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Realistbear

R I C S: Forecast Of Houses Doubling In 5 Years "ridiculous"

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http://icbirmingham.icnetwork.co.uk/birmin...-name_page.html

Talk of 100% rise in prices dismissed

Jul 20 2006

Property experts warned against a "knee-jerk reaction" to increase interest rates by the end of the year, which would push homes beyond first time buyers.
The warning came after a report this week suggested prices were set to rocket by nearly 100 per cent in five years.
But Harvey Williams, regional and national spokesperson on the housing market for the Royal Institute of Chartered Surveyors, said homeowners
should focus instead on an imminent rise in interest rates.
The report, by Oxford Economic Forecasting, said the average home could cost almost £300,000 by 2011. The average price in the Midlands is £166,000.
"The forecast is ridiculous,"
said Mr Williams. "The future of the market is stable because we have the three most important parts in place - we have relatively high employment, low interest rates and low inflation. It is not possible to forecast that far ahead.

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A nominal 100% increase over 5 years is 15% per year, compounded.

If you strip out wage inflation of 4%, it takes a real increase in HP of 11% per year to get a nominal doubling in 5 years.

Doesn't sound so shocking that way, but I still regard it as ridiculous.

Who will be buying these properties? There aren't that many oligarchs.

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RICS have started to talk realistically about price growth from now on. They are always throwing cold water on the flames. I think they have started to see the light and are (shock) trying to be responsible. They clearly can't forecast an actual crash, because that would be like the modern day equivalent of saying the world is flat. But they are getting very cautious of late in their forecasts for the future.

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http://icbirmingham.icnetwork.co.uk/birmin...-name_page.html

Talk of 100% rise in prices dismissed

Jul 20 2006

Property experts warned against a "knee-jerk reaction" to increase interest rates by the end of the year, which would push homes beyond first time buyers.
The warning came after a report this week suggested prices were set to rocket by nearly 100 per cent in five years.
But Harvey Williams, regional and national spokesperson on the housing market for the Royal Institute of Chartered Surveyors, said homeowners
should focus instead on an imminent rise in interest rates.
The report, by Oxford Economic Forecasting, said the average home could cost almost £300,000 by 2011. The average price in the Midlands is £166,000.
"The forecast is ridiculous,"
said Mr Williams. "The future of the market is stable because we have the three most important parts in place - we have relatively high employment, low interest rates and low inflation. It is not possible to forecast that far ahead.

I remember back in 2000 when Mobile Operators were fixated on 3G / Mobile applications/services - they would predict revenues for this service and that service - but when it was pointed out that if they achieved these revenues the average punter would have no money left to pay for food / shelter i.e. all their income would be taken up playing mobile computer games and downloading tunes.

Makes you laugh when 'experts' extrapolate into the future using only a few carefully chosen data points (i.e. the last few years without considering what is affordable and what the ceiling is.

HAL

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"The forecast is ridiculous," said Mr Williams. "The future of the market is stable because we have the three most important parts in place - we have relatively high employment, low interest rates and low inflation. It is not possible to forecast that far ahead. [/indent]

Is that a downgrade of high employment to "relatively" high employment I spot :P

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My guess is that RICS are conscious of the growing credibility gap. With the land registry reporting falls accross the nation and even Halifax saying the rises are over the public must be getting more than a little sceptical when they read in the Express that houses will double next year etc. etc.

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A nominal 100% increase over 5 years is 15% per year, compounded.

If you strip out wage inflation of 4%, it takes a real increase in HP of 11% per year to get a nominal doubling in 5 years.

Doesn't sound so shocking that way, but I still regard it as ridiculous.

Who will be buying these properties? There aren't that many oligarchs.

The same people who are buying now I expect.

What many 'experts' fail to recognise is the effect that equity has when it is rolled forward. People are using accumulated equity to fund the purchase of their next property, or indeed to invest in buy to lets. People who are dying are beggining to leave large estates - built up on the back of booming HPI, which in turn is being passed on to family heirs.

House Price Inflation is feeding itself now, external economic factors are less influential now than they have ever been.

Be prepared for continued increases. If your not on the ladder now, you may want to consider again.

Edited by judas

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The same people who are buying now I expect.

What many 'experts' fail to recognise is the effect that equity has when it is rolled forward. People are using accumulated equity to fund the purchase of their next property, or indeed to invest in buy to lets. People who are dying are beggining to leave large estates - built up on the back of booming HPI, which in turn is being passed on to family heirs.

