Wednesday, Apr 30, 2008
What, a pyramid scheme ? Surely not ?
Telegraph: Rising house prices do not make us better off
5% this year. Is this a joke ?
Posted by doomwatch @ 12:37 PM (1102 views) Add Comment
22 Comments
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1. Baroo said...
As str2007 pointed out on a previous thread, if house prices were frozen today then by October 2008 they will have fallen 4 % YoY (according to Nationwaide). 5% IS a joke.
2. taffee said...
so up 300% and down just 15%
vested interest?
3. mark wadsworth said...
The 5% fall is nonsense of course, but it is important that everybody knows that 'rising house prices do not make us better off'. Otherwise the gummint (of whatever hue) will never be able to introduce a 'property bubble tax' aka 'land value tax'.
4. dohousescrashinthewoods said...
1% fall per month on average at current trend, but expect this to accelerate.
That makes 10% by year-end conservative. Less than this signals improving conditions, more than this signals worsening conditions.
A rough spreadsheet sketch, starting at 0.9% drop in January, accelerating at 0.01% per month plots a trajectory that matches the latest Halifax data and ends the year between 10 and 15% down.
5. uncle tom said...
My comment at 12.54
6. icarus said...
Good point, Taffee. If his projection takes prices back to 2006 levels "when house prices were still high on any conventional yardstick" why is he forecasting a HP level that is.....er.....high on any conventional yardstick? Has he got a new, unconventional yardstick - the availability of mortgage finance, perhaps?
7. planning4acrash said...
Lets go further, true inflation (money supply growth) makes most of us poorer. It involves political and personal decisions about money allocation, which causes misallocation of resources.
8. Andrew Beale said...
Im in agreement that there will be a single digit fall this year and stability for the next 18 months after that before returning to an average 8% growth. I have been listening to some comments on here for a while and find it unbelievable that you guys think the market will fall by such big figures, sorry this aint going to happen.... im a renter because i cant afford a house, i worked in france and belgium for 12 years and the same is true there people rent because they cant afford to buy. The market is generally controlled by the buy to let investors and now britain is heading the same way. Wish they would fall so i can can a bite of the cherry but it wont happen.
regards
andy
9. Sittingitout said...
A developer friend of mine as indicated that things are tough for him and a large local developer has stopped building like Persimmon. He said that at a local meeting with banks, it was anticipated that the credit crunch would be over in about 3 months however lending will not be going back to "normal" previous levels and reading between the lines it appears that the banks want the amateur BLT'ers out of the market.
10. d'oh said...
AB - look at what is happening in Northern Ireland - enough said.
11. confused76 said...
"With that personal disclaimer out of the way, our expectation is that house prices will fall by around 5pc this year with a similar, and possibly larger decline, in 2009 (10pc is perfectly feasible).
This forecast is premised on our expectations for sub-trend economic and income growth this year and next, less abundant mortgage lending to persist, modest increases in borrowing costs as higher financial market interest rates offset Bank of England rate cuts, and some scaling back in new construction.
A 5pc fall in house prices this year, followed by a 10pc fall in 2009, might strike some as pretty severe. But it would only take the level of house prices back to where they were at the start of 2006, when valuations were still high on any conventional yardstick"
5% this year and 10% next year nominal means 25% real in 2 years, this is a reasonable scenario
12. Andrew Beale said...
I dont think the reports are a ture reflection in ireland, again its all paper talk. I have alot of family in ireland and none have seen a fall let alone to the figures suggested, stability and low volumes of sales but no major drops..
13. confused76 said...
"average 8% growth"
Andy c'mon, let us stop this sci fiction argument!
no one except david smith and stuart law calculate long term on nominal price series!
the long term trend has been 2.4% pa real
Outlook for inflation is 3-4% after the recession
that gives u 5.4 to 6.4% ..... what s this 8%?????
14. uncle tom said...
confused/andy
Stop looking at the historical trends - even the trend line on the this site's home page graph is very misleading.
Stop to consider one simple issue - how can house price growth in excess of wage growth ultimately be sustainable?
And Andy, you admit to renting because you can't afford to buy - yet renting is intrinsically inefficient. If you can't afford to buy, you shouldn't be able to afford to rent either.
Rents have been subsidised by rampant house price growth - now house price growth has ended, landlords need much higher rents that their tenants can't afford - so, oh dear, Houston, we have a problem!
15. mark wadsworth said...
What Uncle Tom says, the most meaningful ratio is house prices-to-incomes, which has been between three-and-a-half and seven for a century. Long run average about four.
16. montesquieu said...
'how can house price growth in excess of wage growth ultimately be sustainable?'
Um .. generational morgages ... new paradigm ... strong fundamentals ... permanently low inflation and cheap money ... immigrants ... growing number of households .. crowded island ... don't forget immigrants ... generational mortgages (12 x LTV, 80 year term?) ... truly unlimited investment potential, house prices never go down after all, they go up 8% EVERY YEAR on average don't they, ad ifinitum? Pile in quick before all the estate agents sell out of suitable BTL rat-holes. Join a property club at once!
Hello ...? Sorry where was Greenbay again.
17. letthemfall said...
And chain letters can work too - provided there are an infinite number of takers. Same with pyramid schemes. Same with tulips. And the same with houses, adding an infinite supply of money too. "It won't happen." That's what estate agents always say, because all the others say it too. Bubbles burst. Always have done, always will (see above for reasons).
18. disillusioned said...
@ number 8: Andy, you don't believe what we say and you don't believe what the papers in NI say, so who DO you believe? Yourself only? That strikes me as a bit silly/dangerous.
19. Greenbay said...
hey andy, another realist at last, yep the are all a bunch of dillusioned muppets, welcome aboard..
20. Bfskinner said...
Andy @ 12
I'm suprised to read your comments about Ireand. In Norther Ireland I know many people who have recently had valuations of 15-25% less than they paid last year. Others have seen larger houses in their streets go on a similar or slightly less than they paid. The Republic of Ireland I can't speak for but the Northern Ireland market is in tourmoil and I personally know people there who are in negative equity. At the minute this applies to people who bought over the last 6-18 months, but the confidence of last year has gone. I go back regularly and speak to people there often. I know people in estate agencies and soliciors and they are worried about their bussiness projections for the next year. The estate agent more so.
BFS
21. shipbuilder said...
Andy, I live in Northern Ireland and I know a number of people who have dropped their prices by 15% and still not selling. Estate agents are going out of business. Developments have been slashed in price by 20% in some cases. FACTUAL and RECORDED selling prices ARE down by over 10% in Belfast alone. Again, of course, I talk of Northern Ireland and not the Republic, but let's not get into that one.
If you still don't believe me, visit treesdontgrowtothesky.com
22. Bfskinner said...
Shipbuilder,
I'm pretty sure Andy is refering was Northern Ireland and thats what the newspaper article he refers to was about (unless he is one of those who doesnt understand that the island contains 2 seperate countries). But like you confirm, his comments do not bear out the experience of anyone I know who lives in N.I either. Unless his family live in Stormont Castle or somewhere like that