Posted Thu, 29/07/2010 - 04:37 by tmark938
Property News - Wednesday 28th July 2010
The forecast for UK house prices is very depressing |
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Wednesday 28th July 2010
While the National Institute of Economic Research has today issued a report regarding the UK property sector, with a forecast that house prices will fall by 8% in real terms by 2015, this is not the worst forecast currently in the marketplace! A report by Capital Economics today forecasts that the UK property market could fall by up to 25% over the next two years wiping off almost £42,000 from the value of the average home in the UK. Despite the fact that only a few weeks ago there appeared to be hope for the future, with competition returning to the mortgage market, the outlook for the UK property market has down turned after the emergency budget. But are we now in danger of talking ourselves into a property recession? There is no doubt that negative comments regarding the UK property sector will see more and more buyers waiting by the sidelines as cautious sellers begin to drop their prices and run for the exit door. In this scenario there are very few people who would "jump in with both feet" when the cost of a property tomorrow could be less than the value today. Is there no balance with regards to forecasts for the UK property sector?
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Comments
Depressing ?!
by Anonymous - 29 Jul 2010 - 12:52
What's depressing about something become more affordable
house prices
by Mal - 29 Jul 2010 - 14:09
Exactly,why is this seen as bad news?
Somthing to take into account be we jump for joy
by Home owner wannabe - 29 Jul 2010 - 17:22
On the BBC web site the drop was in terms of people not having jobs to afford the house that they want. Added to this is wage downward pressure and inflation forecast to be between 3% - 4% over the next few years. Also if the current home owners are diving into negative equity, this will only scare banks into enforcing much stricter lending requirements to ensure that new home owners do not land up in negative equity. Combined with new lending requirements for new mortgage customers being proposed by the BOE/FSA (IE 15% – 20% minimum deposit, 3 – 4 x combined lending income only), this will make getting a mortgage harder.
With all the above combined; the average Joe first time buyer will find it much harder to buy a house. 8% - 25% drop on paper looks good for people who are looking to buy a house, but in real terms it is not going to make buying a house in the future house more affordable than it is now.
But I could be wrong
Love the article because its
by Les Amour - 29 Jul 2010 - 14:07
Love the article because its not depressing but love the comment underneath more, in a fraction of the words it means so much more then your article
property
by shazam - 29 Jul 2010 - 14:17
Why should forecasts be balanced? Should we ask that from the weather forecasters too? Everyone thinks it is going to rain...this is not a case for 'balance'. Your article qualifies as the most silly thing I have read today.
Further to those forecasts, good as people will have more to spend on other goods and services.
Depressing - not
by Steve - 29 Jul 2010 - 14:59
It is depressing if you are one of the types who earn a living on the back of rising house prices but for most other people it is great news. Roll on the 25 per cent reduction - then I'll buy!!
Huzzah!
by Anonymous - 29 Jul 2010 - 15:27
You mean we will become less indebted to the land barons? I am anything but depressed!
House price forecasts
by Jonathan Davis - 29 Jul 2010 - 15:40
"Is there no balance with regards to forecasts for the UK property sector?"
Excuse me! Did yiu ask that when every forecast was up????
This is not an advice site. It is a selling site. You want a high reputation? Then be more impartial, less partisan and give advice.
"could fall by up to 25% over
by David Brown - 29 Jul 2010 - 15:53
"could fall by up to 25% over the next two years wiping off almost £42,000"
that should read
"could fall by up to 25% making them more affordable by almost £42,000"
Depressing indeed - for the VIs
by Liz - 29 Jul 2010 - 16:16
Roll on drops of 25% or even more, and I say this as someone whose house was paid off years ago.
I want them for the sake of my own children and everybody else's.
The more 'depressed' the VIs are, the more I shall be giving three hearty cheers.
Old world thinking
by Anonymous - 29 Jul 2010 - 16:22
If the report was talking about bread, cars, sofas or beer you would present this as positive. So why a negative for houses?
Houses are over-valued by any measure and the sooner they come down in price, the sooner our broken economy can recover. Rising house prices is not a sustainable means of economic growth or wealth creation - economics 101.
poor quality journalists
by inbreda - 29 Jul 2010 - 16:45
Is it a requirement, in order to pass all those journalist school exams, to be so stupid as to think that high house prices are a good thing? Do they fail all journalists with an ounce of intelligence? It is not depressing news it is fantastic news. The site is called "financial advice" and financially speaking - to the vast majority - lower house prices is brilliant news. If you want to give financial advice you could a) advise people not to invest in what is quite obviously a massively overpriced asset, b) be a bit more socially responsible and try to point out that houses should be homes for living in, not assets for financial speculation.
