Monday, December 31, 2007

Evening Standard today:

The house price crash starts in 2008

Ten years ago I forecast what would happen to the economy in 2008: a house-price crash ahead of a wider recession. People are being lulled into thinking Britain will still manage a 'soft landing'. House prices may turn down over the next six months, according to the consensus, but they will pick up again towards the end of 2008. These assurances are irresponsible. In my view, the decline in house prices will exceed 20% over the next two years. oOver the past 200 years, housing booms have always been followed by economic recessions.

Posted by little professor @ 03:24 PM (893 views)
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9 thoughts on “Evening Standard today:

  • little professor says:

    Predictions for 2008 from the main analysits:

    Savills 3%
    Knight Frank 3% (Prime London)
    CML 1%
    Hometrack 1%
    RICS 0%
    Lombard Street Research 0%
    Rightmove 0%
    Nationwide 0%
    Halifax 0%
    The Rat and Mouse -2% (national)
    John Charcol -2%
    Citigroup -3%
    Global Insight -3%
    Capital Economics -5%
    Morgan Stanley -10%
    
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  • This is the interesting bit for me…

    ”People are now being lulled into thinking Britain will still manage a ‘soft landing’. House prices may turn down over the next six months, according to the consensus view, but they will pick up again towards the end of 2008. These assurances are irresponsible. ”

    In my area there are houses that have been hanging aroung for months & months without being sold. Desperation to sell is leading not to price cuts – which is going to make the real difference – but to more & more estate agents being asked to sell the same property.

    At last someone speaking a bit of truth!

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  • @hpwatcher – same thing is happening in the area where I live e.g. a property which has failed to sell after say 6-9 months is now being marketed by 3 different estate agents (all of whom incidentally value the property within £5K of each other). These people either don’t get what’s now happening or are simply in denial.

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  • A 20% fall in prices over the next two years is a bullish prediction since half of that fall has probably happened already.

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  • ”@hpwatcher – same thing is happening in the area where I live e.g. a property which has failed to sell after say 6-9 months is now being marketed by 3 different estate agents (all of whom incidentally value the property within £5K of each other). These people either don’t get what’s now happening or are simply in denial.”

    The fools are simply trying to grab as much money as possible. The funny thing is that although they may be more that one estate agent involved, they will all look the same on rightmove:-

    35% OVERPRICED!

    The problem these folks have is that their expectations are too high!

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  • Interestingly Morgan Stanleys forecast for the economy in 2007 was quite low down the success list (Sunday Times 6/10), could be they are undershooting on this prediction too..and yet they are the most pessimistic on little professors list.
    Time for seat belts I suspect. Any bids for greater than 35% correction?!

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  • Interesting readers’ poll on the website – about 50% of people think prices will fall by more than 11% (the lowest option).

    Evening Standard readers are either (a) more switched on than the average person or (b) just repeating what they read in the article

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  • Cyril, if you look at old thisismoney articles on archive.org, you will see that they have been consistently bearish about house prices. I think they actually predicted the crash would happen a lot earlier than this, but I’m sure this is the year they will be proved right.

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  • Here in East London I have started noticing prices coming down in the estate agents windows by 5 % or so.

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