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Si1

Real House Prices - Stability For Next Decade?

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post-496-047907000 1288616568_thumb.jpg

Click on this image to expand it - I overlaid the nationwide graph (non-inflation adjusted) onto the inflation-adjusted prediction from a well cited paper from the US Federal Reserve, downloadable, modelling inflation-adjusted house prices against birth rates.

the earlier peaks do (comaring to the dotted real data line on the underltying chart) do not match as one is inflation adjusted, the other not, but I am assuming that the recent peak should more or less match and the effect of real vs nominal will be slim in the recent past on the chart

The modelled (thick line) outputs suggest to me that there will be no strong downward pressure until 2020 - basically there is a minor baby boom chewing thru the system of people in their mid 20s approaching peak property ownership age, be it thru rents or purchases, they may exert stability on the housing market for next decade, while at the same time baby boomers aren't downsizing for some years yet

For me, whilst marginal returns on property are poor, this does not suggest a buy signal, but rather a rent-for-then-next-decade and put my spare wealth into equities signal.

Unpalatable but, tho this gives me a split personality with my wishes for a crash, quite possible.

post-496-047907000 1288616568_thumb.jpg

Edited by Si1

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It has been a while since I've seen that graph and I still don't quite know what it'll mean for us.

Although if it is time to revisit it, how does the Irish situation compare to their Fed simulation? If I remember correctly theirs showed long term elevated prices. And well let's just say that's not happened in reality has it?

Anyone care to help?

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It has been a while since I've seen that graph and I still don't quite know what it'll mean for us.

Although if it is time to revisit it, how does the Irish situation compare to their Fed simulation? If I remember correctly theirs showed long term elevated prices. And well let's just say that's not happened in reality has it?

Anyone care to help?

blimey yes - here's Ireland:

post-496-042696900 1288618101_thumb.jpg

post-496-042696900 1288618101_thumb.jpg

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From that it looks like if a 35 year old FTBer buys now their property will decline by about 75% when (if?) they retire.

If the graph is generally correct I expect there will be ups and downs in property value on the way down (like on the way up) rather than a relatively straight gradual line down. Rises and falls in the UK have been steep in the past.

Mind you if the chart is for the US the UK will likely be a bit different. Planning laws, government crazies policy making etc etc.

Edited by billybong

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Meh.

Really, this 'housing' boom/bust is nothing more than a skilfully engineered wealth transfer mechanism. Never have so many people been in such vast amounts of debt in modern times. We're only now just scraping along some intermediate inflection point before the real problems occur. Even those in their early 20's, who are without a mortgage, are further in debt due to schooling and living costs than anyone previous. How is this a good thing?

The majority of folk in the world have literally nothing when compared to what a 'poor' Brit has. That disparity will shift in due time, especially when you take into account our own dire outlook in regards to energy and resource independence; we don't have a plan outside of hanging onto the American energy consuming behemoth for as long as we can.

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  • 285 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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