House Price Inflation is feeding itself now, external economic factors are less influential now than they have ever been.

Be prepared for continued increases. If your not on the ladder now, you may want to consider again.

The dead are losing a huge portion of their estates to death duty which means it cannot be passed on to children intact.

HPI cannot feed itslef as perpetual motion as an economic concept is impossible. Pyramid schemes have all been tried and they all fail. Its due to economic shifts including unemployment, recession, IR fluctuations etc. All variables that cause the centuries old boom and busts. Pyramids feed themsleves only as long as suckers buy in at the bottom to keep the thing going. Remove FTBs and the bottom feeders starve and cannot move up the pyramid.

I think Dr. Hidleglow Purgit-Waller debunked the Pyramid in 1871 with the simple formula: there never is somefink for nuffink not nowhow never.

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Just to remind those with short memories or lack of exposure to past RICS knowledge:

FACTS:

1. RICS was recently attacked by the council of mortgage lenders due to its members taking back handers relating to the valuation of new build apartments. No prosecutions resulted, but should have.

2. RICS is "self regulating" (ie: it is not subject to ANY regulation whatsoever).

3. RICS historically (see its press releases over the last five years) talked the market up, whatever the conditions (surprise surprise).

4. RICS is not in the least interested in a global or local house price policy, it is interested ONLY in keeping its members in work.

5. RICS has consistently lied about the state of the market in the last two years, ignoring all the obvious signs that house prices cannot keep going up indeifinitely.

The reasons for RICS' sudden U-turn comments as reported at the top of this thread are obvious: It is a discredited organisation and is recognising that continuing to issue ridiculous statements in the past about the market will only backfire in the current climate. But those of us who keep tags on its activities over the last ten years will not forget. For more info go to the RICS site and see ample evidence of its total lack of objectivity in its valuation services (see its related businesses which are in direct conflict with its remit to fairly assess property values).

To be brutally honest, RICS is acting the part of a wartime collaborator who sees the liberating cavalry on the horizon and is desperate to avoid being strung up after a summary hearing on its past attitudes and activities. For similar examples see the great Endowment Policy swindles of the 1980's (still no-one has been prosecuted, but millions were conned).

Have a look at the way RICS "regulates" itself.

VacantPossession

Edited by VacantPossession

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I remember in the 1980s a 'mathematically-challenged' colleague at work trying to create a computer model of a small fast growing company making a small car exhaust part. When I pointed out that his sales projection for 2016 was 50% of projected UK GDP he replied "Gosh! Well, you never know, I mean this one is really going to take off!". As I recall he became a vet about six months later.

excellent stuff! :lol:

did he become dr. chinnery?:-

http://www.lofg.com/character_profile.php?profile_id=36

in the 1980's the japanese built hotels in hawaii at such great cost that at even at 100% occupancy there was not enough revenue to service the interest on the debt...

spreadsheets & groupthink - a dangerous combination... :rolleyes:

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Just to remind those with short memories or lack of exposure to past RICS knowledge:

FACTS:

1. RICS was recently attacked by the council of mortgage lenders due to its members taking back handers relating to the valuation of new build apartments. No prosecutions resulted, but should have.

2. RICS is "self regulating" (ie: it is not subject to ANY regulation whatsoever).

3. RICS historically (see its press releases over the last five years) talked the market up, whatever the conditions (surprise surprise).

4. RICS is not in the least interested in a global or local house price policy, it is interested ONLY in keeping its members in work.

5. RICS has consistently lied about the state of the market in the last two years, ignoring all the obvious signs that house prices cannot keep going up indeifinitely.

The reasons for RICS' sudden U-turn comments as reported at the top of this thread are obvious: It is a discredited organisation and is recognising that continuing to issue ridiculous statements in the past about the market will only backfire in the current climate. But those of us who keep tags on its activities over the last ten years will not forget. For more info go to the RICS site and see ample evidence of its total lack of objectivity in its valuation services (see its related businesses which are in direct conflict with its remit to fairly assess property values).

To be brutally honest, RICS is acting the part of a wartime collaborator who sees the liberating cavalry on the horizon and is desperate to avoid being strung up after a summary hearing on its past attitudes and activities. For similar examples see the great Endowment Policy swindles of the 1980's (still no-one has been prosecuted, but millions were conned).

Have a look at the way RICS "regulates" itself.

