Monday, December 31, 2007

What’s your forecast for 2008

2008 House Price Forecast

Based on the Halifax Index what is your forecast to Dec 2008. I suggest little explanation, just your gut feeling. I'm going for -13.6%.

Posted by wdbeast @ 07:43 PM (2390 views)
Please complete the required fields.



38 thoughts on “What’s your forecast for 2008

  • Based on Halifax index -15%

    Reply
    Please complete the required fields.



  • I think this thing is going to drop quick and fast over the first 18 months therefore:-

    -16% for 2008, -8% for 1st Half 2009 then slow roll off to the bottom of cycle over the next 12 months of -10%. Therefore by mid 2010 you are looking at a 34% fall.

    Reply
    Please complete the required fields.



  • I’m going for 60%+, but not necessarily all in the next year. House prices need to fall but a little over 60% just to get back to their long term average. This needs to be adjusted for – inflation, which will reduce the required drop in nominal terms, and overshoot, the amount by which it falls by more than the long term average due to expectations of future falls, lenders being unwilling or unable to lend and so on.

    Reply
    Please complete the required fields.



  • Well here goes

    10% in 2008
    0% in 2009 (dead cat bounce)
    15% in 2010 (panic)

    Reply
    Please complete the required fields.



  • Urgh. I forgot the “-” sign for my prediction. Should have been:

    -10% in 2008
    0% in 2009 (dead cat bounce)
    -15% in 2010 (panic)

    Sorry

    Reply
    Please complete the required fields.



  • David Stubbins says:

    I will be watching fasinated. Will the idiots who put this web site together finally get it right! i suppose after guessing so many times it will eventually happen!!

    Reply
    Please complete the required fields.



  • -15% to -20% 2008
    And by 2010 -40% to -50%

    Lets Hope!

    Reply
    Please complete the required fields.



  • japanese uncle says:

    2008: -25%
    2009: -15%
    2010: -10%
    2011: -10%

    Reply
    Please complete the required fields.



  • planning4acrash says:

    So, house prices fall by 5-10%? GBP falls by the same? Inflation (RPI) sticking at around 4.5%. = fall in equity of up to 20-40% in just one year. Buy to loose folks!!!!

    Reply
    Please complete the required fields.



  • planning4acrash says:

    I don’t think there will be a bull trap on the way down, but price falls will soften as interest rates fall (after the first yr or two of falls). Japanese Uncle, when do you see prices leveling out, or stabalising to a modest 2-5% fall?

    Reply
    Please complete the required fields.



  • 0% interest rates here we come

    Reply
    Please complete the required fields.



  • @Japanese Uncle

    Hmm. Perhaps I should call you Japanese Uber Bear instead? Your predictions are very dark and gloomy.

    Seriously; If it gets that bad, will we have martial law and soup kitchens as well?

    Happy new year to all HousePriceCrash readers.

    Reply
    Please complete the required fields.



  • Yes, Happy New Year all (bears and bulls alike!)

    Reply
    Please complete the required fields.



  • crash bandicoot says:

    I agree with Japanese Uncle’s figures but I would swap 2008 and 2009. It will take a while to build up full momentum because of the “denial factor”, but ulitimately we need a 50% fall to re-connect with affordability. I fail to see how there can be support for prices until this level is reached.

    Reply
    Please complete the required fields.



  • 2008 -10%
    2009 -15%
    2010 -20%
    2011 -25%
    2012 -30%
    2012 -35%

    Reply
    Please complete the required fields.



  • Optimistic scenario:

    nominal fall of…

    5% in 2008 (denial)
    5% in 2009 (acceptance)
    5% in 2010
    0% in 2011 (bottoms out)

    With an official RPI of around 4% we have a fall of around 25% by end-2010

    Central forecast:

    5% in 2008
    10% in 2009
    5% in 2009
    0% in 2010

    Worst case scenario:

    An unwinding of leveraged bank loans and a domino effect into other financial instruments…don’t want to go there as that would be scary.

    Reply
    Please complete the required fields.



  • My forecast for 2008 as follows

    20% in 2008.The full affects of credit crunch have yet to be felt yet by the wider economy.I also fully expect further bad news at year end(April) when several financial institutions have to come clean about their exposure.I reckon April/May will see the major falls occur as btl losers try to sell up and more forced sellers come to market.Unemployment is going to steadily rise through 2008 to really hit home.
    15% in 2009 as the resession bites.
    5% in 2010
    5% in 2011
    2012 rock bottom.

