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David Smith

Don’t Fear A Housing Crash

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Prices appear to have managed a ‘soft landing’, with predictions of gentle growth in 2006.

The housing-market crash that some analysts predicted for this year has been avoided. Instead, the soft landing that the Bank of England was hoping for appears to have been achieved. Nationwide building society expects house prices to end the year 2.3% higher than they were at the beginning of 2005. And economists predict more of the same next year.

Fionnuala Earley at Nationwide said: “As additions to housing supply continue to lag the rate at which households are formed — through weddings, partnerships and divorces — by about 30,000 a year, there will be demand pressures. This will be helped by a benign economy with a favourable interest-rate environment, helping to keep debt-servicing costs low. Confidence will support prices but that is not expected to offer an immediate boost. We think prices will rise between 0% and 3% in 2006.”

Nationwide’s prediction is in line with the consensus, as most analysts predict growth of less than 3%. The most bullish forecasts are from mortgage broker John Charcol, property website Rightmove, and the Royal Institution of Chartered Surveyors. Charcol is predicting house-price growth of 5.5%, while Rics and Rightmove both think prices will rise by 4%.

Drew Wotherspoon at Charcol said: “Interest rates are by far the most important influence on house prices, and we expect rates to fall further in 2006. We think there will be at least two, but probably three, quarter-point cuts, which would take base rate to 3.75% by the end of the year. This should stimulate a gentle upward movement in prices as confidence and affordability improves further.”

Savills, an estate agent, believes that house-price growth will be flat in 2006, but adds that its prediction of 0% growth masks a mixed story. Jim Ward at Savills said: “Behind that figure we think there will be big regional variations.”

After three years of very little movement, Savills thinks the London market is ready for further growth. It is expecting the top end, known as the prime market, to do best, with prices rising by around 5%.

Knight Frank, another estate agent, is even more bullish about prime properties in London. It thinks they will go up by an average of 7%, with the most expensive — those worth £3m or more — rising by 8%.

High City bonuses and the continued buoyancy of the financial markets will help boost the housing market in the capital. And the shoots of recovery are expected to spread to the mainstream market as well. Savills expects prices in this sector to rise by around 3% next year.

A pick-up in London will be welcome news for sellers because it has been a buyers’ market in the capital for the past few years. However, vendors in other parts of the country look set for a harder year next year.

Savills thinks the weakness in London and the southeast over the past couple of years will spread north. It predicts falls in every region apart from London, the southeast and Scotland, and thinks that prices in northern England will fall by 5%.

Some places will buck the trend, however, so investors who buy carefully should be able to beat the market. Knight Frank believes that, despite the feeling that many areas in the north will struggle to achieve positive growth next year, some towns in the region have further to go.

It thinks Durham will see above-average growth because of demand from the increasingly prosperous northeastern business community. Bradford and Hull should outperform the market because of the regeneration in those areas. And Newark and Grantham look set to prosper as improved rail links with London let commuters look further north.

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A recent thread on this site quoted headlines from the Sunday Times from the late 1980's based on EA and VI predictions for the market. All were bullish as we entered the correction. Reality is the prices houses are selling in relation to prices paid. In my area (West Midlands) prices are already down 10-15% from the peak. The ODPM reported falls of 7% for Milton Keynes area and so forth., rememember we are at the early stages of the market correction and still in the propaganda phase where there is denial, hype and proliferation of upbeat market reports. VIs and EAs do not want a crash or a threat of one as there commissions will dry up. Understanding the bias in reporting is very important.

Crashes follow bubbles as sure as night follows day. The laws of economics cannot be broken. Never have, never will.

Edited by Realistbear

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Guest pioneer31

I won't fear a housing crash, on the contrary I'll enjoy it

It's interesting that nearly all of the VI's have got their predictions wrong this year. Name me an estate agent or bank who forecast 0% growth?

That's exactly what we've experienced around my neck of the woods.

All these predicted rises for 2006 are laughable. The market is dead on it's a**e.

With so many people locked out of the market, only an idiot would predict further rises

What next? An alien invasion perhaps? They can all buy up the property because no other bugger can afford it.

:rolleyes:

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Prices appear to have managed a ‘soft landing’, with predictions of gentle growth in 2006.

The housing-market crash that some analysts predicted for this year has been avoided. Instead, the soft landing that the Bank of England was hoping for appears to have been achieved. Nationwide building society expects house prices to end the year 2.3% higher than they were at the beginning of 2005. And economists predict more of the same next year.

Fionnuala Earley at Nationwide said: “As additions to housing supply continue to lag the rate at which households are formed — through weddings, partnerships and divorces — by about 30,000 a year, there will be demand pressures.(OOOH - Forgot to mention that 280,000 vacant properties come onto the UK market every year through deceased owners then???) This will be helped by a benign economy with a favourable interest-rate environment, helping to keep debt-servicing costs low. Confidence will support prices but that is not expected to offer an immediate boost. We think prices will rise 0%???????? and 3% in 2006.”

Read this then House prices have worst year in a decade, Nationwide LOL

Nationwide’s prediction is in line with the consensus, as most analysts predict growth of less than 3%. The most bullish forecasts are from mortgage broker John Charcol, property website Rightmove, and the Royal Institution of Chartered Surveyors. Charcol is predicting house-price growth of 5.5%, while Rics and Rightmove both think prices will rise by 4%.

Drew Wotherspoon at Charcol said: “Interest rates are by far the most important influence on house prices, and we expect rates to fall further in 2006. We think there will be at least two, but probably three, quarter-point cuts, which would take base rate to 3.75% by the end of the year. This should stimulate a gentle upward movement in prices as confidence and affordability improves further.”

Savills, an estate agent, believes that house-price growth will be flat in 2006, but adds that its prediction of 0% growth (NILL, NOUGHT, ZERO) masks a mixed story. Jim Ward at Savills said: “Behind that figure we think there will be big regional variations.” (House price FALLS then???)

After three years of very little movement, Savills thinks the London market is ready for further growth. It is expecting the top end, known as the prime market, to do best, with prices rising by around 5%.

Knight Frank, another estate agent, is even more bullish about prime properties in London. It thinks they will go up by an average of 7%, with the most expensive — those worth £3m or more — rising by 8%.

High City bonuses and the continued buoyancy of the financial markets will help boost the housing market in the capital. (A few thousand people will prop up the whole of the South East property market then heh??????) And the shoots of recovery are expected to spread to the mainstream market as well. Savills expects prices in this sector to rise by around 3% next year.

A pick-up in London will be welcome news for sellers because it has been a buyers’ market in the capital for the past few years. However, vendors in other parts of the country look set for a harder year next year.

Savills thinks the weakness in London and the southeast over the past couple of years will spread north. It predicts falls in every region apart from London, the southeast and Scotland, and thinks that prices in northern England will fall by 5%.

Some places will buck the trend, however, so investors who buy carefully should be able to beat the market. So house prices ARE falling then and now it's "A TREND" heh, heh???? Knight Frank believes that, despite the feeling that many areas in the north will struggle to achieve positive growth next year, some towns in the region have further to go.

It thinks Durham will see above-average growth because of demand from the increasingly prosperous northeastern business community. Bradford and Hull should outperform the market because of the regeneration in those areas. And Newark and Grantham look set to prosper as improved rail links with London let commuters look further north.

Vi gobbledygook!

PS Happy New Wind-up!

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Don't fear desperate Bulls posting here with patronising "don't fear" threads masquerading as reasonable and rational argument.

And don't fear three posts within a few minutes by the same person saying the same thing three times, but pretending to be three different posts.

Yours, dreadfully frightened,

VP

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  • 301 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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