VacantPossession

As a "Chartered" body like the Institute of "Chartered" accountants, they owe a duty of care to act truthfully with a regard to public responsibility. Sadly, RICS seem to be little more than EAs. The mindless ramping of the property market is against the public good because it is encouraging indebtedness and financial imprudence of all kinds. Regrettably, we have a government that has been giving its full support to highly inflationary house prices to the detriment of the nation. It is scandalous and a form of financial treason.

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http://icbirmingham.icnetwork.co.uk/birmin...-name_page.html

Talk of 100% rise in prices dismissed

Jul 20 2006

Property experts warned against a "knee-jerk reaction" to increase interest rates by the end of the year, which would push homes beyond first time buyers.
The warning came after a report this week suggested prices were set to rocket by nearly 100 per cent in five years.
But Harvey Williams, regional and national spokesperson on the housing market for the Royal Institute of Chartered Surveyors, said homeowners
should focus instead on an imminent rise in interest rates.
The report, by Oxford Economic Forecasting, said the average home could cost almost £300,000 by 2011. The average price in the Midlands is £166,000.
"The forecast is ridiculous,"
said Mr Williams. "The future of the market is stable because we have the three most important parts in place - we have relatively high employment, low interest rates and low inflation. It is not possible to forecast that far ahead.

As I remember it the OEF forecast was for 50% rises within six years. (by 2012?)

http://www.guardian.co.uk/frontpage/story/0,,1822312,00.html

Why has this suddenly 'gone up' to 100% in 5 years?

Sounds like the Birmingham Post and RICS have sexed up the figures a bit...

Even you go with their spun figures 'nearly £300k' is not 100% up on £166k. RICS are obviously worried about the impact of this forecast on interest rates so they have sexed up the figures to try and ridicule it.

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A nominal 100% increase over 5 years is 15% per year, compounded.

If you strip out wage inflation of 4%, it takes a real increase in HP of 11% per year to get a nominal doubling in 5 years.

Doesn't sound so shocking that way, but I still regard it as ridiculous.

Who will be buying these properties? There aren't that many oligarchs.

11% a year is very shocking, above inflation..

It is massive.

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FACTS:

.......

5. RICS has consistently lied about the state of the market in the last two years, ignoring all the obvious signs that house prices cannot keep going up indeifinitely.

...........

To be brutally honest, RICS is acting the part of a wartime collaborator who sees the liberating cavalry on the horizon and is desperate to avoid being strung up after a summary hearing on its past attitudes and activities. For similar examples see the great Endowment Policy swindles of the 1980's (still no-one has been prosecuted, but millions were conned).

You have a vivid imagination. An excellent qualification for posting on this site.

The market has boomed over the past several years. RICS and all the other bodies that you would call VIs, who have predicted continuing growth have actually been correct. HPC-ers, who have been announcing the start of a crash for those same several years have actually been wrong.

Conditions now are changing, for sure, and most of those same VIs who were correctly predicting continued HPI over the last few years, are now using much more cautious language, and talking about the possibility of a plateau or a correction in the short term.

They are being realistic.

RICS is a professional body representing chartered surveyors. In effect, a trade union and a pressure group. Of course they will promote the best interests of their members, just like any trade union. You may not like them (I don't much either) but they do what they have to do, and they seem to know how to play the media.

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I remember in the 1980s a 'mathematically-challenged' colleague at work trying to create a computer model of a small fast growing company making a small car exhaust part. When I pointed out that his sales projection for 2016 was 50% of projected UK GDP he replied "Gosh! Well, you never know, I mean this one is really going to take off!". As I recall he became a vet about six months later.

Was this "Powerplus" (or similar name). If so I remember it well. Attracted a lot double glazing and kitchen salesmen types . What ever happened to it?

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You have a vivid imagination. An excellent qualification for posting on this site.

The market has boomed over the past several years. RICS and all the other bodies that you would call VIs, who have predicted continuing growth have actually been correct

Yes, but the accumulation of RICS and others talking up the market is partly the reason for the market rising arguably more than it ever should have. This is completely different from the market rising by itself and RICS, EA's and other bodies merely commenting on it. Add the press hype to this and it is no wonder how HPI has managed to just about hold on despite all the conditions being present for a substantial crash.

There is nothing imaginary in my comments about RICS. It is all true. I suggest you research on their activities. Even a cursory glance at their own website reveals an enormous range of commercial activities which directly conflict with their chartered status, and that of supposedly being an independent and fair arbiter of true values. Its members have consistently been involved in fraudulent scams whereby new builds by well known UK housebuilders are over-valued in return for bribes.

Are you a member of RICS? :D

VP

Edited by VacantPossession

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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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