House prices to crash

[Lokki 7]

perhaps some investors think there is a world outside of the USA and UK?

Is this the de-coupling effect that was proved to be complete nonesense when the last shock hit the US and UK stockmarkets?

 

[severnside gull]

I know nothing whatsoever about the housing market but I do know that around the time that this predictive thread started my broker was suggesting a fall in the stockmarket of around 8% in the immediate short term (being a cautious chap he was suggesting a 60% chance of a substantial fall against a 40% chance of a similar rise). In reality, up to this point, my shares have followed general market trends and risen by about 6%.

Where this relates to some of the arguments above is that he has tried to explain this in part in terms of hedge funds and (primarily US) governmental investment in dealing with toxic debt. Seemingly not all that is forseen to be bad actually transpires and most often there are factors to mitigate the potential for disaster when downward trends do bite.

All completely beyond me but I do know that when I invest in the market I am warned that the value of shares can fall as well as rise and when I invest in property the same applies. Except in the very short term investments of all kinds have (like inflation unfortunately) trended upwards. If you keep this thought to the fore then the short term declines you prophecy will be less traumatic for you to ride and - indeed - like the forecast fall in the markets, they may just not actually happen (or the extent to which they do fall might be limited and the period before they rise again might be foreshortened).

Realistically if, as seems likely, house prices fall to 2008 levels by the end of next year they will still be ahead of the level of the beginning of the credit crunch and even the most pessimistic forecasts are suggesting that this steady decline (it's only a crash I guess if selling houses is your living) will be followed by a subsequent rise. The ability of individuals to ride out this short term decline will depend on many factors, not least whether they remain in employment, whether interest rates remain at or about current levels, or whether they can stay put or have to move home for whatever reason. Those who are unfortunate to have to sell over the next few years are going to get hurt to a greater or lesser degree depending on when they purchased (so whether they have equity in the property) whether they can find a buyer and whether they can find alternative affordable accomodation. Those who are not home owners will of course only suffer the last disadvantage and will have had none of the advantages of a rising market. Property investors with capital behind them will continue to speculate and to accumulate in the long term. Landlords will find that rental values do not decline in line with sale values, and estate agents will struggle like many others in many parts of the economy.

 

[Uncle C]

I have no idea why the stockmarket is so bouyant, none of this downside potential is being priced in. I would not recommend stocks or property as an investment to anyone right now, next year could be messy.

I saw an interesting graph a little while ago showing a direct correlation between share prices and the extent of QE. The markets are second guessing that the USA will fire up the printing presses and this will support the markets.

Many shrewd investors are either moving out of the stock market or transferring their money to shares with decent dividends to help safeguard themselves. Perhaps thats why many are still foolishly transferring their money into investment properties.

 

[Uncle C]

Realistically if, as seems likely, house prices fall to 2008 levels by the end of next year they will still be ahead of the level of the beginning of the credit crunch.

Where did you get this piece of fiction from?

 

[severnside gull]

Where did you get this piece of fiction from?

what is the fiction?

current forecasts are for house prices to fall to 2008 levels by the end of 2011 (Financial Times)**

the "credit crunch" is generally accepted to have commenced in August/September 2007

Chronologically 2007 pre-dates 2008

In general house prices in 2008 were higher than house prices in 2007


**I do realise that The Telegraph among others at one point predicted a 30% fall but this has already been shown to be almost certainly inaccurate and in truth the worst case scenarios and doom mongers are rarely accurate. The FT figures I quote are optimistic and are from one analysis that stuck in my memory but arguably no more so than my broker's forecasts on my investments.
Perhaps we can review the numbers in 14 months time?

 

[Uncle C]

The FT figures I quote are optimistic and are from one analysis that stuck in my memory but arguably no more so than my broker's forecasts on my investments.
Perhaps we can review the numbers in 14 months time?

I would love to do that.

I will file it alongside our resident estate agent who took up the challenge to counter my arguments by posting lots of positive news about house prices -- and hasn't been heard of since.

 

[Uncle C]

Mortgage lending drops by 90 per cent within just ONE MONTH.

http://www.dailymail.co.uk/news/article-1324827/Mortgage-lending-drops-90-cent-ONE-MONTH.html#ixzz13kBt1jvX

 

[Uncle C]

Property economist Capital Economics said only a fall of a fifth in the average price will bring homes within reach of buyers.

Read more: More than £2,000 wiped off the average price of a house... but 'must fall 20% to be affordable' | Mail Online

 

[beorhthelm]

Property economist Capital Economics said only a fall of a fifth in the average price will bring homes within reach of buyers.

Read more: More than £2,000 wiped off the average price of a house... but 'must fall 20% to be affordable' | Mail Online

firstly, are you really taking the mail seriously as a source?

secondly, where do these ideas of "affordability" come from? its relative isnt it, to your income and to where you live. and what exactly is wrong with having to save for 4 or 5 years, since when did this become a breach of human rights, as you'd think it was given the tone of some reporting. I read a bleeding heart story yesturday of a couple desperate to save while paying £1200 pm rent. it seemed to me the first thing they could do is move to a cheaper rent and save themselves another £300-400 a month.

