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Written by rosalind renshaw

House prices in Britain are still over-valued by one-third – and the UK property bubble puts that of the US ‘in the shade’.

The claims are made in an article in the Wall Street Journal and come as the US housing market continues its long crash. House prices in America are now one-third off their 2006 peak – a sharper fall than in the Great Depression.

The WSJ piece challenged an analyst who said less than a year ago that the UK housing market was a bubble which had survived the financial crisis intact.

Journalist Alen Mattich disputes this. He says that house prices in the UK are still 4.4 times average earnings, and at peak were 5.8 times average earnings. By contrast, US house prices were 4.8 times average earnings before they crashed. In both countries, he says house prices should be 3.4 times earnings.

He says: “Indeed, the UK property bubble was more akin to that seen in Japan in the late 1980s. This is a comparison to chill British homeowners’ blood, because Japanese property prices have slid for the best part of 20 years.

“So far, the Bank of England has managed to underpin the market. Its zero interest-rate policy and sterling’s 25% devaluation from its 2007 peak have helped stabilise prices. But this stability is now looking vulnerable.

“Indeed, the UK housing market seems to be set more in aspic than on firm foundations. The number of mortgage approvals by banks is running at a mere 40% of where they averaged during the five years leading to the market’s peak. The current rate of approvals is only two-thirds of what economists say is necessary to maintain stable prices.
 
“The BOE’s commitment notwithstanding, the aspic is wobbling.”

The article goes on to say that eventually, even the currently booming London property market “will start to reflect the reality of British economics”.

It warns: “The big risk is that UK real estate suffers a dramatic collapse. The second big risk is that it takes decades to return to normality, much as has happened in Japan.”

In the US, house prices are now back to 2002 levels, with prices in some regions below 2000 levels. An estimated 28.4% of US home owners are in negative equity.

Standard & Poor’s Case-Shiller home price index has fallen for eight months in a row and declined by 4.2% in the first quarter of 2011, following a 3.6% fall in the fourth quarter of 2010.

https://online.wsj.com/
 

Comments

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    PeeBee,

    Just touching on your last point. Don't forget that taxpayers' money is already being used to support the housing market in the form of Support for Morgage Interest (SMI).

    The only difference is that Rant's idea would suppress HP's and SMI maintains HPs.

    God knows how much this has cost you and I since 2009:

    http://www.moneymarketing.co.uk/regulation/budget-2011-support-for-mortgage-interest-payments-scheme-extended/1028284.article

    • 08 June 2011 14:25 PM
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    RE James "PS what is happening to house prices in Hong Kong?

    An over-populated island me thinks"

    You thinks wrong. Honk Kong is an over-populated Peninsula connected to the Chinese main land surround by a series of small islands.

    Yes Hong Kong prices are rising but in the same way all Chinese property prices are in one mass property bubble. Is this because of high population, no its because of high expenditure of western capital reserves acquired through the sale of Chinese goods.


    By the way UK house prices are still extremely overvalued and falling. There is no money to support current levels and with wage freezes and rampant food & energy inflation people are getting poorer by the day increasing further the downward pressure on house prices.

    • 08 June 2011 14:00 PM
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    Mike. A couple of points to answer - so here goes.
    1. NO-ONE, as far as I can see, has ever claimed that the decade-long price boom (or the previous one...or the one before...) has been good for society. Every one of them has had a damaging effect, which has then led to a correction. HOWEVER, that is the cycle - and mere people power alone will not change it - as it is people power that actually fuels it! Different people - but obviously they drive it forward (and then backward - but NEVER back to the original start point...)

    To an extent you preach to the wrong congregation, mate. Estate Agents, and others involved in the property market are PAINFULLY aware of the problems associated with these cycles. In an ideal world, slow, steady growth would suit us all, as would a steady flow of properties to sell - but it is the 'fits and starts' nature of the market that is the cause of it all - and these things are totally out of the control of us all. We simply make hay while the sun shines - but remember that in the periods that Agents make money, it is on the back of others that make tens or hundreds of times more by comparison! If house prices double, an agent's fee might double - but more often they cut the fee for fear of not getting the business. Say they make 50% more. That would be around a grand, using today's average. The homeowner, however, has clicked EIGHTY grand (seventy-nine, to be exact. The Agent gets the other one...). Conversely, in a poor/cr@p market, an Agent is on the bare bones and struggling to keep the lights on in the office. The homeowner does not NEED to sell in the great majority of cases, so can sit tight and wait for a turnaround. So you see, lower prices WOULD be welcomed by many. They simply don't have the capability to accommodate.

