Saturday, Jul 19, 2008
No ramping in the Times today!! It's all doom and gloom!!
Times: House prices tipped to fall 20% in two years
The value of homes in Britain could slump by a further 20 per cent in the next two years as the number of buyers continues to fall, experts predicted yesterday. Property values have already dropped by 10 per cent since prices peaked in August last year, wiping £20,000 off the price of an average home, figures from Halifax show. But Howard Archer, of Global Insight, the economic consultancy, said prices would plummet by a further 20 per cent, or £40,000 on average, before the market begins to recover. “Continued falls in house prices are expected until the first half of 2010, taking the average house price to £140,104, down from £199,600 in August last year,” he said. Three quarters of potential first-time buyers are abandoning plans to get on to the property ladder.
14 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. str 2007 said...
Good news
and as one commentor says, falls weren't even being predicted a year ago (except here), 6 months later low single digit falls were being predicted. What will be the predictions in another 6 months time ?
IMO I have only seen one or two examples of what I would describe as houses being marketed at a lower level, I don't think we have seen the beginning of significant falls yet. But we will.
I have seen one particular house drop from an asking price of £565k last year to £450k this year (each fall has been with a different agent) so won't show on propertysnake. And that is for a 5 bed det. with double garage in a good area.
In fact my friend bought a 4 bed in the same road last year for 500k.
2. mark wadsworth said...
Buyer's strike! Buyer's strike!
str2007, round my way, vendors are gradually starting to crumble, I've seen a couple of asking prices reduced by about 20%, another by 15%, but they are still way too expensive. I hope prices come down by half.
3. p. doff said...
Prices are still holding up well in this area, although sales volume is significantly down and there is more property on the market. This should be a scenario for falling prices but vendors are reluctant to oblige. Agents are under pressure and are getting frustrated. Of course there are some asking price reductions, but these are largely the grossly overpriced opportunistic ones anyway.
I think we need a few forced sales to start the ball rolling down the hill, but the 'buy to rent back' brigade are still active and are soaking up quite a few of the potential repossessions. Buy to let isn't altogether dead either.
4. Robrent said...
Not exactly related to the article i know , but the caption with Phil Spencer made me chuckle, is this the same expert that predicted everlasting house price inflation. It seems the word 'expert' is now used as a catch all for anyone with a half-backed opinion upwards.. in my opinion(and this may make me an expert) there is only one thing less credible than the veiw of an expert and that's the veiw of a panel of experts.. geez give me strength
5. Planning4acrash said...
Add to that a further 50% fall in Sterling.
6. Fjcruiser said...
prices will fall until we reach the level at which income vs house price is back to 3.5 or there about.A long way to go.
7. enuii said...
"prices would plummet by a further 20 per cent, or £40,000 on average, before the market begins to recover"; I am assuming that this calculation is based on the current economic climate outside the housing market. Things could get even worse once a negative economic feedback loop is established which based on the governments budgetary deficit and proposed borrowing strategy is entirely probable.
Pawn Shop economics at it's worse.
8. jonb said...
Fjcruiser,
3.5x earnings gets you back to the long term average. I expect it will overshoot on the way down. How much it will overshoot by, I don't know, but last time round it overshot to around 2.5x earnings.
We won't know when we've hit the bottom until about a year after the event. However, once you get to 3.5x, any short term losses you make after that will be recovered in the long term.
9. str 2007 said...
enuii
I am trying to understand how this might playout.
The biggest item (with regard to houses) in the 'negative loop feedback' I see is Equity top up calls from banks to BTL borrowers.
This hasn't been mentioned in the press yet or as far as I'm aware by the banks.
But if average prices are down almost 10% now, the likelihood is that classic BTL properties are down 20% already (excl. obvious new build city centre flats which must be down about 40%).
I'm very surprised this hasn't come about, because there isn't much equity left in alot of portfolios at present and it looks as though the situation will get alot worse yet.
10. Stevo said...
bargain hunters just sit back and wait, here are some good tips, keep looking on the internet ect and like myself you will see the same properties on the market a year ago, these owners must want to sell, I can put up with screeming kids ect, but not having my home on the market for a year.Then all the old people who pass away, and the relies all want there cut, then the all the divorces, and the oldies wantimg to down size to live near there duaghter, and the grandchildren,I can remember when I was in a pub 3 years ago ,and some one was braging how mutch there house was going up a day, I said what about the first time buyers, he said hard luck, well I worked hard to pay off my house years ago, but if all the other homes dropped to fifty pounds, who cares, I am not moving, and I i have not lost a penny
11. Materialistic Weasle said...
"3.5x earnings gets you back to the long term average"
The question is though, even if prices fall to 3.5x wages again will banks have any money left to offer mortgages even at that level.
It would be dangerous to assume that at the return of 90's values would make everything in the garden rosy again.
12. Redshoes said...
There are agents reducing prices and showing how and why.......Check out Agents in the Isle of Wight. When there is a price reduction there is a url to click and gives you all the gumph. Shame its not the same on the mainland or am I missing something (again). Incidentally I sold my house Feb this year, at a price lower than my agent thought I should accept - my ex next door neighbour has had few viewings, no offers etc and at price 10k less than I got. Waiting before buying again...................
13. Stevo said...
OH yes I forgot to to say, all that rubbish about, estate agents working for the vendor, well keep this a secret, everyone, but,now they work for the buyer, as that is where there comission comes from?,so stick together buyers
14. uncle tom said...
It still amazes me that so many people thought that FTB's would buy into a falling market, when prices had fallen just enough to give them a toehold.
It was never going to be that way. Parents who might previously have been pushing their offspring out of the door - even re-mortgaging their own homes to provide a golden goodbye - are now saying 'hold fire, wait until the market bottoms out'
Another significant factor which distinguishes this crash from the early nineties, is the evolving attitude of parents to their unmarried offspring's co-habiting.
Sixteen years ago, most parents were broadly disapproving, and generally objected to their offspring bringing a girlfriend or boyfriend back to the family home for the night. Today, if the parents don't dislike their offspring's intended, there is rarely much of an issue.
This greatly reduces the imperative for young couples to find a place of their own, and makes it much easier for them to sit tight, save, and wait..