    With regard to the short term in 2008, i think after cutting IR during the first 6months they will be on the rise again by mid year to counter inflation.Any hope by VI’s of a recovery later on in the year because of so called “pent up demand” is just never going to happen.Falling prices and the new tightening of credit will not allow it to happen.
    Happy New Year everybody

    Reply
    Please complete the required fields.



  • -15% in 2008, partially masked by high RPI inflation, and counter-masked by the government’s fake inflation measure of CPI.

    Reply
    Please complete the required fields.



  • My forecast for 2008 is also around -20% or thereabouts. I think there are too many factors in place for a slowdown, I think a juddering halt is more likely (and is arguably happening as we speak).

    Happy New Year to everyone here and GOOD LUCK for 2008 (we’re all going to need it!).

    Reply
    Please complete the required fields.



  • planning4acrash says:

    OK, so, if you fall from 180k to 3*salary you get to 75k houses (if assuming 25k salary).

    That is 56% fall in total. I reckon that will take about 5yrs to happen, so factor in 28% fall by inflation alone as inflation remains at around 4% (RPI) – Tho I won’t rule out much higher inflation. If employment levels fall drastically we could see 2.5% multiples for a short time? So i won’t rule out more of a crash, but I honestly don’t think this is much different to last time, or the 1980’s crash. That leaves a 28% fall in real terms. Only 7% below the HPC website prediction.

    2008: 11% fall
    2009: 8% fall
    2010: 5% fall
    2011: 4% fall
    2012: 0% fall

    Add to that 25% fall in value of pound (over 5yrs) for those who care about retiring to the sunshine.

    Reply
    Please complete the required fields.



  • You have missed the point!!!

    70% over the next four years!!!

    This is the big one.

    Reply
    Please complete the required fields.



  • I disagree with most forecasts, because if you look at previous downtuns, the serious drops come much later….usually 3/4 years down the line, after confidence has been very seriously eroded over a period of time. Big drops never happen immediately because folks are foolish/optimistic enough to believe the good times will return. I have yet to notice any significant drops in my area.

    Reply
    Please complete the required fields.



  • Mariothegreat says:

    Hi,
    2008 minus 31 (brrr…)
    2009 minus 6
    2010 minus 10
    2011 minus 15
    2012 plus 2
    I’m not sure if minus 31 will be 2008 or 2009
    Cheers

    Reply
    Please complete the required fields.



  • planning4acrash says:

    Nope, my calcs were way out, With wage inflation of 4% you need a nominal fall to 91k in 5yrs, i.e. 50% in nominal terms. If that was the case, we get financial devistation, given the weight these CDO’s, etc have on balance sheets. I’ll add an extra year of falls to it, taking me to 95k prices in 6yrs, 47% fall in nominal, 75% fall in real terms. Falls reduce over time as wage inflation has greater effect and interest rates fall.

    Yr HPC Prices Wages
    2007: 180k 25k
    2008: – 20% 144k 26k
    2009: – 16% 120k 27k
    2010: – 11% 106k 28k
    2011: – 6% 99k 29k
    2012: – 5% 94k 30.4k
    2013: 0% 94k 31.6k

    Reply
    Please complete the required fields.



  • Sacred Contracts says:

    I reckon long term there will be around a 50% drop to the bottom but somehow I doubt it’ll go very fast (as an average) so for the next year, from now, I’ll go for a spuriously precise sounding 4.28%

    As to how long, long term is I suspect that this is going to take a long time and it will be 2016ish before it bottoms out… that’s a long, long slide… but then it always takes longer to pay off debts, with interest, than to accumulate them…

    Reply
    Please complete the required fields.



  • planning4acrash says:

    But, what if you get minimal wage inflation, like what the police are seeing, say 2.5%, then you get carnage. Wage inflation eats away just 15% of prices, so you need 60% fall in real terms. I can’t get realistic falls, so opt for a longer soft landing at the end. Fall from 180k to 72k in 7yrs. Also, I just looked up ONS stats, and you get 23764 for average median wage in 2007, oops, looks like 25k was optimistic! (Maybe right for London tho).

    Note, this trough, is almost the same differential between the bottom of the 1980’s and 1990’s boom, so I’ll stick with somewhere between it and 79k. I reckon Labour will want most of the damage over before the 2010 election, expect voting age to be dropped to 16 (they want lower house prices!!) and possibly a hung parliament. A raft of legislation to avoid BTLet, dropping tax benefits to interest repayments. Bringing house price inflation into inflation target, bringing mortgage companies under general regulations.

