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Is Anyone Even Slightly Bullish About Uk House Prices?

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It is now very obvious we are at the beginning of a period of falls in UK house prices.

Is there anyone that thinks there is a slight chance we could see rises within the next 18 months and under what circumstances this could happen?

Sensible senarios and views please

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It is now very obvious we are at the beginning of a period of falls in UK house prices.

Is there anyone that thinks there is a slight chance we could see rises within the next 18 months and under what circumstances this could happen?

Sensible senarios and views please

Some areas and some houses will see rises. It's endless individual emotional transactions all aggregated together, in some cases there'll be the right house that some buyer will pay more than they would have last year to own.

No more frenzy, no more license to print money, but some will still do well even if on balance the market doesn't.

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It depends if you mean "on HPC" or not.

I can certainly think of a few outside of here who are absolutely certain that rises will continue nationwide ad infinitum. Why? Because that's what property does, isn't it? Add in to that those who've told me "I expect prices to fall, but not round here, because <insert random reason here>*", and I can safely say that there are still plenty of house-horney bulls out there.

As for me, give it six months to a year and I think things will look a lot clearer. Bearier, and clearer.

* 'Here' being defined as a swathe of the south coast from Bournemouth to Eastbourne, the Home Counties, Norfolk, Cambridgeshire, several bits f Greater London, Oxfordshire, and a variety of locations in Scotland. Random reasons include 'people would rather live here than London', 'everyone in the Home Counties really wants to live in London', 'it's near Brighton and that'll never fall, because people from London like it', and 'it's really nice here, and nearer London than you think'.

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It is now very obvious we are at the beginning of a period of falls in UK house prices.

Is there anyone that thinks there is a slight chance we could see rises within the next 18 months and under what circumstances this could happen?

Sensible senarios and views please

Is the key thing what inflation does? Pumping vast amounts of liquidity into the markets surely bumps the money supply, and must filter through. If the government decide to pump hard enough, then prices can sustain or even rise. Pretty desperate long term though.

However, in the pump inflation scenario - and given that property is already overpriced (compared to historic norms), it might be better to invest money into other assets that are in limited supply - eg Renoirs, or vintage cars, or more realistically, BP shares.

Remember that HPI has to beat inflation (or risk free deposits like Northern Rock) to be financially sensible.

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It is now very obvious we are at the beginning of a period of falls in UK house prices.

Is there anyone that thinks there is a slight chance we could see rises within the next 18 months and under what circumstances this could happen?

Sensible senarios and views please

Great Crash I saw a few upticks in the journey downward. I would immagine the odd month might crop up where there is a small gain in some regions. But the cycle is headed down for the most part.

50-60% down from the top to the bottom IMO.

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Anyone whos just bought is going to be pretty price conscious about their next house purchase. However people who bought even a couple of years ago still have a lot to be happy about and may keep driving the market upwards. Sharp falls are not inevitable if people continue wanting to invest in property, and the vast majority of homeowners would have to see very significant falls in prices before the current selling price approaches what they paid.

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However, in the pump inflation scenario - and given that property is already overpriced (compared to historic norms), it might be better to invest money into other assets that are in limited supply - eg Renoirs, or vintage cars, or more realistically, BP shares.

I've sold property in expectation of a fall, I'm not in the Renoir league but I've stopped buying signed Cartier Bresson photographs in expectation of a fall, I've traded my gas guzzler in for a hybrid SUV in expectation of a severe hike in petrol prices and congestion charges, but I've bought Shell shares because of the same.

If you don't believe property is going up for the next year or two (and as the OP said, who does?) then a downturn/recession is pretty much inevitable. So it's just a question of what flavour that downturn will come in.

If it's inflationary, ie stagflation, then choose gold, index linked securities, or commodities, and be prepared to hop back into property in a few years. But if it's a deflationary recession then choose cash and be prepared to rent for as long as it takes, which could be decades.

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Well, despite all the scary stuff about poisons hatching from the mud, financial meltdown, and imminent house price Armageddon, the approvals/transactions still seem to holding up quite well, at least for the moment, although going forward they’ll fall back a bit more quickly now. This means that ‘average prices’ are still going up, and will probably continue going up into early next year; the (lagging) YoY will follow along about six months later. Obviously, the usual health warnings about ‘average’ and the ‘local’ price of houses applies.

But I think enthusiastic newbie-bears need to be a bit cautious – it’s very easy to get sucked into a ‘crash’ mentality far too early. You can see what I mean from this graph showing what happened to Average London March and June house prices on Spreadfair when the scary stuff hit the fan.

Average London, March/08 and June/08, Spreadfair

spreadssep07ze5.gif

All those hysterical ‘this is it’ threads in response to Righmove’s -2.6 MoM, the RICS surveyor balance, and the NR meltdown (but selectively ignoring the HIPS mix-adjust reason, the higher RICS sales-to-stock, etc :huh: ) produced a huge avalanche of bearish sell-bets that took the spread down by around 12pts, and many of those bets where hovering up £500 and £1000 per point.

So what happened?

