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What's Your UK Property price prediction for 2012 ?

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What's Your UK Property price prediction for 2012 ?

The experts are more Bearish than last year

===================================================

 

What's Your UK Property price prediction for 2012 ?

 

Here are the experts surveyed by the BBC said :

 

Property price predictions 2012

 

========================

+ 0% : Bernard Clarke - "a broadly flat market"

+-0%: Martin Ellis - "unchanged plus or minus 2%"

- 2% : Robert Gardner - "flat to modestly lower"

- 3% : Simon Rubinsohn - down 3%

- 4% : Ray Boulger - down 4%

- 5% : Ed Stansfield - down 5%

-10%: Jonathan Davis - down 10%

-10%: Henry Pryor - down 10%

========================

MEAN of 8 Experts : - 4.25%

======================

 

It is interesting to see that there are only 2-3 forecasters at "flat" or better.

 

/source: http://www.bbc.co.uk/news/business-16288438

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It is interesting to see that there are only 2-3 forecasters at "flat" or better.

WHY so Bearish?

It will be tougher to get Mortgages, and Sellers are starting to "get it".

 

The penny drops

Another thing that appears to have changed in the past few months is the unwillingness of sellers to drop their asking prices.

 

For the past few years there has been a phenomenal gap between asking prices and actual selling prices.

 

The gap, depending on which measure of selling prices you use, has suggested that homes put up for sale by their deluded owners or estate agents have been as much as 40% over-priced.

 

But the property website Rightmove says new sellers have been dropping their asking prices significantly in the past couple of months, by 3.1% in November and by another 2.7% this past December.

 

"Sellers and their advisors are finally getting it," says Henry Pryor. "We are going to see a significant adjustment to prices - a fall of 10%," he predicts.

 

However Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics), warns that a sharp drop like that would not necessarily be a great boon to the many potential first-time buyers.

 

So far they have been kept out of the market by a combination of high prices and large deposit requirements.

 

 

Foreign money has helped property prices to regain their buoyancy in prime central London locations

He argues that suddenly falling prices would undermine the security of mortgage loans the banks had already made, and make them shy of lending more.

 

"If you think it's tough now, if prices were to start falling sharply, I suspect they [the banks] would be even tighter and harsher, and first-time buyers would struggle to gain any sort of opportunity," Rubinsohn warns.

 

WILL WE SEE a Rush to the Exits, now that Bearishness is taking hold?

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Down 4 percent, a lot more outside of london.

There HAS been a huge Difference in the Past between UK-wide and Greater London

 

Close-up :

H&N Index (average of Halifax & Nationwide) ..... Rightmove's Greater London Offer prices

ukhansmp3.png.ukgrlsmp3.png

 

Mo.: Rt'mov : London : Rest of UK %chg/ Nt'wide H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx

2009

D : : 221,463 : 398,426 : 132,470 +1.42% / 162,103 169,042 168,763 167,260 : £164,681 :+0.30% :134.5%

2010

D : : 222,410 : 408,248 : 127,473 - 0.60% / 162,249 = n/a = 162,803 161,498 : £161,874 :- 0.81% :137.4% :

 

Mo.: Rt'mov : London : Rest of UK %chg/ Nt'wide H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx

2011

J. : : 223,122 : 413,259 : 127,148 - 0.25% / 161,211 = n/a = 164,145 161,470 : £161,341 :- 0.33% :138.3% :

F. : : 230,030 : 430,680 : 125,624 - 1.20% / 161,183 = n/a = 162,697 161,680 : £161,432 :+ 0.06% :142.5% :

M : : 231,790 : 424,307 : 127,160 +1.22% / 164,751 = n/a = 162,712 162,151 : £163,451 :+ 1.25% :141.8% :

A : : 235,822 : 431,013 : 127,721 +0.44% / 165,609 = n/a = 160,393 162,303 : £163,956 :+ 0.31% :143.8% :

M : : 238,874 : 430,936 : 128,189 +0.37% / 167,208 = n/a = 161,039 162,344 : £164,776 :+ 0.50% :145.0% :H

J. : : 240,394 : 438,622 : 128,965 +0.61% / 168,205 = n/a = 163,430 163,642 : £165,924 :+ 0.70% :144.9% :

Jl : : 236,597 : 432,641 : 129,766 +0.62% / 168,731 = n/a = 163,981 164,714 : £166,723 :+ 0.48% :141.9% :

