[Killer Bunny]

Five experts predict how much further house prices will fall

Includes HPC.co.uk

I do hope you'll vote and add a comment at the foot.

This post has been edited by Financial Planner: 05 November 2008 - 02:55 PM

[acceleratorhams]

Financial Planner, on Nov 5 2008, 02:51 PM, said:

Five experts predict how much further house prices will fall

Includes HPC.co.uk

I do hope you'll vote and add a comment at the foot.

The only logical box to tick is for a drop so large it`s scary!

Duly ticked!

[cheeznbreed]

Aye, even put in a good word for the most consistent forecaster too.
nice work, FP.

[Number86]

Do we really know something they don't?

I mean, a 50% drop from peak would be absolutely amazing for me to buy a place at last, and I hope it goes all the way down! But outside of this forum I've really not heard much talk of anything greater than a 25-30% from peak.

[Bosh]

Number86, on Nov 5 2008, 04:46 PM, said:

Do we really know something they don't?

I mean, a 50% drop from peak would be absolutely amazing for me to buy a place at last, and I hope it goes all the way down! But outside of this forum I've really not heard much talk of anything greater than a 25-30% from peak.

Outside of this forum they all laughed about any form of crash only a few months ago.

I might just wait with my STR fund and trust this site to be correct again.

[Bosh]

Voted

[Chicken]

“The market will not bottom out until spring 2011, by which point there will be a 40 to 50 per cent drop from when house prices were at their peak in August last year.

“If you remember the last house price crash in 1988, it took until 1994 for the market to recover, so a good four or five years. There is no reason whatsoever to suppose the market will recover any quicker this time.

“It is far too early to bag a bargain – people should not be buying for at least another two years. We are only one year into the crash, and it has a long way to go yet.”


FP, it is interesting that the emphasis of your comment seems as much on timing as on the size of the fall. What is your relative confidence level of the two statements?

[Killer Bunny]

Chicken, on Nov 5 2008, 05:13 PM, said:

FP, it is interesting that the emphasis of your comment seems as much on timing as on the size of the fall. What is your relative confidence level of the two statements?

I have equal confidence in the forecasts.

4 years is not too much for a house price crash after 14 or 15 years of rises.

40-50% is not too much when prices were such a multiple of earnings and based on levels of lending which will not be revisted for years or decades.

[Number86]

While being a FTB near London(or should I say potential FTB) I don't have a STR fund burning a hole in my bank, but I sure hope that's true. It would be nice to bypass the overpriced shoebox flats and move straight onto a detatched house!

[Chicken]

I'm not disagreeing with either comments but I have greater confidence in the magnitude of the fall than the time it will take for that to manifest.

Barring abnormally high inflation, house prices have to come down to become affordable again. If anything, tighter lending practices and depressed salaries as the result of the depression/recession may make house prices overshoot on the downside (as arguably happened in the previous recession).

Timing though is less exact. It depends on a whole bunch of factors including; foreclosure rates (itself dependent on how long the occupiers can keep making those payments), the willingness of the banks to sell at any price, the availability of credit available to prospective buyers, or the availability of cash in the buyer's pocket. There are good reasons why Detroit has probably already hit rock bottom while New York is only just starting to crumble.

[Happy Teaboy]

Financial Planner, on Nov 5 2008, 06:24 PM, said:

I have equal confidence in the forecasts.

4 years is not too much for a house price crash after 14 or 15 years of rises.

40-50% is not too much when prices were such a multiple of earnings and based on levels of lending which will not be revisted for years or decades.

Spectacular. Decades hey. We should take your advice and buy all that gold and commodities you were championing in september. Brilliant, fantastic what an expert you are.

[bendybogle]

Number86, on Nov 5 2008, 05:30 PM, said:

While being a FTB near London(or should I say potential FTB) I don't have a STR fund burning a hole in my bank, but I sure hope that's true. It would be nice to bypass the overpriced shoebox flats and move straight onto a detatched house!

this interests me... it seems a lot on here either ftb or str are aiming to bypass the 'first rung on the ladder'.

now as far as flats go, i never even considered these the first rung, you rent a flat in your early years, and later you, or you and your partner buy a house.

but we now have th dilemma where a lot of ftb's with despoits that were being saved for the average 2007 priced house are now seeing the market collapse - therefore, with 40-50% falls that deposit could buy 40% of the average house at the market bottom.

so what is the average house - i'd certainly say detached, and maybe 3 bed wouldn't be a bad call.

but there won't be that many too buy, and getting one in a decent area may be even harder (plus decent areas are going to be harder to come by as 50% from peak means a lot of unemployment - hpi didn't happened on debt and employment, hpc happens on the reverse, plus too many other numerous factors to mention).

what i am getting at is that i don't see how every ftb is going to skip the terraced/semi stage (though i'd be perfectly happy if i could buy the semi detached i live in now at a reasonable price - i'd say it's peak 'value' was around 120k, i would have no qualms at 60k even though i know it was 44k in 2000/01).

i suppose it could happen if those who are 'leveraged' to the eyeballs lose it all and end up in the slums they speculated on in the first place, and those that they thought would live in these shoeboxes end up living where they used to live as they wasn't daft enough to gamble their last bean in a crazy market but keep it safe for later. that would be sweet justice come to think of it.

[clloyd]

Another 35% feels about right to me, next 12 months fall about 15 to 18% and slower falls towards the end of next year & in 2010. Whilst there may be a small bounce somewhere I think fairly stagnant prices for at least 2 or 3 years afterwards (by then interest rates should be higher again).

[Killer Bunny]

clloyd, on Nov 5 2008, 09:42 PM, said:

AWhilst there may be a small bounce somewhere I think fairly stagnant prices for at least 2 or 3 years afterwards (by then interest rates should be higher again).

Mortgage rates maybe but central bank rates will be negative real for years.