    2.I am not saying Mr Hicks doesn't have a reasonable point about renting in an uncertain market. It is, like buying and selling at any time, a gamble. You snooze, you lose. In my humble opinion, if you are wanting to own a property, and the 'right' house comes your way - grab it! Regardless of the market. I HAVE - and would again - so I'm not telling people something I haven't done (and wouldn't do again...) myself. My point was that Mr Hicks was seemingly stating that people who ran the risk of a chain collapsing BELOW them should rent. My point is why? Why risk encumbering yourself with a mortgage AND rent? Fine if you can afford it - but even then, why throw good money away? Sell THEN rent - with that I see no problem.

    rantnrave tendered an idea some time ago. All credit to him - the 'experts' have nothing to offer... I seem to be (oops - sorry, Country Lass... nearly forgot your confirmed interest there...) the only one who wanted to hear more.

    Goes something like this (please jump in, rant, if I don't depict it correctly...)

    IF property prices halve, those like you and me would be fine. Owe a bit - but nothing like half of current 'value'. Yes, I would 'lose' my on-paper fortune - but my next property would be commensurately cheaper, and my lads would then be able to buy a modest home each. Win:win:win. I think you would be in exactly the same boat, Mike. THOSE, however, who were caught buying at the 'top' of the market, will be facing NegEq.

    rant believes that via subsidies of some sort, those faced with negative equity can be assisted to move.

    Not a bad idea in my books - maybe even paid for by the rise in SDLT the government will 'earn' by the additional transactions the move would bring.

    However, there are many who would not support such a plan, as it would more's likely be paid out of taxpayers money. It's okay to send money abroad to 'aid' countries that are actually stronger than we are - and who then package the money up and 'give' it to another country in 'aid' - but dealing with our OWN problems seems to be a problem with some.

    What would YOUR views be on such a plan? Open to all, of course... ;o)

    • 08 June 2011 13:07 PM
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    @PeeBee

    I can't stop myself when someone's argument comes down to the fact that I ought to cheer up! As though my view of the world is the depressing one!

    I've yet to find anyone on here who can make the case that what has happened over the last 10 to 12 years has been good for our society and economy as a whole.

    I think Will Hicks point about people selling up and renting is a valid one - I did it myself some years ago. We couldn't find anywhere to buy so we sold and rented rather than lose our buyers. But I didn't auction my house - that would have been a step too far for me.

    • 08 June 2011 10:04 AM
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    @Richard

    There's only one bunch of creationists on here. And that is the people who think the creation of ever expanding debt pushing house prices up year after year (forever, hallelujah) is a desirable thing.

    And, of course, those same believers hang their hat on the idea that the heaven of property ownership is only to be for the chosen few - the ones with 50 property portfolios.

    It would be better for a man to be cast into the sea with a millstone around his neck (nice imagery eh?) than to dare to buy a house to live in at a sensible and affordable price.

    • 08 June 2011 09:58 AM
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    @Richard

    Judging by the number of comments, clearly people are interested in discussing the future direction of house prices. That's why you're lurking around here too.

    • 07 June 2011 14:47 PM
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    Will Hicks: "Well, most sensible people I know are selling & going into rented as failing chains have let them down at both ends."

    Sorry - sensible people? Chains fail BELOW them and they go into rented? They pay rent AND mortgage?

    Wow - you have a VERY 'strange' opinion of who and what is "sensible", Mr Hicks...

    • 07 June 2011 14:43 PM
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    Mike Wilson,

    "If you are the average Joe with a wife and children, how on earth could you auction your own house - where would you sleep after completion?"

    Well, most sensible people I know are selling & going into rented as failing chains have let them down at both ends. This is also particularly true of downsizing baby boomers.

    • 07 June 2011 14:01 PM
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    Mike Wilson: Boy, mate - when I said 'don't go...' I really didn't think you would come back with such a militant head on...!

