Young Goat, on Dec 2 2008, 04:37 PM, said:
Of course the problem is the bubble has been going on for so long now that people have forgotten how cheap they used to be.
Your last line really hits the nail on the head and sums up everything that is wrong with analysis in the maintstream media.
HPI has destroyed base line expectations of what housing ordinarily costs.
A piece of outdated rubbish on what is otherwise a pleasant road near me has just sold for what I expect will be over £500,000. It was on at offers over £590k (previously at £650k). 4 small bedrooms, whole house needs stripped, new bathrooms and new kitchens needed before it would even be liveable (vendor was old man carted off to nursing home by his children), moderately sized garden for the area. Garage and storage areas are rubbish. It wouldn't have sold for more than £350k five years ago, but suddenly people think they are getting "value".
If I were selling in the current market, the obvious tactic would be to retail it like a DFS sofa: put in an impossible starting price of £150k over what it would ever have achieved in 2006/7, followed by 2 quick cuts of £50k and then have the estate agent tell buyers that we were desparate to sell and would accept any reasonable offer that could go through quickly. Some mug would think they were getting the world's best bargain at 2007 price minus £50k.