Monday, Sep 17, 2007
Even the Gruniard now puts the boot in.
Guardian: Speculative horse that left the stables
Well its wake up time for the city pundits as it dawns on them that the UK economy is based on an Empire of Debt. I predict house prices will be 8-10% lower than they are now in a years time - the drop off will be MUCH sharper than folk expect.
Posted by andy h @ 09:21 PM (1426 views) Add Comment
23 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. enuii said...
House prices are already 8-10% down on the rightmove board prices because unless you are in a particularly des-res area that is the sort of mark-down required to sell a run of the mill property at the moment.
2. david20040_0 said...
It will be interesting to see how far they fall.
I can't see as heavy percentage falls as previous crashes due to high level of immigration.
Just out of interest as I know this is unlikely, if this proves to be another false dawn will this prove to be the final straw in waiting for a crash.
Could the Government put enormous pressure on the Bank of England to drop Interest Rates to the floor?
3. david20040_0 said...
Just noticed this in the article:
"Credit spree encouraged by the Tories has reached its apogee under New Labour"
Why are Labour supporting papers trying to blame this on the Tories when they left office over 10 years ago and did not precide over this house price boom.
Stop trying to blame the Tories they have been out of office too long, this is Labour's making.
4. wiltshire said...
On the one hand there is immigration and it's largely economic, i.e. many will probably leave just as quickly as they arrived once there is a better economy to live in.
On the other hand you have the largest house price bubble in history, the largest debt bubble in history, a global credit crunch, a financial system which is coming apart at the seams and (real) inflation about to rip through the UK economy - amongst other woes.
NO WAY in the world is immigration going to be the saviour of the British housing market.
I would bet my life savings (all in a NR high deposit account and therefore as safe as houses - belly laugh) on it!!!!!!!!!!!
5. Scott said...
If an economical meltdown halts immigration then bring on the financial armageddon. Even Harrow is turning into a little Africa and it ain't so posh anymore folks.
6. inbreda said...
It's just occured to me why the government have promised to bail out NR rather than letting them go under to teach the City the lesson that they must be responible for their own actions ... it's because they realise that it could spark a total collapse. A depression. At least something very very serious. I suddenly realise that the government knows EXACTLY how bad a shape the economy is in.
7. david20040_0 said...
I never said immigration would save it, I just don't think prices will drop as much due to 200k people entering per year. I still believe prices will drop now.
Trying to blame the Tories for this though when they have been out of power for 10 years is insane though and I am very disapointed in the Guardian for that piece of very sloppy reporting.
8. Rimmer said...
I wouldnt bet on immigration at all, as the economy changes jobs will dry up and 2/3 will leave.
I think we are talking a long term change, not SO much how prices will crash but how many years before they level at reality, it may be that Golden years of quick money NEVER return again and house actually get viewed as HOMES.
9. Cjovanovoic said...
I SUSPECT THIS IS JUST THE START OF A 10-15% correction. CJ
10. enuii said...
The Guardian is hardly going to bite the hand that feeds the majority of it's advertising revenue in the jobs section as it's chiefly read by government (Labour) employees anyway so has to blame the Tories somewhere.
11. david20040_0 said...
I am not saying the Tories have not had their own problems before eg Black Wednesday.
But to blame this on the Tories 10 years after they left office is ludacrious.
12. Dave Reed said...
Alan Greenspan in his latest interview seems to be saying that the present crisis stems from the Americans building too many houses: he says there is an"overhang" of 200,000 houses in inventories.As the British developers won't build enough houses despite persistent, invariant, demand and the beseeching of Yvette Cooper, there is surely less chance of a UK price crash.Moreover, if Cooper et al do procure a mammoth building programme in the UK, the American experience(and the Spanish) seems to show that they only have to overshoot by a small margin to produce a crash which could well take out a bank harbouring the savings of House Price Crash zealots.The less lurid scenario is for an alliance of concerned people to pressurise the political parties to re-introduce a tax like Schedule A on domestic dwellings which up until the early 60's levied Income tax on the rental value of the house.Alternatively ,there is Land Value Taxation which taxes the inflationary element in house price inflation i.e. the land value and also causes developers to build on their land instead of hoarding it.
