically over-indebted and even then, the resulting consumer price inflation is likely to largely cancel that gain out.

Has anyone calculated the real cost of living rise for a typical household since sterling started slipping following the reversal in the upward trend of interest rates? If so, I'd bet that a typical family will be overall much worse off due to price inflation than they 'save' from lower interest rates on their debt repayments.

Meanwhile, everyone is squeezed by higher prices and prudent savers see the value of their savings eroded away. Let's hear it for lower interest rates everyone! :j:rolleyes:

WTF?_2

Paul_N wrote: »

Secondly some stats from the start of the last cra...correction at the start of '89-'90. These are annual HPI figures for the quarters. Source:
http://www.nationwide.co.uk/hpi/historical.htm

1989 Q4: +7.4%
1990 Q1: +0.1%
1990 Q2: -5.2%
1990 Q3: -8.8%
1990 Q4: -10.7%

And todays:

2007 Q4: +6.9%
2008 Q1: +2.2%
2008 Q2: At least -4.4% as we know but probably over 5%.

Is it different this time?

But it is different this time!

People have (on average) massive amounts of unsecured personal debt as well as whopping mortgages.

I may be being presumptuous here, but I would guess that in general the people likely to take on massive mortgage loans without thinking too much about it first are probably also the sorts of people who think little of running up huge overdrafts or credit card debts too.