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| Britain |
| UK House prices 'may fall 25 per cent' |
| 2004-10-30 |
| House prices may fall by up to a quarter over the coming years, one of Britain's top economists said yesterday. Prof David Miles, who prepared a report on mortgages for the Chancellor in the last Budget, said growing concern about the property market could be enough to send it over the edge and into a crash. "A significant fall in nominal house prices is not implausible," he said, before adding that houses currently seemed to be overvalued by as much as 25 per cent. "It does not require some trigger - a rise in interest rates or in unemployment. Expectations of a degree of over valuation becoming widespread can itself be the factor driving prices down." The comments from Prof Miles, a visiting professor at Imperial College and the chief British economist at the investment bank Morgan Stanley, coincided with official figures confirming that mortgage approvals had dropped to their lowest level for more than four years. The Bank of England said banks and building societies lent £7.7 billion in mortgages in September, considerably lower than the £8.4 billion recorded in August. Mortgages approved also dropped from 95,000 to 89,000 - the lowest since August 2000. Britons also borrowed less on credit cards and through overdrafts, the Bank said, adding that consumer credit grew by £1.6 billion, compared with £1.9 billion in August. The numbers are further signs that households are struggling under the weight of their debts, with the total amount now owed by the British public up to £1,032 billion. Ed Stansfield, a property economist at the research group Capital Economics, said: "The figures suggest that not only has housing demand cooled over recent months but also it has cooled at a very rapid pace. This developing situation could cross the pond and begin to effect the American inflated housing market in the 1st or 2nd quarter of 2005. Energy costs are begining to take a bite out of formerly strong performing sectors. |
| Posted by:Mark Espinola |
| #12 I have to admit that it might not be _totally_ a bad thing if house prices plummet next year. Property taxes, which are tied to assessed house values, have been skyrocketing in Prince William County (VA), where I live, for the last three years or so, and I suspect most homeowners would be relieved to have smaller tax bills even as they mourn their lost equity. |
| Posted by: Joe 2004-10-30 8:06:13 AM |
| #11 Only constraints are availability of broadband and two hours or less from a decent-sized airport. |
| Posted by: lex 2004-10-31 12:38:01 AM |
| #10 True that desirable locations in the bubble-icious east and west coasts are scarce and that high-quality school/housing districts there will probably hold their value. However, there's another factor that's not well understood yet and that could let some air out of the bubble in coming years: a remote workforce connected with broadband. Most service industry jobs, incl finance, consulting, creative and high tech professional jobs, are not location-dependent. Therefore the best solution to SV's and the NE corridor's ridiculous housing prices is continued migration of professionals and professional jobs to neighboring low-cost, desirable locations like the Rocky Mountains, rural Pennsylvania/VA/WVA etc. |
| Posted by: lex 2004-10-31 12:36:59 AM |
| #9 Like I said, now's the time to get in on the ground floor of Tunisian eggs. Everyone has to eat and eggs are food as well as inexpensive industrial building blocks. |
| Posted by: Shipman 2004-10-30 8:20:41 PM |
| #8 I don't know whether we are in a bubble, but I do know that a precondition for an unsustainable bubble is most people not recognizing that one is occuring. If there is a bubble, a 25% decline is probably too optimistic. Pessimism and forced liquidation will likely take it down much further. |
| Posted by: phil_b 2004-10-30 6:23:03 PM |
| #7 SSSshhhhh - the $ hopes are the only reason my children acknowledge me |
| Posted by: Frank G 2004-10-30 11:23:36 AM |
| #6 Don't worry, Frank, the doctors will take care of the inereitance problem. |
| Posted by: Mrs. Davis 2004-10-30 11:17:50 AM |
| #5 I, Frank G being of sound mind and body did spend it all. |
| Posted by: Shipman 2004-10-30 11:15:27 AM |
| #4 Avg house price here in San Diego is $500,000 (+/-). I worry my three kids will never have the chance to remain here and own their own home (at least until they inherit my |
| Posted by: Frank G 2004-10-30 11:12:55 AM |
| #3 Ain't gonna happen Bomb-a-rama. There are too many young professionals with relatively high incomes and new families stuck in the rental trap to allow prices to actually decline. Most listings are still selling in days with a lot getting offers above the asking prices. Bleah. |
| Posted by: AzCat 2004-10-30 10:30:47 AM |
| #2 House prices may fall by up to a quarter over the coming years, one of Britain’s top economists said yesterday. If only housing prices here in SV would fall at all... |
| Posted by: Bomb-a-rama 2004-10-30 10:26:00 AM |
| #1 There will be a correction in real estate values more along the lines of a decrease in the rate of properties appreciation and perhaps a slight decline in value, but it's all a cycle. Back in the late 80's people were bailing out of condo's around here for 20K less then they bought them for, and are now kicking themselves because the are worth 4 times what they were originally. In this area of the country I've read estimates that there will be complete build-out within the next 20 years, and since there is only so much real estate and people will always want some - prices certainly will not collapse. The ninnies have been crying the sky is falling over real estate for the past 5 years, mostly because they are the ones that can't afford to buy any. |
| Posted by: JerseyMike 2004-10-30 8:08:32 AM |