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Price Waterhouse: Uk Property Prices Could Keep Falling Beyond 2020

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http://www.businessinsider.com/price-waterhouse-uk-property-2010-7

You knew UK property prices were under pressure, but Price Water House Cooper research thinks prices could be in for a decade-long bear market. Telegraph:

But according to PwC: "Housing is a risky asset that is not guaranteed to generate positive real returns in the future even though this has been the pattern in the past."

In fact, PwC says, there is a strong possibility that house prices continue to fall for the next five years and could drop further even beyond 2020. According to the report, this would significantly drag back the speed of economic recovery – which PwC claims faces a risk of a double-dip recession.

The "real terms" forecast by PwC includes consumer pricing adjustments that take into account the goods and services you can buy in 2020 compared with 2007. There is a 70pc chance of prices falling further in real terms by 2015 and a 50pc chance of a continued downward trend by 2020.

"The assumption that property is a 100pc safe asset you can continually borrow against is over," said John Hawksworth, head of macroeconomics at PwC.

Is there a feasible scenario whereby American property prices grind lower, for ten years, as well? A lot of people were burned by the crisis, but many remain bullish and 'bargain-hunting'. Thus it hardly feels like sentiment has reached an extremely low point yet, which one would generally expect to happen around a market bottom.

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Yes & no

Some asset prices that were TOTALLY over valued are going to deflate.................watch the prices of others.

Note:- The BAD house price news is now flooding out, like a Dam that burst!

This winter should be "Fun"

Mike

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I suppose its possible given the unheralded level of malinvestment in the asset class it could take decades to find a bottom although like Japan id expect the majority of falls (50%)* to happen in the first 6 or 7 years. The thing that makes me doubt it happening quite like Japan is that the only reason Japan stagnated after the initial 60% falls for a decade was the credit boom in the west gave them some growth

*excluding Maidstone

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Yes & no

Some asset prices that were TOTALLY over valued are going to deflate.................watch the prices of others.

Note:- The BAD house price news is now flooding out, like a Dam that burst!

This winter should be "Fun"

Mike

Which assets are cheap atm?

I have cash I want to put to work and would like to invest in something that has not been inflated by the 60 year credit bubble.

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Which assets are cheap atm?

I have cash I want to put to work and would like to invest in something that has not been inflated by the 60 year credit bubble.

Timeshares

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Add another 15 years & PWC have reached Martin Armstrong territory. Shh, maybe that's where they got it from?

I'm wrong; add another two as the UK is always behind the USA.

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Which assets are cheap atm?

I have cash I want to put to work and would like to invest in something that has not been inflated by the 60 year credit bubble.

Probably nothing cheap at the moment but some assets look like reasonable value against historical numbers, but you have to believe that growth of some sort will happen for these to be worthwhile.

Best bet is a wide diversification if you have the money to justify the transaction costs. Speaking of which keeping these low and management fees to a minimum is absolutely necessary in a low return world.

Also try out some less conventional assets like canadian oil trusts, agricultural commodities, emerging market real estate. You can find some big yields in the first and last of these.

If you go with equities try to search out a fundamentally weighted fund which means it is weighted by something like book value instead of market cap. Historically this has added about 2% extra return a year.

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Bottom line: going Japanese for a decade or so.

A prolonged period falling prices, a.k.a. deflation.

I do hope not. But it could be.

We should revisit that old chart, originally in Confounded's signature:

Japan: Prices of land and housing falling since 1992...

japanhousesandland.png

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Which assets are cheap atm?

I have cash I want to put to work and would like to invest in something that has not been inflated by the 60 year credit bubble.

Sugar, Cocoa, Silver, Agriculture index. Look at ETF's on www.etfsecurities.com. If you want a punt on something likley to fall, try an inverse ETF like copper, which I would expect to go right down. Been slipping a bit lately and likely to do so for the next 6 months or so as things unwind. The ETF ticker/name for that is SCOP. Things like this are often volatile and you may find the trend over time can have a month when it goes against you. So be warned!