    Yr HPC Prices Wages
    2007: 180k 23,764k
    2008: – 20% 144k 23k
    2009: – 25% 108k 24k
    2010: – 15% 91k 24k
    2011: – 6% 85k 25k
    2012: – 4% 82k 26k
    2013: 0% 82k 26k
    2014: – 0% 82k 27.5k

    Reply
    Please complete the required fields.



  • -8% 2008
    -4% 2009
    -4% (bottom) 2010

    Reply
    Please complete the required fields.



  • Maybe the next few months will see the resurgence of that old favourite, the Labour Party Spin Machine.
    I forecast that the spinning will surpass all previous records. There will be constant reference to the ‘American’ sub-prime problem and it wasn’t our fault but we can get through this together.
    GB will come up with all sorts of ideas for saving the day, but they will all involve billions of taxpayers money tied up and lost in a diminishing property asset class. The result will be the same clever people will be allowed to raid the public purse again just to save government face.
    The Conservatives will just stand back quietly and watch it happen. After all they don’t want to trigger an election now and then be seen as the bad boys when they can’t stop the crash either. They will then step in when the timing says they can claim the kudos for a future recovey.

    Reply
    Please complete the required fields.



  • I’m 80% with P4C, 200K properties down to 160K by end 2008, such drops will prompt a death spiral as unemployment in housing associated industries rockets. Local builders and home improvement companies will see their business drop by 50% because speculative gains on property development will not exist. Smaller travel companies will fold as people skip holidays, boarded up shops will appear especially in the extremities of out of town shopping centres, new car sales will drop and restaurants will close. Discretionary purchases will be made by what small change people have left after inflation has eaten up their stagnating salaries, those stuck with large card balances will be especially hard hit.

    Houses will be seen as just somewhere to live.

    There will be immense political pressure to jump into the EURO which will be seen as a lifeboat by many of the financial loosers in the above scenario.

    Above all Gordon Brown should be strung out to dry after a NeuLiebor night of the long knives.

    Reply
    Please complete the required fields.



  • planning4acrash says:

    Renting 2, Tories won’t step in, because of infighting as soon as they try to compete with the relatively progressive policies of Labour. It would be an ideal time for Tories to get in because they can blame Labour, push through reform and say, oh, some pain, but Labours fault, we will see you through. The danger for the Tories is waiting until the feel good factor is back. My predictions suggest that falls will steadily level out during 2010, a resurgent feel good factor for the 2010 election, possibly a mid-crash bounce anybody? Along with Olympics? Maybe Labour gets another term on the back of that.

    Tories, have nothing to say about credit crisis, Cameron backed US style (failed) bail out of banks and interest rate cuts. They supported the war in Iraq before the spin was put to the public. They have nothing to say about climate change. Little about social mobility. The Tories are dead for another two terms until they can graple with today’s issues. At worst, I predict a hung parliament. The public still do not trust the Tories and this time Labour can blame the global economy.

    Reply
    Please complete the required fields.



  • planning4acrash says:

    enuii. Good point. I just checked land registry, they say prices are at 230k. So, whatever it is, I have the same end point, just multiply the earlier falls or use higher inflation to discount the fall (this is most likely as the RPI CPI gap will probably grow and remain for a while yet).

    Reply
    Please complete the required fields.



  • planning4acrash says:

    About the out of town shopping centres, will they be re-developed for industry once GBP has gone down the shoot and we start manufacturing for the new Chinese middle class?! Maybe it was too early to turn the Rover plant into flats and shopping centres/call centres?!?!

    Reply
    Please complete the required fields.



  • My first post. Happy new year. I want to buy into London sometime in next couple of years. When will be the best time? Any ideas?

    Reply
    Please complete the required fields.



  • I remain hopeful of a correction, but will not celebrate a HPC until prices are back to 2005 levels and where I rent (Horsham), that is a 25% drop in asking price. Any drop less than that means nothing to me because I will be still be worse off buying at that point than I would have been in 2005 due to higher mortgage rates and tougher lending conditions. Here, the only change since September is homes are not selling, however, the asking prices have remained at pre-September levels. I think it is very unlikely in the first quarter of 2008 that asking prices will drop significantly because many people believe the expected drops in interest rates will set the HPI hare running again. However, if IR’s drop to 5% (or lower) by April and the housing market and broader economy are still dipping, the latter part of 2008 (Q3 onwards) should see asking prices dropping by 5-10% or more. If this happens, then I believe you are at the beginning of the self re-enforcing sentiment cycle which may precipitate house prices unravelling quickly and then calling the bottom will become a National sport.

    In a nutshell, I believe the housing market is now primed for a crash but for it to happen, I believe we need the broader economy to soften (recession) with the consequential job losses thus increasing forced sales. Whilst people have jobs they will believe they can weather any economic downturn.

