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The Independent: ' Double Dip ' Predicted For Housing Market

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The Independent: 'Double dip' predicted for housing market

By Sean O'Grady

Tuesday, 10 May 2011

House prices look set for a "double dip" this year, even if the economy as a whole manages to avoid it – with a total real-terms deprecation in property values of close to a third since the peak of 2007, say analysts.

The news comes despite evidence of a lift in activity. The Royal Institution for Chartered Surveyors said that 8 per cent more chartered surveyors reported a rise rather than fall in new instructions, up from 4 per cent more in March. Spring is traditionally a busier time of year for the property market, and the exceptionally cold winter may have added to this seasonal bounceback.

The latest Halifax house price index shows that average prices fell by 1.4 per cent between March and April, taking the overall drop in house values from their peak in 2007 to about 20 per cent, and the annual decline to 3.7 per cent.

The current average house price of £160,395 is 4 per cent above the April 2009 low point, but remains 20 per cent below its August 2007 peak of £199,612.

Adding inflation to the equation, the real-terms fall in house prices since 2007 has been closer to 30 per cent – with analysts forecasting a further 5 to 7 per cent fall this year.

Immediate prospects for the market, says Martin Ellis, housing economist at Halifax, are not encouraging: "Weak confidence among households, partly due to uncertainty over the economic outlook, is constraining housing demand and resulting in downward movement in prices."

The Rics housing spokesman, Michael Newey, added: "The return of sellers to the market is positive, but activity still remains subdued and it is difficult to see it picking up materially over the coming months."

Interest rates too may tighten over the coming months, depressing activity and values. Though many analysts only expect the Bank of England to raise the Bank rate by 0.25 percentage points in November or later, the psychological effect on would-be buyers may be greater if they become convinced that this turning point in the interest rate cycle presages a return to pre-crisis interest rates – and higher mortgage bills.

The Bank will indicate its view on interest rates in its Inflation Report tomorrow.

Nothing we didn't know already but my, my those figures must drain the colour from the cheeks of the ill-informed / greedy amateur pwoperdee developer and parasitic BTL boomer. Suck it up, leeches; the tables have turned.

What's that scratching noise? That's the wolf at your door.

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I read this...

billyfromdenmark, 15 hours ago

Who'd have thought those who claim to be champions of competition and free markets would beggar their voters and nation doing all in their power to prevent the housing market from responding to market forces ?

Why would that be Mr Osborne ?

- - - - - - - - - -

Mrs_Cake, 14 hours ago in reply to billyfromdenmark

Maybe it has something to do with the banks having a lot of money on their books tied up in property loans. If there were a crash there might well need to be a few more taxpayer bank bail-outs.

Not really what the boy Osborne wants.

I see this argument time and again but am I correct in thinking that if you declare bankruptcy, or are repossessed, YOU are still liable to repay the shortfall / remainder of the mortgage? Therefore, if prices crash don't banks get their money back (humour me, Injin ;) ) either way?

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The Independent: 'Double dip' predicted for housing market

By Sean O'Grady

Tuesday, 10 May 2011

Nothing we didn't know already but my, my those figures must drain the colour from the cheeks of the ill-informed / greedy amateur pwoperdee developer and

parasitic BTL boomer.

Suck it up, leeches; the tables have turned.

What's that scratching noise? That's the wolf at your door.

Sorry, your generalisation is not accurate.

I agree with you about the BTL brigade, but from my experience they are in the 30 - 40+ year old age bracket!

Many of us 'boomers' are far to nervous to take on debt for a BTL empire.

But, thanks to our beloved HPC.co.uk we got off of the fictional pwoperdee 'ladder' scam long before the bust. :P

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I wish I was seeing 20% off peak around my search area.. Prices are about the same

With real-term only drops the BTL brigade are benefitting from increased rents and inflation eroding their debt.

In fact it's those with a STR fund who are worse off

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I see this argument time and again but am I correct in thinking that if you declare bankruptcy, or are repossessed, YOU are still liable to repay the shortfall / remainder of the mortgage? Therefore, if prices crash don't banks get their money back (humour me, Injin ;) ) either way?

If you are declared bankrupt your debts are gone, apart from your student loan. But if you are merely repossessed the unpaid portion of the mortgage remains (in the UK.)