A : : 231,543 : 418,008 : 128,105 -1.28% / 165,914 = n/a = 161,743 162,076 : £163,995 : - 1.64% :141.2% :

S : : 233.139 : 427,889 : 128,821 +0.55% / 166,256 = n/a = 161,132 162,375 : £164,316 : + 0.20% :141.9% :

O : : 239,672 : 450,210 : 127,252 -1.22% / 165,650 = n/a = 163,311 164,311 : £164,981 : + 0.40% :145.3% :

N : : 232,144 : 444,724 : 124,083 -2.49% / 165,798 = n/a = 161,731 160,801 : £163,300 : - 1.02% :142.2% :

D : : 225,766 : 434,871 : 12X,xxx - X.xx% / 163,822 = n/a =

========================================

mom: -2.75% : -2.22 % : -Est.DI : 138.3% / - 1.19% = n/a = : -0.97% : -2.14% : - 1.02%

yoy:

'10:

'11:

Mo.: Rt'mov : London : Rest of UK %chg/ Nt'wide H-oldSA Halif.SA Hal.NSA: HNindex :

mom: - 2.75% : - 2.22 % : - 2.49% : === / + 0.XX% = n/a = : -0.97% : -2.14% : - 1.02%

yoy:

'10 : + 0.43% : + 2.47 % : - 3.77% : === / + 0.09% = n/a = : -3.53% : -3.41% : - 1.70%

'11 : + 1.51% : + 6.52 % : - X.xx% : === / + 0.XX% = n/a = :

========================================

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If we are talking Halifax/Nationwide figures, then I'll go for -2%, with the usual strong H1, weak H2 seasonality.

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I'll go for the same as last year, but this would be on my bearish side.

 

Up to 5% nominal max drop, possibly up to 10% real.

 

It could be more or less flat, and with inflation falling over the next 6 months, I think the real falls will moderate too.

 

The new mortgage rules don't come in until 2013. Normally this might mean a small rush to bag deals before the new rules come into effect.

 

However, from what I have seen/read/heard, most of the lenders had implemented these type of rules themselves >2 years ago.

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People have consistently underestimated the resilience of the UK housing market, which is why it would not surprise me at all to see prices flat or even rise slightly in nominal (but not real) terms. The continuing combination of high rents and ZIRP will mean owning property remains "desirable" for 2012, and more and more people who are able to will look to buy somewhere, while those who are not will continue to suffer from high rents and falling real incomes - a continuation of the rich get richer/poor get poorer trends that we have come to accept as the norm.

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People have consistently underestimated the resilience of the UK housing market, which is why it would not surprise me at all to see prices flat or even rise slightly in nominal (but not real) terms...

Maybe...

Once London joins the slide, prices will surprise people TO THE DOWNSIDE.

 

I'm inclined to go with -8% for both Greater London, and the UK as a whole.

If banks really suffer, and become more restrictive than now, or if rates rise,

it could be -12%, even -15%. I have seen property prices slide faster than that

in HK in 2008.

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Maybe...

Once London joins the slide, prices will surprise people TO THE DOWNSIDE.

 

I'm inclined to go with -8% for both Greater London, and the UK as a whole.

If banks really suffer, and become more restrictive than now, or if rates rise,

it could be -12%, even -15%. I have seen property prices slide faster than that

in HK in 2008.

 

There was a property piece on one of the business channels last week that said estate agent's Savill had reported London property valued at £4m or more had risen 7.2% in 2010 and 14% in 2011

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The UK can not and will not begin to recover until the housing bubble pops.

It will be a forced event by the markets one way or the other, however I think it's going to be a long drawn out event.

Time to buy in the UK will be in 3 - 5 years time is my prediction, with a flat market for years thereafter.

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Maybe...

Once London joins the slide, prices will surprise people TO THE DOWNSIDE.

 

I'm inclined to go with -8% for both Greater London, and the UK as a whole.

If banks really suffer, and become more restrictive than now, or if rates rise,

it could be -12%, even -15%. I have seen property prices slide faster than that

in HK in 2008.

