How far will house prices fall? [Volume 3]
Discussion
Digga said:
I disagree strongly on this point. I think it rather the case that the (last) government looked after welfare, enculcating the culture of dependece - whether that be on benefits or state non-jobs - first, and business possibly not even second unless you;re talking about 'big' business.
As for money supply, intetrsting argument here: http://www.zerohedge.com/news/2012-10-04/guest-pos...
Yes, I mean big businesses, those that pull the strings.As for money supply, intetrsting argument here: http://www.zerohedge.com/news/2012-10-04/guest-pos...
For welfare, I'm not specifically talking about 'welfare state', so benefits etc, I'm talking more about wellbeing. I think our government put business needs/demands over the well being of our population.
MycroftWard said:
Derek Chevalier said:
Why do you feel Japan is extreme compared to the UK?
Derek Chevalier said:
Why do you say that it is cheaper to pay a mortgage in long term - which >10 year rate are you referring to?
As inflation goes up the value of your mortgage will decline in real terms.Derek Chevalier said:
Why do you think working class wages are too low - take a look at the US - I recall wages haven't outstripped inflation for the working man for decades. Why should it be different here?
It's a problem in the West generally, due to effects of globalisation.Andy Zarse said:
Ignoring the fact that this idiotic graph shows Uk prices rising 15% over the last few years, I'm surprised you show it to support your argument. Japan started its QE and ZIRP programs about 15 years before us. Thus, can you offer an explanation as to why it is not showing us a graph of the nightmare of our future selfs?
that link I posted just before 10 this morning is one of ZH's better efforts IMHO (awaits scrutiny by fbrs...) and tells why we're not all bound for hyperinflation.anonymous said:
[redacted]
Explain why big increases in food/oil/basic commodity prices, negative wage inflation, a Santander SVR going up to 4.74% off the back of ZIRP and increased money supply which flatly refuses to filter through to the real life economy will mean house prices won't fall?Digga said:
that link I posted just before 10 this morning is one of ZH's better efforts IMHO (awaits scrutiny by fbrs...) and tells why we're not all bound for hyperinflation.
king cops are fking keento f
king keep it fking cleanthe f
king chief's a fking swinewho f
king draws a fking lineat f
king fun and fking gamesthe f
king kids he fking blamesare nowehere to be f
king foundanywhere in chicken town
the f
king scene is fking sadthe f
king news is fking badthe f
king weed is fking turfthe f
king speed is fking surfthe f
king folks are fking daftdon't make me f
king laughit f
king hurts to look aroundeverywhere in chicken town
the f
king train is fking lateyou f
king wait you fking waityou're f
king lost and fking foundstuck in f
king chicken townthe f
king view is fking vilefor f
king miles and fking milesthe f
king babies fking crythe f
king flowers fking diethe f
king food is fking muckthe f
king drains are fking fkedthe colour scheme is f
king browneverywhere in chicken town
the f
king pubs are fking dullthe f
king clubs are fking fullof f
king girls and fking guyswith f
king murder in their eyesa f
king bloke is fking stabbedwaiting for a f
king cabyou f
king stay at fking homethe f
king neighbors fking moankeep the f
king racket downthis is f
king chicken townthe f
king train is fking lateyou f
king wait you fking waityou're f
king lost and fking foundstuck in f
king chicken townthe f
king pies are fking oldthe f
king chips are fking coldthe f
king beer is fking flatthe f
king flats have fking ratsthe f
king clocks are fking wrongthe f
king days are fking longit f
king gets you fking downevidently chicken town
LYRICS © JOHN COOPER CLARKE
turbobloke said:
Digga said:
Andy Zarse said:
LYRICS © JOHN COOPER CLARKE
How did you know I'm off to see him next week?chris watton said:
turbobloke said:
Digga said:
Andy Zarse said:
LYRICS © JOHN COOPER CLARKE
How did you know I'm off to see him next week?(Please dont tell anyone about the porn!)
How far off topic are we?IT is one of the most important economic stories of the past few years and yet the one that is least talked about. House prices in virtually all parts of the country excepting prime London have collapsed. It’s hard to believe if you live or aspire to live in Kensington, Richmond or another prosperous location, but it’s true – and it’s impossible to understand the overall economy, as opposed to the London bubble, and British politics without getting to grips with these statistics.
The average home in Britain sold for £163,910 in the third quarter, according to Nationwide. That is 11 per cent below the all time high reached at the height of the boom, when the average home was changing hands for £184,131 in the third quarter of 2007. But these figures are in nominal terms. Since then, inflation has substantially eroded the purchasing power of the pound.
The inflation-adjusted figures reveal that the peak to trough real terms decline has now reached around 24.2 per cent. Average house prices are back in real terms to levels last seen in the first quarter of 2003. In other words, all of the gains incurred over the past nine years have been completely wiped out. For most people in Britain, housing has been a poor investment over the past decade.
The figures provided by Halifax are even more extreme. These suggest that the real terms slump in average UK house prices has now reached a remarkable 33 per cent (and 19 per cent in nominal terms). Andrew Lilico of Europe Economics calculates that the real-terms peak-to-trough collapse in the 1990s was 33.9 per cent, so that could easily be surpassed next month.
The Nationwide figures imply that house prices remain at least 20 per cent too high compared to earnings, when using long-run estimates of the price to earnings ratio. One reason for this is that real wages have been falling sharply. But only half of the over-valuation in the UK housing market has been eradicated; so unless nominal prices fall significantly it will probably take another five years for consumer price inflation to bring the market back into synch.