    Look - first and foremost, Ray Evans is 100% NOT the person you suggest to be unable to counter your argument. He made a flippant comment - even ended it with a smilie for you to show he was having a joky dig! The fact that you and he have opposing views (and Ray's opinions are WELL documented on this site...) is no reason to then launch the old "I don't know how you lot sleep at night..." tirade. It simply isn't justified. As an ex-Agent; as someone who is still actively engaged within the property industry, there is only one answer to your words:

    NO-ONE FORCES ANYONE TO BUY A HOUSE!

    Buying property is a want; not a need; certainly not a necessity. Those things that I NEED to do; those things that are NECESSARY - I do them, as life as I know it would probably not function otherwise.

    On the other hand, there are many things I WANT to do; I simply can't afford to do them. I have a choice - either I save up and make it happen, or if that is not possible then I dream about what may or may not come to be.

    Mike - you know darn well that Estate Agents perform a function; a service - call it what you will. They list available properties for sale; then they market them to those who may be interested and able to buy them. That - AND NOTHING MORE. No guns to heads; no arms being twisted; no coercion - the people they offer these properties to have free choice as is gifted by the society we live in.

    Your last rantlet has undone much of the reasoned argument you have previously offered, which is a shame, as you are better than your post infers, Mike. Once again - your passion oversteps your sensibility. Come back fighting by all means - but don't fire indiscriminately on the opposing troops. Pick your target and make each shot count or risk being overwhelmed, mon ami... ;o)

    • 07 June 2011 13:06 PM
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    Human Cat- JWs also fool themselves and think peolple are interested in their views.

    • 07 June 2011 12:48 PM
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    Yeah, damn those HPC nuts with their sensible argument backed-up by facts. Far better to live in denial.

    • 07 June 2011 12:30 PM
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    Jehovah Witnesses (HPC nuts) out early!

    • 07 June 2011 11:40 AM
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    Recent auction results have shown that force sale prices at auction are way below the values achieved by private treaty

    If you want or need to sell anything fast then of course give it away at auction

    Auction prices have never set private treaty market prices, and will not start doing so now - sorry boys.

    • 07 June 2011 10:21 AM
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    Actually I take that back. It would be really dull. Might as well hike up interest rates and get it over with, short sharp shock stylee.

    • 07 June 2011 10:19 AM
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    Here's the Halifax annual change numbers for the last year or so (updated today):

    6.9
    6.3
    4.9
    4.6
    2.6
    1.2
    -0.7
    -1.6
    -2.4
    -2.8
    -2.9
    -3.7
    -4.2

    19 more years of this could be quite interesting.

    • 07 June 2011 10:15 AM
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    @Will Hicks

    You said: "As more buyers & sellers become increasingly disenchanted with traditional, unreliable & slower methods of sale, it's the logical conclusion that auctions will become increasingly popular of the coming months and years, as a way of securing true market price, both for buyer & seller."

    Really? Surely most people, on the day they move out of their property need to move into another one? It's why we have property chains. If you are the average Joe with a wife and children, how on earth could you auction your own house - where would you sleep after completion?

    • 07 June 2011 10:03 AM
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    @RayEvans

    You clearly have no argument to make - you clearly cannot argue with my position - so you just decide to make daft comments about my glass being half empty.

    Actually, that isn't the case. I'm very positive about the future because I know that one of these days young people are going to act collectively and change the status quo.

    I know that, no matter what estate agents or lenders think or do, we have reached the point where the market must collapse in on itself or we allow massive inflation and watch the economy collapse.

    The position of you and your ilk is VERY depressing. What would make you happy? When every young person has a 200k mortgage around their neck? But what would happen then - where would 'equity' appear from then. Of course the generation following would have to have 300k mortgages and then 400k mortgages because, just in case you have not twigged this basic fact yet ...

    YOUR EQUITY IS SOMEONE ELSE's DEBT

    Think about it. All the old people laying comfortably in their beds at night planning how they are going to spend their 'equity' when they retire - and all the young men and women laying in their beds at night thinking 'what would we do if one of us becomes ill, shame we both have to work, shame the kids are dropped off a nursery at 6.30 each morning because we both have to work to put a roof over our heads, shame we have to borrow SO MUCH MONEY just for somewhere to live ..."

    I don't know how you and your ilk live with yourselves. You are part of the great 'let's immerse every generation in more and more debt' insanity that our economy has been relying on for the last 40 years.

    • 07 June 2011 09:59 AM
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    Adam,

    you are right there. As more buyers & sellers become increasingly disenchanted with traditional, unreliable & slower methods of sale, it's the logical conclusion that auctions will become increasingly popular of the coming months and years, as a way of securing true market price, both for buyer & seller.

