Thursday, May 14, 2009
Wishful thinking
Press Association: Half think house prices will steady
Six out of 10 people looking to buy a new home think that prices will not fall any further during the coming 12 months, a survey has shown.
Only 35% of those questioned said they thought the property market correction still had further to go, down from 69% three months ago.
Young people are most optimistic according to the survey, by Rightmove.
Miles Shipside, Rightmove's commercial director, said: "The fact that a majority of consumers feel confident that prices are set to stabilise or increase in the next 12 months is a key indicator that the worst of the falls may be over.
Posted by little professor @ 01:31 AM (1226 views) Add Comment
30 Comments
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1. refusetobuy said...
"Young people are most optimistic with 41% of people aged between 18 and 24 expecting property prices to rise during the coming year"
They are also unlikely to have experienced a house price crash.
2. Jon said...
How can we have a 10 year boom, in which property prices have gone up by about 300% and then think that a year of decline (-21.2%) will be turned around and just head backup again. Firstly, the money supplies from banks will never be available again as CDO and securitization has ended - unless we re-inflate the bubble - with an even bigger bust to follow. Secondly, UK house prices are still 6x the price earnings ratio. Just look at the falls in the US and the 10+ year decline in property values in Japan. They are still far to high in the UK.
Finally, the UK and the banks are insolvent, regardless of what the MPs say. Clearly the UK needs to learn about exponential maths.
3. lenny said...
I bet these young optimists have never looked at Shares either, all works the same way.
There is a reason why the property looks cheap to them, the price it is sold for is what the buyer and (sometimes) valuer think it is worth. But becasuse the house or share looks cheap doesn't mean it is not going to decline any further, when the relevant market sentiment is negative and other factors like unemployment are rocketing there will be more housing stock on the market at a lower price next year.
We all know this but can you tell it to these eternal optimists?, LOL
Let them buy and come unstuck, it will be an early lesson in reality for them like a few of my young friend's back in 1990-93 as nearly every one lost their then new-build rabbit hutches from Wimpey and Barratt Homes
4. Bear_or_bull said...
There is a good point to this article. The young (gen y?) have a completely different attitude to debt and future opportunities than the current "mid" generation (gen x?).
I know a fair few early 20s couples buying at huge multiples to "get on the ladder" as we speak. The optimism they exhibit assumes a very, very fruitful future both in terms of economic growth, job prospects (they are all going to be FTSE100 board members), salary increases, and security. The assumption is that maxing out on a 1 bed today will lead to a 4 bed in 10-15 years. Gear up for profit.!.. After all, their parents did it... and progress means they'll do it better. After all, they are straight A students who have been constantly assured that the world is their oyster....
The problem is that they don't realise that the ladder concept, taught to them by their parents, is a high inflation strategy now used in a low inflation world. The results are different. When you do the figures it just doesn't work out. The debt lingers longer & you just can't trade up unless your salary sky rockets.
The long and the short of it is that, at least in regards to this bust/boom, they don't feel at risk. They believe that the current prices are undervalued. Seriously. The assumption is that prices will skyrocket (back to "normal", and beyond) and they are desperate not to miss the boat. You all know that this is true. Crazy, but... If you offer the 5x mortgages again they will pile in. It is a solid assumption of their lives that prices only go up. It's going to take a lot more than the recent bustlet (for that's all it is at the moment, the pain hasn't really spread that much to the young) to convince them otherwise.
At the end of the day it bakes deflation into the pie, but the pie may be a loooonnng time cooking.
5. Charlie Brooker said...
Remember that's 41% of 18 to 24 year olds.
The oldest person in that group would have been just out of nappies when the last crash happened.
6. Neil B said...
"The fact that a majority of consumers feel confident that prices are set to stabilise or increase in the next 12 months is a key indicator that the worst of the falls may be over"
.... If enough people think it - it will happen?
7. Pvsoton said...
Yes, and what difference does it make that young people expect prices to stabilise or rise in next 12 months?
Given their unemployement rate is higher than genral population, and their average earnings much lower, how many 18-25 yo will be able to afford a property anyway? What a useless news story!
8. phdinbubbles said...
