Thursday, March 5, 2009

It’s not over

House prices have a lot further to fall

If you own property, look away now because what follows is ugly reading. Margaret Beckett's 'green shoots' were illusory, and the 2.0% upswing in house prices that Halifax recorded for January has been more than offset with a 2.3% fall in Feb. So far prices are down 20 percent from their peak, and it won’t get any better. It may well be the 2020s before anyone who bought in the last few years will recover their capital.

Posted by little professor @ 05:30 PM (4007 views)
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17 thoughts on “It’s not over

  • little professor says:

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  • little professor says:

    Interestingly peak to trough in the last crash was less than 15%, although of course inflation was much higher back then, masking the degree of the falls.

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  • Actually I was aware of that (he says proudly) – at the beginning of this crash it was always being said by VIs that it’ll never be as bad as the 1990 crash but it quickly became apparent that it was going to be far worse.

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  • yes I we need the inflation adjusted comparison to really get a grip on it. I would imagine the graphs would look quite similar then.

    so really the falls won’t stop until they print enough money to get inflation back a bit. still I’m backing the market oracle prediction that we are about halfway there and from 2010 it will be pretty stagnent maybe drifting down. good time to buy at the end of year if you have job security I think.

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  • The very first sentence should read – If you are long property. Some may own property outright already, others may own a single property in which they live.

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  • The Soft Landing is softly landing.

    The plan is still in force.

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  • Tenyearstogetmymoneyback says:

    The most interesting thing is the way prices bumped along the bottom for three years between
    3.5 and 6.5 It took a year of sustained rises before buying a house became fasionable again.
    I reckon the same is likely to happen again.

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  • justwatching says:

    ‘According to the Halifax, house prices are now at the same level as they were in August 2004.

    Although Mr Ellis acknowledged that house prices were likely to continue falling in 2009, he said that homes were becoming more affordable.

    David Smith, senior partner at Dreweatt Neate estate agents, was more strident in predicting some light at the end of the tunnel for homeowners.

    “House prices may have fallen further, but we are now at the point, or certainly very close to the point, at which buyer and seller expectations converge,” he said.

    “We firmly believe that now and the next six months are the trough for house prices.” ‘

    Nuff said. Its time to buy.

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  • justwatching says:

    but we are now at the point, or certainly very close to the point, at which buyer and seller expectations converge

    Buyer
    ‘I’m not buying your house, its too feckin expensive’

    Seller
    ‘Yep, you got that right enough’

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  • “The stock market has plunged to its 1996 level and housing prices are returning to the mean. The question now should be, do we really want to restore a crisis-prone credit-generating system (securitization) by providing a $1 trillion subsidy to profit-oriented hucksters who are largely responsible for the current recession?”
    Mike Whitney

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  • mark wadsworth says:

    @ justwatching, I actually laughed out loud at that second comment.

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  • I like the upward year 4-ish. Anyone know what caused that? Possibility of a similar (more enthusiastic) period?

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  • Norfolk&clue says:

    @little professor

    Both you and your graph are a thing of beauty. :o)

    I’ve been an STR since June 2007 (more luck than judgement) and my ‘chunky’ deposit will remain in various banks/building societies as before…

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  • in perspective, conspiracy facts. Depening upon your definition of perspective, or perspex? can’t be too sure about the mechanicals.
    (btw Gordon is a Moron)

    Securitization soared between 2003 and 2006 when US current account deficit skyrocketed to nearly $800 billion per year.

    That’s when “America’s banks discovered that they could borrow money cheaply from Asia and lend it out in higher-yielding domestic mortgages while using sophisticated financial engineering to wall off and strictly control their risks.”(Brad Delong)

    The US was consuming $800 billion more per year than it was producing, but the damage remained invisible because foreign governments and investors were recycling their savings back into US Treasuries, GSE bonds (Fannie Mae), and mortgage-backed securities (MBS). It was a windfall for Wall Street that put the investment banks and hedge funds deep in the clover.

    http://www.sott.net/articles/show/178060-Blowing-Up-the-Economy-How-Securitization-Lit-the-Fuse

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  • I’ve started to make a few enquiries and had a look at a couple of properties. I’m enjoying treating Estate Agents in an off-handish way, especially when they ring for “feedback” after a viewing. Whwn told I wouldn’t pay nowhere near the asking price, they ask me eagerly what’s my maximum, I tell them that I don’t believe I should strain my finances to get a dwelling and that I’ll rent forever if necessary. They laugh their condescending cretin laughter.
    … and why do they need to wear so much perfume?

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  • To cover the smell of horsesh!t

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  • @13. Snap

    Enjoy folks, we’ve only just begun. Can’t wait to see those employed in “Subprime Vocation” try and talk it up. Trouble is, they know for sure that after April, the market only goes one way, even in a good market. Expect mass redundancies in EA “enterprises”

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