Wednesday, January 14, 2009

House prices forecast.

Housing market falls seen extending into 2010

LONDON (Reuters) - House prices will fall about 11 percent this year and the market will take up to two years to stabilise despite the lowest base interest rates in the Bank of England's 300-year history, a Reuters poll showed. Average house prices are seen falling 10.8 percent this year after diving 16 percent in 2008 and were set to fall a further 3 percent in 2010, the poll of 37 analysts at UK banks, investment firms and consultancies taken January 12-14 showed. Rapidly rising unemployment and a shortage of mortgage credit to new buyers is seen driving future declines in prices.

Posted by flintster1994 @ 05:52 PM (2737 views)
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26 thoughts on “House prices forecast.

  • Slightly odd, as the economy worsens the rate of house price falls slow.

    And it took 37 analysts to come to this conclusion. 10.8% fall for 2009.

    Well my unpaid estimate is 21% by the Haliwide scale for 2009.

    Lets see who’s right.

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  • Agree with str 2007

    This year should be far worse than 2008, as the denial turns to fear!

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  • stillthinking says:

    yeah… and the rest. 2009 is Year Zero.

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  • More experts giving opinions that seem quite bullish with respect to everything I see daily the economy / country.

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  • Talking about house prices for once 🙂

    I have noticed the graph on the main page of this site has been updated to Q4 2009 (and how pretty it looks).

    Does any one know why this more detailed version of it will be update?

    http://www.housepricecrash.co.uk/graphs-average-house-price.php

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  • davecrash

    Thanks for that link, that’s a much better graph than that on the home page.

    So according to Nationwide peak to trough was 37% 117k down to 74k.

    Now is it just me or have you heard from somewhere that prices only fell 15% in the last recession and I’m they were Nationwide figures.

    Maybe Little Professor can put his fingers on the evidence of such talk, perhaps he can’t and I’ve spent all this time on HPC convinced the official line was 15% fall last time and dumbfounded by what I remember as being over 30%.

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  • The full 37% includes the effects of inflation over that period eroding the value of houses.
    15% Nominal.

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  • @davecrash

    There’s an updated version of the graph here

    Nationwide has some nice recent graphs here and the raw data here

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  • Beautiful chart.

    You can change the x axis by hovering over with the mouse and scrolling.

    Nice.

    Nicer every day, in fact, since August 2007.

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  • My calculations from nationwide figures give a 19% price drop and 37% real-term drop when adjusted for inflation. (from 1989 to 1995)

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  • str2007.

    Only a guess wild this really. Maybe in the last crash the actual drop in money terms was only 15% over 6 years, but when adjusted for inflation ie in real terms the last drop was really 37%.

    Using now as an example, all the headlines say there has been an 18% drop in the last year but as inflation has been running at around 5% the drop in real terms is probably around 23% (ie 18% + 5%)

    18% sounds much better than 23% to all the sheeple so that’s the figure they will use.

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  • tyrellcorporation says:

    All lovely stuff folks but be honest, have any of you seen prices falling by this amount? I live in Exeter and they haven’t budged since last summer. 🙁

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  • tyrell

    The ones that are actually selling have shifted down though, I think what we’re still seeing is some denial and the hope that a complete mug is about to buy their house.
    Truth is even if the mug turns up, the lenders surveyor will put things straight.

    Reference the drop in the last recession, hovering over the chart it shows actual average prices – these show a difference of 37% peak to trough.

    Anyway I lived in one good area at the time (South Hants) and the falls were definately in the region of 30% and now I’ve been speaking to people in another (South Bucks) and those people living here then also confirm similar figures.

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  • @ phdinbubbles

    Just noticed your links, cheers.

    So the average UK house prices is now back to its long term trend of growing 2.9% per annum and we now entering overshoot territory. Get in, made my day that, think I will pour myself a cold one from the fridge.

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  • phdinbubbles

    Thanks for those links, can’t get my head around those numbers for the South East myself, matbe things nationally were held up by smaller falls up North.

    The falls caused the negative equity problem but the worst problems were caused initially by the high interest rates.

    A friend of mine bought a 4 bed det with another friend £80k round about peak 1990 (roughly £275k if on market today), their mortgage got upto close to £1000 per month as I recall. Was speaking to my accountant today and she has a £450k mortgage costing under £1000 per month interest only on a tracker which is down to 2.5%. How things change.

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  • davecrash

    I noticed that aswell, 2.9% p/a growth doesn’t seem outrageous to me, but house prices currently (including a 20% fall) do seem outrageous.
    Something doesn’t seem quite right as overshoot should be heading into – that looks cheap territory. And depending on cost of borrowed money, that to me is a long way off yet.

    And to add to that, even if borrowed money is cheap, people still need to get their heads back round how much £100,000 is to them, because it needs to be paid back and currently in the South East for a family house in a reasonable area quite a few lots of £100,000 are still involved.

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  • str2007

    Totally agree with you, still a long way to fall yet. As a lot of people have already said on here, 6 months onwards is probably the time to consider buying property. Because in a nutshell.

    1. Vast majority of sellers are still in denial.
    2. Loads more unemployment is on the way.
    3. People and the media still expecting all Gormless Gordon’s tinking around the edges to do something, it won’t.
    4. Banks are only lending to people with big deposits.
    5. Economic migrants are leaving the UK.
    6. Over building.
    7 .About 10 other reasons I can’t think of, as I’m tired.

    Result more downward pressure on house price.

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  • Now lets look the reasons why a house price prices could now start to bounce back to their 2007 highs.

    1.

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  • @ davecrash @19

    Great post, LOL!

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  • Actual price drops (not accounting for inflation) in last bust were about 25-30% in north London suburbs, from what I remember.

    A 3-bed going for 130K in ’89 was selling for about 90-95K by ’95

    Prices fell until about ’93, then bumped along the bottom for about 2 years…

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  • Old_traveller says:

    Is it just me? I still see the HP chart as it was a few weeks ago, i.e. only updated to mid 2008.
    Puzzled

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  • Off topic a little…. but after watching RRR last night, does anyone else suspect that Krusty Allslopp is growing a nice little Banger?!?

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  • Is Krusty growing a Banger….. ?!?!?

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  • I’ll say it again: in Northern Ireland, prices fell 34.2% in 2008 🙂 🙂 🙂 and I wouldn’t even consider buying before 2010!!! This has a long way to run yet. Just watch the US. Three years into the crash and price falls are accelerating! Just when you think it can’t get any worse… it does.

    p.s. davecrash – very good, ha ha ha!!

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  • Thank you Shodoman

    Thought I was going mad or had become deluded. Certainly not 15% anyway.

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