Well, just over a week later and it’s on its way back up; once the waves have settled it’ll probably end up not too far from where it started. Some of those big price movements, particularly for the average UK markets not too far in the future, imply an index move that can’t actually happen – there just isn’t enough time given the approval levels and delays in a quarterly index. Some of those early bears selling into the downturn will have made a tidy profit from buy-bets near the bottom, but it looks likely to have been at the expense of those late bears trailing along behind. :(

Edited by spline

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Anyone whos just bought is going to be pretty price conscious about their next house purchase. However people who bought even a couple of years ago still have a lot to be happy about and may keep driving the market upwards. Sharp falls are not inevitable if people continue wanting to invest in property, and the vast majority of homeowners would have to see very significant falls in prices before the current selling price approaches what they paid.

I understand what you're saying, that there's an endless reservoir of aspirational demand for property, but what's happening right now is that the means to realise that demand is being throttled by the credit squeeze.

It's instructive to look back at the 1989/95 crash. The average purchase price in 1988 was £51,400. The market peaked in 1989 during which the average price was £61,500. In 1990, 1991, and 1992 house prices remained above the 1988 level, but that still didn't stop the long downward slide in prices. And contented 2004 or 2005 buyers won't stop the slide this time either.

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I hope beyond hope for a sensible correction... 25% would see me able to buy - 40%+ would see me happy with the risk. I am, I have to say, a born pessimist... though, when accused of this by an ex-boss (a born optimist) I explained that I prefer my surprises to be pleasant.

With this perspective, I've been looking for ways in which houses might not fall in price.

One possibility that has crossed my mind is that government could provide 'relief' for those households who can't afford to make mortgage payments - claiming it to be a stop gap measure while social housing is built. Perhaps the government could offer 'shared equity' as an escape route for overstretched home owners in order to avoid distressed sales... In offering such relief, while not having to keep house prices inflated, the market's valuation could be delayed indefinitely.

Another possibility is that another crisis - for example oil - could force rampant CPI/RPIX inflation which - necessarily - leads to rampant wage inflation... 25% to 50%/anm... should do the trick - no numbers need ever dip - no need for any crash - though, obviously, the cost of everything else relative to houses would rise significantly more quickly. Pensioners would be the real losers - and become dependent upon the state... but, as pensioners will be the majority of voters, and if left wing policies offer most funding to support pensioners - maybe this is the objective of the last decade's policies?

Aside from these two (admittedly apparently unrealistic) options, I can only otherwise anticipate a dramatic crash.

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Depends what you mean by bull.

Seriously, I would buy now if my mortgage payments were about the same or not much higher than what I pay in rent, I would sacrifice a 10% deposit and fees for owning a home.

At present I rent a house which similar ones have been on for 400k for1250pm.

Less 10% deposit my 360k mortgage would be 2300 repayment or 1780 IO, thats just too big a difference to me.

If prices were more even I'd buy and risk a fall.

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The recent fall is easily explained by the expected seasonal downturn. The property market is buoyant and will continue to be so due to strong fundementals, low unemployment, shortage of supply, growing economy and high levels of immigration. NOT!

Had you going there. Seriously, the only thing holding it up was sentiment and I reckon that's just about evaporated. I see lots of property on the market as I travel around - seems HIPS are not holding people back.

Edited by othello

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I expect my target properties and areas to decline by at least as much as / increase by less than my current property, so I'm pretty ambivalent. Why?

1. I live in a nice part of zone 1

2. Share f/hold

3. Major employer in the area is largely uncorrelated to UK GDP

The world would have to go to complete sh!t for this analysis to change (40% in < 5 months severity).

Best,

Monty

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I expect my target properties and areas to decline by at least as much as / increase by less than my current property, so I'm pretty ambivalent. Why?

1. I live in a nice part of zone 1

2. Share f/hold

3. Major employer in the area is largely uncorrelated to UK GDP

I'm intrigued, presumably by Zone 1 you mean central-ish London, if so who is the major employer?

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It is now very obvious we are at the beginning of a period of falls in UK house prices.

Is there anyone that thinks there is a slight chance we could see rises within the next 18 months and under what circumstances this could happen?

Sensible senarios and views please

Nothing obvious about I'm afraid. There are still plenty of good mortgage deals out there all lending huge chunks of wonga.

So NR is gone, but Abbey are proving that others will step in to take their market share. Prices show no signs of falling apart from the statistically flawed rubbish rightmove put out (which was acknowledged to be rubbish by hpc's bear posters).

It's far from over - rate cuts are on the horizon as well, we are going down the inflationary route I'm afraid. When it comes to houses, now is always the best time to buy (obviously last year would be even better, but that isn't possible even in a miracle economy).

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The world would have to go to complete sh!t for this analysis to change (40% in < 5 months severity).

I think we're about to see the world economy do *exactly* that. I think we're in the lead-in time while the desperate hold their tongue and hope for a miracle solution.

While I think a 40 to 50% drop is quite a reasonable expectation, I only expect this to be experienced for at least 6 to 18 months. A lot of people are sure to live in denial for a significant period - quite possibly for as long as financially possible - maybe longer.

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