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Which assets are cheap atm?

I have cash I want to put to work and would like to invest in something that has not been inflated by the 60 year credit bubble.

If they fire up the printing presses, which to me seems the only way of 'saving' the banks and all who sail in them, then spend most of your cash on something you'll enjoy, and use the rest for a minimal deposit on debt backed property (!).

If you don't think that will happen, I'd keep your cash as cash.

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I suppose its possible given the unheralded level of malinvestment in the asset class it could take decades to find a bottom although like Japan id expect the majority of falls (50%)* to happen in the first 6 or 7 years.

But not from now. We'll have longer-term downward pressure from demographics, as boomers become pensioners and cash in assets.

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I suppose its possible given the unheralded level of malinvestment in the asset class it could take decades to find a bottom although like Japan id expect the majority of falls (50%)* to happen in the first 6 or 7 years. The thing that makes me doubt it happening quite like Japan is that the only reason Japan stagnated after the initial 60% falls for a decade was the credit boom in the west gave them some growth

*excluding Maidstone

I do hope we have most of the fall as soon as possible, as I am tired of renting. Particularly as our laws leave tenants so unprotected.

But Japan had a weird pattern, like the chart in my post above (#10) shows. They had falls of around 5%/year from 1992 to 94, then almost flat from 1995 to 99, then 5% falls again from 2000 all the way to 2007. Very annoying if this happens here too. Some 16 years of falls, and most of it in the second half of that whole period!

Renting for 15 years?! :(

Edited by Tired of Waiting

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Add another 15 years & PWC have reached Martin Armstrong territory. Shh, maybe that's where they got it from?

I'm wrong; add another two as the UK is always behind the USA.

yep

my accountant (very cautious person panicked & sold his only BTL at a loss when I showed him the print out that certain part of California has lost over 85% house values, that was last year, he was certain that we won't be far behind. Now he is happy that he's sold his BTL & that big drop is just round the corner, perhaps another few months.

Its going to be very interesting & a thoroughly satisfying experience (the huge huge drop) or may be not!!!

Edited by DisQ

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yep

my accountant (very cautious person panicked & sold his only BTL at a loss when I showed him the print out that certain part of California has lost over 85% house values, that was last year, he was certain that we won't be far behind. Now he is happy that he's sold his BTL & that big drop is just round the corner, perhaps another few months.

Its going to be very interesting & a thoroughly satisfying experience (the huge huge drop) or may be not!!!

Yep. We are still near the peak. Look at this chart, HP, since 1970: http://www.houseprices.uk.net/hpuk/house_price_server.php?width=768&height=576&year_min=1970&year_max=2010&type=price&flag_q=0&flag_nw=1&flag_hf=1&flag_rm=1&flag_ft=1&flag_lr=1&flag_o=1&flag_ma=0&lag_yoy=0&lag_qoq=0&lag_odpm=1&leg_pos=0&flag_logy=0

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nice one

wouldn't surprise me bit that we achieve those 70's level its just matter of time

we're moving in that direction

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nice one

wouldn't surprise me bit that we achieve those 70's level its just matter of time

we're moving in that direction

Maybe not so low as in the 70s, but I think we should see at least a 20% fall in the next 2-3 years.

And maybe a total of 30% in the next 5 years?

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Maybe not so low as in the 70s, but I think we should see at least a 20% fall in the next 2-3 years.

And maybe a total of 30% in the next 5 years?

modest, aren't we.

game over mate, it will be full blown CA style failure.

trust me, I know it.

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modest, aren't we.

game over mate, it will be full blown CA style failure.

trust me, I know it.

I am a tenant, "Tired of Waiting" for this bl00dy crash. It is not that I am being modest. It is more that I don't want to hope for too much, and be disappointed again... :( But I DO hope you are right, and I wrong. :unsure:

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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