Monday, March 9, 2009

What year will house prices return to?

House Prices Fall to 2005 Levels

Land Registry figures released at the end of February show that house prices in the UK have fallen to the same levels they were at in March, 2005.

Posted by kaz @ 01:16 PM (3267 views)
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36 thoughts on “What year will house prices return to?

  • 1999

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  • Good question. Personally I think 2000 – 2001 levels before leveling off for quite some time, but the uber bears on here may predict 1997 levels, the time before the buffoons who are responsible for this latest bubble were voted in.

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  • montesquieu says:

    1996 would be nice, bought a 4 bed semi for £86k, made £50k on it in three years and thought I did well, but of course it was ‘worth’ more than £250k at the height of the boom, if anyone was mug enough to buy.

    Interestingly with promotion and a few good pay rises my salary has roughly doubled since then; I bought that £86k place with a 95% mortgage at 2.5 times my salary. A 90% mortgage at x 3 salary ( a more typical measure possible deal in 2009) would probably only just about have bought that house in 2007, though if I was stupid enough I could have got a mortgage for £500k (x6 salary and no pesky deposit).

    I can hear the hissing …. it’s getting louder.

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  • In our patch sale prices have fallen by about 15-20% but there is nothing new or decent for sale. We have been careful and saved our proceeds from a sale in 2004, held gold and rented ever since, however still cannot find anything to buy. We are not better off as interest rates so low and to create income we are trading!! on the markets ..dangerous. There still is a denial around here (surrey sussex border). I cannot believe we are immune to all this.

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  • mark wadsworth says:

    Allegedly, commercial property prices are back to the region of 1999 to 2001.

    My personal guess is residential will go back to 2002.

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  • Eastleighfan says:

    My guess is with “bystander” . I’ll go for 2000-2001 levels , tho I reckon we will see a slight “spring -bounce” later on this year , then prices to crash back down again

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  • Not in my neck of the woods they’re not. Sellers are reluctant to lower prices from their highs but will be most eager to add the 2 or 3% a month to their crazy valuations when they do start rising again.

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  • britishblue says:

    2002 was the year that everyone starting accepting that house prices were in a bubble again. I think from memory they went up about 21% according to the Nationwide.

    If this was just a normal recession they would likely go back to 2003 levels (that is 2002 plus a nominal amount for inflation).

    However we are not in a normal recession. If this recession projects out as the governments of Europe would have us believe I think we would be back somewhere in 2002.

    However, as an avid reader of Nouriel Roubin and some of the other people that predicted this crisis I think that is the very best case scenario and all bets are off just how far this can fall. Even though house prices have fallen 20% already the real impact of the recession is just hitting the middle classes. Past recessions have inflicted much more pain on the working classes. I am now starting to see many friends with 3-6 month redundancy payoffs suddenly realising that they are not on a paid holiday and they might not get another job.

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  • 1999

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  • As long as Gordon Brown is involved and bad news is coming in “I’m out!

    A return to normal sustainable interest rates will be the first sign for me.

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  • happy mondays says:

    1666

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  • 1066

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  • £10.06

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  • 10000 english dollars.

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  • its amazing the article ACTUALLY states that the boom was caused by banks abandoning loan to income ratios yet fails to say that the FSA have spoken about regulation and stated that loan to income ratios is a better way of regulating mortgage lending than simply LTV.
    There was a thread last week on the forum about loan to income ratios, the ROCK I believe are lending 3.5 income with a 10 % deposit, good job no first time buyers could buy anything with sensible loan to income ratios as they would be in negative equity before even signing any papers with a 90% mortgage, unless of course they got the seller to drop at least 35% off the 2007 asking price, and even then not many FTB could afford a property with a 3.5 loan to income. Lenders WILL return now to loan to income of about 3.5 one wage 2.5 two or whichever is highest, this will force prices down and ensure that nothing like the madness of the past 10 years ever returns. NOBODY could afford it and it will take the UK 30 years to pay off the debt caused by irresponsible overlending. So the problem is not a lack of funds for lending, the problem IS that we have needed to borrow so much to support an inflated housing bubble that is deflating as I type.

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  • £16.05

    – Where did that come from??

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  • A house free with every 8 gallons of petrol. A tumbler if you buy 10?

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  • 1000 BC

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  • In my area, a grotty house that was repo’d and sold at £177k in November 05 has been repo’d again and is on sale again at £165k.

    Prices are sticking high in this part of Essex. Estate agents in the High street are looking relieved as enquiries start. Mortgages are becoming available at low rates (for how long?).

    My guess: 2004 prices.

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  • My charts predict Q1, 2001. This is what a -40% fall from peak would be. For interest, that’s the same as 1988 Q2 and 1989 Q3 (either side of the 80’s boom).