Fantastic news for who ?
by PeterB - 23 Aug 2010 - 22:44
How can it be fantastic news.
The majority already 'Own' their own homes and the perceived 'Equity' in that home is usually their main asset.
If a home with a 50% mortgage loses 20% of its value, the 'Owner' loses 40% of their equity, all whilst repayments are going up. Not good for the nations 'Feel Good Factor'
The people that It'll be good for are a few first time buyers or .
negative comments......
by azazel - 29 Jul 2010 - 16:45
I wont be buying a house until they are reasonably and fairly priced & im sure there are many more like me. Lower prices is good news not bad, unless you are a property speculator.
Uk Housing market is hugely inflated in compariosn to the rest i
by Anonymous - 29 Jul 2010 - 16:48
The Labour party, under Brown, as chancellor, stopped tax relief on pension funds in 1997. The treasury issued many stern warnings about what would happen. Including that those funds would then be channelled into other investments, noting, direct property investment, or Buy to Let portfolios. Brown, meglomaniac, ignored this warning. Browns ineptitude created the cornerstone of the debt bubble.
In the ten years previous to Browns Raid on pensions, From 1987 to 1997 the Average House Price rose from £40k to £55k.
A 33.3% rise over ten years.
From 1997 to 2007, the Average House Price rose from £55k to £190k [Nationwide Building Society figures]
A staggering 245% increase over the same period. [Ten years.]
There is NO shortage of houses. What is happening now, is that your money is being stolen, through QE, Low IR, increased taxes, morgate relief, to pay for this toxic mortgage debt, to bail out the banks. You are having your money stolen, in effect, to pay for other peoples houses. Whilst keeping you in debt slavery. That is what the Labour party have done. A debt transfer has taken place. Its unfair, amoral, criminal, theft. Performed by the State. By The Labour party. The party with an extremely twisted ideology, who hope that the public are too dumb, or complacent to realise what has happened.
So we are Working for nothing. No capital. Unable to get ahead in life. unable to get onto the ladder. Why? Because of Labours enforced lack of regulation of the Banks, and sheer evil policies, and incompetence.
We have been forced to waste tens of thousands in rent. If Labour had adhered to Browns 1997 promise, 'I will not let house prices get out of control' Im sure we would have got a mortgage, years ago, and paid off most of it. Instead of paying off the mortgage of a landlord who took out a liar loan from the Bradford and Bingley, and was able, because of Labours enforced lack of regulation of the banks, to borrow enough money to buy a number of houses, by lying about his income. [Look at Gordon Browns Mansion house Risk speeches, as late as 2006, as the blame lies firmly with Labour, despite their lies]
With such a ridiculosly high rise, whats a 25% drop? Nothing. The governmnet, media interests, and banks are trying to 'engineer' a bottom in the housing market.
Dont fall for it.
If you are a FTB refuse to buy, until they return to 3x salary of an average wage earner in your area. Do not believe Estate Agents as they lie for a living. Not an insult. Simply the truth.
If they can fall 30%, they can easily fall 60%, and there are many examples of this already happening. [yest they remain overpriced. Look on propertybee, and propertysnake] House prices will overshoot on the way down. And remember, the majority of these journalists have a vested interest, as they own houses. And journalistic impartiality, does not exist, on the subject.
Well said! Bang on the money!
by Jonny - 29 Jul 2010 - 17:49
Well said! Bang on the money!
Reality check
by Tom Archer - 29 Jul 2010 - 16:50
This is yesterday's language - the notion that rising house prices is a 'good thing'
It isn't, and never has been; and I pity those who have been suckered into mortgaging themselves to extremes.
A house is a home, not an investment. It is a consumer durable that should normally have it's greatest value when new and then gradually depreciate - like any other consumer durable.
I own my own home, and have no mortgage left to pay. If I sold my house tomorrow it would realise £250k.
But as a second hand home that could be built new for £50k, I don't believe its true worth is more than half it's construction cost; or one tenth of it's current market value.
- Bring on reality!
