Thursday, February 8, 2007

David20040_0 said…Theres the evidence

Poll says house price inflation has peaked

"Higher rates are starting to have an effect already, but it would cause serious damage if rates go to 5.75 percent," said Karen Ward at HSBC. Yes thats right karen, looks like your shares are in for a battering (again).

Posted by cheeky charlie @ 08:56 PM (455 views)
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22 thoughts on “David20040_0 said…Theres the evidence

  • If this is so and the projected future rates turn out to be correct then the economy can kiss goodbye to equity release from property.

    For what is now substantially a consumer based economy there will be a lot of house improvement associated companies starting to feel the pinch as well as quite a few new car dealers.

    The reality will be that unemployment will rise, company profits will fall along with tax revenue and quite possibly ftse share prices.

    Gordons economic miracle is starting to crumble having spend the last 10 years as Tony’s stooge.

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  • I repeat my comments i have previously made, with RPI at 4.4% ( and real inflation at least double that ) if house prices stay static for 5 years thats a 30% reduction in real terms, a HPC is all relative and has lots of factors to play, my moneys always been on 8% and due to the UK economy rather than house prices.

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  • Cheekie Charlie says:

    Seems like theres too much bad news for this website to deal with, even the good news spells bad news!

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  • glorious sunshine says:

    Home price inflation may have peaked but they are still going up. In fact people are queuing up to a week to buy I have read recently!

    There is no way they are going to drop over the the next five years at least!

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  • Enuii
    Quote ” then the economy can kiss goodbye to equity release from property”

    Well thats actually called Debt and has a finite positition in the economy, well unless you think you can release and release and release.

    As for your other comments your spot on and sadly correct, unemployments already rising hence lets get everyone to leave school at 18, profits will fall – well for those that are only UK based and part of manufacturing ( which is now 1/2 what it was when Gordon and Tony took over ), Tax revenues and FTSE prices – well if Gordon becomes PM he can blame who ever takes over – was fine while i was running it mate – check the records!!!!!

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  • “Home price inflation may have peaked but they are still going up.”

    You don’t really get the concept of “peaked”, do you sunshine?

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  • “Only 8 said house prices were fairly valued and none said they were undervalued”

    How can anyone argue that house prices are fairly valued?

    Compared with what?

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  • One thing is clear, the economy is a state that it cannot support double digit gains that have been witnessed in previous years. The cheap money is no longer there and such are returns, the term ‘investment’ can no longer be readily applied to property.

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  • Yes he does. HPI has peaked means that it is still inflating. For no house price rise in 2007 HPI would have to drop substantially.

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  • Fine we might not get 20% rises every year. But they are still going up by over £1,000 a month. I can’t save that every month and I am saving £500. How on Earth am I ever going to be able to buy my own home with them rising at £1,000 a month?

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  • Only 15% of these so called experts think there will be any sort of correction.

    Face it lads, we’re wrong, there isn’t going to be any sort of correction or crash.

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  • Higher rates, bring it on, GREAT GREAT GREAT.

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  • I happened to see a developer (Ask Life) releasing flats in a block planned for completion in Sept 2009. They have provisional planning permission from the Trafford Council, subject to apperance, ect. They also need to vacat properties currently there, and in the case of shops, currently trading before demolision and building begins

    The first floor of the first phase of flats is due for realease at release at 10am on Sunday 11 Feb. However, they have already had reservations on over 50% of these, and will also relase the second floor on Sunday now too. There was a queue, literally out of the door fo the office, for people to place their non refundable £500 deposits to reserve 2 bed appartments at £168K in what is not a very expensive/exclusive – but typical – area in Greater Manchester…..Urmston.

    It seems like a lot of poeple have not been taking this forums advice of VERY imminent house price crashes serioulsy.

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  • Glorious, are you stating that House Prices will NOT drop AT ALL over the next 5 years?

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  • “Another large majority — 15 of 23 analysts — said house prices were overvalued.”

    “Only 8 said house prices were fairly valued and none said they were undervalued.”

    Well this seems pretty conclusive.

    “Median estimates showed house prices were around 16 percent overvalued.”

    These estimates are usually pitched at the low end.

    “Estimates of the percentage chance of a correction starting this year ranged from 5 to 75 percent with some saying risks lie to the upside ”

    Thats a pretty big spread but maybe there is some sanity out there after all.

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  • >> “Home price inflation may have peaked but they are still going up.”
    > You don’t really get the concept of “peaked”, do you sunshine?

    To be fair, inflation may have peaked, but it’s not zero, so house prices are still roughly increasing.

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  • If we had ham we could have ham and eggs – if we had eggs.

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  • autopilotengage says:

    Rich,

    PPP (purchasing power parity) tells us that a rise is not a real rise until it exceeds the rate of inflation. Great, now all we need is the official rate of inflation to work out whether house prices are still rising. Oh dear, which one do we use? Well, i guess that depends on where your VI is and what you’re trying to prove with the figures. There’s a whole range of official inflation measures to suit bull and bear alike. Whichever you choose, they are only going one way, and that is UP!

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  • dohousescrashinthewoods says:

    GS, I agree: Paul, as Rich says, price-inflation may have peaked, but it just means that prices are inflating by a steady (or lesser) amount.

    The question, though, is how far price-inflation will decrease from this peak (and will it go below zero)?
    Even if it only dips below inflation, you will be losing real-terms money on your BTL.

    If we are to believe our inklings that inflation is running at 10%, then you are already losing money – even if the property is in London (alternatively, you could be earning loadsamoney in a better-performing asset class). If I believe RPI at 4.4%, this outpaces many areas of the UK and, even in the South-East, brings real return close to the long-term average for both shares and property.

    If official money-inflation rises a little further and property-inflation comes down a touch, value erosion becomes a mathematical certainty. Sorry to burst your bubble, mate, but odds are you’re already on a loser.

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  • Gee, I added soem comments earlier, twice, but it seems that they have not quite made it to the forum. Is it beacuse my view on house prices dropping is opposite to what this website “wishes” to happen?

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  • glorious sunshine says:

    But it is all financed by the tenants! What other asset class can you use someone else’s money? As a landlord like most we are looking for income not capital growth anyway. 🙂

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  • Yep, but other than the deposit, it’s the bank’s money!

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