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DementedTuna

House Prices Won't Peak Again Until 2020

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http://www.dailymail.co.uk/news/article-11...-peak-2020.html

Also predicts no significant upturn in the market until at least 2015.

Pretty reasonable prediction IMO.

"In real terms - after making adjustments for inflation - house prices in 2015 could still be below average 2008 levels, it says."

If house in real terms reach the same level as 2007 in my life time I would be surprise, we have just had a mega bubble in real terms and if they find a way to create a bubble to beat it we will be living in very interesting times.

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http://www.dailymail.co.uk/news/article-11...-peak-2020.html

Also predicts no significant upturn in the market until at least 2015.

Pretty reasonable prediction IMO.

House prices may not return to last year's levels until 2020 or beyond, a report warns today. The study by PricewaterhouseCoopers dampens hopes that the housing market is already in recovery. It says recent predictions may have heralded a 'false dawn', with prices set to fall even further next year.

OK a good start, spelling out to sellers accept 30% off peak now or wait until next year and risk a 40% drop. Anything that SPELLS out that property prices are not going back up (or staying at) 2007 values has to be good but from that point forward the article, like most articles deteriorates into HOUSE PRICE INCREASE RAMPING.

Even in 2020 - assuming five years of relatively strong growth - there is still a 30 per cent chance that real house prices could still be below last year's levels.

However, in cash terms, they will probably appear to have recovered by then. The report offers a different outlook to a separate survey from the Royal Institution of Chartered Surveyors showing an increased belief that prices are on the increase.

I think what Pricewaterhouse is saying is that there is a 30% chance Rightmove will have reduced property values to 2008 levels by 2020.

Then the article picks up again ............

While falling prices may be welcomed by buyers trying to get on the property ladder, many are struggling to access a mortgage they can afford.

As a result, more young buyers are being forced to turn to the Bank of Mum and Dad to fund a deposit, at a time when their parents may struggle to help.

At the same time, it is bad news for those already in, or at risk of, falling into negative equity - where the amount they owe on their home is more than it is worth.

This will put increasing numbers of families at risk of repossession.

This all sounds like "green shoots" doesn't it!!!

The prediction came as MPs warned a key Government scheme to kick start the mortgage market is not working.

Current restrictions mean the £50billion asset-backed guarantee scheme, which provides guarantees on lenders' mortgage-backed securities, enabling them to sell on mortgages to investors and raise new money to lend to consumers, was 'doomed to fail', the Communities and Local Government select committee said.

And all of this amidst the fact that the government have Scrapped FTB Schemes

After that the article slips into the usual muddled messages where the overall message says that a £300000 property should already be values at £225000 and still falling that FACT is hidden in amongst RICS saying the market is recovering and sellers have no reason to even knock the current 20% off!

A combined analysis of the Halifax and Nationwide property price indices shows house prices have already fallen 20 per cent from their peak in late 2007 to Spring this year.

These measures are currently showing stable prices with modest rises, alongside very low levels of transactions and a lack of homes coming onto the market.

John Hawksworth, of PricewaterhouseCoopers, said: 'Although the estimated average UK house price overvaluation of around 25 per cent in mid-2007 has now been largely eliminated, our analysis suggests that house prices could still have further to fall over the next year.

'Despite some recent reports of rises, we are not out of the woods yet by any means.

'It is important for buyers to take a long-term rather than a short-term view.'The pace of recovery in house prices seems likely to be relatively modest until the middle of the next decade, although it could pick up again beyond that as supply shortages reassert themselves, credit conditions return to normal and negative memories of the current housing boom fade.'

"Buyers take a long-term view" means understand the property you buy at even 20% off peak is likely to fall a lot more we are in the middle of a bull trap.

The separate survey from RICS said there was 'more evidence' activity in the housing market was recovering.

It found buyer enquiries increased in June, leading to a rise in the number of newly-agreed sales.

At the same time, six per cent more chartered surveyors said they expected house prices to rise over the next three months than in May's survey.

However, it said ongoing problems with lending would prevent a quick recovery.

Jeremy Leaf, of RICS, said: 'Although the market is showing signs of improvement, it is unlikely that there will be a sustained upturn while mortgage lenders remain risk averse.'

Its great isn't it, "more evidence" of recovery but plenty of evidence that the market will not recover any time soon, or indeed until at least 2020!!

