Tuesday, December 4, 2007

Professor Miles says HPC = -10%

House prices 'will plummet by 10pc over the next year', says banking chief economist

... but where is Professor Nickell and his "house prices will be 20x average salary in 2020"?

Posted by confused76 @ 12:15 PM (1665 views)
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20 thoughts on “Professor Miles says HPC = -10%

  • Comeththecrash says:

    i agree totally with this statement why is the economy led to believe that if your house is 30 or 40 percent more than when you paid for it you feel wealthy and spend more surely stability and security with wages increasing and affordability is better even if houses increased 1 percent across the board is much better than insecurity and debt that the greedy banks and speculators have lead the economy into .

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  • “But he added: “I don’t think house prices falling is in any sense a bad thing. There’s a natural tendency for people to view it as bad for the economy, as unhealthy. But I don’t think that’s right. We have a problem of affordability of housing with people struggling to get into the market.”

    Of all the places that could come from, I never thought I’d see Morgan Stanley’s chief economist say that one.

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  • A 10% decline in prices hardly (IMHO) constitutes “plummeting” bearing in mind the way in which house prices have spiralled upwards in the past 2-3 years alone. A 20% drop in 2008 followed by a 20-30 % drop in 2009 would for me be more reflective of “plummeting” house prices.

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  • C'mon Correction says:

    Jack – the pattern you described is most likely, slow at first and then spiralling downwards. I reckon it’ll go on a downwards path (I would still expect to see increases in some months) for anywhere between 5 and 15 years.

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  • “Professor” Nickell – is that a comment on the quality of the UK education system?

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  • good old percentages hey. ok when rising, but when falling, it only takes a 50% drop to wipe out a 100% rise.

    house prices are 10% overvalued to get the best deal for the client.

    so a 220K house is more likely worth 198-205K in todays market.

    198K – 10% = £178,200 – which is more realistic.

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  • jack c – a 10% drop in asking prices in a single year would be a record. Inevitably there would be a commensurate drop in the % of the asking price being achieved as buyers get more aggressive – this is already happening.

    More generally, this is of course the same story we’ve seen elsewhere today and yesterday, but that doesn’t take the edge off it. It’s a stunning story on three counts: firstly the strength of the language used throughout, secondly the source (a bank!) and thirdly the profile it’s getting in the national press. Top item on the Daily Mail’s website today (just the target audience we need to be converted) and this seems to be prominent and possibly front page news in the Standard. The tide has absolutely, unequivocably turned.

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  • Hands up all those who think that house prices have already dropped by 10% since their summer peak.

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  • It never ceases to amaze me how so many ‘intelligent’ people have sold their education to their highest bidder, if the man was an engineer he would have been sued for issuing such ridiculous statements as “house prices will be 20x average salary in 2020” which could technically be construed as advice based on the use of the term ‘professor’.

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  • David Smith's Sub Prime. . . says:

    Seeing as there is no sub prime problem in the UK, I think that house prices will be 40 times average salary by 2020.

    My newspaper proprietor told me to say that…

    Love David Smith aged 13 and a quarter…..

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  • -10 by close of 08. That’s what I’ve been saying for ages.
    That’s a pretty dramatic fall but I don’t see too much after that unless IR’s rise significantly or we have a bad recession.

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  • it_is_going_with_a_bang says:

    Professor :
    “Latin: person who professes to be an expert in some art or science, teacher of highest rank”
    Dictionary obviously needs updating – Need to add “Someone with a vested interest”

    10pc drop is nothing.
    That brings down a 200k house to 180k – still very unaffordable for genuine FTB’s and BTL’s.
    Before this is over it will be back to 2002/03. Even then the 200k house of today was 135k in my area.

    Even that is way beyond the average wage when making a repayment.
    So a 30% drop is easily possible.

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  • bearshare1616 says:

    The following text is a blog I picked up from the same article in the Daily Mail, this is the level of intelligence from the average BTLer !!

    ‘The buy-to-let owners of property can afford to leave their houses empty. The increase in value alone has given landlords income – without need of tenants’.

    – Nick, Bedford UK

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  • Comeththecrash says:

    you have to have a 50 percent correction to allow fiscal savers and prudent borrowers who realised that they could not afford speculative demands and there time should be now they have waited long enough.

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  • eyeoftheweasel says:

    Be interesting to know what these BTL owners will use to pay their mortgages with.

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  • eyeoftheweasel says:

    Not much good having a massive increase in the value of your property if it ends up getting repossessed.

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  • I think the BTL people have grown up on a diet of “things can only go up”. When the mortgage goes up or the house remains unlet for anything more than a month or two, the BTLs bank managers will be concerned about their exposure. I’ve nothing against BTL people, it’s just amazing that people can think there’s only one way things can go. Very soon the relaxation of lending will come under fire, since without a crash, there’s not need to worry about it. Look out for retreating politicians for not preventing another “mortgage misselling” episode. Deja vu re the pensions misselling you’d have thought. Yes, people don’t have to buy – but when you’re being told by all and sundry “buy, borrow – don’t worry about tomorrow” it’s hard to be objective if you’re not getting facts – especially with 14 years of track record to “seemingly” prove it’s a win-win. This crash will be very educational – and is long, long, long overdue.

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  • @growler

    “it’s hard to be objective if you’re not getting facts …”

    True, but a lot of people mortgaged themslved to the hilt because they couldn’t bear to miss out. Fundamentally, the engine that drove the speculative bubble was greed. Sometimes, homo sapiens is not a pretty thing to behold.

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  • Cheekie Charlie says:

    Property company’s, banks, paragon have already lost 40 – 50% of there value this year! The market doesn’t lie, crash it will be. No 10% may be 10% overnight when the penny finally drops.

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  • george monsoon says:

    is this 10% allowing for the ficticious 3% CPI inflation? (real inflation is nearer 10% anyway)

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