Change the negativity!
by Anonymous - 29 Jul 2010 - 16:55
For far too long, the predominant view concerning house prices in this country was that a rise was 'a good thing'. Over the last decade, the numbers of hardworking young people who cant buy a house has been growing. Their justified grievances about having to pay highly-inflated property prices have barely been given a hearing.
Now, there are an increasing number of home owners in their 50s who are realising that their kids cant afford to buy a decent home (notice I use the term 'home', as in a place to live, not 'house' as in an alternative pension scheme). Staring at the prospect of having to shell out wads of cash to them, or, possibly worse, have them living in the same building for the indefinite future, these parents are adding to the growing numbers wishing for realisitc property prices.
Those in the middle, ie, who bought a home when they were affordable and whose kids aren't at university yet, are becoming a smaller but still vocal group (as this biased piece of journalism shows). Only when the majority have woken up to the fact that everybody ultimately suffers with high property prices can we determine this ludicrous and dangerous bubble of the last decade to finally be over
The forecase for UK house prices is vey EXCITING
by Nick - 29 Jul 2010 - 17:04
When I saw your headline I honestly thought it was going to be about the return to the depressing days of runaway house price inflation. You need to get smart, for the sake of this country's economic wellbeing. Wake up and take a look around you. People are struggling with debt, the banking system is insolvent and on life support, government almost bankrupt propping up insane policies supporting high house prices. The cause? Wages can no longer service the high mortgages required for house purchase (and that's with low interest rates!) - people are having to work longer hours or in many cases multiple jobs just to keep afloat. I won't go into individual responsibility here as this is a different debate.
From where I am standing, higher house prices are utterly depressing, unless you own more than one home, or you buy down - but I suspect that the vast majority of us do not fall into this category.
Lower house prices on the other hand, mean less debt, lower rents (although I suspect you also see this as 'depressing') more economic activity (less money sucked up in debt servicing, lower rental overheads for business), better wellbeing.
Your article is typical of the misguided journalism that appears to celebrate a country getting poorer (high house price inflation) and mourn us getting richer.
By the way, your article cheered me up no end - far from depressing so I corrected the headline for you in my subject.
I agree with nick..
by Tom Archer - 29 Jul 2010 - 17:42
Just to highlight Nick's point about policies supporting high house prices, consider these numbers..
- Govt spending on housing benfit is enough to build over 300,000 houses each year
- Unemployment costs the taxpayer about £12,000 p.a. for each claimant
- Building an extra 300,000 houses each year would create about a million jobs
- The saving on unemployment benefit would be roughly equivalent to 5p off the basic rate of income tax
- The land needed to build 300,000 houses is just 1/30th of the land currently owned by the MoD, or 1/2000th of the undeveloped land in the UK as a whole
- After five years, the misery of housing under-supply in the UK would be corrected
The UK needs more houses, and until the economy re-balances, we urgently need more employment.
- Build baby, build!
Balance
by Dylan - 29 Jul 2010 - 17:43
Predictions aren't supposed to have 'balance'.
If they did they would be worthless as predictions:
'Prices may be up or they may go down'?
The forecast for UK house prices is very encouraging
by Anonymous - 29 Jul 2010 - 18:23
The forecast for UK house prices is very encouraging
Wednesday 28th July 2010
While the National Institute of Economic Research has today issued a report regarding the UK property sector, with a forecast that house prices will fall by 8% in real terms by 2015, this is not the best forecast currently in the marketplace!
A report by Capital Economics today forecasts that the UK property market could fall by up to 25% over the next two years, making the average home in the UK more affordable by almost £42,000. Despite the fact that only a few weeks ago there appeared to be pessimism for the future, with competition returning to the mortgage market, the outlook for the UK property market has improved after the emergency budget. But are we now seizing the opportunity of talking ourselves into a property recession?
There is no doubt that positive comments regarding the UK property sector will see more and more buyers waiting by the sidelines as cautious sellers begin to drop their prices and run for the exit door. In this scenario there are very few people who would "jump in with both feet" when the cost of a property tomorrow could be less than the value today. Has balance with regards to forecasts for the UK property sector finally returned?
*** This is about as biased as the original story, but at least it reflects the sentiments of everyone who has posted a comment ***
The forecast for UK house prices is very depressing
by TommyR - 29 Jul 2010 - 19:09
Is it very depressing when food prices fall?
Do people become happier when petrol prices go up?
