Economist Predicts 25% house deflation!

Not really, it is just giving back between about a year and 18 months inflation.

below ? below where ? - we all look at usenet posts/threads differently. I look at them in ascending date order by thread, so as far as I'm concerned you were referring to a post that hasn't been posted yet !

"In Britain as a whole, for example, average nominal house prices are likely to drop by 20-25%, and in London by much more."

Recessions are defined as two consecutive quarters of negative growth as measured by GDP. The best correlation I get from comparing GDP & house prices is when the previous years GDP is compared with the current years house prices, indicating that GDP influences house prices, not the other way around. So falling GDP indicates a likely fall in house prices.

Other correlations are the non-food retail sales

and theunemployed claimant count. The key is consumer confidence.

The thing I found of most interest was the fact that the proportion of owner occupiers with mortgages exceeding 80% of the value of their homes is higher now than it was in the previous bust in the early 1990s. Which indicates, just as about everything else indicates, at the height of a bubble, that as long as consumer confidence remains, unemployment is unchanged & interest rates do not rise, the situation is unlikely to change. If, however, consumer confidence falls, unemployment increases or interest rates rise, house prices are likely to fall; more so due to the extremes of valuation they're now attaining.

Daytona

As a special offer to members of this newsgroup, I'm willing to buy houses for only 20% below appraised value, so you get to make a quick 5% profit.

Tony

I bet he hasn't sold his house and moved into a rented one.

"Prediction is difficult, especially of the future"*

Niels Bohr

Do you really mean that? In the bust, 1991 or so, a lot of people were in negative equity, i.e. the mortgage was well over the value at the time. I suppose it may be that there's more remortgaging going on now, but even so it would seem rather counterintuitive - someone who took out even a 100% mortgage more than a year ago would be under 80% LTV now, and I don't think remortgages let you go that close to 100%. Are there really more people who have taken out

100% mortgages in the last few months than all the people who were at or near negative equity in 1991?

John....

Hi, I am really interested to chat to you on this basis.....

Are you serious about what your saying? I have previously had strong interest in the housing market.....I was originally planning to buy to rent properties..

However, after some seriously good advice from some highly intelligent individuals from this forum, I decided to research further,which led me to put off this plan...

However, I adopted a better business model for the housing market....

Buy Low and Sell High,,,,and ensure enough profit left over to pay expenses......

I am now attempting this on the second property!

Do you have much luck?

The property that is being now put on the market for fifty percent more than what was paid for it! Eg. it was bought low and I'm trying to sell it high....

The last property that was sold....was sold for 25K more than the valuation...

So I'm hoping to repeat that success...partly it is just a question of waiting long enough for the right buyer..and having a property in that kind of category that has a unique quality about it.

What do you think about that general principle as a money maker?

How many have you bought?

In article , John Smith writes

But you're probably very premature for your region. My BTL is on the market at 8% above last year's price (that is, the price that the flat above actually sold for) and I've had people falling over each other to offer me more. Some of these people are 'investors'.

I'm in the south (40 miles from London).

Tim

I have no luck whatsoever but... I started doing this 6 months ago and it would usually result in a chuckle and/or derision. However, in the past 6 -

8 weeks I have noticed a different attitude/reaction from estate agents which suggests, although greedy, they are worried.

I was in my leading estate agents about 14 months ago and, being the only 'customer' in there at the time, I overheard the partners saying that THEN they already believed the housing price market was a bubble and that it was going to collapse with dreadful consequences. I clearly remember one saying "We've seen this happen before..."

BTW, if you start offering X% below asking price what you need to do is not just state this to the agent but also drop a note round with the owner of the property. Just something along the lines of "I have made an offer of X" with X being 20%or more below asking price. It helps people to be realistic.

J.

See above/below post.

Yep, where I am looking there is evidence that prices are still rising but it is taking much, much longer for hosues to sell. I keep reading articles in my local paper from estate agents saying properties are flying out of the door before they can even advertise them but... I have been keeping a close eye on things and I am seeing the same properties on the market for most of the year.

J.

X-No-Archive: yes

I have around 150,000 in cash.. and was talking to the financial adviser at the Halifax who suggested I buy a house being young and all.

But I decided not to as I told her the house prices were way over inflated and I invested in gilts.

Judging from the comments above, if others do the same as I did, where is the supply and demand in the whole house price equation ? They are going to fall big time.

I quoted directly from the lead article, so they must mean it !

As I said, at this stage in the game, nothing surprises me.....

Daytona

Well good luck John, I am going to try that strategy..myself..if you can get it to work, then that seems an absolute solid proposition.

There was a very wise man once who had made alot of money in his life, he had seen the depression, and he had seen the wars etc..and he allways told me two powerful bits of advice that is the corner stone of much success in financial terms in life.

1/ Buy from the needy

2/ Sell to the greedy.

I know that in purely monetary terms, it is basic exploitation of any given situation to your best financial advantage....

But the fundamental points that it makes are true!

Any comments on that?

They might not, those people who are saying there is going ot be a big crash can be heard every single year..I assure you, there has been many people saying this for many decades....

Doom and Gloom mongers are everywhere...

Even if the prices of houses fall, it is not going to be such a big dramatic thing..

They may just stagnate for some years...which would be the best thing, or they may just gentle decline, which is the best thing also..........

NO big deal..

Or as I have a pet theory, the conurbations will move and regenerate key areas of the north..

Namely Hull, Liverpool, and Manchester, and other midland towns, where there is a large oversupply of derelict and empty property.

If businessess and people moved there..then that could create a whole new tear of property owners.

>

How can there be 2 best things? That is not possible.

Nah, there's plenty of your holidays left.

Ok...how about this then!

Quote: StephenGoldenGun in a pub talking to a customer putting the final touches on a rather nice sale: " Gosh John, thats the best pint of "best" bitter I've had in a long time. They must keep the pipes nice and clean!