Friday, Jan 18, 2008
The bulls are still out there
Telegraph: UK house prices may defy the doomsayers
House prices across the nation will defy the doomsayers this year and settle to an average growth of 3pc, according to latest research from CB Richard Ellis. They say homeowners are in for a slowdown, not a crash. The group has even predicted that London will outperform the market at 6pc. Jennet Siebrits says: "This is not a repeat of the 1990s crash, as housing equity and employment rates are at an all-time high and interest rates remain low." ------ YAWN. She's saying there won't be a crash because housing equity is high. In other words prices won't fall because prices are high. That's great logic, she should be an estate agent. Oh wait she already is. Also unemployment is a lagging indicator. The banks are already shedding staff, the London housing market will suffer as a result.
12 Comments
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1. quiet guy said...
Here is another recent article with an interesting quote from Siebrits :
"Even the buy-to-let market will perform more strongly than critics suggest, said Siebrits.
'A mass exodus is unlikely as these investors tend to have a longer-term view of the market. Within 10 years of the 1990s crash, prices were 30% higher than the peak of boom.'"
(http://www.guardian.co.uk/money/2008/jan/17/houseprices.property)
Yes folks, Jennet Siebrits thinks that BTL is a good long term investment as well.
2. bystander said...
Can anyone dig up a similar article from an American perspective from last year, before all hell broke loose??
3. Davros said...
Yes everyone, it's purely a matter of unemployment and interest rates. Market sentiment is irrelevant.
4. jack c said...
This article reads the complete opposite of the one posted today by Confused76 from the Times. The headlines are becoming more laughable by the day as one day they talk the market up and the next it is doom and gloom.
5. techieman said...
....or they may not.
6. hpwatcher said...
He may be right, but the thing is that the housing market is very, very vunerable.
7. it_is_going_with_a_bang said...
There is nothing new in the article other than 'opinion' from a research department.
It is not based on any new facts or figures.
It also leaving the door open with words such as "unlikely". Which basically shows how confident they are.
Equity is meaningless unless you are selling something and are keeping the money. Otherwise it is the amount of debt and repayment that is important.
Although the opinion is that rates are hostorically low and affordable - the reality is - yes they are low - but for millions of people - not affordable.
8. denzil said...
I'm still believing we will see an national average 10% fall in prices by close of 08. In my neck of the woods (Somerset) the market is clearly slow but since Christmas I've seen a number of "For Sale" boards changed to "Sale Agreed". There is some life in the market but it has as much vigour as Robbie Coltrane doing a 100 meter sprint.
I think we are at a crossroads where rate cuts may be used to stave off an economic slowdown. This could impact any substantial house price falls. At the moment the MPC face a dillema in that the seriously cannot cut rates but if they don't cut rates then an economic slowdown may tip us into recession.
9. Interested said...
I found the actual report....
http://www.cbre.co.uk/portal/page/portal/uk_en/research/report_results?p_results_displayed=40&p_topic=-1&p_serviceline=&p_sector=Residential&p_keyword=&p_location=-1
10. it_is_going_with_a_bang said...
denzil:
Sale Agreed is only half the story for so many sellers/buyers. There are probably chains involved and the chances are they won't see it through.
11. Interested said...
Do people genuinely expect house prices to fall by as much as 10% in the next 12 months when over the entire period of the crash in the late 80s /early 90s they only fell by 13%. Call me a devils advocat but aren't people getting a little carried away?!
Also. Sure, there may be chains involved but i've read that there remains around 7 buyers for every seller. Pretty good odds. The problem really lies in the difference between the type of properties being put on the market and the type of properties the buyers are looking for. There currently seems to be plenty of 2 bed flats in city centres for sale and yet a complete durth of family homes coming on to the market...
My last thoughts... ok, there will be areas such as several city centres where house prices will fall. But when these forecasters provide their forecasts, many are covering te whole of the UK. Northern Ireland, Scotland and London have all been perorming exceptionally well and the souther regions (outside the city centres) have not been performing too badly either. Call me naive, but i see the falls and rises across the UK in 2008 pretty much balancing each other out. But it all really depends on the performance of the economy over the next couple of months.
12. Humanzee said...
Drewster, you must be a great economist. You're so right and Siebrits is wrong!
Has it occurred to you, though, that she is a highly regarded economist who might just know what she's talking about? And you are just an overmortgaged punter, crapping his pants because he didn't realise that house prices wouldn't keep rocketing skyward, and so now you can't cover that 120% equity loan you took out?!