    • 07 June 2011 09:46 AM
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    Adam

    That is pure nonsense, how old are you??

    • 07 June 2011 08:49 AM
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    @Mike Wilson

    Your glass is always half empty - get a life - think of it as half full! :0)

    • 06 June 2011 18:59 PM
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    You can say what you like, were selling properties. So much for prices needing to collapse.

    As it happens we just completed a sale on a guy who sells Bonzai trees. They are small, presuambly to fit on an island, but boy are they expensive.

    • 06 June 2011 16:22 PM
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    @David O'Connor twice

    You said: "I wonder sometimes how journalists come to their conclusions.
    Anyone who knows how the value any investment will know the property is very keenly priced right now.
    Be it a valuation of a company, of shares or any other assets you look at potential yields."

    So, we are to value property based on its rental yield?

    Yet we have just been through a period where many people bought BTL properties on finance which meant that, after taking mortgage payments into account, the yield was negative. They had to top the rent up by a couple of hundred quid a month to cover the mortgage (and that at 300 year low interest rates).

    Do those investors know that you should value a property on yield? Or did they think that capital growth would make up for the negative yield? Now there is no capital growth - and won't be for a generation - presumably few people will be buying investment property using debt.

    • 06 June 2011 16:06 PM
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    Jonnie,

    you're like that kid who keeps shaking a jar of wasps wondering why he keeps getting stung.

    That's a metaphor by the way. Look it up.

    • 06 June 2011 14:12 PM
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    We all know that our house prices in the UK are over priced. Years of re-mortgaging and over ehthusiastic lending by banks and building societies and also a curb on spending has resulted in the market conditions we have today. The only way of guaranteeing a house sale at prices which the market is prepared to pay is at auction it seems.

    • 06 June 2011 13:39 PM
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    The IMF report is out and having looked over it they don’t have a clue what’s going to happen either!? But they definitely haven’t predicted a meltdown so its not so much positive news as not negative / neutral news

    • 06 June 2011 13:35 PM
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    @Hampshire Agent

    What on earth are you talking about?
    Same for the un-named guy who followed you on this post.

    @Hampshire Agent

    Just read your next post. Do you ever read anything properly?

    • 06 June 2011 13:32 PM
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    Meh, nothing new here, the IMF and our own Vince Cable have been banging this drum for years.

    Tell me something I don't know.

    Still, apparently the new paradigm is all about 'affordability'; all I have to do is work an 80 hour week and, hey presto!

    • 06 June 2011 13:10 PM
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    James - I think the point here is not that prices can go up in a densely populated place (like Hong Kong) but that they can also come down again (as in the case of Japan).

    • 06 June 2011 12:52 PM
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    It is all true, but surely a positive mental attitude is better than a negative one

    On a lighter note can anyone think of anything good?

    • 06 June 2011 12:49 PM
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    @Will Hicks,

    Negative to a fault but true! – My friend looked up from his iphone last week and sighed as Murray had lost, I told him not to worry he’s Scottish, he’s only British when he wins!

    Still, Hamilton is in with a shout still with his car and team from Surrey and even Vitell is in a car built in Milton Keynes

    • 06 June 2011 12:45 PM
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    James,

    Our football team is rubbish; look at the last world cup & the lucky draw with the European football powerhouse of ... erm ... Switzerland.

    Andy Murray is his own worst enemy. He's also publicly professed his dislike of things English, so not sure why he deserves talking up, but then again you are an EA.

    A lot of people are going to lose their jobs this year; too much income is consumed with paying over-priced mortgages on properties you lot were complicit in over valuing.

    It's sad, but take your head of of the sand buddie.

    • 06 June 2011 12:32 PM
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    Will Hicks my old son, how are you? we were having a laugh about you the otehr day, You said the following…………….……………….

    ‘’I would expect you lot were expecting a comment from me. Well, I'm staying quiet for fear that Jonnie may want to bummer me. – 2011-05-06 16:09:43’’

    Now my old son, im not sure what being bummered is and I admit when I read what you said I imagined you having a Bristol accent and it was funny but Ive Googled it and found an advert for a nice Brazilian man in leather shorts looking for companionship………………….based on this is think it’s a sex thing, a gay sex thing.

