Tuesday, Sep 14, 2010
"house prices could slide by as much as 30% between now and 2013"
Citywire: Woodford says chances of a UK double dip are rising
Invesco Perpetual's star fund manager Neil Woodford says the chances of the UK slipping back into recession are on the rise. Due to lingering economic uncertainty the group's head of investment believes a double dip scenario is looking more and more likely and the fund manager has even forecast a dramatic slump in residential house prices over the next three years.
Posted by jack c @ 03:21 PM (1498 views) Add Comment
12 Comments
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1. Crunchy said...
"house prices could slide by as much as 30% between now and 2013"
Follow the money, or fear...........
Watch the banks deposit requests. 25% drop on the cards already. Any advances?
Another Crunchy prediction. A major bank run to come. What doesn't go around, comes around.
2. str 2007 said...
Does anyone know if this guy a good track record ?
His views to me seem correct (they would I guess) but it's comforting to hear someone who at least should know what they're talking about agreeing with what I think.
Certainly, taking all the fundamentals and as I've posted earlier today, valuations on a rental basis (based on a 7 percent yield) prices should be coming down by 30 % and this would still leave detatched properties with a yield below 5%. And that's gross yield.
Anyone seen a BTL mortgage with a repayment of interest less than about 4% above base ?
It was these mortgages that revalued everything at a much higher level and now the numbers are miles off even stacking up to stand still, never mind being a great investment.
Of course what we do have now are people down sizing their aspirations which is difficult to allow for on calculations.
By that I mean a doctor for example now buying Anglos house on an estate where as 10'years ago they'd have bought a big house with 1/2 an acre.
3. jack c said...
str 2007 said...Does anyone know if this guy a good track record ?
Neil Woodfords track record as a UK fund mgr is excellent and he remains very highly respected and high profile. He almost got the sack back in the late 90's when he refused to get involved in the technology boom and was proved correct when the bubble burst. Similarly he held an aversion to banking/financials well before the recent crisis (oddly enough it's the 3 year anniversary of the run on N Rock today) and sold out of BP before they ended up in crisis. NW tends to tell it how he really sees it which many see as very refreshing - now he was predicting roughly a 30% drop in house prices around 3 or so years ago so it's nothing new for those who are familiar with his work and expectations to find him bearish on uk residential property.
4. str 2007 said...
Cheers jack
I suppose if he was really, really good he'd have been involved with all the bubbles and used his judgement to get out of them before they burst.
But maybe that's not what you want from your fund manager, particularly with a mature portfolio.
5. jack c said...
str 2007 - he cant really do that because the funds he runs fit within certain IMA (investment managers association) sectors and aim to achieve a certain yield with geographic restrictions etc.. plus the funds have a specified objective and it would be inappropriate to suddenly ratchet up on say financials and or TMT's (technology, media & telecoms). Most retail investors are looking for long term returns and do not want significant volatility - hence he stuck by his mandate and won through in the end. I can remember back in the late 90's when people bought into the Invesco Euopean fund (when Invesco was a seperate company to Perpetual) unaware that it had a 20% holding in the german technology market - all was well on the way up but many soon found that a £6k PEP turned into a £2500 PEP and they werent happy!
If NW has something to say I definitely think it's worth listening.
6. mark said...
Lets just get it over and done with
Hike rates to 15%
Sack 80% of useless government workers
Cut long term jobless benefits to a tenner a week
let it all crash out and we can start over, buy a house for the price of a big mac and enjoy lives without working to pay mortgage and nothing else
7. str 2007 said...
Crunchy
Care to elaborate ?
8. taffee said...
lloyds to me is the biggest risk....opted out the protection scheme and is now horrifically vulnerable to a property crunch
9. greenmind said...
Mark
Care to elaborate?
10. str 2007 said...
Well, if there's going to be a run here is as good a place as any to start it.
Is your prediction based on anything firm or is it just a hunch Crunchy ? And please no riddles to solve !
11. braindeed said...
Go on Munchy - take a stab, I'm interested to hear the cogs whirr
12. devo said...
Haven't they given you back your full posting rights yet, (C)crunchy?
Swallow your pride and ask them politely.