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If house in real terms reach the same level as 2007 in my life time I would be surprise, we have just had a mega bubble in real terms and if they find a way to create a bubble to beat it we will be living in very interesting times.

I wouldn't - earnings have historically exceeded RPI by 1.5%. Compound that over the rest of your lifetime.

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I don't agree that this is a realistic article. To me it seems overly bullish.

I am not expecting house prices to reach 2007 levels again until 2020 in nominal terms.

I predict many people paying an interest only mortgage for 20 years and still being in negative equity.

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I wouldn't - earnings have historically exceeded RPI by 1.5%. Compound that over the rest of your lifetime.

So how low will they go? 1988?

Back to sensible salary multiples, or are we so f_cked that the decent working folks of the UK are resigned to slavery forever?

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I wouldn't - earnings have historically exceeded RPI by 1.5%. Compound that over the rest of your lifetime.

That is because you are a straight line inflationist and someone who has looked at recent history and expect the future to continue in the same vane. Hence your medium term view on equities and clearly houses. When you state historically earning exceeded RPI by 1.5% is this the 300 year average or are you focusing on the period since the credit expansion process began? Wage deflation is happening and I can see a significant decline in wages over the next 10 years. As ever you have your view and I have mine.

Total%20U.S.%20Debt%20to%20GDP.gif

Edited by Confounded

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That is because you are a straight line inflationist and someone who has looked a recent history and expect the future to continue in the same vane. Hence your medium term view on equities and clearly houses. When you state historically earning exceeded RPI by 1.5% is this the 300 year average or are you focusing on the period since the credit expansion process began? Wage inflation is happening and I can see a significant decline in wages over the next 10 years. As ever you have your view and I have mine.

Total%20U.S.%20Debt%20to%20GDP.gif

+ about a million

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Making any long term predictions for Britains financial and HPI future is pie in the sky.

The only thing that could change the long term trend positive would be another North Sea type boom within the UK/UKCS, which just isn't going to happen. The future in the North Sea: levels of crude and gas are on the decline, big time, along with the investment.

We will be at the mercy of our EU allies and our former, resource rich colonies for energy. The basic costs of home heating and cooking will become the majority expense, possibly surpassing mortgage debt servicing costs. The costs of maintaining our energy security around the globe will also become prohibative.

Those who have older, energy inefficient properties will find them next to impossible to sell.

Just imagine what it is going to be like if it takes 25% or more of your take home pay to service the running costs of your motor.

Are we going to be happy to prop up a 20th century social welfare system with big taxes by the time the nation is a quarter of the way through the 21st century? I think not.

How you paint a pretty picture without acknowledging these basic facts is beyond me.

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That is because you are a straight line inflationist and someone who has looked at recent history and expect the future to continue in the same vane. Hence your medium term view on equities and clearly houses. When you state historically earning exceeded RPI by 1.5% is this the 300 year average or are you focusing on the period since the credit expansion process began? Wage deflation is happening and I can see a significant decline in wages over the next 10 years. As ever you have your view and I have mine.

Total%20U.S.%20Debt%20to%20GDP.gif

"When you state historically earning exceeded RPI by 1.5% is this the 300 year average or are you focusing on the period since the credit expansion process began? "

Since mid 60s. Can you post the 300 year history please - would be good to have.

"Wage deflation is happening"

From where are you sourcing your data? I see the last "av earnings inc bonus" at +2.1% and RPI at -1.6%, so way above the 1.5% historical average

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"When you state historically earning exceeded RPI by 1.5% is this the 300 year average or are you focusing on the period since the credit expansion process began? "

"Wage deflation is happening"

From where are you sourcing your data? I see the last "av earnings inc bonus" at +2.1% and RPI at -1.6%, so way above the 1.5% historical average

Not sure how they calculate the figures above, but surely you have heard the news with pilots accepting a wage cut, car industry accepting wage cuts, many other area's of Industry accepting wage cuts, there are headlines every day?

This is just the start of it, but hey your super bubble may come along to your rescues.

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Not sure how they calculate the figures above, but surely you have heard the news with pilots accepting a wage cut, car industry accepting wage cuts, many other area's of Industry accepting wage cuts, there are headlines every day?

This is just the start of it, but hey your super bubble may come along to your rescues.

I get them from Bloomberg, which gets them from ONS. How are you working out your numbers?

