Tuesday, January 12, 2010

Reality of overpriced housing for all to see

Flatline not crash

Slowly the media are coming round to the fact that property prices are not going to go up anymore. Sooner or later they will start to print stories about them going down.

Posted by chrisch @ 10:21 AM (1983 views)
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7 thoughts on “Reality of overpriced housing for all to see

  • “Over at Merrill Lynch, economists who don’t rely directly on the property market for their incomes are altogether less enthusiastic about the market’s prospects. Its global predictions for the year, across all asset classes and all countries, suggest that UK house price optimists are in for something of a shock. … He brandishes a graph labelled “housing assets overpriced”, which indicates that the current firmness in the property market may be a false bottom.”

    Does anyone know if this chart “housing assets overpriced” is in the public domain ?

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  • House prices never flat line for long so we can rule that option out.

    The average of the Halliwide index for the last 8 months has all been positive, but the media vibe is now turning bearish, if the sentiment of the average man on the street turns then the falls should resume.

    Not sure what the people will make of a second downturn in prices. Will they all rush for the exits or bury their heads in the sand and hope for the best? Shame the base rate is on the floor as this is keeping too many zombie home owners cosy in an house they can ill afford.

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  • A flatline maintained by the media and QE. Media reporting gives the impression that house prices are going up, but if they stay flat is very bad news as speculators only buy if prices go up and families can not afford them.

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  • Nothing in financial markets flatlines, especially the most speculative investments. They go up fast and down fast, with the players betting on either side of the price action to make money in all markets.

    People buy housing because it is going up in value, they dont want to miss the boat. If the price action isnt up you invariably get a crash as the expected returns do not materialize and people panic by rushing to the exits in a disorderly fashion.

    Its like that quote about housing/stocks reaching a permanently high plateu, it just doesnt work that way.

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  • Mark Wadsworth says:

    Mr Flibble: “Shame the base rate is on the floor as this is keeping too many zombie home owners cosy in an house they can ill afford.”

    Hang about – if house prices were realistic (half where they are now) AND if interest rates were realistic (say 4% or 5%), then said zombies would be able to afford to live there. On average, the average family can afford to live in an average house, surely?

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  • tenyearstogetmymoneyback says:

    Strlondon

    Interesting comment. It ties up with Guardian survey in the next blog entry.
    When I voted it was about 40% -5% expecting drops and 40% expecting +5% rises.
    When realiaty catches up with public opinion it will go one way or the other (20%
    inflation could cause +5% rises).

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  • The Daily Mail screams:

    “only 3 out of 10 people think house porices will rise at all in 2010.!”

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