    But there are a lot of downside risks: UK could do an Iceland, or the Bank of England might ignite an Inflationary spiral (actually not such a bad idea, as long as they can contain it – which I doubt they could), or political meddling could prolong the depression Japanese style, or the depression could lead to social unrest worse than the early 1980s

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  • Affordablehousing says:

    The Land Registry figures are fixed.
    Missing out those sold at auction.

    When these figures are part of the mix, we find the house prices are lower than March 2005 even now.

    Trying to make things look better for their masters.
    That is Corruption.

    If this recession turns into a Depression and it lasts a good 10 years
    as I suspect it will.
    The house prices will just keep going down and down year after year, 10% for 10 years will bring it down to before the 1980’s.

    As low as £75,000 if not lower.
    At least half what it is now.

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  • TC,
    Anecdotal evidence is all I have. My wife works above an estate agents (not connected) and shares facilities.

    One bloke in the football team is buying and another has a mortgage quote ready to go.

    I take the points made by Martin Armstrong, in an earlier article, and do not discount this government making more economic gaffes. I’m not selling my gold just yet! House prices can in many ways be impacted by government meddling, as Growler says.

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  • stillthinking says:

    There are so many adverse trends that previous cycles haven’t had.

    What about the baby boomers? They are about to stop working but their retirement funds are shot to pieces. Increased taxes affecting disposable income as government debt about to spike beyond all reason. Any recovery in employment in the private sector being offset by redundancies in the public sector (to avoid ruin). A price shock on exports if the world recovers before the UK ( seems likely to me). Possible spike in emigration. Productivity losses in certain sectors as skilled workers retire but can’t be replaced by media study graduates. UK/London losing pre-eminence as a financial services global leader. Possibility of an inflationary spiral (maybe that helps houses, maybe of course people run to another currency). Change-of-use for commercial property, government building programmes contributing to supply. Declining rents. Increasing council taxes. Realisation that property income/appreciation is subordinate to currency devaluation. Possible legal restrictions on lending multiples. Personal debt. Changing to a net importer of oil as North Sea production runs down. Two billion people coming on stream as resource competitors. I could go on…..
    Finally, the fact that declining prices are a self-reinforcing trend.

    I don’t think the collapse in asset prices has even got started yet. This is just blowing the foam off the top of the beer.

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  • what about QE, won’t that put a break on falls, even though they will be worth less but priced at similar levels??

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  • 1688

    or was it 1694?

    no wonder the Dutch teach english in the schools

    they need to know the difference between a revolution and an invasion

    and so do we.

    tc, you’re cool, all things considererated.

    when did r2 last change his underpants?

    sorry bit it will get much worse

    gardennetting’s on your case

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  • QE will only put a brake on falls if people start getting loads of mortgages and buy houses which would put the QE money into the economy. The government can’t force people to take on mortgages or buy houses and if people do decide to wait it out then QE will have relatively little effect on the downward trend of house prices.

    I can realistically see 40%+ nominal falls from peak.

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  • Cool, I sold my house in July ’05 and been renting since, I’ve finally made the right decision !!!!!

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  • When was the last time the average house price was 3.5 X the average national wage?
    Anyway that’ll be the date.
    Btw are we all in the poo or what!!!!

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  • tc ~~~ Oh! never mind, that was a but not a bit
    or perhaps a but of bith I mean both.

    Confusus said don’t listen to those who would confuse you or have a name that sounds like they would if they could.

    Sadly tc I have to admit miss marples has more get up and go than you, gordon’s not the only moron

    sorry crunch, did I steal your line or are we one and the same? ~~~~

    20. stillthinking said…There are so many adverse trends that previous cycles haven’t had.

    penny farthing not being one of them.

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  • @25.

    The downturn will overshoot 3.5 times before it recovers. I think it might get as “bad” as under 3 before coming back. It all depends on the banks, the rest of the world, the appetite for risk, regulatory reform, taxpayers being refunded their money, national debt….

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  • Btw are we all in the poo or what!!!!

    “both I think” (cousin malct)

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  • plato, where’s this website then?

    tc, that’s no effin excuse

    growler, take care with your use of language

    do you really mean what you said?

    “The downturn will overshoot 3.5 times before it recovers” how many times?

    I know what you mean but there are one or two strange people in South Wales who may not.

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  • sold 2 rent 1 says:

    All Elliott waves will return to zero in the consciousness singularity

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  • man to man is so unjust ~~~ you don’t know which ‘one’ to trust.

    (sorry bob)

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  • voiceofreason says:

    Price falls are taking their time.
    Property Bee shows loads of stock that has been on the market since spring 08 that has only had a token 5% price drop.

    There is precious little that is at even 2006 levels where I am looking.

    0.5% IRs are holding back the tide of repos.
    Meanwhile the pound continues to freefall.
    So eventually, IRs have to rise don’t they.
    Cue the repossession frenzy like you have never seen before.

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  • s2r1 – if you’re predicting waves will return to zero/singularity, then you are effectivey predicting the end of boom and bust. I heard that one before.

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