UK Landlord Forum / Life

House prices in Britain could crash by 25 per cent before mid-2010, forecasters at Capital Economics have warned. That would wipe £45,000 off the value of an average house, currently worth £180,000.

Ed Stanford, property economist at Capital, said it was 'entirely plausible' that house prices would fall by between 20 per cent and 25 per cent in the next two years, particularly if the economy continued to be buffeted by the credit squeeze, financial markets' turbulence and sliding consumer confidence.

Capital has already published forecasts that flag a 5 per cent fall in house prices in 2008 and 8 per cent in 2009. It also expects unemployment to rise from 5.3 per cent of the working population to 7.5 per cent.

Last week, Nationwide building society revised its forecast of no change in prices this year to a modest fall. It changed its prediction after publishing figures that showed UK house price annual inflation at its lowest rate for 12 years. Prices fell for the fifth month running; March was down 0.6 per cent on February. If the trend continues Britain's housing market will soon record annual falls for the first time since 1996.

Other UK housing bears include David Miles, chief UK economist at Morgan Stanley. He reckons the market is due a 20 per cent correction. If he and Capital are broadly correct, a significant number of people who bought two years ago will find themselves in negative equity by 2010.

Not everyone is as pessimistic: JP Morgan's Malcolm Barr envisages a 6 per cent fall in 2008, but then a slow recovery.

The Royal Institution of Chartered Surveyors reports that new buyer inquiries at estate agencies are sharply down.

The market is being depressed by the credit crunch, with banks hoarding cash and demanding that borrowers put down huge deposits.

Gulp

There are so many different statements by so many 'in the know' people. But the mental thing is .... they are all saying something different !
Its just who to believe.

No one can sadly predict the future ... and thats what they are trying to do.
The housing market isnt that good atm .... but its not awful. Houses do sell .

People will always want to move house.
There will always be ftb's with good desposits.
People will always want to buy and there will always be people with enough money.


I very much doubt houses will go down in price by 25% ... that will mean homes are devaluing by the month.
I just cant see it .

*steps of her soup(Im making soup tonight you see haha)soap box*

The market is correcting itself in areas where likes of Inside Track and other 'experts' inflated prices to generate cash-flow. There are still good properties out there valued correctly, now is still a good time to buy, just a question of doing homework - and hey, if the prices drop 25% then they'll be 25% cheaper!! To quote Warren Buffet - probably wisest investor
"buy when everyone else is panicing and panic when everyone else is buying"

I think any predictions like this about how far houses might fall are near worthless. I believe that houses might fall in value, but the fact of them falling would completely change the market. So the amount and speed by which they might fall simply cannot be predicted as that would depend on things we cannot yet see. Say if houses fall 10% over the next year, what will people then believe about the housing market? That it's a short blip, or something that's likely to continue long and hard? Who can possibly know?

As for doing homework, I believe that I am doing my homework. Problem is, my homework suggests that apart from some flats sold at auction, there isn't any good value left.

I don't believe in God, does that mean I'm going to Hell? 

I really don't think you can put a number on anything - 25% seems like scare tactic me, what for I'm not sure but the fact that so many figures are flying around makes it hard to believe.

Theres a house for every buyer and a buyer for every house.

Quote from: Property Guru on April 01, 2008, 03:33:20 PM
I think any predictions like this about how far houses might fall are near worthless.

I agree

As i have said before, untill it starts to pinch in areas you dont want it to, why listern to it all !
Ok apart from being interested in it.

Quote from: greybob on April 01, 2008, 02:01:14 PMHouse prices in Britain could crash by 25 per cent before mid-2010, forecasters at Capital Economics have warned. That would wipe £45,000 off the value of an average house, currently worth £180,000.

Sounds like balls to me.

Bear this in mind; HSBC isn't desperate for deposits the way the rest of the banks are; it has tonnes of cash from the far east and never used the kind of leveraged credit vehicles that resulted in the banking sector catching flu. I'm sure it can't be the only one where this is the case.

Right now its commercially sensible for banks to hike up as much rates and deposit requirements as possible - they can, so they will. But you're already seeing good deals coming out of First Direct and HSBC, and before long the other banks will start to feel the impact of this competition, especially since more and more people remortgage every month. Losing interest-paying people won't help their financial situation.

Then there's the fact that when negative equity starts affecting a wider range of people, it will no longer be in the bank's interest to perpetuate this situation - all it will do is increase their losses. If someone told me I owed the bank £25K from negative equity after they auctioned my house, I'd declare bankruptcy. When that starts happening, I reckon you'll see the banks all of a sudden become interested in supporting the housing market.

The property problems of the early nineties lasted about three or four years before the market could be said to be "ok" again, but the real crunch only lasted around 18 months - prices falling, negative equity. We've already seen a little of that, but even if we're only at the start now, 18 months will see us clear of it.


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