Britain: Traders Predict House Prices Will Fall by 50% in Four Years
June 10th, 2008Via: Guardian:
The slide in house prices will continue for at least three years and crush the value of a home by almost 50% in real terms, according to a key index of property price futures. Indications from futures trading on long term property prices shows that the average UK home will recover its current value only in 2017.
By the end of this year prices will be down by 10% and by a further 10.5% in 2009, according to the index. Prices will keep dropping through 2010 and cut values by 23.5% when they hit rock bottom in 2011. House prices will then begin a slow climb back to current market values over a period of about six years.
If an average retail price inflation rate of 4% is included in the calculation and in addition the 8% drop in prices over the last eight months already registered by the Halifax index, the fall in values over almost four years will reach 47.5% in real terms.
While all those who find themselves upside-down on mortgage loans are sure to see this as a Very Bad Thing, on the upside, everyone who owns their place outright will see lower property valuations and all the resultant taxes and levies based on said value will decline.
Perspective is everything.
HA Indeed, I’m sure it’s possible to find an upside in just about any situation. Unfortunately, the only people who will see a net benefit from this are the usual suspects. Sure, some people will see their property taxes decline, but what happens when their currency collapses?
Perspective is everything.
Everything indeed.
Let’s just assume they’re operating on a broadly informed perspective and possess a large and abundant garden, a back stock of edible goods, a growing skill set and a shelf overloaded with DIY books, an ever-growing toolshed and a generally cooperative attitude at the local level. Zero debt and a relationship with farmers in the village and around the area. Forest to be managed.
I’d say they’ll be alright, so long as they can get the neighbors together to trade eats and throw in on larger community-oriented tasks.
Then there’s the eternal consideration: location, location, location. If there is a slow exodus toward the countryside from the cities, then farm and household labor will be available in exchange for room & board. When the going gets tough, the well-prepared go old school.
If the countryside empties out as people flee to the cities looking for handouts, then it’ll be nice and quiet for the gardeners who stay.
And if their currency goes ker-plop, odds are good there won’t be a means or a mechanism by which to levy the taxes — since the currency of the realm is no more. Of course, that’s precisely when the real shakedown often begins…
There are house fires breaking out today in at least half a dozen cities in California, (incl. two dozen in Stockton which had high foreclosures). This is driven by the dry windy conditions, but there are probably a couple owners who are lucky to get the insurance value.