 

[Uncle C]

firstly, are you really taking the mail seriously as a source?

secondly, where do these ideas of "affordability" come from? its relative isnt it, to your income and to where you live. and what exactly is wrong with having to save for 4 or 5 years, since when did this become a breach of human rights, as you'd think it was given the tone of some reporting. I read a bleeding heart story yesturday of a couple desperate to save while paying £1200 pm rent. it seemed to me the first thing they could do is move to a cheaper rent and save themselves another £300-400 a month.

The facts in the Mail are often right its the rhetoric that surrounds them that is suspect.

Affordability is worked on averages not individual cases.

 

[Uncle C]

Nationwide house prices down another 0.7%.

Thats down 1.5% this Quarter following a decline of 1% last Quarter.

Year on year gains now stand at just 1.4%. Next big landmark is when that goes negative.

And here is a new survey to show just that.

Supply and demand is now well in favour of the buyer.
"The supply of homes for sale has now risen by 14pc during the past six months, but demand has fallen by 8pc during the same period. "

http://www.telegraph.co.uk/finance/economics/houseprices/8100445/UK-house-prices-show-first-year-on-year-fall.html



.

 

[Uncle C]

In America, despite bank rates of 0.5%, house prices are predicted to fall a further 8% taking the overall drop from peak to trough of 34%

http://money.cnn.com/2010/11/01/real_estate/housing_market_state/index.htm

 

[sten_super]

And here is a new survey to show just that.

Supply and demand is now well in favour of the buyer.
"The supply of homes for sale has now risen by 14pc during the past six months, but demand has fallen by 8pc during the same period. "

http://www.telegraph.co.uk/finance/economics/houseprices/8100445/UK-house-prices-show-first-year-on-year-fall.html

It's funny that you chose not to mention this part of the article;

Mr Donnell said: ''Further price falls are inevitable in the run up to Christmas and are likely to continue into the first half of 2011.''

Although he expects a ''modest adjustment'' in prices, rather than a return to the double digit falls seen during 2008.

 

[Uncle C]

It's funny that you chose not to mention this part of the article;

Without supporting evidence he's only guessing.

 

[sten_super]

Without supporting evidence he's only guessing.

Sorry, one of the meters in my office just exploded, only I'm not sure whether it's the sarcasm-meter or the irony-meter. Can you please enlighten me?

 

[Uncle C]

Sorry, one of the meters in my office just exploded, only I'm not sure whether it's the sarcasm-meter or the irony-meter. Can you please enlighten me?

OK, let me explain.

Nobody should trust the word of an Estate Agent or any other person with a vested interest in the property market

Richard Donnell is/was both

http://www.house-builder.co.uk/conferences_and_events/speakers/?speaker_id=104&event_id=70

 

[sten_super]

OK, let me explain.

Nobody should trust the word of an Estate Agent or any other person with a vested interest in the property market

Richard Donnell is/was both

http://www.house-builder.co.uk/conferences_and_events/speakers/?speaker_id=104&event_id=70

I do a decent amount of work in the property sector, and to suggest that these researchers are either i) lying or ii) sticking their fingers in their ears is, I can tell you genuinely, completely and totally wrong. I have spoken to, and been to talks by, many major UK researchers/investors over the last 12/18 months and they foresee a difficult time ahead. Not, however, the kind of massive crash that you continue to talk about.

You seem to be trying to paint yourself into a position where the only person that we can believe on this topic is you, by selectively quoting articles/sources that back up your own viewpoint and attempting to dismiss any that disagree (no matter how reputable or otherwise any of these sources, positive or negative, may be).

 

[Uncle C]

I do a decent amount of work in the property sector, and to suggest that these researchers are either i) lying or ii) sticking their fingers in their ears is, I can tell you genuinely, completely and totally wrong. I have spoken to, and been to talks by, many major UK researchers/investors over the last 12/18 months and they foresee a difficult time ahead. Not, however, the kind of massive crash that you continue to talk about.

You seem to be trying to paint yourself into a position where the only person that we can believe on this topic is you, by selectively quoting articles/sources that back up your own viewpoint and attempting to dismiss any that disagree (no matter how reputable or otherwise any of these sources, positive or negative, may be).

I do appreciate alternative views, but not from Vested Interests or Estate Agents, who make their living by talking up the market.

I have lost count of the number of Estate Agents that have recently said that with interest rates at an all time low there's never been a better time to get into the housing market. This is a con.

I love facts and figures, so if you have any to support a gentle decline in the housing market lets hear them.


Meantime I will stick up graphs like this.

 

[Return of the Rev]

Here we go, it's show time. The proper house price crash is under way.

We have just passed the denial and bull trap phases where recent buyers have been suckered into the market by a mismatch between supply and demand.

The "return to normal" was never going to last, so get ready for the real action.

good

 

[Tim Over Whelmed]

To be honest Uncle C you are going to be right at some point. There will be a housing crash, unfortunately this could be short, medium or long term, you seem to be hoping for it now rather than predicting it.

No, again, I'm not an Estate Agent and have little interest in the price of housing or the housing market ...