Thursday, Nov 02, 2006
PricewaterhouseCoopers challenge housing as a safe bet for growth
TimesOnline: One in three chance that house prices will be lower by 2010
PWC challenge the misconception that housing is always a "one-way" bet and state that there is currently a one is three chance that house prices will be lower in 2010.
Posted by denzil @ 08:40 AM (124 views) Add Comment
7 Comments
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1. waitingfor hpc said...
there anaylsis is not much use. does anyone know on what basis they accept inflation at 2.5 - 3%. Or are they just picking up the same figures (manipulated) as the BoE?
2. J. B. M. C. said...
Or rather there's a 2 in 3 chance house prices will be higher in 2010. I like those odds!
3. Nohpc said...
I think it is quite a bullish article. They say there's a 65% chance prices will be 10 - 40 percent higher but a 35 % chance they will be 10% lower. Still sounds like a good investment to me. Sure the risk is high but the rewards are too if they are to be believed. All high return ventures are high risk. I still don't see the obsession with housing as a short term investment.
4. Zag said...
1 in 3!
Thats not very good odds.
5. paul said...
To summarize their answer to the question of what will happen to houseprices:
"Don't Know"
Thanks PWC - good work.
6. rich said...
They actually made three predictions
1) "Optimistic" - There's a 7% chance that prices will be lower in 2010
2) "Central" - There's a 35% chance that prices will be lower in 2010
3) "Based on past trends" - There's a 63% change that prices will be lower in 2010
It's interesting that only one of these predictions has any justification or explanation behind it:
"Its historic scenario [number 3 above - Rich], the most worrying for existing homeowners, is based on property prices behaving just as they have over the past three decades. Over that time, house prices have tended to drop sharply in the wake of a boom, falling back to a long-term level of about 3.5 times average full-time annual pay. Against that measure, house prices are overvalued by about 25 per cent compared with average earnings — so that there is now a two-thirds chance of them having fallen by 2010."
7. Nohpc said...
Brilliant rich. You should get a PhD for your research! It seems so stupid to give numerical values for a house price crash. How on earth can it be predicted in this way. And who cares about 2010? Why is this the year they mention? Surely 2012 would have been a better year to use factoring in the olympic effect (which may or may not affect the property market). I think most people have accepted long ago that to own their dream home they will have to pay more than 3.5 times their average salary.
If the market has a crash it had better be big not a piffily 25% drop. If I'm going to be able to buy a mansion in the west end I need at least 95% off current prices.