Friday, Mar 23, 2007
The only way is up...
MoneyExtra: House prices unstoppable
It would take a major economic decline for house prices to fall in the foreseeable future, which is highly improbable, experts have agreed at the second annual 'Great Housing Debate', organised by financial PR firm, The Wriglesworth Consultancy.
David Miles, Chief Economist at Morgan Stanley said: "Public expectations regarding house price growth are key to the market's stability. Growth would need to fall successively for a number of months before peoples' expectations, and therefore prices, were seriously impacted."
Nigel Terrington, Chief Executive of Paragon Mortgages, said "A serious correction in the housing market traditionally occurs as a result of a sharp economic downturn, which looks extremely unlikely."
Posted by little professor @ 07:24 AM (187 views) Add Comment
14 Comments
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1. harold said...
Nigel Terrington, Chief Executive of Paragon Mortgages, said "A serious correction in the housing market traditionally occurs as a result of a sharp economic downturn, which looks extremely unlikely."
Dream on, Nigel.
2. This comment has been removed as it was found to be in breach of our Blog Policies.
3. Taffee said...
'if people are managing their debt on 6 or 7 multiples of income then everything is okay'
its like tulips from amsterdam innit.These people are being reactive not proactive in their thoughts....normally a good contrarian indicator
4. Richc said...
These "experts" are ignoring the experience in the US, where housing prices are now declining despite record low unemployment and mortgage interest rates that have been stable or even declining for the past 2 years. Lending practices are becoming more stringent there, but only as a result of losses generated by declining prices. Tighter credit conditions didn't burst the US bubble, as this article predicts, though they certainly will accelerate the decline in prices. Also, it's pertinent to point out that US incomes are higher and housing prices are lower than what you see in the UK.
5. Taffee said...
arrears are also apparently historically low..............so the bankrupsy and people in debt problem doesn't exist the?????this is weirder and weirder
6. george monsoon said...
Expecting a chief executive of a Mortgage Lender to talk about a downturn in the market is like asking a BMW driver to consider other road users.!
7. David20040_0 said...
Unfortunately the house price market is unstoppable in some ways.
The British public appears to believe that house prices will only go up and from about 1996 they have only done that, even with a "slowdown" houses will still rise at roughly 5% a year which is still a good return.
However at the moment the average house price is rising at £100 a day which is an amazing return, what other investment gives a return of that magnitude? Many British people own property and it makes them feel good and more weathly.
The British have also not lost their insatible appetite for property.
I was reading some articles on the BBC site from 2004 and 2005 which both said that house prices rises would slow down in the year and go for a sodt landing. The media has been saying for years that they expect a house price slowdown sometime in the future but that have been saying that since 2002.
Professor Andrew Oswald who predicted a massive crash in 2003 to 2005 has been proved completely and utterly wrong.
With the stock marlet volatile and people reluctant to put money into pensions a great swathe of the British public are pouring their money into housing.
The British perception is that housing prices can only rise and more and more people are pouring their money into it.
Immigration into the UK is extremely high yet we are simply not building enough new homes to satisy demand. Another force behind prices rising.
Many of you guys criticise me for saying that prices will only rise, I want them to fall, I am in my early 20s and would love to buy my own home someday but I have now given up hope. There simply isn't going to be any sort of a crash.
8. Bearfacts said...
Hes quite right of course .....it was the massive economic slump in the US, Ireland and Spain which has caused their housing markets to fall.
9. harold said...
"The only way is up..."
Hmm, sounds a bit like the title of a Nu Labour theme tune.
10. Chilli said...
"Public expectations regarding house price growth are key to the market's stability. Growth would need to fall successively for a number of months before peoples' expectations, and therefore prices, were seriously impacted."
Doesn't this just paint a clear picture: In the first sentence, he states clearly that house prices are being held up on the opinion of the market. And in the second, he blatantly reinforces the opinion of the market.
"Rising income multiples, the panel agreed, are the key to continuing affordability amongst homebuyers" - constradition if I ever heard one.
11. royston said...
"A serious correction in the housing market traditionally occurs as a result of a sharp economic downturn, which looks extremely unlikely."
Rubbish! - the academic approach to finance conditions us to believe that triggers are necessary to turn markets. So, whenever there is a downturn, we rake through the ashes and appoint a culprit. That does not mean it is predictable.
Trying to predict a market crash is a little like riding a horse towards a cliff edge - backwards. Looking at rolling flat land unfolding in front of you doesn't tell you very much about what's coming. However, the increased force of the wind and the noisier sea might give you a little clue.
12. Scott said...
Estate agents and mortgage lenders are crooks. They don't produce anything, they don't help anybody. If I was one, I would go to church every Sunday and beg for forgiveness.
13. Dugmug said...
These comments were already posted yesterday, and they were nonsense then too!
There is a mathematical barrier to how many multiples of your salary you can borrow because you only take home a set net monthly wage that you have to make your repayments out of - as the multiples increase, so do your repayements, but your net salary is the same. This doesn't prove the market will definitely go down, but it does prove it can't go up at 10% per annum forever that's for sure. And even if it only stagnates, many BTL investers (particularly those purchasing in the last few years) can only make a decent return based on capital gains, so it won't be worth it for them anymore, so they and all the other speculators will pull out to put their money in something more profitable. Then see what happens...
14. paul said...
"Expecting a chief executive of a Mortgage Lender to talk about a downturn in the market is like asking a BMW driver to consider other road users.!"
Very good George. Yes, it is BMW drivers especially!
I'm surprised glorious sunshine hasn't made an appearance for this one ...