Tuesday, Sep 18, 2007
Crash averted? If there is only a 10% chance prices will drop then that means that there is unlikely to be a crash :( :(
BBC: 10% chance' of house price crash
There is a one in 10 chance of a 1990s-style housing market crash in the UK, according the Royal Institution of Chartered Surveyors (Rics).
Posted by david20040_0 @ 05:58 PM (1197 views) Add Comment
26 Comments
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1. David20040_0 said...
A one in ten chance is pretty low odds.
2. david20040_0 said...
A one in ten chance is pretty low odds.
There were no queues outside Northern Rock where I live today (Midlands).
Has the financial crisis and any subsequent house price crash been averted?
3. Swordfish147 said...
Actually a 20% chance if you read the article. I wish journalists proofed what they write. The headline should say "20% chance of a 10% fall" as in the article
4. Realist said...
Keep on hoping dave.
5. enuii said...
The RICS statement is characteristically vague, using the term 1990's style crash is also a very vague generalisation and we are even blessed with such statements as there is a 20% chance of a 10% fall in house prices in London. This article does not mean anything positive or negative and does not mean a crash is off or a continuation of the boom is on and has been spun into a story by the BBC by the selected use of the pecentage chance predictions and ties in with the BBC leading on the story this evening that savers are flocking back to the Rock.
6. Ticktock said...
Ref - 'However, Peter Damesick, head of UK property research at CB Richard Ellis, said the chances of a housing market crash were still "pretty small" because there was no obvious trigger such as the economic downturn or sharp interest rate rises seen in the early 1990s.'
No obvious trigger? Mr. Damesick must live under the sea or something!
7. inbreda said...
It is a revised forecast david. Don't get despondent until it hass been revised another three or four times. At the moment it is not worth wiping your rear with.
8. uncle chris said...
Are these figures just picked out of thin air, or is there any scientific or statistical basis used to determine them. If this was the world of medicine, physics or even physcology, there would have to be peer-review before any claims like this could be published. But because this is the murky and often secretive world of economics, it seems that any Tom, Dick or Harry can make these rash and biased statements without being subject to question or detailed analysis.
9. Quiet Guy said...
History suggests that there will be a substantial slump over something like 5-10 years. I think "10%" is being given by RICs to try to keep confidence in the market. If prices slipped only 10% before the next surge then I'd be OK about buying now. In reality, the cheap loans have gone and sellers will struggle to find buyers at today's prices.
10. Realist said...
Ignoring dave's faux disappointment for one minute, the real significance is that the the BBC are now quoting research from RICS (a trade body for estate agents, or at least surveyors which are often one and the same)raising the possibility of a housing crash. Only a month ago very few people were even raising this as a remote possibility. In my view, once something like this reaches the BBC website it is as good as game,set and match.
11. Dude said...
Only a 10% chance of a crash? Well that's a bit more likely than previously. I thought we were only going to get stagnation. As I do when I f**k up at work, always err on the side of least impact and use words to reduce the impact. I read this as 'bloody hell, they are now talking about a crash...'
12. captain sensible said...
The simple fact is that they haven't got a clue so are trying to put as positive a spin on things as possible. BBC breakfast news today had two tame commentators saying, based upon no sound evidence at all as far as I could see, that the housing market would remain stable. Interestingly, one of the commentators, who appears now to be a ft property investor, let slip that she had decided not to buy a property at auction this week as she would have needed a 100% mortgage. For someone who has already built up a property portfolio yet has no ready cash to put down a deposit, it sounds very much as though she is on a knife edge and will suffer even if the market falls moderately. There are a LOT of worried people out there sitting on massive mortgages and trying desperately to keep the market talked up. Now is not the time to believe them and do anything stupid - like buy a property!
13. mybrainhurts said...
Look at who he is as much as what he's saying. If he really thought there was a 90% probability of no crash - think how close to certainty 9 out of 10 is - you can bet your house he would be saying soft landing, growth steadying to about cpi for a year or two, no nominal falls. If he is saying 10% I think he thinks its 50/50 or more probable.
14. Wilee said...
Never mind the numbers, this is a landmark article. Who'd have thought the BBC would even mention the possibility of a HPC 6 months ago? And now here it is, in the headline, putting it out there...
