Wednesday, June 24, 2009

Standard & Poors makes formal application to join comedy club

House prices will bottom out before the winter

House prices will stabilise in the last quarter of this year as the low number of homes for sale more than compensates for the fact that houses still aren't affordable, forecasts Standard & Poor's. 'UK house prices will stabilize in the final quarter of this year about 7% lower than in December 2008, and remain roughly stable in 2010,' said Jean-Michel Six, Standard & Poor's chief economist for Europe.This is much sooner than for the rest of Europe, where Standard & Poor's expects house prices to fall both this year and in 2010. The Spanish housing market is poised for worse, with prices declining until 2012, Six said.

Posted by jack c @ 05:28 PM (1814 views)
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16 thoughts on “Standard & Poors makes formal application to join comedy club

  • rotten tomato says:

    Is it a surprise? After all they were the ones who gave all those silly MBS AAA credit ratings. But that was soooooo long ago, now’ s the time to turn a new leaf, find a new swindle.

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  • S+P were AAA rating sh*t 24 months ago so I guess they are to be believed.

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  • Surveyors are currently undervaluing properties by about 10%. This (nominally) puts up to 25% of the nations householders into negative equity. Thats an awful lot of houses removed from the supply, so I can understand why they think that supply will be constrained.

    Only large increases in interest rates and unemployment will force these people out of their homes and therefore increase the supply

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  • japanese uncle says:

    Standard who? Ah the con firm that gave AIG ‘AAA’. Heaven forbid!

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  • How much is this bloke being paid as the Standard & Poor’s “Chief economist for Europe”?

    Will he be sacked for getting his forecast totally wrong?

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  • Flash – replace the word “Only” with “But” in your last sentence and I agree with you.

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  • Surveyors are currently undervaluing properties by about 10%. This (nominally) puts up to 25% of the nations householders into negative equity. Thats an awful lot of houses removed from the supply, so I can understand why they think that supply will be constrained.

    but large increases in interest rates and unemployment will force these people out of their homes and therefore increase the supply

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  • Reading the article and garnering their analysis, their conclusion should be the the house price crash will be drawn out (‘roughly stable’) until there is a ramp in interest rates and / or unemployment. I think most here would agree with this conclusion anyway.

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  • Flash its the lack of supply issue that I just don’t buy. Excepting FTB’s transaction levels between 2002 and 2007 were abnormally high, this was not based on need (true demand) but were more a discretionary spend with people finding they could borrow more and buy bigger or live alone. Gone now.

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  • ie not only will supply increase but what we think of as demand will wither – know nothing about formal economics but must be a term for this. The demand was illusory

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  • bellwether: do you not buy it now, or in the future?

    For what it’s worth, I think there is a slightly constrained supply now but that there will be a gushing supply down the line.

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  • bellwether. sorry cross post.

    51ck you studied more recently than me. Give Bellwether an economic term . Everything I can think of has the word fukked in it

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  • One of my relatives has just remortgaged with Halifax. Their new pricing model undervalues the house by 7 or 8%. The net effect is that he is forced into another “higher” loan band. Not “under water”, but paying a slightly higher percentage for the same loan.

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  • @flashman

    “Surveyors are currently undervaluing properties by about 10%.”

    I’m not sure what you’re getting at with that assertion. Do you mean that surveyors are calculating an estimated value for property and then lopping off 10% or they’re getting their valuations wrong? Surely the only conclusive way to establish the value of a property is to sell it in the market – everything else is just opinion.

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  • quiet guy. they are estimating the real market value of the house and then taking approximately 10% off that because that is what the banks are telling them to do. This is a strategy designed by the lenders to give them a further cushion against predicted falls in the market. They are generally demanding a minimum deposit of 25% but this additional 10% cushion implies that they think that a 25% deposit may not be enough to cover future falls in value.

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  • Still Waiting To Buy says:

    Flashman… I can see your take on the whole issue of why there is a 10% reduction factored in, but rather than they expect prices to drop even further, is it not that the banks are just making sure that THEY are buying a house for a reduced price with the expectancy that the property price will indeed increase over the coming years, which limits their own risk on investment and also increases their own profits if the customer cannot repay and they have to reposess and sell the property… This would make more sense to me.

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