Saturday, May 26, 2007

house prices overvalued by 65%

house prices 65% overvalued

good article showing economists talking reality economics.demand is speculative and supply is NOT a problem for home dwellers-just speculators.House of cards

Posted by taffee @ 10:30 AM (497 views)
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8 thoughts on “house prices overvalued by 65%

  • Just the sort of news that will put the jitters into the housing market. D(i)M readers might feel slightly aggrieved however; wasn’t this rag lauding the virtue of HPI not so long ago? Looks like the Mail may have been duping their readership (not for the first time).

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  • The fact that house prices can go down as well as up is well known – and the fact that it is appearing in a VI rag such as the Daily Mail, it heartening. Do newspapers follow public opinion or do they shape public opinion?

    This may add a dose of reality to the market.

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  • speculatorone says:

    As every week goes by more and more press are highlighting a crash, but you always have so called experts dismissing the facts. I feel the waiting is going to go on for some time to come.

    As harlod said the same paper is likely to print a story next week advising house prices are to rise again.

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  • The thing that lead to the boom in the first place, and that has continued to sustain it, is the idea that “house prices always go up in the long run”. Little thought is given to why this should be so. Ask yourself why have they gone up in the recent past? The main reason they have gone up is because people have bought property as investments. What do these investors plan to do with these investments in 5, 10 or 20 years? They intend to sell them! The oldest investors will sell in about 5 years, increasing the supply of property. They will be followed by younger investors, boosting supply even further….and so on. Overstretched and spooked investors may sell out before then, particularly if interest rates continue to rise, which I am certain they will. House prices will drop steadily when this selling phase kicks in. That is why I believe that we are in for a steady 30 bear market in UK property – “death by a thousand cuts”, as another blogger recently put it!

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  • I do hope Royston gets his 30 year apocalypse that he is so wishing for, but I hope it starts soon.

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  • As I sit here typing this in my average little semi I have the full knowledge that if I sold it the estate agent would have it up for 250K and it would in all probability rapidly sell for that. However in the back of my mind I fully realise that in the real world it is only worth 160K, strangely enough this figure (64% over value) ties in comfortably with the above story.

    Welcome to Fantasy Island where the fortunate gorge themselves with equity and the unfortunate load themselves with the burden of excessive debt, will your property dreams turn to nightmares or will your wildest aspirations come true at the expense of others.

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  • Royston,

    You have convinced to sell my house!

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  • Yes Enuii I can accept that analysis. They may be more overvalued in sopme parts of say London. For example 57 Railway Cuttings Balham, a small terraced workers railway cottage. Perceived ‘worth’ £500k, 2 salaries no more than about £60k, x 2.75 = £160k plus 10% deposit = say £20k = £180k.

    Errrrrm yes well we’ll leave that for now.

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