Friday, Nov 16, 2007
Nationwide come clean
Times: House price growth to collapse next year
Better late than never Fifi.
The property market is due to suffer its worst year since the mid-1990s as houses fall in value across the country, Britain's biggest building society gives warning today.
Nationwide said that house price inflation would collapse from 9.7 per cent at present to precisely 0 per cent next year - below the expected inflation rate of around 2 per cent, meaning that prices will fall in real terms.
Posted by realist @ 06:40 AM (585 views) Add Comment
8 Comments
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1. Jonathan said...
What effect will HIPS have? The crash is a certainty in my view if and when the market is flooded by properties that aren't selling - prices will tumble. However, will HIPS prevent people from putting their houses up and sitting tight. If too many people do that prices won't significantly fall vindicating people for sitting tight. Views?
2. Dave The Box said...
There is no growth anymore, only collapse.
Even with 0% they're still being wildly optimistic. How many times have we had aperiod of 0% growth in the past? Never. Only rises and falls.
So much for the end of boom and bust. Did anyone every believe Brown???
3. Realist said...
Fifi is now saying on Bloomberg that "While current unrest in financial markets will affect jobs in the City and bonuses, the capital has a lot of construction projects and there's a vast investment in the Olympics. That will increase employment and demand for accomodation".
So presumably the construction workers will all be moving into big houses in Chelsea and loft appartments in Canary Wharf?She is really clutching at straws now.
4. denzil said...
Jonathan, I struggle to understand how HIPs in the grand scheme of things has any impact. Consideing stamp of 2,3,4% when buying a gaff that paltry sum related to HIPS is close to meaningless.
Blaming HIPS for anything is similar to blaming HIPS for the puncture I got this morning.
Maybe I'm missing something about this HIPS business, seems like a scapegoat for EA and lenders to use as it suits them.
5. wdbeast said...
Denzil, you are right about the relative costs of HIPs
The only effect they could have on the market is that they are likely to reduce the number of people who speculatively put their house up for sale at an inflated figure to test the market.
By reducing/removing this type of seller in the market, we should see a decline in the number of houses for sale, and real sellers becoming more realistic about selling prices quicker as they do not compare their asking prices to the speculators in the market who don't need to sell.
The net effect will be to accelerate price correction/HPC.
6. paul said...
Nationwide are not coming clean - they are still not mentioning the word "crash". The difference between a "significant slowdown" and a "crash"? None.
Jonathan you're not factoring in the rise in unemployment from the housing slowdown and spending squeeze and credit market tightening effects, surely?
7. denzil said...
Good point re speculative sellers wdbeast. I'm not an EA and never have I been but from my outside point of view the speculative sellers always strike me as those who will get a couple of agents to give a valuation and then leave it there. I'm not sure if they need a HIPS to get a valuation.
Paul, regarding Nationwide. I read from a respected blogger that during the 90's property crash Nationwide's monthly statistics never appeared negative, so they are most unlikely to call a crash or even falls.
8. Letthemfall said...
I think lenders and estate agents always put on as big a gloss as they feel they can get away with. It makes their prognostications valueless. Their price forecasts are nearly always wrong. I just wish they'd shut up and stop trying to persuade people to borrow crazy sums of money to buy an overpriced asset.