    So, and too my point. What in gods name have I ever posted / said about or to you that gives you the idea I may want to engage in ‘Bumming’ with you? – I think you are misreading the signs mate.

    You are going to have to tread carefully Will, chaps like you can be misunderstood by some (mainstream society) in fairness you could be popular in prison but try and avoid misinterpreting what people say. When someone’s not being very nice and just takes the mickey out of you for the amusement of them selves and their colleagues that isn’t a ‘Go’ for any sex stuff, its because they think you’re a bit daft.

    Oh, best to avoid bars, nightclubs, shopping centres, you know ‘public places’ and remember your internet history is never really deleted…………..

    Jonnie

    • 06 June 2011 12:30 PM
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    Oh dear, little Jonnie has to ask about the woes of Japan's housing market. He doesn't know as much as he pretends does he. Jonnie the only time a real "oddball" like you opens his mouth, is to exchange feet. It's quite clear the other EAs posting here are sick of your irrational bile.

    • 06 June 2011 12:24 PM
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    PS what is happening to house prices in Hong Kong?

    An over-populated island me thinks

    • 06 June 2011 12:24 PM
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    Is it not amazing how we take so much delight in talking this country and the economy and everything else down?

    The football team is rubbish, Andy Murray will not win Wimbledon, we will all lose our jobs, repossessions will soar and oh of course house prices will crash

    the HPC mob talk house prices down on this blog because it suits them, even if they have to listen to out of touch Yanks with irrelevant comparisons

    Come on peeps lets be positive, no crash just adjustments where necessary - still selling good houses in good areas at reasonable prices, even outside of London

    • 06 June 2011 12:21 PM
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    That's not what I said at all Jonnie. I'm saying the scenario this article portrays isn't taking a significant point into consideration.

    For what it's worth, I think Japan is an excellent example of a heavily populated island nation with limited space for building experience two decades of property price declines.

    • 06 June 2011 11:55 AM
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    I wonder sometimes how journalists come to their conclusions.
    Anyone who knows how the value any investment will know the property is very keenly priced right now.
    Be it a valuation of a company, of shares or any other assets you look at potential yields. Rental properties continue to return yields of around 5% (pretty good). This along with the shortage of supply, continues to mean that property prices have already had their correction.
    Classic economics low supply high demand price would normally rise, due to current funding issues they remain level. Once the world get out of the grip of auditors & compliance directors the economy will start to move.


    Please stop publishing negative opinions. Publish some positive ones. Media effects confidence which does effect value.

    • 06 June 2011 11:52 AM
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    Rant,

    ……..so what you are saying is Japan is a poor comparison / different to the UK?

    Right – conversation over, this article nonsense and not worth discussing

    Jonnie

    • 06 June 2011 11:46 AM
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    One aspect that this article hasn't touched on is the difference between the consumption / savings ratio in Japan and the UK.

    The Japanese are a nation of savers - there is next to no welfare system there, so people have a lot less to fall back on. When their government racked up masses of debt, the Japanese people snapped up the bonds they were issuing. Thus, the public is in effect bailing out their own country.

    The UK has until at least very recently been a consumption driven society. If our debts spiral out of control, the public here cannot respond in the same way. We will need to attract overseas sources to fund our borrowing and they are tempted by higher interest rates.

    The Japanese model is a poor one for this country to follow. I don't think we'll be given the opportunity of spending the next 20 years walking down that path though.

    • 06 June 2011 11:41 AM
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    Alright, Hampshire Agent, ill give you a reply as it clear you don’t read much of what I say. Although few could blame you as I do post a lot of cobblers but I am very clear on my view on prices, so………………

    No, im not mortgaged up to my lug holes on BTL – sold the one I had along with my own house in March 08…………….So, I don’t care that much from a personal point but really, a bloody American’s view on UK house prices getting the lead story on EAT?

    And as im justifying my self to you and wondering why I see you have actually summed up the whole thing yourself when you say “Nobody, not even you, can see into the future”………………and that’s the point fella.

    However, if you are ‘with’ the more extreme elements of HPC, im not talking Rant and Sibley, im mean proper odd balls, like BRIT123 and Will Hicks and you agree with realising Reality on any of the nonsense he dribbles on about then we wont agree but you are either very naive / inexperienced or just in the wrong job but probably both

    Jonnie

    • 06 June 2011 11:19 AM
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    "It takes two to make a transaction, and if I was an EA in this terrible market [outside London off shore money washing], I'd be working for the buyers right now."

