Tuesday, August 26, 2014

This is more like it!

UK home prices likely to fall 30% over four years

"The message is clear. Houses are now so over-valued that a prolonged period of falling prices is on the cards," says Roger Bootle, managing director of Capital Economics.

Posted by novice pete @ 10:10 AM (3553 views)
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14 thoughts on “This is more like it!

  • Gingellenator says:

    This article is a load of rubbish, take the quotes and google them.

    They have been lifted from article in 2001 and 2002.

    Here is an article that more accurately shows his views: http://moneyweek.com/merryns-blog/house-prices-are-bound-to-readjust-but-not-yet/

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  • mountain goat says:

    “Median home prices are currently 5.7 times the average salary, according to Capital Economics, and the ratio is significantly higher in London. History tells us that such a high ratio cannot be sustained”

    I have my doubts about history. History never had Central bankers as hell-bent on printing and debasing money as now. The current contradiction (from a historical perspective) of stock market highs with bond market highs (low IR) speaks volumes. All investments are long.

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  • If you don’t want a bust, don’t have a boom!

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  • stillthinking says:

    I have heard this tale before. It depends entirely on how much money gets freely dumped into the economy. Wages are inflating who knows if we have wage push inflation? Nobody.

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  • Not all investments are long. Oil has had the greatest liquidation of longs in history according to Zero Hedge. Not sure why.

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  • if people were so flush why are they all shopping at lidl and fighting over end of day discounts ?

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  • I agree with Mark. 5 years ago Lild was considered the supermarket for poor people. Now it’s mainstream. I am still stunned by what has happened in Japan. Loose money inflates assets in different ways. In Japan with massive quantitative easing their stock market has gone up by 100% in 12 months but living standards have dropped and house prices haven’t shifted. In the UK our natural asset bubble is always in housingbut the funny money has helped both our stock market and the Americans.

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  • deflation is the new buzzword

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  • “History tells us that such a high ratio cannot be sustained”. Depends which history you look at. China has several cities where the house price to income ratio is far higher (sometimes more than double, even triple) than the London one.

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  • Quotes are from 2001/02 – google it.

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  • @Libertas oil is interesting given political upheaval in oil producing regions. Probably something to do with the fracking revolution reversing the declining US oil production? By “all investments being long” I meant little cash and plenty of leverage. Of course this does not rule out sudden corrections. With so many being long we could get the mother of all liquidations if everyone tries to get out first. London high-end housing could suffer this too if it is true that lots of speculative foreign money is responsible for the latest surge in prices. Classic bubble behaviour when foreigners buy and locals sell. Still as long as Central banks keep pumping cheap money it is hard to see this happening, which is why everyone is so complacent in the first place.

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  • i wonder how much electric cars effect petrol purchasing ? or even more economical cars pushed over the past few years with rebates and taxpayers backing

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  • Interesting but difficult to compare incomes and house prices with the mid-19th c. Middle class earnings were something like £100 pa. with a typical house price in the low hundreds, depending on size. Many earned much less of course so their price-income ratio would be not too far away to what we’re seeing today for the majority. No loans in those days of course, which is why most rented.

    So we really are going back to Victorian times where housing is concerned. Better living conditions for most of course – though not all.

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  • Agents have been cold-calling and ringing back for a month or so now–and being polite! Always a sign of a cooling market: now London has snapped it should soon spread and suddenly the cat will be out of the bag—we’ve been “had” again–houses are 50% overpriced. Spare a thought for those who have just climbed on as the wheels start to come off.

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