15. Happy Boy said...
That same female commentator was ex BBC as well, which I thought was a bit whiffy...
16. Davros said...
Where does this figure even come from?
It seems like a case of trying to get some positive spin in the headlines when the rug is being pulled out from under the housing market.
17. inbreda said...
To be honest I think the mere possibility of a crash could spook a lot of people.
the fact that the comment comes from RICS could spook a MASSIVE amount of people.
You know it's crashed when even the last VI admits it has crashed.
18. Northernlad said...
when will we get information and statistics that you can trust?
19. denzil said...
David, David, David,
I don't think you completely buy into this story but just like to get people champing at the bit ;-)
Everytime there is really bad economic news the BBC and the possibility of an HPC gets talked about in the mainstream media RICS and BBC wheel out the 10% chance story.
I'm a stagnation theorist but even I would say the likelyhood of an HPC is greater than 10%.
On a more concerning note, I'm really tiring of the BBC and their support of the current government. They are ready to grill Cameron and Campbell at every opportunity both on the radio and TV but Labour receive next to nothing by way of probing questions.
It's fair to say the public have little faith in the BBC but what is more concerning is that that the BBC have completely forgotten the the concept of impartiality and the values associated with it.
I really have little interest in funding the UK's own version of Pravda.
20. Vicmac64 said...
Yeah - you have got it in one bbpravda.
21. uncle tom said...
If RICS say 10% it means 'we know it's going to happen, we don't want it, but don't accuse us of not being in touch, or fanning the flames"
- There are no buyers out there now to support the stagnation theory..
~~~
If Mr Cameron wants an ounce of my respect, he will pledge to abolish the licence fee if elected. It will give him the high ground against the BBC, so that everyone thinks 'well they would say that'
But he's a twerp - I find him very depressing..
22. wiltshire said...
24 hours is a long time in politics - and in economics for that matter. Think how much the climate has changed in less than a week. It was only as recently as last Thursday that no-one had heard of Northern Rock and most of the mainstream media hadn't used the term House Price Crash for about 15 years. Well that has all changed now. Can the UK's house of cards economy ride each successive shock that will now hit it? I doubt it very much. Each shock will weaken it further. Look at the USA, sure they've dropped the interest rate in a final half hearted attempt to keep confidence high but what happens when that doesn't work? They do it again. It still doesn't work. And so on. It's basically Japan all over again. Meanwhile the US's house price crash is upon them and much like the UK in the early 1990's (remember kids???) they cannot give houses away.
The VI's are going to talk things up as house prices and the economy go right down the toilet. We're heading for Comical Ali territory here.
Personally, I think Rics have around a 10% chance of being right about their 10% prediction.
23. inbreda said...
LOL I like your last comment Wiltshire!!
24. david20040_0 said...
Hmmmmm.
But look at what happened when the BoE cut rates by 0.25%. Housing took off again.
CPI has dropped to 1.8% which is complete bullsh*t when RPI has risen to 4.1%.
However as it is only the CPI which has to be taken into account and the FED has cut rates it is highly likely that the BoE will follow suit, cut rates and then we are back to a 2005 type scenario.
25. Happy Renter said...
ok, let's say BoE cuts by .25% so those on 2 or 3 year fixed coming out will still see their payments up by the other 4 .25% rises - still will have some significant impact on stretched households dealing with the RPI as wallets and purses feel the financial reality...
...plus banks are less willing to lend to slightly riskier borrowers (we don't have sub-prime, we have 'less-primes' ;-) so they ask for higher deposit percentages (already happening), they offer their new low-ish fixed price rates to a smaller number of borrowers (and not to self certs or BTLs in anything like the same numbers as pre-crunch - no one else wants to be 'Rock'ed)
Result? although headline rates are somewhat lower, a large chunk of 'slightly-less-prime-than-top-primes' are paying somewhat more to keep borrowing, forcing many of them to sell
The bilge pump may be on full power, but the iceberg's already hit.....
26. Martin said...
Mr Rubinshon said there could be a 20% chance of a 10% fall and not a 10% chance of a 20% fall.