Saturday, Apr 25, 2009
I hate to be the bearer of bad news - LOL!!
Wallet Pop: House prices to fall 50%
OK, this is an obscure source but the basic point is valid. Who do you trust most to predict future property price trends? An estate agent or a fund manager who deals in property derivatives?
Posted by quiet guy @ 10:28 AM (1877 views) Add Comment
20 Comments
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1. will said...
'many esate agents will tell you thet the worst is over'
and many esate agents can't survive another 12 months let alone 4,5 or 6 years.
2. amjidk said...
yep, 50% off peak sounds about right...
3. Karen said...
I find that even Estate Agents tell the truth, when I state quite clearly to them that I don't beleive the green shoots theroy. I tell them that I still need to buy a home, I need something to live in and accept that it will drop in value but I am prepared to go ahead and do that provided that I limit that loss by buying at the lowest that I can right now, and not at some inflated 2007 price.
4. Maihem said...
How does the fund manager get paid?
5. japanese uncle said...
50% drop from the peak, how unreasonably optimistic! 85% drop in London, 75% in Edinburgh 65% elsewhere is the full-mark answer.
6. Danny said...
Small 2 bed bungalow near me sold for £65k in Nov 1999. Sold again for £78k in April 2000. Is now on the market for £240k.
50% off this property is NOT a good deal.
If they drop 50% they can drop 75%. I am not buying my first house until they return to 1999 prices.
BECAUSE THEY ARE NOT WORTH A PENNY MORE.
7. Happy Renting said...
I've been calling 50% for a long time. I have changed that to 60% (in real terms). HPC'ers are ahead of the curve!
8. stillthinking said...
But which currency?
9. mark wadsworth said...
I wouldn't particularly trust the fund manager's personal guess, but assuming he is reporting accurately, I would very much trust the people who are prepared to bank their own money on house prices falling fifty per cent.
True, once you have sold forward at a low price, you then have to try and talk the market down (making you a VI, just as much as I am) because otherwise you lose money, but hey...
10. Puppee said...
50% peak to trough i said this last august but the problem is we know it, the banks and BS know it , the govt knows it so surely the quicker they drop the sooner we will see an easing of the recession , yes i know our properties will fall and nothing is going to stop it but the sooner it does the more jobs and companies can be saved as long as we can keep in work neg equity does really matter but if more and more companies and jobs go then neg equity really takes an effect as people will be forced to sell so the govt should set the readjustment of house prices now slash them by 50% on the 1st june and then we can get the economy moving again , saving the wider economy should be the priority now not proping up house prices its a losing battle that if they persist in will make this recession last longer and be deeper and once most of these jobs have gone they will not be returning at least not to this country
11. crunchy said...
4. japanese uncle
If you are right that would mean one hell of a depression. If you are a business owner or employed in a sector that would suffer due to this outcome then one would rather pay a little more for a house. I hope for most people the drop is not so steep. Personally to me it does not matter. It will not effect my standard of living financially, it may even enhance it, but one's standard of living is also connected to the well being of society en-mass, not just the square mile that surrounds you.
Most would rather a more moderate drop in property values. 40% I feel would be better than say 60%. As bearish as we all here are on prices I feel that there is a point upon which the overall negative impact of a total collapse in the housing market would out weigh any benefit to be gained on further mortgage savings, or indeed the ability to qualify for one.
As much as your pessissism amuses me, I find it also quite disturbing as a self-fullfilling prophecy.
As the saying goes, you must be careful what you wish for. Would you really like to buy a cheap Detroit Spinner?
12. japanese uncle said...
crunchy
Wishful thinking shoud not help in the analysis of economics.
HP boosted for the past 10 years without any reason to substantiate nor sustain it, so it must come back to where it belonged. Simple and sparkling clear. As 20% unemployment is a possibility that cannot be ruled out, this economy that has been thriving on gambling in the name of 'risk-taking' for too long must appreciate the bitterest taste of the downside of risk, never to repeat the same folly again.
13. Danny said...
@7 Crunchy: Most would rather a more moderate drop in property values. 40% I feel would be better than say 60%.
I dont know anyone who wants the housing market to come back down to affordable levels, to suddenly stop at a 40% fall from peak.
Small house near me has risen from £65k in 1999, to £240k by 2007.
If it came down by 50%, to £120k. It would still have very nearly doubled in value.
When, in the last sixty years history of the housing market, has a house, doubled in value, over just a seven year period, and held that price?
Never. Why did it happen this time? We all know the answer to that.
60% + fall sounds fine to me. In fact a 60% + fall sounds a lot more reasonable, and likely, than a 40% fall
14. crunchy said...
Ok, a lesson has to be learnt, but who will suffer here. The people that made it all possible? no. The people that will suffer are the duped and that is not just the speculators and "some" banks. Most here have suffered enough already through being locked out of owning there own home through prudence or affordability issues.
JU, untill the truely guilty are made to suffer and not prosper, this monopoly on financial manipulation will continue.
15. crunchy said...
They have sown the seeds over the years to be able to play society financially any which way they please to.
Think on!
16. Redcellar said...
"untill the truely guilty are made to suffer and not prosper, this monopoly on financial manipulation will continue."
Isn't that the people who constantly harped on about how much they were making by owning a house compared to renting etc etc etc. talking up a false market = financial manipulation.
17. britishblue said...
7. Crunchy.
I have some sympathy with your argument here about the wider impact on the economy. On a isolated personal level I would benefit from an enormous drop in house prices, but too much of a drop could switch the life support off the wider economy.
But the staggering fact is that a 50% fall from peak only takes us back to 3rd quarter 2001, which isn't that long ago, especially when you consider we were due a hefty recession then. From an economic point of viewpoint it may be better that there is a correction to -35%, then a prolonged period of 10 years or so where house prices don't rise, houses become more affordable in real terms and the whole attititude towards a house as a place to live rather than an investment is adopted.
I sense though if you compare the last crash and overlay the gdp figures and the unemployment figures that what we have seen to date is a mild correction and that the vested interests are desperately trying to stop an all out crash. What they are saying to the press is probably considerably different to what they are saying behind closed doors. Many would probably be happy with a -35% crashn, but they cant say that in public.
18. ianbe said...
'many esate agents will tell you thet the worst is over'
Yep. Connells in Bury St Edmunds ran an advertising campaign tellings us that LAST SUMMER.
19. crunchy said...
Ok britishblue thanks for that.
I am all for affordable housing. I strongly disagree with the percentage of wage people are paying to JUST have a home to live in. I say just, because it should not be such a big deal. Unfortunately this fundamental need has been exploited to further the financial gains of the few. History indeed.
We should not blame the manipulated but the manipulators for the current state we are in.
We have all lost out in this. The full impact of which is yet to be realised.
Oh boy could I go on, but the kettle has just boiled.
20. Noel said...
The market isn't pricing in 50% from peak