Monday, December 29, 2014
ZZzzzzzzzz
Prepare for house prices to FALL
After a year of soaring house prices across Britain, they are set to fall Warning comes from the Centre for Economics and Business Research Group will warn prices will slip during 2015 - conflicting with other analysts It predicts London house prices will fall by around 8 per cent in 12 months
Posted by hpwatcher @ 09:36 AM (6749 views)
14 thoughts on “ZZzzzzzzzz”
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mombers says:
8.8% up one year vs 0.6% down the next – still up 8.14% over 2 years. Wildly in excess of increases in other prices and still bears no relation to building and maintenance costs.
Mine has allegedly gone up by more than 70 grand in the last year. How does this help me? Luckily I’m not moving any time soon, but if I did, I’d be at least £70k out of pocket as a bigger house would have gone up by more and an already punitive stamp duty bill would be higher too. I also derive most of my wealth from working in the non-land speculation based part of the economy, so all that extra money sucked out by landowners is at the expense of my customers and hence my business’ revenue and profits.
hpwatcher says:
8.8% up one year vs 0.6% down the next – still up 8.14% over 2 years
Drops in prices are unlikely to be so low, if the market turns. All in all, a pretty silly article.
(It always surprised me how many home owners post on this website. Why? If I owned I would not be here)
p. doff says:
Building firms working flat out… brickmakers can’t keep pace… prices predicted to fall. Recent headlines support Flashman’s view – and yet some people on here are still miserable.
mombers says:
@2 hpwatcher, an HPC would suit me fine – as I said, I derive most of my income and wealth from working so stand more to gain from a balancing of the economy away from housing. I’ve also got a lot of equity and am not planning to move for 20 years anyway so not too fazed if I lose a meaningless paper gain anyway…
taffee says:
Bubbles don’t plateau
The Irish property bubble was the collapsed overshooting part of a long-term price increase of Irish real estate from the late 1990s to 2007 in a period known as the Celtic Tiger. In 2006 the prices peaked at the top of the property bubble, with a combination of increased speculative construction and rapidly rising prices, in 2007 the prices first stabilised and then started falling until 2010. By the second quarter of 2010, house prices in Ireland had fallen by 35% compared with the second quarter of 2007, and the number of housing loans approved fell by 73%.[1][2]
The fall in domestic and commercial property prices contributed to the Irish banking crisis and as of February 2013, prices continue to fall. House prices in Dublin are now down 56% from peak and apartment prices down over 62%.[3]
hpwatcher says:
Building firms working flat out… brickmakers can’t keep pace… prices predicted to fall. Recent headlines support Flashman’s view – and yet some people on here are still miserable.
I think you will find it’s a bit too early to start the celebrations just yet.
khards says:
As HPW says, why would anyone be celebrating about the facts, prices rising 8.5% in a year.
You can get all excited about the propaganda, fake facts and statistics that various organisations put out, but that does not change the fact on the ground
– House prices continue to be unaffordable for the majority of younger people who are forced to rent.
Just what are people celebrating?
libertas says:
They are only talking about the top end, the part of the market negatively effected by stamp duty changes.
This may drag down net prices, HOWEVER,
The OPPOSITE will occur to properties below £800k, i.e. the average London house and more.
libertas says:
Mombers. You completely fail in your math.
House prices appear exponential, but are leveraged to wages. Local Authority wages this year rise 2.2%. I can borrow easily 3.5x my salary thus, that 2.2% rise allows me to buy 7.7% more house. That is why owning your own home makes so much sense, your housing value is leveraged to average wages even after you stop working. The alternative is to get left behind by rising rent on a fixed income.
OF COURSE, this math mainly works for owner occupiers, because they have the opportunity cost of renting. Highly leveraged investment in buy to let is a completely different ballgame.
libertas says:
Not only that, but, the fall in un-employment rates, particularly in the capital, mean that the rise will be greater than a leveraging of pay rises.
reticent says:
@9
Haha. Pot kettle black much?
Do you plan towns with that shoddy arithmetic?
The multiple is constant. Only the salary rises. There is no compounding (or leveraging as you call it).
reticent says:
Sorry, perhaps a better explanation would have been :
Your income is what you borrow against. You can’t leverage collateral. You leverage the cash you have now (ie deposit).
mombers says:
@Libertas, my point is that it doesn’t matter to me what happens to the value of my house – I can only take advantage if I sell AND I don’t have to buy anything more expensive. At the moment, my house has gone up by £50k but I’d want to move to a place that has gone up by £100k. The ‘math’ says I need to miracle up £50k – typically a more oppressive mortgage. If mine had gone up £0, the other place would have also gone up £0 and I wouldn’t be £50k out of pocket. What does your ‘math’ say?
I’d have to be a BTL or downsizer for rising prices to help me.
cornishman says:
Libertas, reticent is right, you are wrong @ 12:14.
example:
£30,000 wage x 3.5 = £105,000 mortgage
Add on a 2.2% pay rise
£30,660 wage x 3.5 = £107,310 mortgage
£107,310 – £105,000 = £2,310
– which is 2.2% of £105,000 – not 7.7%