 

That is possible as we saw in 2008, but it will take a combination of higher interest rates and recession/unemployment to force sellers' hands, and it will take something extraordinary to make the BoE raise rates. They know that the UK economy is still greatly leveraged to mortgage rates and it will take many years of slow inflation to lessen this dependency.

 

Lending is already severely restrictive and the market is still surviving. There will always be lenders, the question is will there always be borrowers (my guess is yes - enough to support - the market if ZIRP continues).

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People have consistently underestimated the resilience of the UK housing market, which is why it would not surprise me at all to see prices flat or even rise slightly in nominal (but not real) terms. The continuing combination of high rents and ZIRP will mean owning property remains "desirable" for 2012, and more and more people who are able to will look to buy somewhere, while those who are not will continue to suffer from high rents and falling real incomes - a continuation of the rich get richer/poor get poorer trends that we have come to accept as the norm.

 

Yep, increasing rents, low interest rates and a continuation of mortgage support are the only things that matter now. I will go for 1 percent down outside of London and two or three percent up in London. In real terms of course that will mean a fall of maybe 6 percent or more

Any UK bears should be considering that we are now in mid winter, the weakest time of the year and there is no evidence of prices falling. Just another couple of months until the so called "spring bounce".

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There was a property piece on one of the business channels last week that said estate agent's Savill had reported London property valued at £4m or more had risen 7.2% in 2010 and 14% in 2011

No doubt, that info is part of their own marketing exercise.

I wonder how long the London-as-Safe-Haven bubble will last?

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"Sellers and their advisors are finally getting it," says Henry Pryor. "We are going to see a significant adjustment to prices - a fall of 10%," he predicts.

 

However Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics), warns that a sharp drop like that would not necessarily be a great boon to the many potential first-time buyers.

 

So far they have been kept out of the market by a combination of high prices and large deposit requirements.

DOUBLE WHAMMY!!

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An interesting comment from a HPC version of this thread...

 

NuBrit :

"Greece had the mother of all economic collapses and their house prices are down by less than 15%, Ireland likewise saw a similar fall YOY with the economy imploding.

 

My prediction is an 8-12% fall for next year with London surprising you all with the biggest drop. My logic is that London is the most over-priced market, and that a credit contraction will hit it most. Merv the swerve will finally be proved right and inflation will fall to 3%, putting pressure on the BOE to raise rates, which they won't do. Unemployment to hit 9%, GDP to be revised downward and a Winter of discontent with unions clashing with the Tory government over further and inevitable cuts to the public sector. No dramatic crashes, not in the UK at least, just another even more dismal year."

UNQUOTE ... /source

 

He could be right

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An interesting comment from a HPC version of this thread...

... /source

Another there said:

"Any prediction is meaningless without stating real or nominal.

It is likely that real falls will far outweigh nominal falls."

 

Actual, I think only Nominal forecasts make sense.

 

After all, what do you deflate House prices by to make "REAL" prices?

CPI, RPI, the CRB index, Gold ... ?

 

There are many possibilities, and the most meaningful of all would be Mean Incomes IMHO.

But that is rarely done. Does anyone have a data series for Mean Incomes?

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Hi Azazel just a quick update on our wager. With 12 months to go the average house price is £165,798.

 

http://www.nationwide.co.uk/hpi/historical/Nov_2011.pdf

 

Looks like you need a 20% fall by the end of 2012 to cross the finishing line. Not impossible but I still fancy my chances of scooping the £20 worth of silver prize :)

remind us: what was the bet?

Can you also post the response on the 2012 Houseprice predictions thread?

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An interesting comment from a HPC version of this thread...

 

NuBrit :

"Greece had the mother of all economic collapses and their house prices are down by less than 15%, Ireland likewise saw a similar fall YOY with the economy imploding.

 

My prediction is an 8-12% fall for next year with London surprising you all with the biggest drop. My logic is that London is the most over-priced market, and that a credit contraction will hit it most. Merv the swerve will finally be proved right and inflation will fall to 3%, putting pressure on the BOE to raise rates, which they won't do.. Unemployment to hit 9%, GDP to be revised downward and a Winter of discontent with unions clashing with the Tory government over further and inevitable cuts to the public sector. No dramatic crashes, not in the UK at least, just another even more dismal year."