You can declare yourself bankrupt of course... ;)

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I wish I was seeing 20% off peak around my search area.. Prices are about the same

With real-term only drops the BTL brigade are benefitting from increased rents and inflation eroding their debt.

In fact it's those with a STR fund who are worse off

20%? Pfft, I'm used to seeing 40%+ over here in NI! ;)

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The article is written by Sean O'Grady. Any relation to Sarah at the Daily Express? Could make for some interesting conversations over the meal table at family reunions...

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...

The current average house price of £160,395 is 4 per cent above the April 2009 low point, but remains 20 per cent below its August 2007 peak of £199,612.

Adding inflation to the equation, the real-terms fall in house prices since 2007 has been closer to 30 per cent – with analysts forecasting a further 5 to 7 per cent fall this year.

...

Except the "real terms" effect of the type of inflation the UK is getting is that houses are becoming less affordable. So saying that the real-terms fall is closer to 30% is a bit misleading.

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House prices have indeed lost ONE THIRD of their real values since the peak. We always knew that prices would need to fall 50% in real terms in order to bring them back into line, and so it is proving to be the case, as ludicrous and unbelieveable as that may have sounded at the time. No we are more than half way there, and there is hardly anyone in disagreement that prices have further to fall. No new paradigm. The bears win.

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We always knew that prices would need to fall 50% in real terms in order to bring them back into line, and so it is proving to be the case, as ludicrous and unbelieveable as that may have sounded at the time.

Not everyone. I believe they need to fall at least 80% relative to wages to fall back into line. We've got some way to go.

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Not everyone. I believe they need to fall at least 80% relative to wages to fall back into line. We've got some way to go.

Agreed, and it's to be expected that there will be some undershoot at the other side.

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Agreed, and it's to be expected that there will be some undershoot at the other side.

Exactly.

And that is assuming everything goes really well. It is a low probability outcome.

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20%? Pfft, I'm used to seeing 40%+ over here in NI! ;)

Only because some people(/banks) foolishly thought that the market price for property in NI without "the troubles" was the same as in the mainland so they ramped up prices to match. Only to find that there are other reasons why NI property is historically cheaper than the rest of the UK.

tim

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If you are declared bankrupt your debts are gone, apart from your student loan. But if you are merely repossessed the unpaid portion of the mortgage remains (in the UK.)

You can declare yourself bankrupt of course... ;)

Is it quite as straightforward as that Nationalist? I only ask as I think there are circumstances in which a bankrupt can keep their house(and presumably the mortgage debt!) whilst eliminating everything else. May be determined by dependents in the house etc. I think under some circumstances it's possible to keep the car too (if needed for employment for example)

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Agreed, and it's to be expected that there will be some undershoot at the other side.

Relative to wages.

greenwheelbarrowcash.jpg

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That 30% in real terms is bogus, wage inflation is the only inflation that counts, so it's not there yet. Until houses are affordable they are going down, it's that simple. We've had nothing like the drops we need yet, it's barely started. Throwing large sounding numbers about relating to drops doesn't make them affordable, before long the actual nominal fall figures will be large.

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An unpleasant alternative to further house price falls, is the government allowing a kind of 1970's style inflation to take place. ie keeping rates at zero until wages double before choking off inlation with higher rates and taxes.

Since the whole system is fiddled anyway, this ought to be considered, even though it would annoy everyone on hpc.

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An unpleasant alternative to further house price falls, is the government allowing a kind of 1970's style inflation to take place. ie keeping rates at zero until wages double before choking off inlation with higher rates and taxes.

Since the whole system is fiddled anyway, this ought to be considered, even though it would annoy everyone on hpc.

The BOE is trying its damnedest but it's not easy with the pound refusing to fall and wage demands being stubbornly subdued. It will take a few years at least.

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The BOE is trying its damnedest but it's not easy with the pound refusing to fall and wage demands being stubbornly subdued. It will take a few years at least.

The risk is currency collapse. Why on earth would anyone keep their assets in pounds, when those pounds are buying less stuff every month? Ditto dollars, euro etc.

My concern is it could be very sudden, everyone getting out on the same day.

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  • 276 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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