Wednesday, Nov 22, 2006

7% house price growth in 2007?

Firstrung: House price growth to be 7 percent in 2007 - Savills research

Savills Residential Research has forecasted 7% growth in average UK house prices for next year and substantially more in the London and South East markets. The forecast assumes that interest rates will peak at 5.25% but Savills say that, even with further rises, there would still be room for further value growth - albeit at a reduced rate. This reflects a departure from conventional thinking on property values as they say that the extremely supply-constrained market in most parts of the UK puts additional upward pressure on prices - even when traditional measures of affordability look strained

Posted by converted lurker @ 11:23 AM (436 views)
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1. nearly30 said...

Seeing as P. Doff moaned about there not being a blog on this:

Statement 1
"Is not how much spending power people have compared to other periods in the past, it is what they have left over for discretionary spending after taking housing costs and living costs into account. Because inflation on basic spending has been substantially lower than the inflation of household incomes in recent years, there is a more substantial 'comfort cushion' in most households' finances than many people imagine."

OK - then why say the following when saying that buying is rosey for Joe Public:

Statement 2
"We have seen considerable growth in these sectors this year largely fuelled by the buoyant financial markets. With no sign of this weakening combined with the prospect of City bonuses amounting to 8.8bn by the year end there will be plenty of cash for further investment in property. We estimate that 5.5bn from City bonuses will go into housing at the top end of the market in 2007".

So what are you saying the 7% will be from?

Savills says that 'people' and 'most households' have a 'comfort cushion' - against what - just inflation on essentials? - what about HPI itself - and why is there massive HPI in London/SouthEast - yes see statement 2.

So - to sum up - is Saville's trying to say people are not so stretched or are not wise enough (dumb) to realise that buy-to-launderers will try and force a 7% increase in 2007? I doubt it?? Yes they will inflate the bubble further - fine but those with the 8 billion are the only ones at the party!!! Everyone else left 6 months earlier.


Wednesday, November 22, 2006 10:01PM Report Comment

2. Disgustedofyork said...

Of course, they would say that wouldn't they? If they gave any public indication of any doubt as to the continued strong rise in prices, they would be acting against their own, and their clients interest, as growth is based upon buyers being prepared to pay more as they believe in continued growth. Ever notice how nobody with an interest in growth ever gives forecasts predicting anything other than growth, regardless of what else is happening.
Of course they might be right, if they can keep making others believe this, and be prepared to fasten themselves with ever more expensive arrangements (50 year loans, interest only, 5x salary etc) to keeping on paying more.

Wednesday, November 22, 2006 11:15PM Report Comment

3. Nohpc said...

Is it actually possible to predict what the housing market is going to do? Why do we keep on printing articles from one economist or real estate agents predictions. VIs are present on both sides of the arguement. I note that one guy in the predictions section on the main page (Invesco Perpetual Manager) says prices will drop by 40% and he has positioned his funds in a position so that the company will not lose money. So it is in his interest to say house prices will plummet. Are there any genuine house price predictions.. no. So lets stop printing this kind of rubbish. I don't like the sense of security this gives me. I prefer to always think the worst or the best may happen.

Also, during the last house price crash was London affected less or more than the rest of the country?

And my third and final point/question is this. When you all own your own home one day and house prices start to boom will you all groan or will you all cheer?

Thursday, November 23, 2006 05:59AM Report Comment

4. Nohpc said...

Or alternatively sell to rent and lose out on a truck load of money like sold2rent :p

Thursday, November 23, 2006 05:59AM Report Comment

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