The Average Earnings Index (AEI) is Great Britain's key indicator of how fast earnings are growing. The index measures how earnings in the latest month compare with those for the last base year when the index took the value of 100. The current base year is 2000. Average earnings are obtained by dividing the total amount paid by the total number of employees paid, including those employees on strike and temporarily absent. The headline rate of increase, introduced in April 1998, replaces the previously published `underlying rate'.

Edited by Noel

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I get them from Bloomberg, which gets them from ONS. How are you working out your numbers?

The Average Earnings Index (AEI) is Great Britain's key indicator of how fast earnings are growing. The index measures how earnings in the latest month compare with those for the last base year when the index took the value of 100. The current base year is 2000. Average earnings are obtained by dividing the total amount paid by the total number of employees paid, including those employees on strike and temporarily absent. The headline rate of increase, introduced in April 1998, replaces the previously published `underlying rate'.

I thought you did not trust Bloomberg? If you are basing your investment decisions on the ONS data good luck :huh:

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http://www.dailymail.co.uk/news/article-11...-peak-2020.html

Also predicts no significant upturn in the market until at least 2015.

Pretty reasonable prediction IMO.

If the above is true ( and it could well turn out like that) then I suspect that what we'll see is shallower falls, with prices staying at their low point for longer.... this won't suit those hoping for bigger falls and a large overcorrection.

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I thought you did not trust Bloomberg? If you are basing your investment decisions on the ONS data good luck :huh:

I'm not discussing investment decisions. I'm discussing the fact that historically, earnings have outstripped RPI. Can you point me a link to your accurate earnings data based on what would appear to be news reports please?

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Making any long term predictions for Britains financial and HPI future is pie in the sky.

The only thing that could change the long term trend positive would be another North Sea type boom within the UK/UKCS, which just isn't going to happen. The future in the North Sea: levels of crude and gas are on the decline, big time, along with the investment.

We will be at the mercy of our EU allies and our former, resource rich colonies for energy. The basic costs of home heating and cooking will become the majority expense, possibly surpassing mortgage debt servicing costs. The costs of maintaining our energy security around the globe will also become prohibative.

Those who have older, energy inefficient properties will find them next to impossible to sell.

Just imagine what it is going to be like if it takes 25% or more of your take home pay to service the running costs of your motor.

Are we going to be happy to prop up a 20th century social welfare system with big taxes by the time the nation is a quarter of the way through the 21st century? I think not.

How you paint a pretty picture without acknowledging these basic facts is beyond me.

Absolutely...this is the real issue. You're also not accounting for the rising cost of food as energy is a huge component of food production and distribution. In the UK, and other energy poor countries, the cost of housing will have to shrink in relation to other things. Also, not only will the actual cost of energy increase, but the relative cost will to as the pound will have to re-adjust against other currencies globally. This will only compound the problems this country faces. I pity anyone retiring here in 2020.

I'm off to canada (provided my visa gets approved), loads of Oil and renewable energy.

Edited by HovelinHove

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I'm not discussing investment decisions. I'm discussing the fact that historically, earnings have outstripped RPI. Can you point me a link to your accurate earnings data based on what would appear to be news reports please?

Type "Wage Cuts" into google plenty to read there about wage cuts.

The UK has a huge public sector that will only feel the pain once the election is out of the way (unless IMF step in first), I believe this is what is distorting your statistic/view atm the moment which is why it is not representing the real world private sector I am more interested in as a leading indicator to the way wages are going. In Ireland the Public sector is payed TWICE the rate of the private sector, they are having to address this.

See graph from US

P1-AO355A_WWage_NS_20090116214834.gif

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Type "Wage Cuts" into google plenty to read there about wage cuts.

The UK has a huge public sector that will only feel the pain once the election is out of the way (unless IMF step in first), I believe this is what is distorting your statistic/view atm the moment which is why it is not representing the real world private sector I am more interested in as a leading indicator to the way wages are going. In Ireland the Public sector is payed TWICE the rate of the private sector, they are having to address this.

See graph from US

P1-AO355A_WWage_NS_20090116214834.gif

"Type "Wage Cuts" into google plenty to read there about wage cuts."

I fail to see how this puts a number on wage increases/falls

"real world private sector"

+0.3% YOY I believe

"See graph from US"

I don't live in the US

Edited by Noel

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