Friday, March 11, 2011

Bears predict only a 10% fall

Mortgage data reveals a sharp drop in house sales

A 29% fall in house sales in January compared to December is being blamed on inclement weather, rising inflation and government spending cuts ... the 13% year on year fall is much more substantial than it appears.

Posted by mken @ 12:48 PM (3128 views)
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12 thoughts on “Bears predict only a 10% fall

  • Should be remembered that a 13% fall can only be rebalanced by a 15% rise …

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  • sibley's b'stard child says:

    Jolly good Paul, I guess that’ll make a pleasant headline in 2014.

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  • Not only is alot of credit required to keep house prices high but also two other emotions. GREED and FEAR.

    GREED if you’re a bull – and you want to get as much of the coming future gains as possible.
    FEAR – if you’re a bear and don’t want to get left behind and are concerned you’ll ed up never owning a home.

    Lack of obvious future rises in house prices rule out not one but both of these motivating emotions.

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  • mark wadsworth says:

    From bitter experience, we know that predicting falls is tempting fate.

    So I hereby predict 5 – 10% per year, year on year for at least five years, possibly ten.

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  • I’ll wager you won’t get -10% for ten years Mark. (in sterling terms before GC pops up with house price Gold ratio)

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  • Mark, so you’re figuring a 50% fall spread over 5 to 10 years. Sounds plausible.

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  • mark wadsworth says:

    STR, sure, it might be “only” 5% a year for 5 years against a backdrop of 5% normal inflation or something.

    Alan, about 40% inflation adjusted seems ‘about right’.

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  • ontheotherhand says:

    I love one of the comments on the page as follows,

    “I took the decision not to call the local estate agents about a house I was very interested in because of the cold weather outside.

    I was scared that I would have to leave my flat and my coat would not protect me.”

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  • 10%, is that all?

    I knew I should have bought 3 years ago. wink, wink.

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  • I am looking at a nice house tomorrow. I want to get out of cash – I think it’s doomed – and I want to get at least something for my paper and binary pounds.

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  • sibley's b'stard child says:

    Being a charitable soul HPW, let me help you out with your painful predicament. All I require are your bank account details; it is entirely legitimate…

    Image and video hosting by TinyPic

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  • 10% fall over 5 yrs is not a 50% drop

    eg……….

    100,000 flat(if you can find one)

    yr 1 = 100,000
    yr2 = 100,000 – (10/100) x 100,000 = ( 100,000 – (100,000/10) = 100,000 – 10,000 = 90,000
    yr3 = 90,000 + (90,000/10) = 90,000 – 9,000 = 81,000
    yr4 = 81,000 – 8,100 = 72,900
    yr5 = 65,610
    yr6 = 59,049

    100 x (100,000 – 59,049) /100,000 = 40.9% drop 5 yrs

    yr7 = 53171
    yr 8 = 47854
    yr 9 = 43068
    yr 10 = 38762
    yr 11 = 34885

    so 10% for ten yrs is about a 65% drop in prices…. if inflation adjusted, considering our wages are not increasing in line with inflation, so effectively are decreasing, and a lot of living expenses are increasing faster than inflation giv credit for..

    i don’t see it as that inplausable either..

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