    Aaaaaaaaaaaaargh you're all as bad as each other. We try to sell houses at the best price in the current market. Sure some vendors want too much but it's their house, we can't just prise it from their kung fu grip and do what we want.

    Can't you HPC guys swap numbers with Ray, Jonnie et al and take this tedious dance elsewhere.

    • 06 June 2011 11:12 AM
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    @neil

    You said: "If rates go up, who knows, but I believe the last thing that either the Bank of England or the government are going to encourage is a house price collapse, so expect interest rates to stay low until we see MUCH better economic data coming through."

    You do realise that interest rates are actually set by the interest rate demanded by international investors buying our government's debt? At the moment, against the global backdrop, they are happy with the current low interest rates. Do you know what interest rates are in Greece, Ireland and Portugal. Despite membership of the Euro, government debt in those countries is at much higher rates of interest than we pay.

    So, the idea that the government will keep interest rates low to prevent a house price crash is, I am afraid, somewhat delusional.

    At the moment the markets are allowing the government to do this. The second they decide the UK economy is a basket case (which is becoming ever more apparent to everybody as the 'recovery' has got no legs because the only way we get growth in our service and property based economy is through the endless expansion of debt (and we aren't in a position to do that anymore without simply printing money again)) then, interest rates will go up and the government will sit there wringing their hands.

    That's the way it is. You live on debt - you are at the mercy of the lenders. So far we've got away with it. It can't go on forever.

    If I owned an estate agency that was profitable and successful, I'd be looking for a buyer now.

    • 06 June 2011 11:05 AM
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    Japan property prices have suffered for many years now, and we're heading that way.It's a shame most EAs have kowtowed to the vendors over the last couple of years. If they had been more firm and put asking prices out that were reasonable, they'd have got sales volume going through their books and this sorry episode [transfer of market share] would have been avoided.

    "but it's our job to represent our clients & get them the best price for them" I hear you cry. As Mr Gecko said; "Follow the cash" dummies. Where does the CASH come from ? Yes, the buyer. Unless, you're not in the business of buyer & selling vendor sentiment ?

    It takes two to make a transaction, and if I was an EA in this terrible market [outside London off shore money washing], I'd be working for the buyers right now.

    • 06 June 2011 11:02 AM
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    @ Jonnie and Ray

    Up to your necks in BTL by any chance? Otherwise I can't see why you care so much. What does it matter to the average agent where prices go?

    You two talk as much rubbish as the HPC guys. Nobody, not even you, can see into the future.

    • 06 June 2011 10:53 AM
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    I wouldn't listen to anyone who can't even spell their own name.

    • 06 June 2011 10:51 AM
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    Ray – easy mate, I argued this one a while ago as I was absolutely disgusted by the price of Range Rovers (£70 flipping grand the dealer wanted!?) and some of the HPC guys pointed out that its not a necessity to have one but a home is

    …………….although im not sure why renting doesn’t count as a home, or why its someone’s right to own a house………………..but no matter, I think they might plop this one on you

    Jonnie

    • 06 June 2011 10:40 AM
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    ……………..ah, I spoke a bit soon, I see our other resident fruit loop RR is back and positively moist with excitement.

    I wonder if he’s put his house on the market at 3 x’s whatever his sums are based on yet? – also, as he’s a pioneer (in his mind solely but never the less a pioneer of sorts) shouldn’t he insist the excellent selection of instructions on his superb website should be prices his way too?

    Jonnie

    • 06 June 2011 10:36 AM
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    This subject has become very boring over the last few months. Prices will not fall by the amount predicted by some
    However, I have a view on the price of BMW's, they are too expensive!. Nomatter what it costs to produce them in materials,labour,research etc. etc. they should be reduced by at least a third then I may be able to afford one.

    • 06 June 2011 10:34 AM
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    I think the Americans often call it right and have excellent judgement on many things, especially stuff that’s going on outside their own country.

    So, vendors of the UK, listen up – you all need to drop the price of your house by a third…………an American says so.

    I have a cracking semi on at the moment (you need to get your wife to see it before it goes) for £300,000 – its going to be £200,000 later today……..bargain, although I think the sealed bids ill have to do might come in a bit higher than that, not sure but lets see.