It may not be enough to do nothing and hope everything will turn out for the best like the inhabitants of pre-Revolutionary Animal Farm .This appears to be the HPC strategy at the moment.DBCR
13. Kaitain said...
"I never said immigration would save it, I just don't think prices will drop as much due to 200k people entering per year. I still believe prices will drop now."
David,
The problem with your reasoning is that you invoke what philosophers call a "ceteris paribus clause" without seeming to realise it. That is, you are trying to analyse a change to one variable, assuming that all other things stay the same. The key flaw here is that if the UK economic boom is over (which it almost certainly is), economic migrants will tend to migrate elsewhere. Unemployment will be on the rise in the UK, growth will be down, and a chain reaction will be triggered. Drops will beget lack of confidence which will beget lower levels of liquidity which will beget job cuts which will beget defaults which will beget oversupply and underdemand which will beget drops.
Here's where the fun begins.
14. crash bandicoot said...
I really don't understand how imigration can support high house prices. I have no information on the skills mix of the imigrants moving here but they would have to be earning £50k a year to actually consider buying a house, and that would be without sending money home. So then we move into BTL fantasy that more people living in the country will support higher rents. It is patently obvious that if these people cannot afford a mortgage themselves, then they cannot afford to pay a high enough rent to pay the BTL mortgage. The same holds true for FTB's too. The only option is for the landlord to subsidise the rent themselves, which will be less appealing as prices fall.
15. enuii said...
Immigration is a total Bum Steer with regard to the majority of low-skilled migrant workers taking sub £10/hr employment in this country who will stay in shared accommodation and leave when they have enough money to take back home where it goes a lot further.
16. harold said...
david20040_0
Tories, Labour - they're the same thing really, just with different window dressing. Their economic policies, particularly regarding the City, are inseparable. The whole point is to give people the impression of choice, while at the same time ensuring that those who actually work for their living (as opposed to the parasites who gamble, sorry, invest in the City) are gently bled of their labour.
17. Orwell said...
Possibly 8-10%, I am not so sure.
More likely about 20-30%, although I am not sure about the time frame (it could be 18 months) and also although there could be an overshoot in which matters could become very serious (and I stress very)...
18. Housecrashwallop said...
crash bandicoot , you are right that your average immigrant worker from Poland wont be putting down a 50k deposit, but they can afford the rents, that is the problem.
19. Alan said...
Andy,
The "city pundits" are often in the pockets of Vested Interests. Most of my mates in the city saw the dangers of the NR situation 6 months ago. They just moved their own money and advised their families accordingly.
I'm willing to bet that many of the elderly people queueing outside NR were told to spread their cash, especially if it was in NR. They were probably as obstinate as most of our grandads....
20. inbreda said...
I agree that as the spiral starts and the economy stops booming there will be job cuts and many immigrants will leave.
In that sense the immigrant issue is actually the problem - the prop that has played it's part in sustaining high house prices will be removed, thus causing prices to fall further.
There are no more props for the housing market save for the extreme stupidity of hardcore BTLs. And they will bail the moment they realise what's happening. When they buy the Sun or Daily Express and the front page is covered in "house prices plummeting" stories.
21. crash bandicoot said...
Inbreda
I wouldn't bet on it. I spoke to an amateur BTL'er the other day and he told me that the only people with negative equity last time round were the ones that sold up. He's holding tight and riding out the storm!
22. Chilli said...
Masses of immigrants entering the country provide a source of renters for the BTL brigade. So immigration does have an effect on house prices. I agree, though. When the economy suffers many of the immigrants will realize that it just isn't worth working here unless they can save. If they can't, they will go back home, to sunnier weather, and the rest of their families.
23. Lord D'arcy Pew said...
Immigration will become emigration. I expect the Polish economy to have a mini boom as many young skilled workers return home with money in their pockets. Most immigrants cann't claim benefits here so will return when jobs dry up. They can have a higher standard of living with their money overseas than in the UK. Many have been sending money overseas to their families and have build up a good nest egg.