How far will Sheffield house prices drop?

[GrannyGranny 10]

Even in the late 80s they didn't continue dropping for that long.

 

An IFA friend of mine thinks it will take 5 years for the prices to reach what they were in late 2007/early 2008.

[Cyclone 10]

All the signs at the moment point to the worst recession we've had since the 30's. And this time it was housing that triggered it, rather than housing just being a casualty.

[SupraSteve 10]

Even in the late 80s they didn't continue dropping for that long. An IFA friend of mine thinks it will take 5 years for the prices to reach what they were in late 2007/early 2008.

"Even"? You (and your IFA!) should realise this bubble is much bigger, and much worse; it has been fuelled by the typical speculation that causes bubbles AND a credit bubble providing further fuel for the fire. In the late 80s/early 90s the bubble took over 6 years to deflate.

According to the index archives of both Halifax and Nationwide, the property decline was more drawn out than many of us may remember.

The average house price peaked at £70,246 in May 1989 (a 28.8% increase on the year before)

...

the market finally bottomed out in July 2005 at £60,965.

 

Full story; how does this crash compare to the 1990s.

And now compare the last correction - which was devestating for many - to this bubble.

[SupraSteve 10]

[some] people think paying £1/4Million for a 3~4 bed semi, or £80k for an ex-council box on a not particularly nice estate is "normal"; it's not and it never has been. "Normal" is what prices were in the mid/late nineties; when genuine fundamentals such as affordability underpinned a realistic value for our houses. The last 10 years haven't been "normal", and we won't see such crazy ratios of house prices Vs earnings until we get greedy again and conveniently forget that fact, which almost certainly won't be within 5 years time.

Outdated graph showing previous corrections in terms of average earnings.

 

Typical stages & sentiment throughout a bubble generation and correction

...now compare that graph, and the long term mean line, with this one which tracks house prices. (It's a little small but it's the best up to date graph I could find which has both aspects.) - which stage do you think we are currently at?

[Tomataheeed 10]

[some] people think paying £1/4Million for a 3~4 bed semi, or £80k for an ex-council box on a not particularly nice estate is "normal"; it's not and it never has been. "Normal" is what prices were in the mid/late nineties; when genuine fundamentals such as affordability underpinned a realistic value for our houses. The last 10 years haven't been "normal", and we won't see such crazy ratios of house prices Vs earnings until we get greedy again and conveniently forget that fact, which almost certainly won't be within 5 years time.

Outdated graph showing previous corrections in terms of average earnings.

 

Typical stages & sentiment throughout a bubble generation and correction

...now compare that graph, and the long term mean line, with this one which tracks house prices. (It's a little small but it's the best up to date graph I could find which has both aspects.) - which stage do you think we are currently at?

 

That last graph shows rises each year of less than 3% - inflation has been more than 3% over the last 35 years I would think.

[SupraSteve 10]

That last graph shows rises each year of less than 3% - inflation has been more than 3% over the last 35 years I would think.

Nope.

 

edit: Don't forget that the mean of 2.9% house price increase year on year is currently being affected by the bubble that is bursting. Prior to the bubble I believe the long term, post-war mean was ~2.2% (from memory so I may be slightly off). If you read the monthly Nationwide reports you will see them alter that number each update; whilst the current price index remains above the red line it'll go up slightly, once it drops below it'll drag the trendline down slightly. Extended periods either way (e.g. like the 'boom' that ended a year ago) will obviously introduce skew.

[saxondale 10]

There is no floor below which house prices magically will not fall

 

 

 

I`ve thought about this so spent some time going round several car dealers with your argument and oddly enough non of them will give me a car either.

 

fair enough if a house is too expensive then it will need to be reduced, however you simply cannot say values will fall to zero.

[espadrille 10]

Espadrille, Ranmoor is a lot of peoples dream area hence the prices of houses in the area. Dont hold your breath on being able to afford it any time soon.

 

I wont hold my breath, but I always Hold The Dream.

Life is about having a dream and pursuing that dream.It would be pretty sad without it.

In my life so far, whenever anyone has told me that something will not work, if I do believe it will work, I never give in to that.

Determination is the key and having the ability to keep on believing when others may give up.

There is a house for sale in Ranmoor now that I could buy if I sold the one that I live in, but as the house is much smaller than the one I am in, it would only make sense if I needed to release the capitol and be mortgage free.As I dont need to do that now, I will just wait a while and then move when the time is right.

 

The current market wouldnt make any difference to me as I would get less for the house I am in, but would pay less for the house that I would buy.

[Cyclone 10]

I`ve thought about this so spent some time going round several car dealers with your argument and oddly enough non of them will give me a car either.

 

fair enough if a house is too expensive then it will need to be reduced, however you simply cannot say values will fall to zero.

 

Fair enough.

The value below which houses will definitely not drop is zero.

 

That doesn't help your argument.

 

You might be interested to examine your analogy more closely though. Have a look at the price of second hand performance cars over the last year. It dropped rapidly after the tax changes were made, it's probably dropped again due to the recession occurring.

I can choose not to sell my car, but denying that it's value has fallen and putting it up for sale at the price I'd like will result in it not being sold.

 

Anyway, no one has ever talked about being given a house, we're talking about how the value has and is falling.

[saxondale 10]

 

 

I can choose not to sell my car, but denying that it's value has fallen and putting it up for sale at the price I'd like will result in it not being sold.

 

Anyway, no one has ever talked about being given a house, we're talking about how the value has and is falling.

 

 

 

and where have I denied my price needed to be reduced or indeed that I refused to reduce it?

 

 

however

 

 

unfortunatly your one of those saying "the price will fall next month ......" which as you now know is wrong.

[Phylis 10]

[some] people think paying £1/4Million for a 3~4 bed semi, or £80k for an ex-council box on a not particularly nice estate is "normal"; it's not and it never has been. "Normal" is what prices were in the mid/late nineties; when genuine fundamentals such as affordability underpinned a realistic value for our houses. The last 10 years haven't been "normal", and we won't see such crazy ratios of house prices Vs earnings until we get greedy again and conveniently forget that fact, which almost certainly won't be within 5 years time.

Outdated graph showing previous corrections in terms of average earnings.

 

Typical stages & sentiment throughout a bubble generation and correction

...now compare that graph, and the long term mean line, with this one which tracks house prices. (It's a little small but it's the best up to date graph I could find which has both aspects.) - which stage do you think we are currently at?

 

 

So would you like your wages to go to what was "normal" in the 1990's. Money isnt worth what it was in the 90's. We have moved on a couple of decades since then.

[Tomataheeed 10]

and where have I denied my price needed to be reduced or indeed that I refused to reduce it?

 

 

however

 

 

unfortunatly your one of those saying "the price will fall next month ......" which as you now know is wrong.

 

There is one way to test it....agree on which survey you trust and have a bet....put your money where your mouth is. Want a fiver on it?