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kilroy

Home Prices In U.k. Poised To Decline After `sucker's Rally,'

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oh dear, hope the mainstream media don't pick up on this, mwa ha ha. Definitely something to post in reader's comments.

http://www.bloomberg.com/news/2010-08-10/home-prices-in-u-k-poised-to-decline-after-sucker-s-rally-savills-says.html

Home Prices in U.K. Poised to Decline After `Sucker's Rally,' Savills Says

By Simon Packard - Aug 10, 2010 10:30 AM GMT+0100

The gain in U.K. home prices during the first half will prove to be a “sucker’s rally” as an increase in properties for sale causes values to fall this year and next, Savills Plc said.

The market probably won’t recover until 2012, the London- based property broker said in a report today, a year later than it predicted in November. Prices will drop 2.5 percent this year and 1 percent in 2011, Savills said.

Residential property values climbed 4.1 percent during the first half, according to a quarterly index compiled by Nationwide Building Society. At the same time, home sales fell 20 percent from the previous six months, making the price gains both unexpected and unsustainable, Savills said.

“The mainstream housing market is at a tipping point,” said Yolande Barnes, Savills’s head of residential research. The lack of homes for sale and drop in transactions “resulted in price gains that some in the stock market might call a ‘sucker’s rally,’” she said.

There is already evidence the market is cooling. A house- price gauge for July released today by the Royal Institution of Chartered Surveyors showed the first decline in a year as its members reported a drop in buyer inquiries and more homes coming onto the market.

Until 2012, potential homebuyers will find it harder to borrow money because of rising unemployment and tax increases stemming from government efforts to cut the deficit, according to Savills.

Fewer Home-Loans

Mortgage lending has fallen to 52 percent of the average for the past 15 years, according to June approvals figures compiled by the Bank of England. Council of Mortgage Lenders data show the average down payment required for a first-time buyer is equivalent to one year’s disposable income, at least five times more than in 1995, Savills said.

Sales prices in England and Wales rose 8.4 percent in June from a year earlier, down from May’s 8.7 percent annual growth rate, according to the Land Registry.

While prices won’t sink back to the low point reached in 2008, “the correction will be longer and more drawn out,” Barnes said. “There will be a big divergence in the pace of growth” between southern England and the rest of the country, she added.

In London, home prices will rise 6 percent in 2012, double the national rate, after barely changing in the preceding 18 months, Savills predicted. For homes in central London costing more than 1 million pounds ($1.6 million), the recovery will be stronger, with values advancing 7.5 percent in 2012, the company said.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net.

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I thought the 2012 bit was probably going to be a bit optimistic.

Or do they just mean in the Olympic area?

I expect East London prices peaked in the run up to the Dome, and are peaking again as the Olympics approach.

Wonder how long they can keep up the twelve-year 'regeneration' cycle?

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It's great that they used the phrase 'suckers rally' but it seems at odds with their pretty unimpressive prediction that prices will fall a mere 4% in 2 years then recover!

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It's great that they used the phrase 'suckers rally' but it seems at odds with their pretty unimpressive prediction that prices will fall a mere 4% in 2 years then recover!

They typically ignore the result of a 4% fall in price - banks are further limited in spending, the economy shrinks and bad debts increase. This negative feedback loop further reduces prices; such 'sophisticated mathematical models' are beyond estate agents who probably struggled to pass O-level maths.

I doubt they took account the effects of inflation that is hidden and biting into incomes and the negative psychological effect of falling prices to feed into the loop.

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They typically ignore the result of a 4% fall in price - banks are further limited in spending, the economy shrinks and bad debts increase. This negative feedback loop further reduces prices; such 'sophisticated mathematical models' are beyond estate agents who probably struggled to pass O-level maths.

I doubt they took account the effects of inflation that is hidden and biting into incomes and the negative psychological effect of falling prices to feed into the loop.

exactly - i consider anything within a 5% swing either way to be a static market, one problem is though the housing market does not do static.

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I am sure Savils customers over the last year or so will be chuffed that Savils regard them as suckers.

I know quite a few suckers who have bought this year.

They wouldnt listen.

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"Prices will drop 2.5 percent this year and 1 percent in 2011, Savills said. "

2.5% in a month will be normative in the dark days ahead. Property crashes do not do 1-2.5% in a year. They do those kinds of numbers every 30 days for quite a long time. The last great crash lasted 7 years--this one will last longer because it is that much deeper.

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Guest UK Debt Slave

"Drink deeply from the well of nothingless"

;)

Mike

Perfectly put

House prices are meaningless in this environment

All you have to do is ignore the insanity

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I am sure Savils customers over the last year or so will be chuffed that Savils regard them as suckers.

I know quite a few suckers who have bought this year.

They wouldnt listen.

I bet Savils forgot to mention this to their clients at the time..... "go on, buy it. House prices only ever go up!"

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I bet Savils forgot to mention this to their clients at the time..... "go on, buy it. House prices only ever go up!"

I am in the used car trade and it's a pretty reliable pointer to the economy and house prices.In april prices started to fall back and the drops have steepened every month since.This has conicided with the disappearance of buyers.The budget finished it totally and some prices went into freefall.We now only see people whose cars are dead plus the 18 year olds looking for "A little low mileage Clio/Fiesta/Corsa for £1000 - must be Silver/Black and one old lady owner"

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I bought in the last month. If the article is correct, why would I be bothered if prices dip a bit over the next year and recover by 2012?

I was hoping prices would dip for about three years recovering in about 2016, just after I trade up.

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I thought the 2012 bit was probably going to be a bit optimistic.

Or do they just mean in the Olympic area?

people just fail to get their heads round the concept of medium to long term house price falls

it's a bit like Dougal in Father Ted saying 'run that past me again' when he doesn't understand the difference between small and faraway

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BBC news are now behind a crash IMO. Houses are our main economy? houses are not shifting, therefore a main part of our economy is not working, therefore the Government want people to drop their prices and get some volumes going? Reporting "from Sale in Manchester today boys and girls, because we want you to make that sale, and cut the price to do so, the bank can maybe lend some mug 25% less than you paid, geddit?" Running a ticker with "House price double dip" says it all, the media are on-side, the stats are coming on-side, the crash is ON, big time, with the BBC doing their best 80`s doom and gloom cheerleading.

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people just fail to get their heads round the concept of medium to long term house price falls

it's a bit like Dougal in Father Ted saying 'run that past me again' when he doesn't understand the difference between small and faraway

Your price drop is too SMALL, and your next buyer is FAR FAR AWAY.

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BBC news are now behind a crash IMO. Houses are our main economy? houses are not shifting, therefore a main part of our economy is not working, therefore the Government want people to drop their prices and get some volumes going? Reporting "from Sale in Manchester today boys and girls, because we want you to make that sale, and cut the price to do so, the bank can maybe lend some mug 25% less than you paid, geddit?" Running a ticker with "House price double dip" says it all, the media are on-side, the stats are coming on-side, the crash is ON, big time, with the BBC doing their best 80`s doom and gloom cheerleading.

I don't know about that yet. I agree that sentiment HAS shifted to the negative recently but I think by the end of the year we will know whether we will see a nominal crash in progress or a slow grind down in prices with a mix of nominal and real topped with a sauce of QE2.

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  • 201 Brexit, House prices and Summer 2020

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      • down 5% +
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