House price predictions roundup: experts get it wrong?

Brett Alegre-Wood
January 25, 2011

House Price Predictions roundup

Once again I am going to look to a range of property experts across the UK and the world and see what the general consensus is on 2011 UK house price predictions.

The 2010 house price predictions winner? Err.. winners?

There was no clear winner for the 2010 House price predictions so it was shared by Zoopla, Knight Frank, RICS, and Building Society Association. My 2010 prediction of a 4% rise wasn't far off the 2.2% official rise for the year – and better than other property experts. I always use Land Registry for figures as it represents the best over indication of house prices we have.

Can experts really be so wrong about price predictions for so many years?

What astounds me is that fact that so many ‘experts' continue to predict large falls year after year and year after year they are totally wrong every year. An example of this is Capital Economics who have reported large falls every year and every year they have been wrong, but it gets them the headlines I guess so this works for them. I certainly wouldn't trust them for property investment advice, but they are good measure of the worst that could happen. One does wonder if these poor souls go home every night fearing they won't wake up in the morning, I much prefer to have some level of optimism in my life.

Brett Alegre-Wood's predictions for 2011.

This year my 2011 UK House Price Predictions is going against the grain of things. I predict that prices will rise by 4% in 2011. I feel that the overall sentiment will see many investors moving back into property as the fears for double dip subside. There are a lot of risks to this but I am optimistic.

The Experts House Price Predictions for 2011?

The interesting thing about 2011 is that the range has gotten a lot closer.

Let's take a look at what other experts are saying:

  • Average 2010 UK House Price prediction – Down 2%
  • Highest 2010 House Price Rise for 2010 – Up 5%
  • Biggest 2010 House Price Drop for 2010 – Down 10%

NO FIGURE for price predictions

No figure means they did not predict price predictions in that year or we were unable to locate a prediction for them that was published. In cases where experts claim a % figure after the event and we were unable to find a published figure before we have rejected it. Where predictions have a range we have simply taken the average.

Now if you remember last year the average drop expected was 3% yet the reality was a rise of 2%ish. So if you had of listened to the ‘experts' last year you would have been around 5% on average worse off. On a £200,000 home that's £10,000 difference which is not that bad when you consider that in 2009 the difference was £24,000.

Will the experts get it right this year?

Well did doesn't really matter most experts were totally wrong in their previous year predictions but for some strange reason we will continue listening to them.

Never forget that house prices are a localised thing, in many cases street by street, so think and research locally, and know your indices.

Now the truth is that I do believe based on my experience that house prices will end somewhere between -5% and +5%, realistically they will remain pretty stagnant, although there are still lots of risks. If you remember my comments in 2010 I said that they wouldn't end up lower which was correct.

The real question you should be asking is – What does any of it mean for my portfolio? You may find like many of our clients that in fact it means little. Then stop worrying and get on with life.

The economic recovery is well underway and whilst 2011 will be a slow stagnant year, astute investors will be buying while prices are so low, because I believe that 2012 will be the game changing year for all of us. This sentiment is surprisingly echoed across all but a few experts.

2011 is the year to get your cash flow in order as interest rates are likely to begin to rise.

Why using Gladfish for price predictions to source for you is the best way to ensure a 10% rise in prices

Irrespective of what house prices are doing this year, the many developers that we are working with are still struggling on all fronts, they have little ‘footfall' which is people coming to their show homes to buy, they are still struggling to get finance for developments, especially apartments, and more so outside of London and the major cities. Finally, people are afraid of off-plan property sales because of their lack of knowledge, so forward financing through off-plan sales is barely non-existent.

This means that huge opportunity exists for savvy investors who are prepared to negotiate price predictions (or have us do it for them). It's a buyers market 100% and with 10% – 25% discounts off the current market value (which is often 40-60% below Peak 2007 prices, they cannot and will not fall further.

Add to this that Affordability to back with yields of 8% commonplace and you have a great investment even with moderate interest rate rises.

Now obviously you won't be banking these profits until mid 2012 I feel but when you do you will realise just how good a deal you secured.

Anyway if you want to know the impact of any of these situations like price predictions on your personal portfolio or just want to get involved for the coming boom give the team a call on +44 (0)207 923 6100.

Live with passion,
Brett Alegre-Wood


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