2011 Hp Forecasts .....

[LuckyOne]

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aJu_3Wzz5tGA&pos=6

2011

4CAST 0

CAPITAL ECONOMICS -10

CARTER JONAS -5

CB RICHARD ELLIS -4

CHESTERTON HUMBERTS-CEBR 0.9

CLUTTONS -0.1

COMMERZBANK 0

CONFEDERATION OF BRITISH INDUSTRY -4

COUNTRYWIDE -2.5

HAMPTONS INTERNATIONAL -4

IHS GLOBAL INSIGHT -7

INTESA-SANPAOLO 0

INVESTEC -2

JONES LANG LASALLE -1

KNIGHT FRANK -6

LSL PROPERTY SERVICES -4.5

NATIONAL AUSTRALIA BANK -4

ROYAL INSTITUTION OF CHARTERED SURVEYORS -2

SAVILLS -3

SCHRODERS 3

SOCIETE GENERALE -5

SPICERHAART -1

WINKWORTH 0

[Bloo Loo]

these guys all appear to see a bottom.

[LuckyOne]

these guys all appear to see a bottom.

All that it will take for a serious fall in prices is for everyone to believe that they will fall even moderately and delay their purchases until prices are lower.

The prophesy can become self fulfilling. It certainly feels like this is the path that we are going to take.

This is how deflationary death spirals begin.

[Bloo Loo]

All that it will take for a serious fall in prices is for everyone to believe that they will fall even moderately and delay their purchases until prices are lower.

The prophesy can become self fulfilling. It certainly feels like this is the path that we are going to take.

This is how deflationary death spirals begin.

just wondering how deflation ends in death?

for whom will it end their lives?...ah yes, the over lenders...for people with currency, it means more spending power.

[LuckyOne]

just wondering how deflation ends in death?

for whom will it end their lives?...ah yes, the over lenders...for people with currency, it means more spending power.

Unfortunately, deflation can crush both sides of the balance sheet if it is violent enough.

Asset prices drop, loans are defaulted upon, banks become insolvent due to lending failures and people who thought that they had currency in the form of bank deposits find that it is also destroyed.

This is one of the reasons that "hard money" assets can rise in price even in a deflationary world.

[Mikhail Liebenstein]

Unfortunately, deflation can crush both sides of the balance sheet if it is violent enough.

Asset prices drop, loans are defaulted upon, banks become insolvent due to lending failures and people who thought that they had currency in the form of bank deposits find that it is also destroyed.

This is one of the reasons that "hard money" assets can rise in price even in a deflationary world.

I doubt we'll see any nominal falls now of more than 5%, the real damage is being done by inflation. Everything is going up, and whilst general wages lag, there are a few hot spots.

[Bruce Banner]

Unfortunately, deflation can crush both sides of the balance sheet if it is violent enough.

Asset prices drop, loans are defaulted upon, banks become insolvent due to lending failures and people who thought that they had currency in the form of bank deposits find that it is also destroyed.

This is one of the reasons that "hard money" assets can rise in price even in a deflationary world.

Hard money assets?

Property, classic cars.....

Hold on, the bottom fell out of those in the early 90s. Property prices temporarily bounced back under NuLabour............... .

[Bruce Banner]

I doubt we'll see any nominal falls now of more than 5%, the real damage is being done by inflation. Everything is going up, and whilst general wages lag, there are a few hot spots.

I don't see much going up other than things I don't spend much on like food and fuel. Big ticket items are on the way down.

I expect nominal house price falls of between 30% and 40% over the next few years.

[MrFlibble]

I expect nominal house price falls of between 30% and 40% over the next few years.

Sounds more like it. Those numbers in the article were a little too optimistic for my liking.

The Sheeple need to embrace the idea that 'this sucker is going down' then we should see some sparks fly - off their feet as they head to the estate agent to get shot

[LuckyOne]

Hard money assets?

Property, classic cars.....

Hold on, the bottom fell out of those in the early 90s. Property prices temporarily bounced back under NuLabour............... .

A hard money asset is a bit like pornography. I can't really define it but I know it when I see it.

The closest that I can get to a rational definition is that a hard money asset is one which has a stable relationship between price and value in the long run which is not materially impacted by credit availability.

Collectibles such as art, wine and classic cars fail in this definition. Some precious metals fail but I am willing to make an exception for their insurance value only. Some commodities pass. Some government bonds pass. Property fails.

[Tired of Waiting]

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aJu_3Wzz5tGA&pos=6

2011

4CAST 0

CAPITAL ECONOMICS -10

CARTER JONAS -5

CB RICHARD ELLIS -4

CHESTERTON HUMBERTS-CEBR 0.9

CLUTTONS -0.1

COMMERZBANK 0

CONFEDERATION OF BRITISH INDUSTRY -4

COUNTRYWIDE -2.5

HAMPTONS INTERNATIONAL -4

IHS GLOBAL INSIGHT -7

INTESA-SANPAOLO 0

INVESTEC -2

JONES LANG LASALLE -1

KNIGHT FRANK -6

LSL PROPERTY SERVICES -4.5

NATIONAL AUSTRALIA BANK -4

ROYAL INSTITUTION OF CHARTERED SURVEYORS -2

SAVILLS -3

SCHRODERS 3

SOCIETE GENERALE -5

SPICERHAART -1

WINKWORTH 0

Thanks for that Lucky. Good summary there.