    All we need now is some intelligent comment from Will ‘Mad Dog’ Hicks to really make a credible article.

    Jonnie

    • 06 June 2011 10:30 AM
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    This is yet another attempt at trying to say there is such athing as the "UK property market" just as much as there is a "US market" -they are both comprised of a miriad of smaller markets with very localised factors that affect supply and demand.I'm sure that in former industrialised towns in the US where the principal industries have gone or places like New Orleans the house prices have gone through the floor which must definitely reflect badly on the overall figures.Here people often have substantial savings to put into housing- back in the 1980's the majority of people were having 100% mortgages in the area i work (London) and now its averaging 50% or less and is suprisingly common to have totally cash buyers so where does that figure in statistics?

    • 06 June 2011 10:29 AM
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    The only way to avoid market forces (resultant from the recent financial crisis) from impacting on UK house prices, is to try and hold prices high by continuing to ask excessively high prices.

    The inevitable downside to this would be that demand would dwindle to a mere trickle for ages to come.

    The notion of getting our lending institutions to bridge the gap, is unworkable and totally unrealistic.

    Why don't we just bite the bullet and let market forces decide house prices, then more people could move and the whole economy could benefit from all the spin-off spending, resulting from such an increase in those able to move house.

    • 06 June 2011 10:28 AM
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    @TM

    Each country has a different ethos, values, market forces, economies and circumstances; Japan is no different. Its comparing pears with apples.

    • 06 June 2011 10:18 AM
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    Amazing how peple produce a ratio that they say is correct, ie.house prices should be 3.4 times earnings'. A house is worth what someone is prepared to pay and while interest rates are low prices are unlikely to fall as there will not be large scale repossessions. If rates go up, who knows, but I believe the last thing that either the Bank of England or the government are going to encourage is a house price collapse, so expect interest rates to stay low until we see MUCH better economic data coming through.
    Also, I agree wholeheatedly with Hampshire Agent, so perhaps all of the above is a moot point!

    • 06 June 2011 10:17 AM
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    An interesting article but basically guesswork, just like some of the responses below claiming the opposite. The fact is that nobody knows and only those of us up to our necks in BTL really care. It doesn't change my day to day routine of selling houses for the best price in the current market. If prices fall I suppose I'll be selling them for less, if they rise I'll be selling them for more.

    • 06 June 2011 10:08 AM
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    Chris Wood, Japan is also an island with severe shortages of land. Look what happened to thieir housing market.

    • 06 June 2011 09:50 AM
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    It is so hard to give accurate predictions. Japan is more like UK than USA in terms of available land v population ... well they were until the tsunami. Japan is sadly fairly much unique. UK ... who can predict beyond a gentle fall between now and next Spring, pockets of high income/high desirability excepted?
    An interesting article nevertheless.

    • 06 June 2011 09:39 AM
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    I usually avoid pricing punditry, but what this perspective also fails to take into account, is that London is a total enigma in terms of worldwide cities - almost every billionaire from every country in the world owns a property (or portfolio of properties) in London, making it not an English city, but a truly international city, from a property-value point of view. This has forced otherwise-wealthy English folk (mere millionaires) into the suburbs, and the former suburb occupiers further out still, hence there are people with postal addresses in almost all the home counties who still class themselves as living in London.

    The ripple effect of this international property boom in London has created further property shortage (one of our overseas clients alone owns over 300 apartments in central London) which is a factor which cannot be ignored in this context, but has been by the WSJ.

    In my humble opinion, whilst we may face stagnating house prices for some time, the only danger of a pricing collapse is if the international community decide to exit London en masse - and seeing as they seem to be getting ever richer, there seems less and less danger of this happening.

    I wonder what the inimitable Henry Pryor thinks.....

    • 06 June 2011 09:24 AM
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    "......American journalist Alen Mattich........"

    A really qualified expert on the UK market then!

    • 06 June 2011 09:23 AM
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    Another property 'expert' who fails to grasp the difference between the American and British markets.

    America is a big place. Britain is a small island. Lots of building land v shortage of building land.

    Its a little more complex than that but that's about the crux of it.

    • 06 June 2011 09:12 AM
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    I wonder if the auther of this report has studied house prices outside London. In my area of West Nottingham, you can buy a nice 2 bedroom house, 25 mins from the city for less than 100k. Over-valued ? I don't think so Alen.

    • 06 June 2011 09:12 AM
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