Monday, Apr 20, 2009
No.
BBC: Is the housing market about to recover?
"Prices will weaken further over the next three or six months," says Simon Rubinsohn of Rics. A few experts are happy to be more specific.
• Ray Boulger - "a fall of 5% this calendar year." Ed Stansfield - "down 20% this year and 10% next year." Jonathan Davis - "a 40% drop from September 2007 to the end of 2010 or 2011."
Posted by mark wadsworth @ 07:37 AM (2282 views) Add Comment
22 Comments
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1. taffee said...
why on earth do people suddenly think its 'back to normal'?
High house prices caused this problem with tulips from amsterdam theory
average price in cornwall is £200,000...average salary is £12,800
2. a saver said...
There seems to be a concerted effort (engineered by NuLiebour with the next election in mind?) to make things seem as if it's business as usual now, with the economy and housing market. It looks as if this false optimism has pushed up sterling, despite our banks still being on life support, building societies being downgraded and continuing job losses.
3. Dissavoweddan said...
Taffee, people dont think its back to normal. The BBC just lie.
4. timmy t said...
Taffee - you should have said "average price in cornwall is £200,000...average salary is £12,800, and average owner lives in Surrey"
5. uncle tom said...
Curious, the Beeb seems to have scratched this story - I wonder why..?
6. little professor said...
Working linky:
http://news.bbc.co.uk/1/hi/business/8002664.stm
7. mark wadsworth said...
LP, thanks, I appear to have missed off the "n" from "news" in the URL I posted, that's the article I meant.
8. Alan Lubin said...
'it will be a while before the market returns to anything resembling normality'
O RLY? i'd say it was headed that way at quite a pace.
9. uncle tom said...
Well found LP - I noticed that the links from the Beeb's main pages had been removed, and when the link above failed, I assumed it had been taken down.
Amusing how all the experts tend to come out with opaque language, when the real reasons the market has not yet bottomed out are plain and simple:
a) Most would be FTB's still can't afford anything, and most of those that can are waiting for prices to stabilise before taking the plunge.
and
b) Those who got on the mythical ladder in the last five years are well and truly stuck on the bottom rung.
10. str 2007 said...
Tough one.
Given current interest rates and taking repayments into account I guess prices are further back than indices suggest. Perhaps back to 2002 levels on a repayment basis or even 1999/2000 on an interest only basis.
Certainly in 2 good areas (South Bucks and South Hampshire) asking prices are at the most 10% down, but I'd say the majority of asking prices in these areas are still above Sept 2007 levels.
Certainly in South Hampshire there has been alot of activity and sale boards gone up in the last 2 months (and I haven't seen many come back onto the market ie sale fallen through).
However, having given it much thought myself I feel this is the Dead Cat Bounce as we simply haven't seen much pain from this recession yet and in my opinion this recession will be worse than the last.
I guess one supporting factor for house prices this time around is that there is really no-where else for those with money to put it and get a return.
Last recession saw incredible interest rates for savers, and correct me if I'm wrong a slowly rising stock market from the October 1987 stock market crash. So there were sensible alternatives for the man in the street.
With regard to capitulation, | haven't seen this in BTLers yet which I was expecting by now. And given the majority have had 15-20% wiped from their portfolio value (which would equate to 60-80% of their equity based on 70% LTV) I would have thought we'd be fairly close. And yet I see them out looking for 'opportunities'. Quite where they are getting the funding is beyond me.
With regard to home owners, it is currently far cheaper for them to stay put than realise a loss and start renting.
So I am a little cautious as to the size of future falls but on balance expect them to continue in ernest from June/July onwards.
11. str 2007 said...
Tough one.
Given current interest rates and taking repayments into account I guess prices are further back than indices suggest. Perhaps back to 2002 levels on a repayment basis or even 1999/2000 on an interest only basis.
Certainly in 2 good areas (South Bucks and South Hampshire) asking prices are at the most 10% down, but I'd say the majority of asking prices in these areas are still above Sept 2007 levels.
Certainly in South Hampshire there has been alot of activity and sale boards gone up in the last 2 months (and I haven't seen many come back onto the market ie sale fallen through).
However, having given it much thought myself I feel this is the Dead Cat Bounce as we simply haven't seen much pain from this recession yet and in my opinion this recession will be worse than the last.
I guess one supporting factor for house prices this time around is that there is really no-where else for those with money to put it and get a return.
