I know of people who are emigrating who've _already_ had to cut their asking price by 20% just to get a sale... though admittedly their original asking price was probably higher than they'd have got last year.
We're in it right now. The country is full of people who are in serious negative equity but just don't realise it yet.
Give it another two or three years and those 300k 'executive flats' will be selling for 50-60k while houses are down 50-60% from the peak.
Mark
The article wasn't clear over what time period that prediction of a
20% fall might occur over. If prices fell by 20% next month you'd probably call that a crash. If they gradually declined by that amount over the next 5 years, you probably wouldn't.Chris
LOL Of course prices have been falling for months if YOY is now down to just 2.5% from 21.3% last August how else do you think they have gone from +20 to 2.5 ?
YOY will go negative on all indices pretty soon; will you still be claiming prices are going 'sideways' when we reach that stage ?
Double LOL by levelling out to 2.5% YOY of course! Put some numbers in a spreadsheet and you'll see that its trivial. There is no implication at all that prices fell, the implication is that they rose by 2.5%!
For example 100 102 104 106 108 110 112 114 116 118 120 121 121.0% 121 118.6% 121 116.3% 122 115.1% 122 113.0% 122 110.9% 123 109.8% 123 107.9% 124 106.9% 125 105.9% 126 105.0% 126 104.1% 126 104.1%
The second 'column' is the rolling 12 month average taken by comparing the value at that point with the one 12 periods previously. As you can see it starts at 21% increase compared to 12 periods ago, and ends at a 4% increase, but at no point did prices fall.
I can see plenty falling from where Im sitting ;-)
But isn't that just the whole point of these boring perpetual threads - estate agents to get the business will promise the earth to the sellers and the sellers believe them (because its in their best interests).
Then if the price isn't snapped up, it gets lowered to lure people into buying. That lowering is a normal marketing ploy. Its no crash. And the only thing that led to the reduction, was the concoction of flashy estate agents promising a hefty sale price and their greedy / desperate / wishful thinking punters.
"Crowley" wrote
Are you really that stupid? The price change from August 2004 to August 2005 is a totally separate period to the change from August 2003 to August 2004.
Now if you'd said "the average over the last *TWO* years is 2.5%", **THEN** there must have been a fall over the last 12 months (if there had been an increase from 2 years ago, to 1 year ago, of 21.3%).
Get it?:
After finishing a maths BSc I taught algebra and geometry for several years so by all means tell me what you think you know about 'basic geometry' and I'll correct it for you. As to english language; the word 'between', apropos 'the lines', has no spatial implication whatsoever and therefore has not even a dot of relevance to the word as understood in geometry. Rather it's about drawing inference, and such is the sophistication of human communication that even single words carry nuance and meaning when these words are responses. Let me know if you find that hard to grasp and i'll paraphrase it for you in monosyllables if I can be arsed (unlikely).
By which evidence you mean the indices vis-a-vis average house-prices? The concept of the 'average house' makes about as much sense as the 'average cake' which contains every known fruit both dry and fresh, a variety of chocolate types, sugar, honey and or/nor malt, an assortment of confitures, seven kinds of flour, is both eggless yet egg-based, is gluten-rich, contains no gluten but every table fat known to man, bakes like lead and is then finished over one side with cream and iced on the other. Marzipan would be optional.
A) It doesn't exist. B) if it did, tasting it would tell you sweet f*ck-all about 'cake' per se.
Now, when our daft housing market is on a UK roll as it was say between 99 and 2003 (i'd like to say between 96 and 2004 but all the tossers from alt.pedant would flood the thread) it is BROADLY rising and very few would gainsay it. On the other hand between 91 and 94 it was BROADLY falling - ditto, very little argument. Now it is mixed, seemingly falling here and allegedly rising there and therefore The-Indices-Mean-Sweet-F*ck-All. At the very best of times (when all is in synch) the indices offer a very crude means of taking the temperature of the market but currently it's transitional and could go either way. If you're seeking solace in 'indexes' and 'sideways prices' I would recommend instead sucking a nice soft dummy. There is a danger that an index which incorporates both rising and falling markets could well be masking some extreme and variable behaviour which might upset the stomach. Only sellers and buyers know what's going on and even they can only speak with limited reliability for their local neighbourhood.