I'm a bit surprised by how modest most of these forecast falls are. For what it's worth, I think in 2011 we should see nominal falls of around -10%, and 5% inflation = 15% real falls.

[Caveat Mortgagor]

I doubt we'll see any nominal falls now of more than 5%, the real damage is being done by inflation. Everything is going up, and whilst general wages lag, there are a few hot spots.

I hear this argument many times and it baffles me. You fail to mention that wages are not increasing and dont look like doing so. As a result, the already household budgets are going to be even more stretched next year. I dont see how this can suport house prices.

Inflation per se will not put a bottom on the nominal prices, in the absence of wage inflation it will push them even lower.

[LuckyOne]

I don't see much going up other than things I don't spend much on like food and fuel. Big ticket items are on the way down.

I expect nominal house price falls of between 30% and 40% over the next few years.

I expect real falls of between 30% and 40% over the next few years.

I am still undecided about nominal falls as I can see the possibility of extreme outcomes for inflation / deflation and don't yet know which way it will go.

My experience in Japan tells me that reflationary monetary policy can take to a decade or more to "work" so I am leaning towards nominal falls slightly larger than real falls but without 100% conviction.

[LuckyOne]

I hear this argument many times and it baffles me. You fail to mention that wages are not increasing and dont look like doing so. As a result, the already household budgets are going to be even more stretched next year. I dont see how this can suport house prices.

Inflation per se will not put a bottom on the nominal prices, in the absence of wage inflation it will push them even lower.

The traditional transmission mechanism between price inflation and wage inflation has been collective bargaining power. In a world of weak unions and globalisation, this transmission mechanism is now extremely weak relative to its position in the 1970s / 1980s.

I agree with your assessment that price inflation without wage inflation is bad for house prices, especially if it is accompanied by higher interest rates.

Edited December 30, 2010 by LuckyOne

[Bloo Loo]

I doubt we'll see any nominal falls now of more than 5%, the real damage is being done by inflation. Everything is going up, and whilst general wages lag, there are a few hot spots.

prices of high order goods can only rise in two circumstances..

1. people have more spending power to purchase

2. people can get leverage to buy the thing.

in this inflationery environment, we are not seeing wage rises, we are seeing borrowing costs rise, food and energy costs rise....this means disposable income is reduced from the bottom end, so at the top end, the leverage one can afford to buy the house is reduced.

ergo, rising commodities means falling asset prices. government schemes to support people in "difficulties" with their housing means that the squeeze is again on incomes, other through tax increases, or no job at all.

Houses are going to fall. Bread is going to rise...as it kneads to..

[tim123]

I hear this argument many times and it baffles me. You fail to mention that wages are not increasing and dont look like doing so. As a result, the already household budgets are going to be even more stretched next year. I dont see how this can suport house prices.

They don't, ZIRP does.

The people that don't need to sell wont do so at -10/20% and there are few forced sales. The sales that do go through will be at around current prices.

IMHO 2011 prices wil be slightly down on very low numbers. The market will continue like that until IRs go up. When that will be is anybody's guess (but it wont be before the end of 2011, at the earliest).

tim

[Bruce Banner]

They don't, ZIRP does.

The people that don't need to sell wont do so at -10/20% and there are few forced sales. The sales that do go through will be at around current prices.

IMHO 2011 prices wil be slightly down on very low numbers. The market will continue like that until IRs go up. When that will be is anybody's guess (but it wont be before the end of 2011, at the earliest).

tim

Unless they can see the writing on the wall .

[Caveat Mortgagor]

They don't, ZIRP does.

The people that don't need to sell wont do so at -10/20% and there are few forced sales. The sales that do go through will be at around current prices.

IMHO 2011 prices wil be slightly down on very low numbers. The market will continue like that until IRs go up. When that will be is anybody's guess (but it wont be before the end of 2011, at the earliest).

tim

Not sure why you've quoted me. I was questioning why someone thinks inflation (without wage inflation) would support house prices. Whilst i dont disagree with the reasoning for your comments, they are irrelevant to my comment on the previous posters reasoning.

FWIW, this year is all about managing expectations but with a new twist. Yet again the VI's are trying to squeeze every last ftb out, this time by suggesting that prices will fall, but its ok, the falls are contained - it will only be 5% or so.

The implication is that if you are buying for the long term then you are ok. It is left to the buyer to have an internal dialogue in which they tell themselves that 2 years is long enough to recoup their 'investment'. I am sure some will fall for this.

[winkie]

prices of high order goods can only rise in two circumstances..

1. people have more spending power to purchase

2. people can get leverage to buy the thing.

in this inflationery environment, we are not seeing wage rises, we are seeing borrowing costs rise, food and energy costs rise....this means disposable income is reduced from the bottom end, so at the top end, the leverage one can afford to buy the house is reduced.

ergo, rising commodities means falling asset prices. government schemes to support people in "difficulties" with their housing means that the squeeze is again on incomes, other through tax increases, or no job at all.

Houses are going to fall. Bread is going to rise...as it kneads to..

Finished making my bread for today.