2009 Price Predictions
I started this article thinking that by the end I'd throw my predictions into the ring about where I think house prices are going to end up in 2009.
I started by doing some research into what other ‘property experts‘ within the industry were predicting and after about 2 hours of research I had 27 different predictions from industry professionals. All of the conclusions I read made one thing crystal clear: most of the predictions were based on assumptions, and most of them seemed to be taking the best guess rather than using a working model.
And you know what? I would be doing the same if I were to make a prediction of my own, which is why I'm not going to.
Kind of like the guess the number of marbles in this jar competition you used to enter when you were a kid. Predicting house prices, especially given what's gone on in the past 18 months, is a bit like predicting the number of marbles in the jar.
Anyway, let's take a look at what the average results from my research. I have assumed a few things and some of the data weren't available, but I've put it all down so you can see it.
- The average predicted house price drop in 2009 is 10%
- The best prediction is stagnant (I.e., 0%) and the worst is 20%
- The recovery is sometime between middle of 2009, and worse is 2012
- Average recovery period is sometime in 2010
- Average predicted full house price recovery is sometime in 2012
House Price Predictions
|Halifax||Martin Ellis – Chief Economist||-5%|
|The British public (Building Society Association)||-8.60%|
|National Association of Estate Agents||Peter Bolton King – CEO||-10%|
|Centre for Economics and Business Research (CEBR)||-10%|
|Royal Institution of Chartered Surveyors (RICS)||-10%|
|This is Money||-10%|
|Knight Frank||Liam Bailey||-10%|
|Lloyds TSB||Victor Blank – Chairman||-10%|
|Nationwide Building Society||Graham Beale – CEO||-12%|
|Property Finder||Nicholas Lemming||-12%|
|Location, Location, Location||Phil Spencer||-12.50%|
|Jones Lang LaSalle||-14%|
|Capital Economics||Kelvin Davidson||-20%|
|House Price Crash||-20%|
|Council of Mortgage Lenders (CML)||No prediction|
* Notes – Halifax and Nationwide have not released official predictions for various reasons, so I have used previous predictions. Where predictions have been a range, I have simply taken the average.
Last years price predictions
If we look at last year's predictions, we see that people went too far but most people went too soft. They didn't see the credit crunch or the financial meltdown coming.
What are the YPC results of 2008?
Looking back at the properties we sold during 2008 and, in particular, our marketplace of new build properties. The following happened in 2008:
- The average sales price on a property we sold in 2007 was £175,000 this dropped to £144,000 in 2008. This was as much to do with price drops as it was to do with additional deposits required to complete a property
- Last year actual drop from YPC perspective in 2007 discount were 15% to in 2008 discounts of 25%. These were a price below value as opposed to the discount available. So you could assume a 10% drop in prices which I think is a fair reflection of what real values have come down during 2008.
What to do about this?
Here's the most important part of this investment blog: what to do with the information. Unfortunately, the answer is very little. What will be will be! Prices will definitely come down by 5%. Or 10%. Or maybe 20%.
The only thing you can do is protect your cash flows and decide when the time is right to jump back into the market.
For me, this should be sometime between now and the next 6 or 12 months to take advantage of the bottom of the market. Any later, and you'll be saying I wish I had!
As always if you have questions give the team a call, and they will be more than happy to chat you through the results and price predictions. Simply call them on +44 (0)207 923 6100.
Live with passion,