    Happy New Year to all!

    Reply
    Please complete the required fields.



  • The housing market in the real world stalled and then started to fall some time ago, the VI driven media sources have simply reached a point where there can be no further denial, this is not the sudden start of the crash.
    The pattern of the previous crashes can be used as a guide for how things will develop, but the ‘form’ will differ. The huge level of personal debt combined with the ridiculous average wage/average house price level and the lurking insolvency of major financial ‘players’ who hold toxic waste both on and off balance sheet will combine to create financial mayhem.
    I for one cannot see the EURO riding up over the horizon like John Wayne to save the day, they have their own massive imbalances that they need to address before they can take on another failing economy.
    I expect the initial fall in the market to take place over 12-18 months and to be in excess of 30%, the remainder of the fall will be somewhat slower and over a longer period, quite how low prices will go will depend on variables that I cannot predict. The worst case scenario that I have calculated was a worrying -66.9% from current values but I would expect some sort of intervention by central govt if things started to go that far, so for what it is worth my humble opinion is 50/60%.
    Happy New Year.

    Reply
    Please complete the required fields.



  • Angrywithbrown says:

    Happy New Year everyone!

    I notice that nobody has predicted a Japanese style, 18 year long downturn and wonder why?
    If this did happen then the 2006/7 market high will not return for at least a couple of generations. There is still an inverted triangle of population ie older people dying off leaving properties to a smaller group of younger generation.
    BTL’ ers will be mostly extinct after the downturn.

    Reply
    Please complete the required fields.



  • Cheekie Charlie says:

    I’m with you iguana. I also predict there will be a dramatic fall in the population of euro economic migrants when they move to places like Germany leaving a massive oversupply in the already troubled buy to let market. This will have a devestating effect on the already troubled residential market leading to an oversupply and only the houses with much reduced asking prices selling.

    Reply
    Please complete the required fields.



  • new user 2007 says:

    Some anecdotal evidence…

    I have continued to look at house prices in my area since March. There was one last attempt to raise prices here by agents…prices for a terraced houses went from actual prices of around 220k in January to asking prices of 330k in June (the only way this could happen was a strange across-the-board asking price increase of the same magnitude across 5 estate agents here…this looks like collusion but that is another story).

    Two mugs bought at this height in September (one bought at 330k on a house that was bought by a speculator in March 2007 for 220k, who then painted it) but the market has completely stalled since (the sample is around 70 houses on the market). Sales have stopped but there are few houses coming onto the market, so supply is going up only slowly. The key thing is that after this surge in made up asking prices only the two mugs bought and prices have been stuck at 330k.

    This is a BTL area I think (most houses for sale don’t have a chain). This means either the BTL are waiting for April and/ or the legitimate people are refusing to budge on the price that they were given by estate agents (either way I think supply will start rising sharply in April). This will change as the houses do not budge i.e. with no commissions coming in, agents will quote lower prices to new clients (better to get 2% of 290k than 2% of no sale).

    If this area is anything to go by, I suspect asking prices will fall from 330k to 290k by May 2008 based on the last two idiots who raised the bar (and the future idiots who fall for this bar without saying 2 houses is not a decent size sample) BUT this is still a rise from the 220k at the beginning of 2007.

    2009 will see large falls as VIs will no longer be able to say falls cannot happen i.e. evidence will be everywhere, and then the true vicious cycle will begin. By end 2010 prices here will be at 200k and continue to fall until they hit the level they were at at the start of 2005.

    This 2005 figure is on the grounds that interest rate and business cycles are indeed smoother (and so rates will not return to 15%), that salaries will continue rising modestly, the RPI will continue to rise by around 4%, that prices reached their fair value in 2002 and that even since 2005 we should take into account the natural (sustainable) rise of around 3% e.g. take prices in 2002 and add 3% a year to get the price we should have right now i.e. back to the trend line (this is just for someone eager to buy, I think like all bubbles bursting it will eventually fall below the trend line and the falls in real terms will continue for a couple of years after that)…

    …put another way, if wanting to buy at a fair price, looking at the Chart on the home page, real prices need to fall by 25% from their current price to return to the trend line.

    Because of the higher base (price) it requires less of a fall to reach the same price i.e. a 10% rise on 100k goes to 110k, but to return to 100k a fall of 9%. This cycle will be faster than the early 1990s as then people were losing their homes and so tried to take the pain, whereas this has been a worse BTL (sell more quickly as not their home) and easy credit situation (this has fallen suddenly and sharply).

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>