"Only 35% of those questioned said they thought the property market correction still had further to go, down from 69% who expected further price falls when the same research was carried out three months ago."
The amazing effect of spin on feeble minds. Can't think of any other reason for explaining this - are their 'optimisitc' predictions informed by the improving economic situation in the last three months (LoL) or because they've been fed crap by VIs? And what are they being 'optimistic' about? Are potential first-time buyers really wanting prices to go up? Oh, I see, it's just the Press Association who will be happy if prices go up again - so this therefore means potential FTBs will be happy too.
9. mark wadsworth said...
Yes, sentiment is important (and can be manipulated) but do we really care?
What would the results of a survey taken in mid-2007 have been, just before Northern Rock went *pop*? 99% would have said prices will continue to rise - but they started falling anyway.
10. the haunted said...
"the property market correction" or as I like to call it for short: Crash.
11. happy mondays said...
The behavior of lemmings is much the same as that of many other rodents which have periodic population booms and then disperse in all directions, seeking the food and shelter that their natural habitat cannot provide. Lemmings of northern Norway are one of the few vertebrates who reproduce so quickly that their population fluctuations are chaotic,[1] rather than following linear growth to a carrying capacity or regular oscillations. It is unknown why lemming populations fluctuate with such variance roughly every four years, before plummeting to near extinction.[2]
While for many years it was believed that the population of lemming predators changed with the population cycle, there is now some evidence to suggest that the predator's population may be more closely involved in changing the lemming population
12. it_is_going_with_a_bang said...
1- to 24 yr olds?
Sorry but what is the average age of a first time buyer?
Why not ask the 14 - 17 yr olds what they think too? It is just as relevant.
Asking people who clearly have no clue what is going on is hardly digging very deep is it.
Furthermore if 53% questioned expected to buy in 12 months they surely cannot be within the 18 - 24 yr bracket? and 25% expected to sell???
So these 53% would not have been people on the street but prospective buyers in a direct survey - probably of people visiting the site or the such like. In which case they would be prospective buyers.
It's like asking people parking in the multi storey in town if they expected to buy anything today. Suprisingly 53% said yes they would! lol. Talk about manipulating figures for a headline.
13. stillthinking said...
FTB opinion is irrelevant without financing.
14. Adamskirockski said...
"Six out of 10 people looking to buy a new home think that prices will not fall any further during the coming 12 months,"
Bit of an odd group of people to be drawing conclusions from, doesn't really tie in with the title.
15. Willing said...
Another pointless survey which has been targetted to get the 'right' result.
If you only ask people buying a house if they think prices are going to fall further then what do you expect?
The majority will be buying because they think prices have bottomed, no one really want's to buy a depreciating asset unless they have to - hence all this survey proves is that the small amount of people out there buying are doing so because they believe we're at the market bottom....shock...horror....what a revalation!!!
16. wdbeast said...
it_is_going_with_a_bang said...
You read between the lines very well, you're nearly as cynical as me, lol.
17. inbreda said...
@14 Adam has spotted the flaw. The survey is only looking at those looking to buy. The fact that ANY member of this group thinks that house prices will do anything other than go up is a very scarey fact!!
The full picture may be: "99% of people are not looking to buy a house because they think prices have much further to fall. Of the remaining 1%, 40% think prices will fall but are buying anyway. The remaining 0.6% think prices will stay steady, but they are generally young, naive and inexperienced so there views should probably be discounted."
FAesibly 100% of people might have negative views on the market
18. alan said...
The headline was very popular. I think people wish for house price stabilisation, especially those who want to sell houses and retire.
Could the prediction come true? Well, I think that if we get severe inflation, houses will, once again, go up. That said, I'm not looking forward to a loaf of bread at £2.50p.
I don't think severe inflation was on the minds of the people who took part in the survey. I suspect a little suggestion..?
19. wiltshire said...
Meanwhile in other 'news', 99% of 3 to 4 year olds believe in Father Christmas........