A house is for living in, not for speculation.
Housing in today's society
by Anonymous - 29 Jul 2010 - 20:10
I think it's a sad reflection of our society today in Britain that houses are so expensive relative to the average person's pay, and that this situation has been deliberately kept going as long as possible.
Why do estate agents, bankers and other people in financial services generally think that rising / high house prices are a good thing when it's obviously not for the ordinary person's benefit?
It's good news for 'property investors', more people chasing the same number of houses, but bad news for the average youngster unemployed or on or just above the minimum wage. Property investors just want to sit back and take the money. It's like commodity investment - these people don't care that they are driving up the cost of a basic human need. If they did care they wouldn't do it.
It looks as if the property greed factor has taken over, and certain people in high places will stop at nothing to keep property prises rising indefinately. Examples are reckless lending and the Bank of England keeping interest rates at record lows for so long. Interest rates need to rise because so many mortgages have been granted to people who are at high risk of default. Banks need to get as much money back as soon as they can before morgage holders default.
We are no longer a happy country.
Parents of the baby boomer generation are 'selling their family silver' in that they are giving thousands to their children to put deposits on houses. So even though their house may have risen in price three times since 1990 or whenever, they are actually no better off as they have to give so much to their children.
In the end the greed factor will meet it's match when people have used their savings and have no more left for housing. I predict this 'recession' is only just the start of a long depression and terribly needed house price correction. Unfortunately living standards will fall for the ordinary person so that it may threaten to start impinging on those who have caused this situation. I guess those with vested interests will turn to something else.
Good
by NickNike - 29 Jul 2010 - 21:47
Higher food prices = bad
Higher energy prices = bad
Higher house prices = good?????????
What a strange country I live in.
I'm sick of the media ramping up prices.
The people who pay the high price is the poor sod who buys it, meanwhile all the parasites and snake oil salesmen make easy money.
People should be boycotting the house market. Please tell the 45 thousand idiots who buy a house every month.
people must protest by not buying
by Garry - 29 Jul 2010 - 22:53
Unfortunately this county's economy and banks depend on people borrowing imaginary money and giving banks real money. This system of greed will only change when people en masse refuse to give away our hard earned cash as a deposit for a huge loan.
I have been waiting to buy a house for 2 years, but I refuse to loan my life away by borrowing over £150k
a house should be a home, not an investment
by Tony - 2 Aug 2010 - 10:26
Historically, average house prices have been about 3.5 to 4 times average salary. Average salary is currently about £24k, so average house price should realisically be £84 to 96k - just under £100k.
Current average house price is just over £200k. Prices need to drop by 50%.
Prices have been artificially boosted by greedy investors. A house should be purchased as a home, not an investment.
test It has just been
by Anonymous - 5 Aug 2010 - 20:33
test
It has just been reported that the prices in rural areas are now 12x the average wage in those areas
unconscious incompetant
by Anonymous - 8 Aug 2010 - 02:54
Housing investment is normal practice in every country. House prices are a function of rent values...only when rents drop house prices will fall as investors will look for alternate options...it is finance 101. People invest in property to earn a rental yield plus some capital appreciation. You can all sit and wait for house prices to crash so you can afford to buy, or be a little proactive and start to understand the real dynamics of the market. Britain is the only country I know that wishes for the worst...take a look at house prices in Australia...they have gone up like crazy but rather than complain Australians try to understand how they can take part, whether for investment or a home to live. All these conspiracy theories, you can sit and pontificate about what is happening in the background or become financially literate and start trying to understand the market, it is supply and demand driven, with some speculation, perhaps allot at some stage, but the market always normalises and is driven by yields, i.e rental returns as a function of value. Being an unconscious incompetent I can assure you will get no-where further than where you are now which will be a depressing story in 10 years time because the people you believe are conspiring against you will have been allot more proactive and will most probably be allot more financially secure.
Yields not looking so good now.
by PeterB - 23 Aug 2010 - 23:15
I'm not against property speculation, I've even got a couple of mortgage free flats that I rent out, however, yields of 4-5% when let, are OK when property values are going up, but now?.
Buy to let Property is a business that does not work when prices are reducing.
Domestic property is currently hugely over valued and due for a significant drop in the next 2-3 years. Ease of Borrowing has been the single most important factor in creating an artificial housing boom and repayment difficulties shall bring them down to the correct level.
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