Friday, Nov 06, 2009

Peaks and troughs ahead!

BBC: More house price falls forecast

"The Savills' report suggests that there is a 50% probability of prices falling 6.6% next year, followed by a return to price rises thereafter. Prices will rise by 2.7% in 2011, 5.5% in 2012, and 8% in 2013, according to the forecast. " I'd love to know how their model works given that it can give something a accurate as 8% rise in prices in 2012. Anyway, doesn't the fact that Savills think prices are going to fall slightly mean they're actually about to fall off a cliff?

Posted by phdinbubbles @ 07:32 AM (1301 views)
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4 Comments

1. will said...

How do Savills calculate their figures? Do they look at affordability at all? Do they take into account the fact that most people who have a mortgage already have a very large one and have equity released in the past few years and may not want an even bigger mortgage.

Is Gordon Brown being prudent by replacing debt with even more
debt?

Friday, November 6, 2009 07:55AM Report Comment
 

2. paul said...

I love the way the BBC has couched this one:

The recovery in UK house prices could be punctuated by a 6.6% drop

Not if the BBC has anything to do with it!

(self interested bias? moi?)

Friday, November 6, 2009 08:01AM Report Comment
 

3. mark wadsworth said...

Sure they'll fall off a cliff, but when? If the govt senses that the Home-Owner-Ist vote is strong enough, they can keep propping up prices for years, even when faced with a severe contraction in money sloshing around (as we have now learned to our cost over the last six months). Hands up if anybody thinks that the Tories will be any less determined to protect "hard working prudent families from the threat of eviction" etc.

I actually read that 300-page report by Iain Duncan Smith. While the background research and a lot of the logic is spot on, the recommendations are terrible. The bit on "encouraging prudence" muddles up "prudent savers" and "prudent mortgage borrowers" in the same short chapter and says how they want to encourage, i.e. subsidise, both savers and borrowers. Surely "savers" are the opposite of "borrowers"? You can either subsidise the one or the other (and preferably neither), but subsidising both just leads to a death spiral - the only way to do it is to tax the productive economy even more and even more (thus reducing rate of return to investors and making it harder for people to either save or pay off their mortgage).

Friday, November 6, 2009 10:00AM Report Comment
 

4. alan said...

I'd like to read an article where there were lots of jobs created. If I read a lot of these I'd be confident that we were coming out of recession, taxes were being paid and prosperity was coming towards me.

All I see is articles giving unemployment numbers from long established companies....hardly confidence inspiring!

House prices overall will decline, even Gordo won't be able to keep them up (by the way, he's accusing the Afghans of corruption today...).

Friday, November 6, 2009 10:34AM Report Comment
 

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