Prices will fall by 50% in four years

brit1234

Traders predict house prices will fall by 50% in four years

Monday June 9 2008

The slide in house prices will continue for at least three years 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 recover its current value only in 2017.

By the end of this year prices will be down by 10% and by a further 10.5% in 2009, according to the index. Prices will keep dropping through 2010 and cut values by 23.5% when they hit rock bottom in 2011. House prices will then begin a slow climb back to current market values over a period of about six years.

If an average retail price inflation rate of 4% is included in the calculation and in addition the 8% drop in prices over the last eight months already registered by the Halifax index, the fall in values over almost four years will reach 47.5% in real terms.
The Liberal Democrat Treasury spokesman, Lord Oakeshott, said the figures revealed that property investors had little confidence in the market and were predicting steep and prolonged falls in prices.

"This government says this housing depression will be different from the early 1990s. Yes, that's right. It will be worse."

When not attacking government policy in the Lords, Oakeshott invests in property on behalf of pension funds through his investment vehicle Olim. He says he has watched the index steadily fall over recent weeks. On Friday it "fell off a cliff" after the Halifax published its latest house price survey.
Halifax said the value of a home fell by 2.4% in May, the seventh month in the past eight when prices have fallen.
The May figure spooked investors, who said prices were now falling more rapidly than at any time since the early 90s property crash. House buyers benefited from low prices until 1995 when values began to pick up.

Last week an economic consultancy, the Centre for Economics and Business Research, predicted that in 2008 almost 15,000 estate agents would lose their jobs. It said real estate output will also decline during the year by 3% in real terms, as the drop in mortgage approvals and housing transactions take its toll.
The slide is also hitting mortgage brokers, illustrated by John Charcol, which last week announced job cuts and made Katie Tucker, product specialist and one of the public faces of the broker, redundant.

The firm's chief executive, Ian Kennedy, is also reported to be in discussion with chairman John Garfield - one of the founders of the business - about his future. In January, the broker announced it was putting itself up for sale. But no buyer turned up and instead its founders were expected to inject more funds into the business.
The residential property futures market is based on the Halifax monthly house price index, published by the bank. It is an-over-the-counter market designed for banks, pension funds, insurance companies and housebuilders to trade on the future values of property. Tradition Property, a City-based property broker, operates a derivatives futures index based on the Halifax figures.

http://www.guardian.co.uk/business/2008/jun/09/housingmarket.houseprices?gusrc=rss&feed=politics

You will see over the next few months that 50% falls in house prices will increasingly spoken of as reality sets in. Inflation is rising and the days of low interest rates are over. That means traditional lending again which will bring prices back to normal.

:j

brit1234

Traders are betting that house prices will fall 50 per cent in four years and they do not expect prices to recover until 2017.

http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article4092430.ece

Also mentioned in The Times.

Remember inflation is rising fast across the UK and the world, interest rates are going to rise.

Oil was $139 dollars a barrel on Friday

dopester

80% of the sheeple here won't believe it can happen, perhaps until it happens. The City traders putting their money on it must be stupid or something.

The sheeple won't be able to comprehend how it would be possible for houses to lose so much "value", but will happily accept magical 300% rises over around 12 years - or a UK private housing market going from £1.5 trillion to £4 trillion in 12 years.

brit1234

dopester wrote: »

The sheeple won't be able to comprehend how it would be possible for houses to lose so much "value", but will happily accept magical 300% rises over around 12 years

All that house price equity is bearing a closer resemblance to fools gold by the day.

It simply doesn't exist, there was nothing tangible holding prices up, it was purely speculation.

WTF?_2

Pretty much in line with what I'm thinking. Though I'm wondering why it's only obvious to these financial 'professionals' now that the slide has well and truly started.

All of this was utterly predictable more than 18 months ago. The only thing in question was 'when will it start'? However, the general 'wisdom' in the financial world seemed to be that at worst prices would level off for a bit and then resume their rises.

pickles110564

brit1234 wrote: »

You will see over the next few months that 50% falls in house prices will increasingly spoken of as reality sets in. Inflation is rising and the days of low interest rates are over. That means traditional lending again which will bring prices back to normal.

:j

Glad to see you are still wishing for misery on normal home owners, cant wait for the bad luck to hit you.
By the way a curse is on you until you stop wishing misery on others.;)

iyiarz

Yawn! I'm gettting bored of all this mindless speculation.

WTF?_2

iyiarz wrote: »

Yawn! I'm gettting bored of all this mindless speculation.

Seven consecutive month-on-month price falls and a year-on-year drop are not speculation

mymatebob

Thank goodness I bought my house a long time ago.

50% drop would still leave me well in profit.

But then I bought my house to live it - not for speculation or to let or to be an investment - it is my home.

SingleSue

Even I, a non house owner, not looking to own in the future (and have no vested interest in the property market whatsoever) could see what was happening. The signs were there and it seems the majority of those who could see what was happening, was those that saw and lived through the late 80's early 90's.

Snooze

!!!!!!? wrote: »

Seven consecutive month-on-month price falls and a year-on-year drop are not speculation

There is no price crash. It's just a blip. It'll all be over in a couple of months.

Signed,

Pickles110564, Mr. Broderick, IveSeenTheLight, Dan:, BTLnewbie, etc