UNQUOTE ... /source

 

He could be right

 

Errr

 

Merv the swerve will finally be proved right and inflation will fall to 3%, putting pressure on the BOE to raise rates, which they won't do.

 

OK, wait, say again, "inflation falls and Merv will be forced to "raise" rates :blink:

 

Inflation falls, and Merv has to raise rates?......Enough said? :rolleyes:

 

No?

 

OK, what about......

 

Winter of discontent with unions clashing with the Tory government over further and inevitable cuts to the public sector.

 

yeah, about as useful as the last strike, (not much by all accounts), and hardly noticed by the rest of the country, much to the dismay of the unions.

 

Even as we speak, the unions are back tracking and quietly signing up to the government’s deals.

 

1970's? No, I was there and I can tell you, this ain't no 1970's.

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I put on a friendly wager with Azazel back in October 2010:

 

http://www.greenenergyinvestors.com/index.php?showtopic=4058&view=findpost&p=190279

 

If the nationwide index falls to £131,505 or lower I lose. That's a 20% drop form here.

 

I think we will see nominal falls in 2012 for sure of maybe 10% or so but 20% seems a little steep. The last time that level was seen was in September-October 2003. Time will tell.

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Errr

Ok, wait, say again, "inflation falls and Merv will be forced to "raise" rates :blink:

Inflation falls, and Merv has to raise rates?......Enough said? :rolleyes:

I agree that part is silly, but I was focused on the part that I highlighted:

"My prediction is an 8-12% fall for next year with London surprising you all with the biggest drop. My logic is that London is the most over-priced market, and that a credit contraction will hit it most."

 

I do think that a rise in rates, and a further contraction in credit is possible, but not for the reason he mentioned. I think it will come from a spread of Europe's debt ills to the UK. Banks may find their own sources of liquidity strained, and they will need to become even more restrictive.

 

(I also wanted a link to the HPC predictions, so people could use this thread as an archive to other predictions.)

 

What's your forecast for UK prices in 2012, JD?

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I put on a friendly wager with Azazel back in October 2010:

http://www.greenenergyinvestors.com/index.php?showtopic=4058&view=findpost&p=190279

If the nationwide index falls to £131,505 or lower I lose. That's a 20% drop form here.

I think we will see nominal falls in 2012 for sure of maybe 10% or so but 20% seems a little steep. The last time that level was seen was in September-October 2003. Time will tell.

Thanks, Doc Solar.

 

People can record their forecasting bets on the 2012 UK Property Predictions thread if they like. Since they may be easier to find here.

 

Alternatively, we could even start a "Forecasting Wagers" thread.

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I agree that part is silly,

 

Yes, I know you didn't write it.

 

What's your forecast for UK prices in 2012, JD?

 

It's on this thread, post #6.

 

Similar to last year (between 5 and 10% YoY real), but slightly less bearish.

 

Do I get a prize for last years prediction? :rolleyes:

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FALLING REAL INCOMES and job troubles are not a good prescription for housing price health

 

Outlook

Mr Gardner, at Nationwide, said that a fall in real income for many people, as well as high unemployment and an uncertain economic outlook, had restricted activity among buyers in 2011.

 

Yet, low interest rates and a lack of newly-built homes meant supply was also low and stalled any price falls.

 

He predicted that the same low level of activity was expected in 2012, although the outlook would depend "crucially" on how the wider UK economy performed.

 

The Nationwide is the first to publish figures for the year as a whole. Prices are expected by most observers to fall a little in 2012, echoing the Nationwide's prediction.

 

"We suspect that squeezed purchasing power, a now markedly weakening labour market, and major concerns over the economic outlook will limit potential buyers and weigh down on house prices through to mid-2012 at least," said Howard Archer, of IHS Global Insight.

 

"On top of that, there still seem to be significant difficulties in getting a mortgage for many people."

 

Nicholas Ayre, of UK buying agents Home Fusion, said: "Interest rates and mortgages are key. If the Bank [of England] rate remains at its current level, and if lenders do not go back into their shells, 2012 could see house prices continue to stagnate rather than collapse. That is probably the best we can hope for.

 

"But with 2012 shaping up to be a brutal year for jobs and the economy, even low interest rates will become less of a support. If the economy deteriorates significantly, house prices in the UK will come under further pressure."

 

/see: http://www.bbc.co.uk/news/business-16356568

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