Monday, Jun 15, 2009
Even with current 21% Falls Property Still 85% higher than 2001
The Motley Fool: Is There More Pain After this Rally
Since peaking in the summer of 2007, housing prices have fallen 21%. For an asset that some thought would never fall in value, that's a huge drop. Yet housing remains 85% higher than it was in January 2001. A decade's worth of inflation and the government's efforts to provide a housing floor should help, but remember that just as we overshot fair value on the way up, there's the possibility that we could overshoot on the way down.
Average national home prices still have room to drop.
Posted by sybil13 @ 03:20 PM (1501 views) Add Comment
12 Comments
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1. hpwatcher said...
House prices are completely out of balance with the rest of the economy, even more so, not that the banks mad orgy of lending is now over.
The only way for house prices is down...
2. hpwatcher said...
Sory, meant to say ''now that the banks mad orgy of lending is now over''
3. mark wadsworth said...
An IFA who comments on my 'blog reckons that the mad lending still hasn't stopped.
4. happy mondays said...
Is there more pain after this rally ? Oh i do hope so, some people need to be put on there a*se and humbled, reminded that high house prices are not a good thing! Stability, sustainability and community need to be prioritized..
5. britishblue said...
'Events dear boy events' Harold Macmillan.
The housing market may stabalise or even increase in price over the next few months or it may gently decline, but its is 'Events' that will trigger the downfall again. We don't know for sure what these events are but they could include:
a. The Bank of England increasing interest rates several times in succession.
b. A new Conservative government making swingeing cuts in expenditure
c. Another oil peak (especially if Iran goes of the rails)
d. Something unknown to do with the banks.
e. Sterling rising to rapidly, killing of the increases in exports
Or none of the above and something totally different. But it is normally unpredicted events that trigger of a change in sentiment
6. Hmm said...
houde in my road (west London W7) rose 2001 to 2007 by a max of 50%. Don't know where the 85% comes in. Saying that there has been no 21% drop either is sales prices, more like 10, from the peak. Maybe it's the thought of a new crossrail link, or maybe just the rise was not as pronounced in our area?
7. will said...
And once the house price indexes have shown that final fall perhaps the estate agents can apply them to asking prices.
8. Polyester Eyed Joe said...
i'll say it again. nobody is buying houses near me....solihull, stratford-upon-avon way...
im getting calls from estate agents out of the blue for the first time in months
i dont know what the rest of the country is like...
but here...sales have fallen off the cliff
9. george monsoon said...
British blue @ 5
The events have already been happening for the last 10 years. Wage freeze, houseprice rise, inflation..
and now the banking collapse. the overpriced housing market is not only going to continue crashing down, the next 12 months are going to be even more severe than the last 12.. I predict drops of 30 to 40% by next spring.
Watch this space..
"Im moving to Jeopardy, because thats where the radio man says all the jobs are!! "
10. uncle tom said...
britishblue,
There doesn't need to be a trigger - this false dawn seems to dimming a little now - the fundamental lack of affordability will prevail.
I'm also clocking an emerging trend that could have quite an impact - women, we know, are martyrs to fashion; and for several years that fashion has dictated that after starting a family they should return to work.
There seems to be a change in the air - being a full time mum (if you can afford to be..) is coming back into vogue.
This may impact the decision making of higher earning couples - they may start looking at what is affordable on one income, rather than two..
11. happy mondays said...
@ GM, sounds like a nice place, I'm off to Threat, apparently lots of jobs..
12. refusetobuy said...
Don't go to Gunpoint. People get robbed there all the time.