Well if calling a spade by some other name makes it easier for you to deal with I don't think anyone would begrudge you. Like dear old Gordon redefining the economic cycle so that he can include a couple of years of surpluses and "hey presto!!", he brings borrowing under control. But actually he doesn't and can't. The figures are the figures. If it helps you to classify them in some personalised sugared way so be it. For some tender souls 'crash' seems to have become the new c-word.
You watch 'location, location' regularly? ROFL! 5 gets you a 100 that most goons who watch this garbage (and its ilk) believe the value of their own home can only ever rise.
If what now follows bears any resemblance to what happened in the early 90s you'll likely find the media will refer to the fall, as they did then, as a crash. Definitions have a habit of arising out of consensus use but you could always write to your local paper telling them of your dissatisfaction with their use of the word while quoting your vital figures above. It's a fascinating subject.
..and thank you for helping us in our unerring task....
So, since the dawn of time there's never been a drop in prices?
Bitstring , from the wonderful person Crowley said
Lots of +3% months fell out. Why don't you go LOOK at that page
YOY indices will go negative if the fall in the next 4 months exceeds the 2.1% rise in the first 8 months of the year .. however we were talking about whether there IS a crash not whether YOY indices will eventually go below zero.
No, I'll be claiming they're going down. Why are you such a jerk? Never mind
LOL Why are you getting angry ? You're not an estate agent are you ? Or perhaps youre stuck with a load of BTLs you cant offload ?
Prices go up, prices go down. Depending on your perception at any given moment, it really doesn't matter. In the longterm, prices will always go up. The occasional fall only harms people who get caught out. So really, what's all the fuss about?
Fascinating.
When the bulwark of our economic 'miracle' is borne on consumerism fueled by a rising housing market it matters a great deal.
...most of the excitement is downstream right now.
But benefits FTBs-in-waiting (some of whom start most of these threads).
It's called propaganda and I'm quite sure more will follow - thank you for your insightful contribution.
If prices drop by 20% over three/five years for example and then you add in inflation, or presume you can achieve 5% p.a. or greater through other investments then the actual drop is more severe, that's a 35-40% drop when consider the purchasing power.
Forgot to add, for prices just stop rising, or go sideways is enough, that's a considerable erosion if it continues for a few years, especially when inflation is rising. It's also puts a stop on things when the market and wider economy needs continuous growth for equity withdraw, essentially the 'free money' disappears and higher inflation may eventually require higher future interest rates.
That's what happened in the late 70's, prices stayed static, so you could fool yourself and say "my has was worth 30k two years ago and still is today, see, no drop" great but due to inflation and currency devaluation that money may have lost 30% of its purchasing power.
In message , Aztech writes
Clutching at straws?? Nobody takes inflation into account when discussing house price rises, but you now need to include it to make an argument for a crash???
Seems you're creating strawmen for yourself, I wasn't the one who put forth that figure of 20% falls, nor am I a soothsayer. However that doesn't change the fact that stagnation is a fall in real terms, especially when faced with higher inflation, see my other thread re the 1970's.
If people receive a RPI-X wage settlement each year and that is compounded for a couple of years combined with a modest drop in prices by 10% then that
20% figure isn't so difficult to attain. Inflation does matter because it impacts future affordability, it's simple purchasing power, I refer you to all those nicely spun headlines of late "wage growth catching up (or exceeds) house price inflation".
no need to panic, move along please, nothing to see here
Jolly good.
"Agents optimistic about house prices A leading national firm of estate agents believes a collapse in the property market in 1989 is highly unlikely. Strutt and Parker has completed a review of 1988 trends, dominated by panic buying in the summer, then a London-led slowdown in the last quarter."
The Times (TUE 03 JAN 1989)
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