Last recession saw incredible interest rates for savers, and correct me if I'm wrong a slowly rising stock market from the October 1987 stock market crash. So there were sensible alternatives for the man in the street.
With regard to capitulation, | haven't seen this in BTLers yet which I was expecting by now. And given the majority have had 15-20% wiped from their portfolio value (which would equate to 60-80% of their equity based on 70% LTV) I would have thought we'd be fairly close. And yet I see them out looking for 'opportunities'. Quite where they are getting the funding is beyond me.
With regard to home owners, it is currently far cheaper for them to stay put than realise a loss and start renting.
So I am a little cautious as to the size of future falls but on balance expect them to continue in ernest from June/July onwards.
12. str 2007 said...
sorry 1st tim has a double posts happened to me before.
13. bellwether said...
Bear markets in housing last roughly as long as the bull market that preceeded them. Relative to average earnings, rents GDP housing remains and about any other measure you can mention housing remains hugely overvalued. Not only is the mother of all bubbles bursting but there is a global recession with the UK terribly placed in the centre of it both as a financial centre and as debtor/consumer nation when lines of credit are razed. Setiment has changed and cannot change back, there is debt satuaration and unemployment is rising. We will be squeezed externally by imports becoming more expensive and internally by deflationary forces hopelessly beyond the governments control.
Why anyone would surmise that housing might recover soon is beyond me.
Notice that Societe General who have been pretty accurate on macro trends put a £0.46 target on barclays at the begining of April
14. doomwatch said...
It's interesting how JDs 40% drop prediction doesn't appear on the side panel summary.
15. bellwether said...
Mentioned barlcays because its share price hit £2.40 5x market low just over a month ago. The market is just guessing of course as it always does but credible analysis seems to suggest it is way overvalued.
On the larger scale this seems to be the bullish nature of sentiment right now and it is infecting everything - green shoots coinciding with spring.
Belief that the banking crisis is over is driving it although ironically the banking crisis being over wouldn't solve matters anyway, credit as the engine of growth has gone. But worse the banking crisis is not over. Tier One capital remains pathetic in face of impending consumer defaults and commercial property defaults - the next big story.
16. A Solovine said...
If the Chancellor thought the housing market was about to recover, he wouldn't be contemplating a £50bn home loans boost. So 'No' is the Government's answer, as well as MW's.
17. Btl_and_milking_it said...
You can always rely on JD to make a complete plonker of himself as usual
18. str 2007 said...
JD seems to be pretty accurate.
Perhaps you can explain your comments.
BTW hows your LTV ?
19. Btl_and_milking_it said...
str 2007 said...
'With regard to capitulation, | haven't seen this in BTLers yet which I was expecting by now. And given the majority have had 15-20% wiped from their portfolio value (which would equate to 60-80% of their equity based on 70% LTV) I would have thought we'd be fairly close. And yet I see them out looking for 'opportunities'. Quite where they are getting the funding is beyond me'
You'll have a long wait for capitulation in any established BTL portfolio. Why do people on this forum assume we all bought property summer 2007? We bought ours (nine of them) in 1999/2000 and they are all paid for now. On the INITIAL MONEY INVESTED they now produce a return of 16%
Now we are buying back in, This is why there will be no " 40% off " because prices will always be underpinned by yield. You also answer your own question with regard to cash buyers. - Bank 2/3% ....property 7/8% and safer than the bank. Funding? not a problem for people that need it, several BTL mortgages available at less than 5.5% on a 3 year fix
http://www.moneyfacts.co.uk/money/mortgages/5/buy-to-let-mortgages.aspx
This is why JD spouts such crap, and the people of this forum follow his word.
BTW, LTV?.....er Zero
Explained.
20. vindicated said...
BTL_and_milking_it
If you have nothing nice or constructive to say, then don't bother. How's your denial phase?
21. justwatching said...
Maybe BTL_and_milking_it is actually Ray Boulger, both are in denial. 5% drop this calender year? Pull the other one.
JD's prediction of -40% could seem a little conservative.....
22. sold out said...
btl_and_ bricking_it would be a more apt username.
As for JD being a "plonker as usual" on what basis do you make that judgement, considering he has been a lot more accurate in his predictions than anyone else.
milking it, your cash cow rolled over and died last year and i am Looking forward to buying one of your repo'd properties for peanuts when it comes up for auction next year