20. Adarmo said...
I have a colleague who offered on his current proeprty in August 2007 an completed in December. Despite a lot of advice to pull out or lower the offer they pressed ahead. I'm not even sure the full extent of what's happened has registered with him. He's for sure in negative equity and he got a joint mortgage that amounts to something like 8 times his own salary, so if he or his girlfriend lost their jobs he'd be in so much trouble. I'm only 26 so barely remember the 90's recession, but most young people I talk to have so little clue about money, let alone asset bubbles. They keep blurting out what their dumb parents say, "Property is fine if it's for the long term"!
REALLY?
Well how about this, you buy for £300K, I wait 2 years and buy for £140K. In 25 years the properties are worth a million, who's made more than twice the rate of return in 2 years less? I think the maths escapes a lot of people.
If God had not wanted them to be fleeced he would not have made them sheep.
21. wdbeast said...
@19 Wiltshire -
Is that because 1% of 3 to 4 year olds parents are EAs?
No, sorry, that would entail telling the truth as well as ruining lives!
22. need-a-crash said...
@18. loaf of bread at £2.50... well Hovis loaves round my way are already £1.90 so not far to go! lol.
23. peter_2008 said...
Hiding in yesterday’s unemployment figure was the astonishing 10% unemployment rate for the under 24 age group. It begs believe how ill educated this country’s young people are with regard to any common sense of financial risk.
On the other hand, I DO hope they all jump in, because these brats will have to beg, borrow and steal huge amount of deposit from Bank of Mom and Dad. These brain washed financial suicide bombers will take their close ones with they when they explode.
24. Schadenfreude said...
http://en.wikipedia.org/wiki/Schadenfreude
25. matt_the_hat said...
It appears to me that we have a lot of baby boomers on this tread who still think its OK to laugh in the face of FTBers who just want a house. As a 28 year old just out of nappies in the last crash, I don't think its unreasonable to expect progress and to achieve more than your parents did - after-all this has been the way since the industrial revolution (before any of us were "in nappies").
The reality is this - a generation (baby boomers) that is all consuming who profiteered on that back of a once great nation and instead left a legacy of debt and moral bankruptcy. It is not that any generation is more or less in any respect to that of the other (I believe in the law-of-large numbers).
The blame for an ill educated youth stands with the adults at the wheel - FAILED
The reason for dysfunctional families - a system to incentivize teenage pregnancy in the poorest and least prepared members of our society - to pay for boomers pensions - FAILED
A nation with debts that will take a generation to pay - cause by baby boomers greed - FAILED
The only people that will live in Britain in the next 10 years will be the boomers because they have a house worth jack sh1t and a pension paid for buy the non-educated product of single parent families who will be the debt laden slaves for the old because they don't have the skills to move abroad. That I am afraid is the legacy of the 40-80 year olds in this country who smirk at the misfortune of the young!
26. Hotairmail said...
"of those looking to buy"
What about those not looking to buy.
Skewed sample methinks.
27. crunchy said...
9. mark wadsworth said...Yes, sentiment is important (and can be manipulated) but do we really care?
crunchy...Sentiment is senti,mental. Eyes are for seeing senti,mental!
28. mander said...
According to Rightmove, should we not have independent bodies to do these surveys? I mean comon on the people with no depozit or credit history will tell you anything.
29. matt_the_hat said...
What's the matter just realized your defined contribution pensions won't cover your retirement plans and the government is removing all obstacles for continued work - I'm afraid the ones who were sitting smug in this property boom (i.e. the boomer generation who did have property) have just realized that the productive youth is moving abroad to leave the de-skilled to wipe the ar5e5 of the binge drink and drug generation.
When the UK goes to the IMF and your pension/property is worth the same as that of an average Icelander just blame it all on the youth of today whilst your soldering that resister onto a TV designated for a middle-class chinese family. Don't give me that "in my day" b0ll0ck5, the question everyone needs to ask themselves is why am I not working in a paddy field, the answer is history and now that is being re-written by an army of hard working people who want to reap what they sow, wealth is moving from west to the east - enjoy your retirements!!
30. new user 2007 said...
The survey was based on people who are visiting the site or have their contact details with the company?
That is a slightly skewed sample, given that they are most likely to be confident by definition i.e. they are only on the site because they still want to buy?