Violent, lengthy booms and busts in the housing market mean that house prices can end up stagnating over long periods of time in real terms. In today’s money, an average house cost £81,708 in the first quarter of 1975, according to Nationwide; it was at virtually the same level – £82,469 – by the fourth quarter of 1995, 20 years later, at the trough of the previous house price bust and after huge ups and downs. Housing during that period was merely a hedge for inflation, nothing more. Timing is everything, and many made a fortune buying low and selling high.
There are, of course, massive regional variations. Northern Irish prices are down 53 per cent in nominal terms compared with 2007 levels. Southern England has seen prices hold up better, in particular London (down two per cent from peak, with some areas at record highs thanks to inflows of foreign cash) and the Outer Metropolitan area. The capital’s price to earnings ratio is at a horrendously unaffordable 7.4 times.
Given how over-valued the London market is, and its dependence on a troubled City and declining bonuses, as well as on potentially fickle foreign cash, a severe readjustment at some stage is a strong possibility, despite supply shortages. London property owners should resist succumbing to delusion. It is also dangerous for the government to encourage first time buyers to jump into the market when prices are falling in much of the country. And at some point, the Bank of England will hike interest rates – and then all bets will be off.
http://www.cityam.com/latest-news/allister-heath/o...
The average home in Britain sold for £163,910 in the third quarter, according to Nationwide. That is 11 per cent below the all time high reached at the height of the boom, when the average home was changing hands for £184,131 in the third quarter of 2007. But these figures are in nominal terms. Since then, inflation has substantially eroded the purchasing power of the pound.
The inflation-adjusted figures reveal that the peak to trough real terms decline has now reached around 24.2 per cent. Average house prices are back in real terms to levels last seen in the first quarter of 2003. In other words, all of the gains incurred over the past nine years have been completely wiped out. For most people in Britain, housing has been a poor investment over the past decade.
The figures provided by Halifax are even more extreme. These suggest that the real terms slump in average UK house prices has now reached a remarkable 33 per cent (and 19 per cent in nominal terms). Andrew Lilico of Europe Economics calculates that the real-terms peak-to-trough collapse in the 1990s was 33.9 per cent, so that could easily be surpassed next month.
The Nationwide figures imply that house prices remain at least 20 per cent too high compared to earnings, when using long-run estimates of the price to earnings ratio. One reason for this is that real wages have been falling sharply. But only half of the over-valuation in the UK housing market has been eradicated; so unless nominal prices fall significantly it will probably take another five years for consumer price inflation to bring the market back into synch.
Violent, lengthy booms and busts in the housing market mean that house prices can end up stagnating over long periods of time in real terms. In today’s money, an average house cost £81,708 in the first quarter of 1975, according to Nationwide; it was at virtually the same level – £82,469 – by the fourth quarter of 1995, 20 years later, at the trough of the previous house price bust and after huge ups and downs. Housing during that period was merely a hedge for inflation, nothing more. Timing is everything, and many made a fortune buying low and selling high.
There are, of course, massive regional variations. Northern Irish prices are down 53 per cent in nominal terms compared with 2007 levels. Southern England has seen prices hold up better, in particular London (down two per cent from peak, with some areas at record highs thanks to inflows of foreign cash) and the Outer Metropolitan area. The capital’s price to earnings ratio is at a horrendously unaffordable 7.4 times.
Given how over-valued the London market is, and its dependence on a troubled City and declining bonuses, as well as on potentially fickle foreign cash, a severe readjustment at some stage is a strong possibility, despite supply shortages. London property owners should resist succumbing to delusion. It is also dangerous for the government to encourage first time buyers to jump into the market when prices are falling in much of the country. And at some point, the Bank of England will hike interest rates – and then all bets will be off.
http://www.cityam.com/latest-news/allister-heath/o...
porridge said:
City AM Article
I remeber reading a story which was the polar opposite to that a year or two back in City AM, also written by Allister Heath.It's interesting that the subject is getting more column inches in the press, but until the likes of Kirsty stop convincing people that property only ever goes up, the general public will not be impacted by 'real term' decreases in values.
Interesting article, stating the obvious. Why don't politicians get it? House prices need to fall
Article said:
This misplaced obsession with the housing market was also evident in the proposals put forward by shadow chancellor Ed Balls.
He said Labour would introduce a programme to build 100,000 houses using the proceeds of the 4G licence auction to fund to the programme.
At the same time he talked about reintroducing the Stamp Duty holiday for property purchases under £250,000 that Alastair Darling introduced for two years in 2010
This is surely intended to encourage more people to buy houses. How will that make them more affordable? These two policies point in opposite directions, but then I would hardly accuse Balls of economic competence.
He said Labour would introduce a programme to build 100,000 houses using the proceeds of the 4G licence auction to fund to the programme.
At the same time he talked about reintroducing the Stamp Duty holiday for property purchases under £250,000 that Alastair Darling introduced for two years in 2010
This is surely intended to encourage more people to buy houses. How will that make them more affordable? These two policies point in opposite directions, but then I would hardly accuse Balls of economic competence.
It also said:
Politicians of all persuasions need to learn one simple lesson on housing: in order to make it more affordable, prices have to fall.
Its not rocket science, it is?Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff