UK house prices? July 2007 comment on longer term outlook and warning of potential short term 10-15% house price fall.

http://www.globalchange.com UK house price trends - recorded July 2007 - warning of possible 10-15% correction / fall in UK house prices, but in wider context of longer term more positive outlook. While house prices may fall or rise in short term, UK house prices are generally stronger than they would otherwise be because of many complex factors which include population growth, more people living alone, 100% tax relief on own homes, 18% capital gains tax on property investments, planning restrictions, shortage of land, crisis of confidence in pension funds, poor performance of UK stock market over last decade, so people investing in property instead... plus other factors. Complex area. Expect some kinds of housing to be worse hit eg small flats. Video comment on UK real estate trends by Dr Patrick Dixon, futurist and author of Futurewise, including UK buy to let, UK property investment funds. Message: invest in UK property for long term (unless you sure you can add serious value in doing up a run-down property) and make sure you have contingencies to prevent having to sell property at a bad time ie do not massively overstretch personal finances.

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[pjvdixon]

Thanks - hard to say - I am not really so much interested in short term speculation on house prices. My message is that we need to take a long term view. I am certainly more pessimistic about the short term than I was a year ago. But we will reach a stage, probably within the next 12 months (I am starting to see it already with property investor friends) where people think they can drive a great bargain and want to buy. It all depends on local factors, especially in the buy to let market.

[BubbFromGEI]

The Property market is and always has been cyclical. All that has happen is that it moved past the peak in the cycle in August 2007. If you had seen the cycle top coming, you could have sold out before the peak. And now it is likely to keep sliding until at least 2011-12, and the next several months may be particularly devasting.

The Bulls who ignored cycles, will now pay for that oversight. And those who understand them, and use them well will be the big winners.

[pjvdixon]

Thanks. Most people live in their properties so selling has complex issues attached including family well-being, and most people are buying property intending to own it for a very long time. Your selling point applies mainly to retiring people looking to realise capital who may have to sit tight with equity release etc until market settles (most have no mortgage) + buy to let landlords (but their rentals have increased significantly last 12 months (>10% in some areas) as people delay buying.

[duffduffbeerbeer]

A fall of only 10 to 15%, you will be lucky... my own prediction is a 12 to 15% drop in 2008 and a 15 to 18% drop in 2009 followed by a 5 to 10% drop in 2010 before levelling out in 2011... so a 32 to 43% drop over 3 to 4 years... those of you who brought during this housing boom may be in slight trouble unless purchased before 2000 that is.... the housing market is a cycle it goes up and it goes down... however this time it has got a long long way to fall.. oh dear...

[pjvdixon]

You may be right - who knows. But if that happens there will be likely rebound boom the other side. Easy to lose money dipping in and out of housing market as stages in short term cycles are hard to read and costs of buy / sell huge. First time buyers may want to delay but need to be careful... life is complex. People need homes at particular times, properties they really like come up - will they again? Over 25-30y ears whether one bought at top / bottom market becomes far less significant.

[pjvdixon]

Thanks - important of course to watch whole video. UK housing very complex and cannot be summarised in a 3 minute soundbite (popular YouTube length). So I recorded up to max 10 mins allowed by YouTube, but really still too short. Some people only watch first 3m of 10 so miss wider context, which is why annotations relating to content further in the video now appear in first secion. Weakness of all videos of course - with text the reader can skim read to get the whole sense of the argument.

[MURDERyourLEADERS]

Ironically, and with hindsight, this video marks the top of the bubble, posted July '07.

It's a classic example of bubble mentality. All the hollow cliches and popular misconceptions are included - prices always go up, lack of supply, it's different this time (with regard to affordability)- perfect nonsense of course. The film maker even manages to lose any remaining credibility by changing the title after the event by adding a warning of short term price falls. Didn't see this coming?...hmmm

[dom597167]

Buy to let has to be one of the most socially divisive and just plain unpleasant popular speculations ever. The participants are not content just competing with young families who(dare to)aspire to have a tiny stake in their country and security. No. They want to see their rents rise too. The fact that you think it's OK and your "friends" are "investors" (selfish and greedy)is a harsh indictment on your character, Dixon.

[pauloz386]

Here in Australia interest rates are variable so you can buy in with "cheap" interest rates and get caught out as they rise. Borrowing 8 1/2 times yearly salary is nowhere near sustainable, what happens if you loose your job? Housing is simply overvalued here in Australia, but the economy relies on debt to act as a motivator rather like the whip did in the days of slaves.

[numbermoney]

OMG this guy is clueless!

[SPOILTBALLOT]

maybe I should not bother commenting now on this, but the reason house prices were so high compared to incomes in July 2007 was because of a relaxation of lending criteria and an explosion of debt. Now the credit has been withdrawn back to more reasonable levels, house prices are falling back to more reasonable levels. it is not difficult to understand.

[kipinat]

Good on you, Peter, for keeping this video up despite the critical comments. As I said when you first posted it, I thought you were wrong about housing. Still do.

Perhaps the title needs changing again, sort-term falls of 10-15% is already quite wide of the mark, since we are already at 20% (index-linked).

[sonakoya2001]

this video was a wonderful snap-shot...of the housing bubble mentality...GOOD RIDDANCE...

:)

[straydoggio]

Yes sure. You heard of deflation?

Job losses, pay-cuts, businesses that could only survive in the credit-expansion boom and who borrowed more in the expectation it would continue... now under massive pressure or going under.

House price crash + Wage crash + Rent Crash.

Enjoy the education coming your way.

[tech4156]

there are over 200,000 vacant property so wots he on about shortage?? also, why are there soo many people on housing waiting list if all these property are empty??

[cam230723]

COME ON THE HOUSE PRICE CRASH! Go you good thing go